Orellana v. LOUISIANA CITIZENS PROP. INS.Orellana v. LOUISIANA CITIZENS PROP. INS.
Javier ORELLANA
v.
LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION.
Court of Appeal of Louisiana, Fourth Circuit.
*1253 Mark P. Glago, Glago Law Firm, L.L.C., and Anthony D. Irpino, Irpino Law Firm, L.L.C., New Orleans, LA, for Plaintiff/Appellee.
Shawn M. Roussel, Hulse & Wanek, APLC, New Orleans, LA, for Defendant/Appellant.
(Court composed of Judge DENNIS R. BAGNERIS, SR., Judge TERRI F. LOVE, Judge EDWIN A. LOMBARD, Judge LEON A. CANNIZZARO, JR., and Judge ROLAND L. BELSOME).
DENNIS R. BAGNERIS, SR., Judge.
Defendant, Louisiana Citizens Property Insurance, appeals a judgment of the trial court, which found in favor of Plaintiff, Javier Orellana, and awarded $87,500.00 for dwelling property damages as well as $125,000 in general damages. For the following reasons, we affirm.
FACTS:
This suit arises out of the property damages suffered by Plaintiff to his duplex located at 631-33 S. Solomon Street, New Orleans, Louisiana, as a result of Hurricane. Katrina. At the time of the August 29, 2005 storm, Plaintiff had a homeowner's policy of insurance with Defendant, Corporation Citizens Property Insurance Corporation (hereinafter "Louisiana Citizens"), with policy limits of $144,000.00 for dwelling. There was no coverage for contents or loss of use.
As a result of Hurricane Katrina, Plaintiff sustained wind and rain damage to his *1254 house. In November of 2005, Plaintiff reported his claim to Louisiana Citizens. Thereafter, Louisiana Citizens sent out its adjuster, Bradford Knight, to do an inspection of the premises. Mr. Knight submitted his estimate in the amount of $48,181.84 to Louisiana Citizens on December 14, 2005; however, Louisiana Citizens did nothing and paid nothing to Plaintiff. On August 3, 2006, Plaintiff's expert, James Simpson, estimated the wind and rain damages to be $103,635.51. Mr. Simpson's estimate was submitted to Louisiana Citizens on August 16, 2006; however, Louisiana Citizens did nothing and paid nothing to Plaintiff. On March 1, 2007, Louisiana Citizens sent a new adjuster, Don May, to Plaintiff's home to do a reinspection. The re-inspection estimated the wind and rain damages to be $80,594.41; however, again, Louisiana Citizens did nothing and paid nothing.
After a one day bench trial, the trial court found in favor of Plaintiff and against Louisiana Citizens. The trial judge awarded Plaintiff $87,500.00 for dwelling property damages, plus interest and cost, as well as $125,000.00 in general damages for Plaintiff's "mental anguish, stress, and inconvenience sustained as a result of Louisiana Citizens' bad faith failure to properly and timely adjust this claim." Louisiana Citizens now appeals this final judgment.
DISCUSSION
Louisiana Citizens briefed three assignments of error arguing that; (1) the trial court erred in awarding general damages for mental anguish in contravention of La. C.C. Art.1998[1]; (2) the trial court erred in awarding general damages for mental anguish because the claim does not rise to the level necessary for an award of mental anguish damages under Louisiana jurisprudence; and (3) in the alternative, if this Court re-characterizes the general damage award as a penalty pursuant to La R.S. 22:1220, the trial court erred in failing to recognize that, pursuant to its founding legislation and the overall legislative intent thereof, Louisiana Citizens is immune from the penalty provisions of the Insurance Code.
