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Ammar Investments, LLC v. Certain Underwriters of Lloyd's, London

Court of Appeals of Louisiana, Fifth Circuit

December 12, 2018





          Panel composed of Judges Susan M. Chehardy, Hans J. Liljeberg, and John J. Molaison, Jr.


         Plaintiff/Appellant, Ammar Investments, LLC d/b/a Zegar, Inc. and d/b/a Fouad & Faris, Inc. ("AI"), appeals the trial court's judgment awarding it $26, 654.10 in damages for loss of personal property as a result of Hurricane Isaac, but denying its claim for damages sustained to the roof of its building. AI also appeals the trial court's denial of its motion for new trial and/or rehearing of a prior judgment granting summary judgment in favor of defendant, Certain Underwriters of Lloyd's, London ("Underwriters"), and dismissing AI's claim for bad faith damages due to Underwriters' alleged misrepresentation of its policy provisions pertaining to the hurricane deductible. Underwriters filed a cross appeal seeking reversal of the trial court's award to AI for loss of its business inventory. For the following reasons, we affirm the trial court's judgment in part and reverse in part.


         Ammar Zughayer is the owner of AI, which owns and operates Mike's Food Mart, a convenience store and gas station located on River Road East in Garyville, Louisiana. Mike's Food Mart was insured against building and personal property (inventory) loss under a policy of insurance issued to AI by Underwriters ("the Policy").[1] The Policy, which required a three percent (3%) wind and hail deductible, was effective from June 8, 2012 to June 8, 2013; its coverage included a $300, 000.00 limit for damages occasioned to the building, and a $200, 000.00 limit for loss of personal property located on the premises.[2]

         On August 28-29, 2012, Hurricane Isaac made landfall in St. John the Baptist Parish causing widespread power outages throughout the parish. These power outages caused the coolers and freezers at Mike's Food Mart to shut down. Following the storm, Mr. Zughayer filed a claim under the Policy on behalf of AI averring that Mike's Food Mart sustained both building and personal property damage as a result of the hurricane's "wind, tornadoes, rain, and/or wind driven rain."

         Underwriters retained SyNerGy Adjusting Corporation to investigate Mr. Zughayer's claims. On September 8, 2012, SyNerGy's senior claims' adjuster, Mike Dossett, inspected the property and assessed the damages. Specifically, Mr. Dossett inspected the outside of the building, which he noted was newly constructed, and observed the canopies, awnings, gas pumps and signs. In doing so, he discovered only minimal damage to the metal fascia of the canopy situated over the diesel pumps. Mr. Dossett then inspected the inside of the building, which he found to be in good condition and well-stocked. Mr. Zughayer identified for him two areas of the store where he claimed water was leaking through the roof: (1) in between a walk-in cooler and a back wall, and (2) around a hood vent positioned over cooking equipment in the kitchen. Mr. Zughayer then showed Mr. Dossett the store's inventory that was damaged, which included food and drinks that were spoiled as a result of the power outage.

         Mr. Dossett found the building to be in "excellent condition" and determined that the covered damages to the premises were minor. Mr. Dossett provided Mr. Zughayer with a Contents Loss Claims Sheet with instructions to itemize any inventory and contents losses.[3] By letter dated September 28, 2012, Mr. Dossett informed Mr. Zughayer that his "initial inspection" of AI's loss to the building indicated that the damages did not exceed the Policy's 3% hurricane "deductible of $15, 000.00."[4] Mr. Dossett also advised Mr. Zughayer that if he disagreed with the assessment, he was encouraged to forward any "competitive, detailed estimates for … review and further consideration." No estimates for building damages, nor a completed itemized list of damaged contents, were ever provided by Mr. Zughayer to Mr. Dossett during the adjustment period. Several months later, having heard nothing further from Mr. Zughayer, Mr. Dossett closed the file on AI's claim.

         On September 27, 2013, AI filed suit against Underwriters seeking recovery for damages to the building and personal property (i.e., business inventory) caused by Hurricane Isaac. AI sought additional damages claiming that Underwriters acted in bad faith and was "arbitrary and capricious" in adjusting its claim and refusing to pay for its property damage. The matter proceeded to a two-day trial held on September 18 and 19, 2017.[5] At its conclusion, the trial court took the matter under advisement and later issued judgment on February 9, 2018, with written reasons. The trial court denied AI's claim for damages to the building on the basis that AI failed to adduce sufficient evidence to satisfy its burden of proving that damages were sustained to the building's roof, canopies or signs. Despite its rejection of AI's claim for damages to the building's roof caused by the hurricane, the trial court awarded $26, 654.10 to AI for the cost of replacing its water-damaged tobacco inventory (less the 3% hurricane deductible), which was stored in the attic directly underneath the roof.

         The instant appeal and cross appeal ensued.


         On appeal, AI contends the trial court erred in failing to grant its motion for new trial and/or rehearing of the prior judgment rendered in favor of Underwriters granting Underwriters' motion for summary judgment and dismissing AI's claim for bad faith damages. AI further contends the trial court erred in failing to award damages for the loss occasioned to the building's roof.

         Underwriters filed a cross appeal wherein it contends the trial court erred in finding that AI presented sufficient evidence to prove its claim for damages to its inventory.


