FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2017-01991,
DIVISION "D" Honorable Nakisha Ervin-Knott, JUDGE
Silverstein, David A. Silverstein COUNSEL FOR
Matthew J. Farley, Richard E. Baudouin COUNSEL FOR THIRD
composed of Judge Edwin A. Lombard, Judge Daniel L. Dysart,
Judge Paula A. Brown)
A. Brown Judge
appeal arises out of an insurance policy coverage dispute
between the insurer, Travelers Casualty and Surety Company of
America ("Travelers") and its insured, The Ville
St. John Owners' Association, Inc. (the
"Association"). Travelers filed a Motion for
Summary Judgment contesting coverage, and the Association
filed a cross-motion for summary judgment. The district court
granted Travelers' motion for summary judgment and denied
the Association's cross-motion; the district court
dismissed, with prejudice, all of the direct action claims
against Travelers. The Association appeals, seeking review of
this judgment. For the reasons set forth below, the district
court's judgment is affirmed.
AND PROCEDURAL HISTORY
Forrest was Trustee for the Jack Thrash Forrest III Trust
(the "Trust"), and the Trust owned unit, number 301
(the "unit"), in a condominium complex managed by
the Association. On March 3, 2016, a fire occurred in the
unit resulting in damage to the unit and to common elements
of the condominium complex. The Association carried a
commercial property insurance policy with Lloyd's,
London, International Insurance Company of Hannover SE
("Lloyd's, London"), and the unit was insured
under the policy. The Association made a claim under the
commercial property insurance policy for payment of losses
suffered as a result of the fire damage to the unit and the
common elements of the complex. Lloyd's, London accepted
coverage for the loss and paid the Association; the payment
to the Association represented specific amounts for repairing
the common elements and, separately, the unit. With the
payments from Lloyd's, London, the Association repaired
the common elements but had insufficient monies to pay for
repairs to the unit. As a result, the Trust filed a Petition
and an Amended and Superseding Petition for Damages against
the Association asserting the following pertinent
Count 1: Breach of Duty under Civil Code article
17. Under La. R.S. La. R.S. 9:1123.112(D), the Association
had the fiduciary, contractual, and legal duty to adjust the
insurance claim reasonably both for itself as well as for the
Trust. To the extent the Association failed to secure
adequate compensation for the loss of both the common
elements and the Trust's condominium, the Association
breached that duty. Further, to the extent the Association
performed minimal repairs within the Trust's unit and did
so in a negligent manner, it has also breached its duties.
18. To the extent the Association failed to secure adequate
compensation to repair the Trust's unit, and to the
extent it negligently repaired the unit, it has proximately
caused the Trust to sustain damages in that the unit remains
damaged and unrepaired.
19. The Association is, therefore, liable to Mr. Forrest (in
his capacity as Trustee) under article 2315 for an amount to
appropriately repair the unit.
Count 2: Failure to Repair under the Louisiana
* * *
23. The Association has failed to "promptly" repair
the Trust's unit and has likewise failed to pay the Trust
the proper amount to repair the damage. This conduct violates
La. R.S. 9:1123.112(G) and renders the Association liable to
Mr. Forrest (in his capacity as Trustee) for the amount to
repair the Trust's unit.
Count 3: Failure to Properly Spend Insurance Funds
under the Louisiana Condominium Act
24. Under La. R.S. 9:1123.112(G), if the condominium is not
repaired or replaced after a fire (when one of the three
exclusive criteria of La. R.S. 9:1123.112(G) occur), a
statutory formula directs how the insurance money must be
* * *
27. The Association violated La. R.S. 9:1123.112(G)'s
statutory formula to the extent it used more of the insurance
funds on the common elements than the insurance company had
attributed in its payment. In that case, it necessarily
violated La. R.S. 9:1123.112(G)'s statutory formula
28. Any failure to properly spend insurance proceeds in
accordance with La. R.S. 9:1123.112(G) renders the
Association liable to Mr. Forrest (in his capacity as
Trustee) for the difference between the insurance
company's attribution of funds and what the Association
later set aside for the unit's repair.
the Association filed a third party demand against Travelers.
Travelers had issued to the Association a Community
Association Management Liability Coverage Policy (the
"Management Policy") that provided coverage for
losses incurred due to directors and officers' alleged
wrongful acts. The Association reported the Trust's
claims to Travelers; Travelers denied coverage, including the
duty to defend.
September 2017, the Association moved for a summary judgment
against Travelers, requesting its third party demand be
granted on the ground that there was coverage under the
Management Policy. In October 2017, Travelers moved for a
summary judgment seeking dismissal of the Association's
third party demand arguing that coverage was excluded under
the policy, and Travelers had no duty to defend the
Association. A hearing on the motions was held on November
17, 2017. On December 7, 2017, the district court denied the
Association's motion for summary judgment, and granted
Travelers' motion for summary judgment, dismissing with
prejudice all claims against Travelers. The Association,
pursuant to La. C.C.P. art. 966(C)(4), requested written
reasons for judgment which were provided by the district
court. In its written reasons, the district court
found that coverage for the Trust's claims was excluded
as "[t]he policy contains a clear and unambiguous
exclusion precluding coverage 'for any claim based upon,
arising out of, directly or indirectly resulting from, in
consequence of, or in any way involving' property
this judgment, the Association seeks review.
