United States District Court, E.D. Louisiana
KIEF HARDWARE, INC.
HARTFORD FIRE INSURANCE CO.
ORDER AND REASONS
ZAINEY UNITED STATES DISTRICT JUDGE
following motions are before the Court: Motion for
Partial Summary Judgment (Rec. Doc. 43) filed by
plaintiff, Kief Hardware, Inc.; Motion for Partial
Summary Judgment (Rec. Doc. 44) filed by defendant,
Hartford Fire Insurance Co. Both motions are opposed. The
motions, submitted on April 18, 2018, are before the Court on
the briefs without oral argument. For the reasons that
follow, Plaintiff's motion is GRANTED and Defendant's
motion is DENIED.
September 9, 2015, Plaintiff's property located at 16230
Highway 3235, Cut Off, Louisiana 70345, sustained damages as
a result of a fire. The building was originally a hardware
store established in 1944, which was being used for storage
at the time of the fire. The Lafourche Parish Fire District
(“LPFD”) responded to the blaze. Captain Ryan P.
Collins was first to arrive on the scene. Captain Collins
prepared the incident report. The cause of the fire was
undetermined but nothing in the report suggests that the fire
was intentionally set. (Rec. Doc. 44-2). The LPFD contacted
the State Fire Marshal to investigate the cause of the fire.
Russell with the Office of State Fire Marshal
(“OSFM”) responded to the scene. His initial
report reiterated that the cause of the fire was undetermined
and the status of the investigation was open. (Rec. Doc.
44-3). In the incident report Russell stated that the OSFM
was called in to investigate due to the “unusual
circumstances.” (Id.). To wit, the building
was vacant and for sale, and during the fire cleanup the
owner, Mr. James Cabirac, had arrived at the scene and
removed the video recorder. (Id.). The very next
sentence in the report clarifies, however, that Mr. Cabirac
had secured the video recorder to examine it to determine if
there were any recordings that would show what happened.
(Id.). But again, nothing in the report suggests
that the fire was intentionally set.
initiated this action in state court on September 9, 2016, to
recover unpaid losses, as well as damages, penalties, and
attorney's fees pursuant to La. R.S. 22:1892 and §
1973. Hartford removed the case to federal court.
motions currently before the Court are essentially cross
motions directed at the claims asserted under La. R.S.
22:1892, which provides for mandatory penalties when certain
criteria are met. Plaintiff moves for partial summary
judgment awarding penalties and attorney's fees for
Hartford's alleged violation of the statute. Hartford, on
the other hand, moves to have all of Plaintiff's
“bad faith” claims dismissed on summary judgment.
nonjury trial is scheduled to commence on July 25, 2018.
Plaintiff seeks recovery for additional amounts allegedly
owed under its policy for property damage, $375, 935.96 was
the undisputed amount owed to Plaintiff. This total comprises
a business personal property damage payment of $62, 890.71,
and a building coverage payment of $313, 045.25. These
payments were made on February 2,
2016, and on February 25,
2016, respectively. It is undisputed that
Hartford's own adjuster finalized reports as to these
amounts no later than October 21,
2015. (Rec. Doc. 43-5, CIA reports). Thus,
payment to Plaintiff of the “undisputed” amounts
owed was not made until 104 days and 127 days after receipt
of satisfactory proof of loss, for business personal property
damage and building damage, respectively.
Revised Statute § 22:1892 mandates that an insurer pay
the amount of any claim due within thirty (30) days after
receipt of satisfactory proof of loss from the insured or any
party in interest. La. R.S. 22:1892 (A)(1). Failure to timely
make such payment when such failure is found to be arbitrary,
capricious, or without probable cause, shall subject the
insurer to a penalty, in addition to the amount of the loss,
of fifty percent (50%) damages on the amount found to be due
from the insurer to the insured, as well as reasonable
attorney's fees and costs. La. R.S. 22:1892(B)(1). Once
the requirements of the statute are satisfied, penalties and
attorney's fees are mandatory rather than discretionary.
See Calogero v. Safeway Ins. Co., 753 So.2d 170, 174
(La. 2000) (interpreting predecessor statute La. R.S 22:658).
phrase “arbitrary, capricious, or without probable
cause” is synonymous with “vexatious, ” and
a “vexatious refusal to pay” means
“unjustified, without reasonable or probable cause or
excuse.” La. Bag Co. v. Audubon Indem. Co.,
999 So.2d 1104, 1114 (La. 2008) (quoting Reed v. State
Farm Auto. Ins. Co., 857 So.2d 1012, 1021 (La. 2003)).
Both phrases describe an insurer whose willful refusal of a
claim is not based on a good-faith defense. Id.
Penalties should be imposed only when the facts “negate
probable cause for nonpayment.” Id. (quoting
Guillory v. Travelers Ins. Co., 294 So.2d 215, 217
(La. 1974)). In the absence of reasonable and legitimate
questions as to the extent of the insurer's liability, an
insurer who fails to pay the undisputed amount has acted in a
manner that is, by definition, arbitrary, capricious, or
without probable cause, and will be subject to penalties
under the statute. Id. at 1116.
Hartford received satisfactory proof of loss as to undisputed
amounts on October 21, 2015. Although the cause of the fire
had initially been undetermined, Hartford knew as of October
2, 2015, that its own investigator had ruled out arson and
that the cause of the fire was likely a faulty electrical
sign. (Rec. 43-17, HART-002028). This conclusion was
confirmed in the investigator's report sometime in
November 2015. Therefore, as of November 2015 Hartford
could no longer legitimately resist payment based on a
question that its arson exclusion might preclude coverage.
Nonetheless, Plaintiff was not paid the undisputed amounts
until February 2016. If Hartford's withholding of payment
of the undisputed amount for more than thirty days was
arbitrary, capricious, or without probable cause then
Plaintiff is entitled to penalties and attorney's fees
under § ...