The thrust of Louisiana Citizens' arguments goes to the issue of whether a trial court, after finding a breach of the duty to act in good faith, may award general damages sustained as a result of the breach. The trial court, in its reasons for judgment, states, in pertinent part:
Finally, the Court awards Plaintiff general damages for his mental anguish, stress, and inconvenience sustained as a result of Louisiana Citizens' bad faith to properly and timely adjust this claim. See La. R.S. Art. 22:1220(C). Mr. Orellana testified that, since he was not given any money from his insurer to repair his house, he and his mother have had to live with various friends and relatives. To this day, which is over a year and a half after the storm, they still live, in a FEMA trailer in front of the subject residence of 631-33 S. Solomon Street. *1255 Mr. Orellana testified that his two children, who are ages 13 and 25, came to stay with him in the FEMA trailer and were extremely uncomfortable. This has caused strained relations between Plaintiff and his mother, and between Plaintiff and his two children.
Further, because Plaintiff has not received any timely insurance payments, he has been forced to piece-meal his home repairs. Plaintiff has been forced to hire various independent laborers to do the repairs to his home, rather than just hiring a general contractor and have the contractor deal with the "headaches" of doing the renovation. Further, the financial burden of having to come out of pocket for his home repairs on such a limited budget has caused Plaintiff emotional strain. In fact, Plaintiff testified that the reason his home is not complete and livable is because he did not have enough money to pay the workers and they left the jobsite. The Court finds Plaintiff's testimony regarding his emotional distress to be very credible. Had Louisiana Citizens actions not been so arbitrary and capricious in their failure to pay Plaintiff's claim in a timely manner, Plaintiff could have rebuilt his house in a timely manner and the strained relationships Plaintiff has had to endure with his family and the emotional distress described herein could have been avoided. Accordingly, the Court awards Plaintiff $125,000 in general damages. See National Union Fire Insurance Company of Louisiana v. Harrington, 2002-832 (La.App. 3 Cir.2003),854 So.2d 880 .
A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.
B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer's duties imposed in Subsection A:
(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.
(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.
(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.
(4) Misleading a claimant as to the applicable prescriptive period.
(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
C. In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater. Such penalties, if awarded, shall not be used by the *1256 insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings. (emphasis added)
Further, this Court, in Blache v. Jones addressed the issue of whether a homeowner can recover for mental anguish caused by property damage. Specifically, this Court stated:
In Louisiana, an award for mental anguish resulting from property damage is permissible in limited situations: (1) when property is damaged by an intentional or illegal act; (2) when property is damaged by acts for which the tortfeasor will be strictly or absolutely liable; (3) when property is damaged by acts constituting a continuing nuisance; or (4) when property is damaged when the owner is either present or nearby and suffered a psychic trauma as a direct result. First of Georgia Insurance Co. v. Cohen,398 So.2d 1209 (La.App. 4th Cir.1981); Turgeau v. Pan American World Airways,764 F.2d 1084 (5th Cir. 1985).
Blache v. Jones,
In this case, Plaintiff has had to watch his home sustain ongoing damage[2] as a result of Louisiana Citizens' decision to not pay timely insurance payments, which qualifies the case under subsection (1). Had Louisiana Citizens actions not been so arbitrary and capricious in its failure to pay Plaintiff's claim, Plaintiff could have prevented further deterioration of the home and/or allowed Plaintiff the opportunity to properly rebuild. The trial court observed the testimony of the Plaintiff and found that the Plaintiff was very credible. We find nothing in the record to indicate that the award of $125,000.00 was beyond the "great, even vast" discretion of a trier of fact in fixing such a damage award. See Youn v. Maritime Overseas Corp.,
Although Louisiana Citizens argues that it is immune from the ramifications of
AFFIRMED.
LOVE, J., Concurs in Part and Dissents in Part and Assigns Reasons.
CANNIZZARO, J., Dissents and Assigns Reasons.
LOVE, J., concurring in part and dissenting in part.