         Standard of Review

         In all civil cases, the appropriate standard for appellate review of factual determinations is the manifest error - clearly wrong standard, which precludes the setting aside of a trial court's finding of act unless that finding is clearly wrong in light of the record reviewed in its entirety. Cenac v. Public Access Water Rights Ass'n, 02-2660 (La. 6/27/03), 851 So.2d 1006, 1023. Thus, a reviewing court may not merely decide if it would have found the facts of the case differently. Hall v. Folger Coffee Co., 03-1734 (La. 4/14/04), 874 So.2d 90, 98. Rather, in reversing a trial court's factual findings, the appellate court must satisfy a two-step process based on the record as a whole: there must be no reasonable factual basis for the trial court's conclusion, and the finding must be clearly wrong. Stobart v. State through Dept. of Transp. and Development, 617 So.2d 880, 882 (La. 1993).

         This test requires the reviewing court to do more than simply review the record for some evidence that supports or controverts the trial court's findings. The court must review the entire record to determine whether the trial court's findings were clearly wrong or manifestly erroneous. Parish Nat. Bank v. Ott, 02-1562 (La. 2/25/03), 841 So.2d 749, 753-54. The issue to be resolved on review is not whether the judge or jury was right or wrong, but whether the judge's or jury's fact-finding conclusion was a reasonable one. Rosell v. ESCO, 549 So.2d 880, 884 (La. 1989); Canter v. Koehring Co., 283 So.2d 716, 724 (La. 1973).

         Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel its own evaluations and inferences are as reasonable. Varmall v. Bankers Specialty Ins. Co., 15-223 (La.App. 5 Cir. 10/28/15), 178 So.3d 181, 183-84 citing Waguespack v. Sentry Select Ins. Co., 12-280 (La.App. 5 Cir. 11/13/12), 105 So.3d 880, 884-85, writ denied, 12-2700 (La. 2/8/13), 108 So.3d 90. Moreover, where there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous. Id., 178 So.3d at 184. It is only where the objective evidence so contradicts a witness' testimony, or the testimony itself if so internally inconsistent or implausible on its face that a reasonable fact finder would not credit it, that the court of appeal may find manifest error even in a finding purportedly based upon a credibility determination. Id.

         When an appellate court finds that a reversible error of law or manifest error of material fact was made in the trial court, it is required, whenever possible, to re-determine the facts de novo from the entire record and render a judgment on the merits. Ferrell v. Fireman's Fund Ins. Co., 94-1252 (La. 2/20/95), 650 So.2d 742, 745. While great deference should be accorded to the fact finder, appellate courts have a constitutional duty to review facts, and to perform its constitutional duty properly. Thus, appellate courts must determine whether the lower court's conclusions were clearly wrong based on the evidence or are clearly without evidentiary support. Stewart v. State ex rel Dep't of Transp. & Dev., 08-0772 (La.App. 1 Cir. 3/20/09), 9 So.3d 957, 963, writ denied, 09-1228 (La. 9/18/09), 17 So.3d 968.

         With these legal precepts in mind, we turn to the issues presented herein for our review.

         Misrepresentation of the Policy Provisions

         Prior to trial, the trial court granted Underwriters' motion for summary judgment dismissing AI's claim for bad faith damages. Thereafter, AI filed a motion for new trial and/or rehearing, which motion the trial court considered and denied in open court on the morning of trial.[6] On appeal, AI contends the trial court manifestly erred in granting Underwriters' summary judgment motion, and in denying its motion for new trial, despite clear evidence that Underwriters misrepresented the Policy's deductible. We disagree.

         Appellate courts review summary judgments de novo using the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Jones v. ABC Ins. Co., 17-368 (La.App. 5 Cir. 5/30/18), 249 So.3d 310, 315. The decision as to the propriety of a grant of a motion for summary judgment must be made with reference to the substantive law applicable to the case. Ricalde v. Evonik Stockhausen, LLC, 16-178 (La.App. 5 Cir. 9/22/16), 202 So.3d 548, 551-52, writ denied, 16-1923 (La. 12/16/16), 212 So.3d 1170. To prevail on a claim for bad faith claims adjusting under La. R.S. 22:1892 and La. R.S. 1973, [7] a plaintiff bears the burden of proving: (1) the insured provided a proof of loss; (2) the proof of loss was satisfactory; that is, sufficient information to allow the adjuster to pay the undisputed amount within 30 days; and (4) the insurer's failure to timely make payment of the undisputed amount was the result of conduct that was arbitrary, capricious and/or without probable cause. La. R.S. 1892(B)(1). An insurer's actions are "arbitrary and capricious" when its willful refusal of a claim is not based on a good faith defense, or is unreasonable or without probable cause. Calogero v. Safeway Ins. Co. of Louisiana, 99-1625 (La. 1/19/00), 753 So.2d 170, 173.

         In the case sub judice, although AI posits that "[Underwriters] … acted arbitrarily and capricious and without probable cause in failing to pay [its] claim," AI does not set forth any facts upon which it relies to support this contention, nor does it direct this Court to any testimony or exhibits in the record to substantiate its bald allegation. Our de novo review of the record convinces us that the trial court properly dismissed AI's claim that Underwriters acted in bad faith or was "arbitrary and capricious" in its handling of AI's insurance claim.

         AI also contends that Underwriters' breached its duty of good faith and fair dealing when its adjuster, Mr. Dossett, misrepresented the Policy's deductible. In particular, AI contends that "[m]isrepresenting the deductible is a breach of the ...

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