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Swayze v. State Farm Mut. Auto. Ins. Co.

Supreme Court of Louisiana

June 30, 2015

HOLLY D. SWAYZE, ET AL.
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, ET AL

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, SECOND CIRCUIT, PARISH OF OUACHITA.

Anthony J. Bruscato, Sarah Catherine Leary, For Applicant.

Martin Shane Craighead, DAVENPORT, FILES & KELLY, LLP, For Respondent.

OPINION

[2014-1899 La. 1] WEIMER, Justice

This matter addresses the " amount in dispute" which determines subject matter jurisdiction of a city court with a jurisdictional limit of $30,000. After filing suit, plaintiff settled with the tortfeasor and the tortfeasor's liability insurer for $25,000, leaving only plaintiff's claim against her uninsured motorist insurer. The issue to be determined is whether following the dismissal of the settling defendants, the city court had jurisdiction over plaintiff's claim against her uninsured motorist insurer to the full extent of that court's $30,000 jurisdictional limit. Stated simply, the issue to be determined is whether the settlement amount counts toward the city court's jurisdictional limit. We hold that it does not. Because the $25,000 settlement

Page 1027

amount no longer constitutes part of the " amount in dispute," the city court's jurisdiction over the uninsured motorist claim is to the full extent of its $30,000 jurisdictional limit. Therefore, the appellate court's decision is reversed, and the case is remanded to the court of appeal for further consideration.

[2014-1899 La. 2] FACTS AND PROCEDURAL HISTORY

A vehicle driven by Holly D. Swayze (plaintiff) was struck on the passenger side by a vehicle driven by Brittany Miles (tortfeasor). Plaintiff filed a petition[1] for damages for injuries to her back and neck against the tortfeasor and the tortfeasor's liability insurer in Monroe City Court which has a jurisdictional limit of $30,000.[2] Plaintiff then supplemented and amended her petition to set forth a claim against her uninsured motorist (UM) insurer, Shelter Mutual Insurance Company,[3] because, as alleged by plaintiff, the tortfeasor's liability insurer " carries a policy limit of $25,000.00, which is insufficient to cover [her] entire claims." Subsequently, plaintiff filed an ex parte motion to transfer her case to the district court, alleging her claims " now present an amount in dispute which exceeds [the city court's] jurisdiction." [4] In her motion, plaintiff also indicated that she had reached a settlement with the tortfeasor and the tortfeasor's liability insurer. The city court granted the motion to transfer.

Within the next week, plaintiff executed a settlement agreement with the tortfeasor and the tortfeasor's liability insurer for the limits of the liability policy, $25,000. A few days later, plaintiff filed a motion to dismiss these two defendants with prejudice, as well as a motion to vacate the transfer order,[5] both of which were granted by the city court, allowing the case to remain in city court. The UM insurer then moved for summary judgment, urging that the $25,000 settlement amount and the voluntary $5,000 medical payment by the UM insurer to plaintiff exhausted the [2014-1899 La. 3] city court's jurisdictional limit. Accordingly, the UM insurer demanded that plaintiff's claims be dismissed with prejudice. Treating the UM insurer's motion as an exception raising the objection of lack of subject matter jurisdiction, the city court found that " [t]he settlement can be counted in determining whether the jurisdictional limit of the court has been reached notwithstanding the fact that [the tortfeasor's liability insurer] has been dismissed from this lawsuit and in effect is not a party before the court." Nonetheless, the UM insurer's exception was overruled since the city court did not have information before it that showed the allocation of the settlement between plaintiff and her husband, who could each recover $30,000 in the city court proceeding.[6] This matter then proceeded to trial in city court.

In her post-trial memorandum, plaintiff argued that the settlement amount from

Page 1028

the tortfeasor's liability insurer did not apply to the city court's $30,000 jurisdictional limit and that an award of up to $30,000 could be entered against her UM insurer. The city court initially disagreed, finding the liability insurer " was a party before the court when the settlement with [plaintiff] was effectuated." As a solidary obligor, the UM insurer was " entitled to a $25,000 credit" for the settlement amount paid by the tortfeasor's liability insurer. Due to the city court's jurisdictional limit of $30,000, the city court found that the UM insurer's maximum exposure was $5,000. Finding the medical records and testimony supported an award of $5,000 in general damages, the city court entered judgment in plaintiff's favor for that amount. The city court further held that " [a]ny amount above that is outside the court's jurisdiction and would dictate that the matter be transferred to district court."