I respectfully dissent in that I do not find that general damages were properly *1257 awarded. I concur with the majority that Louisiana Citizens Property Insurance Corporation (LCPIC) is not immune from penalties and its actions are compensable as such pursuant to
I find the majority's reliance on Blache v. Jones,
"Laws on the same subject matter must be interpreted in reference to each other." La. C.C. art. 13. Two laws in Louisiana pertain to damages for nonpecuniary losses. The Louisiana Insurance Code section on unfair trade practices contains
An insurance policy is a contract. La. C.C. art.1906. The object of an insurance contract is the payment of money. Dixon v. First Premium Ins. Group, 05-0988, p. 16 (La.App. 1 Cir. 3/29/06),
I find that the LCPIC failed to tender any amount to Mr. Orellana more than sixteen months after he reported the wind and rain damage claim from Hurricane Katrina. The LCPIC sent two adjusters to estimate Mr. Orellana's damages sixteen months apart with estimates at $48,181.84 and $80,594.41 respectively. Mr. Orellana's adjuster estimated his damages at $103,635.51 almost a year after Hurricane Katrina. Accordingly, $48,181.84 of damage to Mr. Orellana's *1258 home was undisputed. Also, the LCPIC never denied Mr. Orellana's policy covered the alleged damages and Mr. Orellana repeatedly requested payment. The LCPIC could not provide an explanation as to why Mr. Orellana claim was not addressed properly.
I find that the trial court was correct in its factual finding that the LCPIC acted arbitrary and capricious as required for a penalty award. Therefore, pursuant to the de novo standard of review used for reviewing questions of law, like, the awarding of penalties as per
CANNIZZARO, J., dissenting.
I respectfully dissent from the majority's award of $125,000.00 to the plaintiff, Javier Orellana.
The defendant, Louisiana Citizens Property Insurance Corporation ("LCPIC"), contends the trial court erred in awarding to Mr. Orellana $125,000.00 in damages for mental anguish, stress and inconvenience. LCPIC maintains that because Mr. Orellana's claims were based on an alleged breach of an insurance contract, his damages are limited to pecuniary losses flowing from the breach.
As a threshold matter, while it is undisputed the trial judge compensated Mr. Orellana for his nonpecuniary damages, LCPIC maintains the statutory basis for the award is somewhat vague. It notes that, while the trial judge characterized the award as "general damages" on several occasions, he cited to paragraph (C) of
General and Nonpecaniary Damages
"General damages are those which may not be fixed with pecuniary exactitude; instead, they `involve mental or physical pain or suffering, inconvenience, the loss of intellectual gratification or physical enjoyment, or other losses of life or life-style which cannot be definitely measured in monetary terms.'" Kaiser v. Hardin, 06-2092 (La.4/11/07),
As stated,
Damages for nonpecuniary loss may be recovered when the contract, because *1259 of its nature, is intended to gratify a nonpecuniary interest and, because of the circumstances surrounding the formation or the nonperformance of the contract, the obligor knew, or should have known, that his failure to perform would cause that kind of loss.
Regardless of the nature of the contract, these damages may be recovered also when the obligor intended, through his failure, to aggrieve the feelings of the obligee.
It is clear each paragraph of the Civil Code article provides a separate vehicle for nonpecuniary relief.
Applying La. C.C. art.1998, Mr. Orellana is barred recovery under the first paragraph. It is well settled in Louisiana law that the object of a contract of insurance is the payment of money. Bye v. American Income Life Ins. Co.,
Additionally, recovery for general damages is barred under the second paragraph of La. C.C. art.1998. Although the nature of the contract is irrelevant, Mr. Orellana still had to sustain the burden of proving LCPIC intended to aggrieve his feelings. The record is absent any evidence LCPIC knowingly and intentionally sought to aggrieve or cause distress of any nature to Mr. Orellana's feelings. LCPIC's behavior, while characterized as "arbitrary and capricious," did not equate with "intentional" misconduct.
