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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

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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

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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 ...


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