[2014-1899 La. 4] Plaintiff filed a motion for new trial, arguing that the amount received from the settling/later-dismissed defendants should not be considered in determining the jurisdictional amount available for an award against her UM insurer, the only defendant then before the court. Persuaded by plaintiff's arguments, the city court granted plaintiff's motion for new trial and vacated its original judgment, concluding:

The settlement by [plaintiff] with [the tortfeasor's liability insurer] was for its policy limit of $25,000.00. A voluntary settlement is not an award by the court. [The UM insurer's] maximum exposure in Monroe City Court [is] $30,000.00.
The court, without having specified the amount, determined in its reasons for judgment that [plaintiff's] damages were in excess of the amount covered by [the tortfeasor's liability] policy. That determination triggers [the UM insurer's] underinsured coverage, nevertheless, [the UM insurer] could not claim an offset as a solidary obligor because [the tortfeasor's liability insurer's] settlement was not in excess of its policy coverage. With [the UM insurer] being the only party defendant before the court at the time of trial, it was subject to the court's jurisdictional limit of $30,000.00. Taking into account [plaintiff's] testimony and that ... of her treating physician, the nature and extent of her injury, and the cost of her medical treatment, she is entitled to a judgment of $22,700.04 which is $7,700.04 for medical expenses and $15,000 for general damages.

On appeal from the judgment in plaintiff's favor for $22,700.04, the UM insurer argued that the city court erred in failing to find that the settlement amount constitutes a portion of the " amount in dispute" for purposes of La. C.C.P. art. 4843(F). It further urged that the city court manifestly erred in its determination of causation and abused its discretion in finding that plaintiff's damages exceeded $30,000, which had already been paid to plaintiff.

The appellate court concluded that the city court did not have subject matter jurisdiction in this case because the " amount in dispute" exceeded the city court's $30,000 jurisdictional limit. See Swayze v. State Farm Mut. Auto. Ins. Co., 49,079, pp. 7-8 (La.App. 2 Cir. 6/4/14), 142 So.3d 369, 373. Recognizing that plaintiff bears [2014-1899 La. 5] the burden of proving the tortfeasor was underinsured or uninsured in order to establish coverage under her UM policy and that the tortfeasor and the UM insurer are solidary obligors,[7] the appellate court held that the tortfeasor's obligation, her negligent breach of that obligation, and " the total amount of damages caused by her negligence remained central" to plaintiff's claim against her UM insurer even after the tortfeasor's dismissal. Id. Because the total amount of plaintiff's general damage

Page 1029

claim against the tortfeasor and the UM insurer, which the trial court determined to be $40,000,[8] exceeded the city court's jurisdictional limit, the appellate court held that the city court lacked subject matter jurisdiction to adjudicate plaintiff's remaining claim against her UM insurer. Id. " The effect of the reduction of [plaintiff's $40,000 general damage] award by $25,000 for the [tortfeasor's liability insurer] settlement under the uninsured motorist law does not change our assessment of the total amount in dispute in this case." Id. Accordingly, the city court's judgment was vacated, and the case was remanded to the city court for transfer to the district court because the city court lacked subject matter jurisdiction since the total amount in dispute exceeded the jurisdictional limits. See La. C.C.P. art. 4841(C), quoted infra. Id. Having found that the city court lacked subject matter jurisdiciton, the appellate court did not reach the issue of causation and quantum.

Plaintiff then sought review of the appellate court's decision by this court. Plaintiff's writ application was granted[9] to address the extent of the city court's jurisdiction to adjudicate plaintiff's claim against her UM insurer in light of plaintiff's $25,000 settlement with the subsequently dismissed defendants. Stated differently, [2014-1899 La. 6] the issue presented is whether the city court's judgment for $22,700.04 against plaintiff's UM insurer exceeded the city court's $30,000 jurisdictional limit in light of plaintiff's $25,000 settlement with the tortfeasor and the tortfeasor's liability insurer.