Nor I do not find merit in the majority's reliance on Blanche v. Jones,
Over two years after this court's decision in Blanche, the Louisiana Supreme *1260 Court articulated, in Moresi v. State Through Dept. of Wildlife and Fisheries, 567 So.2d. 1081 (La.1990), the elements necessary for recovery for intentional infliction of mental distress: "One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm. [citing to Restatement of Torts (2d) § 46(1)]." The jurisprudence is clear that the mental anguish must be a real mental injury, illness or other physical consequence. If a defendant's conduct is merely negligent and causes only mental disturbance, absent accompanying physical injury, then the defendant is not liable for emotional distress. Moresi v. State Through Dept. of Wildlife and Fisheries,
Applying these principles, I do not find LCPIC should be held liable for mental distress under the facts. Although its actions were arbitrary and capricious, they were not intentional or outrageous. Further, I do not doubt Mr. Orellana suffers from the same worry and inconvenience the other innumerable victims of Hurricanes Katrina and Rita are suffering from over the consequences to their property. However, with the exception of his own testimony, Mr. Orellana did not present any evidence that he suffered measurable and severe psychic trauma and/or injury to justify such an award under these circumstances. For instance, in Blanche, the plaintiffs presented evidence of medical treatment for mental health conditions precipitated by the criminal damage to their home.
Moreover, I do not find the instant contract case to be the type of case envisioned by the courts in Moresi and Blanche to warrant mental anguish recovery. Moresi and Blanche were both delictual *1261 cases relying on general principles of tort law to sustain a cause of action for nonpecuniary damages. Neither court cited to statutory support for mental anguish recovery and, rather, relied exclusively on jurisprudence. In contrast, the Louisiana Legislature specifically enacted
Penalties
The law of Louisiana is clear insofar as it provides that an insured or claimant cannot recover penalties for failure to settle a claim, except in the limited circumstances provided by statute. While
A. There shall be no liability on the part of and no cause of action of any nature shall arise against the Louisiana Insurance Rating Commission or any of its staff, or against the governing board of the Louisiana Citizens Property Insurance Corporation or anyone acting on behalf of the corporation or the plans, or against any servicing carrier or carriers, or against any assessable insurer, or against any participating insurance producer, or against the Department of Insurance or its representatives, for any action taken by them in the performance of their duties or responsibilities under this Subpart.
B. Such immunity from liability does not apply to:
(1) Any of the persons or entities listed in Subsection A hereof for any willful tort or criminal act.
(2) The corporation, or insurance producers placing business with one of the plans, for breach of any contract or agreement pertaining to insurance coverage.
(3) The corporation with respect to issuance or payment of debt.
(4) Any assessable insurer with respect to any action to enforce such insurer's obligations to the corporation under this Subpart.
[Emphasis added.]
Paragraph (A) clearly provides the exemption from liability applies to, among others, LCPIC and anyone acting on its behalf during the performance of their duties or responsibilities. Paragraph (B) sets forth the exceptions to the grant of immunity. This paragraph is not the most artfully of drafted provisions by the Louisiana Legislature and, as such, the exceptions are difficult to discern. Notwithstanding, LCPIC correctly asserts the entirety of
In stark contrast, overriding public policy dictates the Louisiana Legislature did not intend to have an exception from the grant of immunity for the assessment of penalties. See, Sultana Corp. v. Jewelers Mut. Ins. Co., 03-0360 (La.21/03/03),
Finally, as stated,
For these reasons, I Conclude the majority's award of $125,000.00 is inappropriate under the facts.
NOTES
[1] La. C.C. Art.1998. Damages for nonpecuniary loss.
Damages for nonpecuniary loss may be recovered when the contract, because of its nature, is intended to gratify a nonpecuniary interest and, because of the circumstances surrounding the formation or the nonperformance of the contract, the obligor knew, or should have known, that his failure to perform would cause that kind of loss.
Regardless of the nature of the contract, these damages may be recovered also when the obligor intended, through his failure, to aggrieve the feelings of the obligee.
[2] In 2005, Louisiana Citizens' adjuster estimated the damage to be $48,181.84; however, in 2007, Louisiana Citizens' adjuster estimated the damage to be $80,594.41.
Notes
[1] LCPIC does not contest on appeal the trial court's special damage award for the repairs to Mr. Orellana's property.
[2] In Moresi, the court listed the several occasions where mental anguish damages were awarded:
A number of courts have allowed recovery against a telegraph company for the negligent transmission of a message, especially one announcing death, indicating on its face a potential for mental distress. E.g., Graham v. Western Union,