Association asserts the district court erred by dismissing
the third-party demand and granting Travelers' motion for
summary judgment. In challenging the district court's
judgment, the Association assigns two errors: (1) the
district court erred in finding the Management Policy
unambiguously excluded coverage for the Trust's claims;
and (2) the district court erred in failing to find Travelers
had the duty to defend the Association against the
Trust's claims as required by the Management Policy.
motion for summary judgment is a procedural device used when
there is no genuine issue of material fact for all or part of
the relief prayed for by the litigant." Tate v.
Touro Infirmary, 17-0714, p. 1 (La.App. 4 Cir. 2/21/18),
So.___3d ___, ___,  writ denied, 18-0558 (La.
6/15/18), 245 So.3d 1027 (citing La. C.C.P. art. 966(A)(1)).
An appellate court's review of summary judgments is
de novo, and it employs the same criteria district
courts consider when determining if a summary judgment is
proper. Madere v. Collins, 17-0723, p. 6 (La.App. 4
Cir. 3/28/18), 241 So.3d 1143, 1147 (citing Kennedy v.
Sheriff of E. Baton Rouge, 05-1418, p. 25 (La. 7/10/06),
935 So.2d 669, 686). In Chanthasalo v. Deshotel,
17-0521, p. 5 (La.App. 4 Cir. 12/27/17), 234 So.3d 1103, 1107
(quoting Ducote v. Boleware, 15-0764, p. 6 (La.App.
4 Cir. 2/17/16), 216 So.3d 934, 939, writ
denied, 16-0636 (La. 5/20/16), 191 So.3d 1071), this
This [de novo] standard of review requires the
appellate court to look at the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, to determine if they show that
no genuine issue as to a material fact exists, and that the
mover is entitled to judgment as a matter of law. . . . A
genuine issue is one as to which reasonable persons could
disagree; if reasonable persons could reach only one
conclusion, no need for trial on that issue exists and
summary judgment is appropriate. To affirm a summary
judgment, we must find reasonable minds would inevitably
conclude that the mover is entitled to judgment as a matter
of the applicable law on the facts before the court.
of an insurance policy usually involves a legal question that
can be resolved properly within the framework of a motion for
summary judgment." Thebault v. Am. Home Assur.
Co., 15-0800, p. 5 (La.App. 4 Cir. 4/20/16), 195 So.3d
113, 116 (citing Bonin v. Westport Ins. Corp.,
05-0886, p. 4 (La. 5/17/06), 930 So.2d 906, 910). In the case
sub judice, Travelers, the insurer, has the burden
of proving that a claimed loss fell within the policy
exclusion. Supreme Servs. & Specialty Co.,
Inc. v. Sonny Greer, Inc., 06-1827, p. 6 (La. 5/22/07),
958 So.2d 634, 639 (citation omitted).
case sub judice, there are no factual issues in
dispute, only a legal question-whether the Management Policy
excluded coverage of the Trust's claims against the
Court explained in Burmaster v. Plaquemines Parish
Government, 10-1543, p. 4 (La.App. 4 Cir. 3/30/11), 64
So.3d 312, 316, (citation omitted), that "[a]n insurance
policy is a contract between the parties and should be
construed employing the general rules of interpretation of
contracts set forth in the Louisiana Civil Code." The
extent of coverage is determined by "[t]he parties'
intent as reflected by the words in the policy," and
"[s]uch intent is to be determined in accordance with
the general, ordinary, plain and popular meaning of the words
used in the policy, unless the words have acquired a
technical meaning." Louisiana Ins. Guar. Ass'n
v. Interstate Fire & Cas. Co., 93-0911 (La.
1/14/94), 630 So.2d 759, 763 (citations omitted)(footnote
omitted). "An insurance contract is to be construed as a
whole, and one portion thereof should not be construed
separately at the expense of disregarding another."
Pareti v. Sentry Indem. Co., 536 So.2d 417, 420 (La.
1988) (citation omitted). In Doerr v. Mobil Oil
Corp., 00-0947, p. 6 (La. 12/19/00), 774 So.2d 119, 124,
Supreme Court, citing La. C.C. art. 2046, held that the
"Civil Code is clear that if a contract does not lead to
absurd consequences it will be enforced as written."
Additionally, "courts have no authority to alter the
terms of policies under the guise of contractual
interpretation when the policy provisions are couched in
unambiguous language." Pareti, 536 So.2d at 420
(citations omitted). On the other hand, any ambiguity in a
policy "should be construed in favor of the insured and
against the insurer. Id. If an insurance policy
provision is amenable to two or more reasonable
interpretations, "it is considered ambiguous and must be
liberally construed in favor of coverage." Chicago
Prop. Interests, L.L.C. v. Broussard, 08-526, p. 7
(La.App. 5 Cir. 1/13/09), 8 So.3d 42, 47 (citation omitted).
This Court, in Burmaster, 10-1543, at p. 8, 64 So.3d
at 319 (citation omitted) opined, that although an exclusion
could have been worded more explicitly, it "does not
necessarily deem it ambiguous." Likewise, insurers can
limit their liability absent a conflict with statutory
provisions or public policy. Pareti, 536 So.2d at
421 (citations omitted).
Management Policy issued by Travelers to the Association was
a claims-made-reported policy. "Insured Person" was
defined in the Management Policy and provided in pertinent
[D]uly elected or appointed member of the board of directors,
officer, member of the board of trustees, member of the board
of managers, member of the board of regents, member of the
board of governors, or a functional equivalent thereof,
member of a duly constituted committee, or volunteers of the
Insured Entity or any Executive Officer.
Insured Person also means any
Community Association Management.
Management Policy provided general coverage for "Loss
for Directors and Officers Wrongful Acts."
"Directors and Officers Wrongful Act" was defined