DISCUSSION

" When the jurisdiction of a court over the subject matter of an action depends upon the amount in dispute, or value of the right asserted, it shall be determined by the amount demanded ... or value asserted in good faith by the plaintiff ...." La. C.C.P. art. 4 (emphasis added). The subject matter jurisdiction of a city court is addressed in La. C.C.P. art. 4841, which in pertinent part provides:

A. The subject matter jurisdiction of parish courts and city courts is limited by the amount in dispute and by the nature of the proceeding, as provided in this Chapter.
B. For the purposes of this Chapter, the amount in dispute is determined by the amount demanded ... or value asserted in good faith by the plaintiff ....
C. If the demand asserted in an amended or supplemental pleading exceeds the jurisdiction of the court, the court shall transfer the action to a court of proper jurisdiction. [Emphasis added.]

Under La. C.C.P. art. 4841(A) and (B), " the subject matter jurisdiction of city courts is limited by the nature of the proceedings and by the amount in dispute, which amount is determined by the amount demanded." Thompson v. State Farm Mut. Auto. Ins. Co., 10-1244, p. 4 (La. 11/19/10), 50 So.3d 1271, 1274. City court jurisdiction is further established by La. C.C.P. art. 4843, which in pertinent part provides:

A. Except as otherwise provided for in this Article, the civil jurisdiction of a city court is concurrent

Page 1030

with the district court in cases where the amount in dispute, or the value of the property involved, does not exceed fifteen thousand dollars.
[2014-1899 La. 7] ....
F. In ... the City Court of Monroe ..., the civil jurisdiction is concurrent with the district court in cases where the amount in dispute, or the value of the property involved, does not exceed thirty thousand dollars. [Emphasis added.]

Therefore, if the " amount in dispute" as determined by the " amount demanded" by plaintiff in her petition and supplemental petition exceeds $30,000, La. C.C.P. art. 4841(C) dictates that the city court transfer the action to a court of proper jurisdiction. However, " [w]hen a plaintiff reduces his claim on a single cause of action to bring it within the jurisdiction of a court and judgment is rendered thereon, he remits the portion of his claim for which he did not pray for judgment, and is precluded thereafter from demanding it judicially." La. C.C.P. art. 5.

The UM insurer contends that the " amount in dispute" limitation of La. C.C.P. arts. 4, 4841, and 4843 includes the amount of plaintiff's entire claim for damages inflicted by the tortfeasor. According to the UM insurer, the " amount in dispute" necessarily takes into account the settlement amount received from the dismissed defendants since UM coverage is not triggered until there is proof of damages exceeding the amount of the tortfeasor's liability coverage. Contrarily, plaintiff maintains the " amount demanded" includes only the amount being demanded from the defendant that is before the court at the time jurisdiction is determined. Thus, the " amount in dispute" is the amount that plaintiff can potentially recover from her UM insurer, which she stipulated was no more than $30,000.

In construing La. C.C.P. arts. 4, 4841, and 4843, we are guided by La. C.C. art. 9, which directs that " [w]hen a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." Furthermore, [2014-1899 La. 8] " [l]aws on the same subject matter must be interpreted in reference to each other." La. C.C. art. 13.

We begin by observing that La. C.C.P. arts. 4, 4841, and 4843 address jurisdictional limits and that these articles pertain to the plaintiff's right to bring an action in a court of limited jurisdiction. Although La. C.C.P. art. 4841 does not delineate whether the " amount in dispute" or the " amount demanded" relates to an action, claim, proceeding, case, or cause of action, guidance in this respect can be gleaned from La. C.C.P. arts. 4 and 4843. In determining subject matter jurisdiction, La. C.C.P. art. 4 generally references the " action," while La. C.C.P. art. 4843, which provides for the $30,000 jurisdictional limit in this case, addresses " jurisdiction ... in cases."

" Action" is defined in Black's Law Dictionary as " [a] civil or criminal judicial proceeding." Black's Law Dictionary 31 (8 ed. 2004). The th interchangeability of the terms " action" and " proceeding" is evidenced in the code articles on jurisdiction that precede La. C.C.P. art. 4. See La. C.C.P. arts. 1-3.[10] Thus, pursuant to La. C.C.P. art. 4,

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the city court's jurisdiction is determined by the " amount in dispute" or the [2014-1899 La. 9] " amount demanded" by the plaintiff in the " action" or proceeding that was filed in city court. Such an interpretation is supported by La. C.C.P. art. 4843, which provides for " jurisdiction ... in cases." Black's Law Dictionary defines " case" as " [a] proceeding, action, suit or controversy at law or in equity." Black's Law Dictionary at 228. Absent from this list of synonymous terms is the term " cause of action," which is defined as " [t]he juridical facts which constitute the basis of the right" or " [t]hat which serves as a basis for demand," [11] or " the operative facts which give rise to the plaintiff's right to judicially assert the action against the defendant." [12]

In the context of the monetary threshold for the right to a trial by a jury, this court in Benoit v. Allstate Ins. Co., 00-0424 (La. 11/28/00), 773 So.2d 702, analyzed the 1989 amendment to La. C.C.P. art. 1732,[13] which substituted the phrase " the amount of no individual petitioner's cause of action exceeds" for " the amount in dispute does not exceed." In analyzing this change in phraseology, this court found that the legislature's prior use of the phrase " amount in dispute" or " amount in controversy" [14] denotes something other than " cause of action," [15] and that the term " amount in controversy" refers to the amount of the plaintiff's overall claim arising out of the transaction or occurrence. See Wallace v. State Farm Mut. Auto. Ins. Co., 36,099, p. 8 (La.App. 2 Cir. 6/14/02), 821 So.2d 704, 711,[2014-1899 La. 10] citing Benoit, 00-0424 at 9-10, 773 So.2d at 707-08; Meyers v. Neighborhood Restorations, Inc., 98-3046, p. 2 (La.App. 4 Cir. 9/1/99), 743 So.2d 755, 756 (" The 'amount in dispute' is the total amount at risk in the litigation." ); Walker v. Thap, 92-0016 (La.App. 4 Cir. 5/17/94), 637 So.2d 1150, 1153 (" 'Amount in dispute' means the maximum amount that the successful party may be awarded by judgment; conversely, the maximum amount the unsuccessful party may be ordered to pay. It is the amount at risk in the litigation." ).

In her action, plaintiff initially asserted claims against the tortfeasor and the tortfeasor's insurer, which provided $25,000 in liability coverage. By a supplemental and amending petition, plaintiff added her UM insurer as a defendant, alleging that the tortfeasor was underinsured and seeking to recover under her UM policy. Once the UM insurer was named as a defendant, the " amount in dispute" or the " amount demanded" in plaintiff's " action" or " case" admittedly exceeded the city court's $30,000 jurisdictional limit. Plaintiff's filing of a motion to transfer her action to district court confirms that fact. Thus, the question to be resolved is whether plaintiff's settlement of her claims against the tortfeasor and the tortfeasor's liability insurer and subsequent dismissal of these defendants affected the " amount in dispute"

Page 1032

or the " amount demanded" in plaintiff's " action" or " case" so as to bring her remaining claim against her UM insurer within the jurisdictional limits of the city court.

The legislature did not impose a time frame in La. C.C.P. arts. 4, 4841, and 4843 for determining the " amount in dispute" or the " amount demanded" in a plaintiff's " action" or " case" for purposes of jurisdiction, nor did it place one in La. C.C.P. art. 1732 with regard to the monetary threshold for a jury trial. In resolving the time frame issue with respect to the right to a jury trial, this court in Benoit began by observing:

[2014-1899 La. 11] [T]he overall legislative trends [in the Code of Civil Procedure] (1) to restrict, rather than expand, the right to jury trials; (2) to expand the jurisdiction of courts of limited jurisdiction in which there is no right to trial by jury; and (3) generally to limit the availability of the more costly methods of litigating claims and to encourage more efficient methods, such as summary judgment. [Footnote omitted.]

Benoit, 00-0424 at 9, 773 So.2d at 707-08. Considering these trends, particularly the one restricting jury trials, this court, in Benoit, declined to interpret La. C.C.P. art. 1732(1) in a manner that would expand a party's right to a jury trial, finding that the right to a jury trial is determined by " the value of the plaintiff's cause of action against the defendant or defendants who are before the court at the time the right to a jury trial is litigated." Id., 00-0424 at 9-10, 773 So.2d at 708 (emphasis added). Accordingly, this court concluded " that the amounts received by plaintiff in settlement [from the tortfeasor's liability insurer] or payment from persons against whom plaintiff has a separate cause of action are not to be considered in determining the amount of plaintiff's cause of action against the defendant [UM insurer] presently before the court." Id.

Despite the distinction between the phrase " amount in dispute" used in La. C.C.P. arts. 4, 4841, and 4843 and the phrase " cause of action" found in La. C.C.P. art. 1732(1), we find this court's resolution of the time frame for determining a " cause of action" in Benoit to be instructive relative to the time frame for determining the " amount in dispute" or the " amount demanded" for purposes of jurisdiction. In light of the legislative trends, observed in Benoit, that " expand the jurisdiction of courts of limited jurisdiction" and " generally ... limit the availability of the more costly methods of litigating claims and ... encourage more efficient methods," [16] we interpret the " amount in dispute" referred to in La. C.C.P. arts. 4, 4841, and 4843 as the " amount [2014-1899 La. 12] in dispute" relative to, or the " amount demanded" [17] from, the defendant or defendants who are before the court at the time that jurisdiction is determined. Although the " amount in dispute" or the " amount demanded" in plaintiff's action as established by her pleadings initially exceeded the city court's $30,000 jurisdictional limit, we find that the subsequent settlement and release of the tortfeasor and the tortfeasor's liability insurer affected the " amount in dispute" or the " amount demanded" in plaintiff's action. Upon settlement in this case, the " amount in dispute" in plaintiff's action no longer included the amount originally demanded from the tortfeasor's liability insurer as that amount was no longer part of plaintiff's demand,

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was no longer an amount at risk in the litigation, and could no longer be awarded by judgment.[18] To find otherwise would undermine the legislative trends recognized in Benoit and result in inconsistent treatment of settlement amounts in connection with the determination of the right to a jury trial and the determination of jurisdiction in the context of an action involving a claim against a UM insurer. Consistency demands that these provisions be interpreted so that the determination of the right to a jury trial under La. C.C.P. art. 1732(1) and of subject matter jurisdiction of courts of limited jurisdiction under La. C.C. arts. 4, 4841, and 4843 can be made in a similar manner.

Following plaintiff's settlement with and release of the tortfeasor and the tortfeasor's liability insurer, all that remained of plaintiff's action was the claim against her UM insurer. At that point, she was simply demanding the amount owed [2014-1899 La. 13] by her UM insurer, which she stipulated did not exceed $30,000 ($20,000 less than the amount of the UM coverage provided in her policy). See Thompson, 10-1244 at 4, 50 So.3d at 1274 ( a plaintiff can stipulate that her damages do not exceed the jurisdictional limit of the city court). The fact that plaintiff's UM coverage is not triggered until she has shown that her damages exceed $25,000 (the amount of the tortfeasor's liability coverage) does not reduce the city court's $30,000 jurisdictional limit.[19] This threshold issue is simply an evidentiary burden that must be satisfied by plaintiff to impose liability on her UM insurer. As with the determination of the right to a trial by jury, it is not relevant that the value of plaintiff's entire action or case at one point exceeded or constructively exceeds the jurisdictional limit of the city court as a result of amounts received in settlement.

[2014-1899 La. 14] CONCLUSION

Reading the law in its entirety in a manner that harmonizes the various provisions with each other,[20] we find that the " amount in dispute" or the " amount demanded" in plaintiff's " action" or " case" is determined by the damages plaintiff is

Page 1034

seeking at the time jurisdiction is to be determined. Therefore, we conclude that the city court properly looked to the only viable claim that remained in plaintiff's action, i.e., the one against her UM insurer, to determine the " amount in dispute" or the " amount demanded" in plaintiff's action for purposes of jurisdiction. Following the settlement with and release of the two other defendants, the " amount in dispute" relative to the claim against the tortfeasor's liability insurer was no longer being demanded by plaintiff and could not be awarded by the court. Given plaintiff's stipulation that the value of her claim against her UM insurer did not exceed $30,000, the city court had subject matter jurisdiction over plaintiff's existing " action."

DECREE

For the foregoing reasons, we find that the appellate court legally erred in vacating the city court judgment as a nullity and in remanding this matter to the city court for the sole purpose of having the city court transfer plaintiff's action to a court of proper jurisdiction. Because the appellate court's determination of jurisdiction allowed it to pretermit the issues of causation and quantum that were raised by the UM insurer on appeal, the interest of justice requires that this case be remanded to the court of appeal for consideration of those issues.[21]

[2014-1899 La. 15] REVERSED; REMANDED.


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