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Placencio v. Progressive Paloverde Insurance Co.

United States District Court, W.D. Louisiana, Lafayette Division

January 28, 2019

MAGDALENA PLACENCIO
v.
PROGRESSIVE PALOVERDE INSURANCE COMPANY, ET AL.

          MEMORANDUM RULING

          PATRICK J. HANNA UNITED STATES MAGISTRATE JUDGE

         Currently pending is the motion for summary judgment that was filed by the defendant, Progressive Paloverde Insurance Company. (Rec. Doc. 25). The motion is opposed. Oral argument was held on January 24, 2019. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, the motion is GRANTED IN PART and DENIED IN PART.

         Background

         On March 25, 2016, the plaintiff was allegedly injured in a motor vehicle accident that occurred in St. Landry Parish, Louisiana. The plaintiff contends that she was a passenger in a vehicle that was owned by Genesis Learning Center, LLC, being driven by Francisca Placencio-Santos, and insured by Progressive under Commercial Auto Policy No. 04474596-8, which was issued to Genesis. The other vehicle involved in the accident was allegedly owned by Ravin Renee Savoy, being driven by Kaylan Malik Coleman, and insured by Progressive under a different automobile insurance policy.

         The plaintiff asserted a claim under Ms. Savoy's insurance policy, alleging that the accident occurred due to the sole fault of Ms. Coleman, the driver of Ms. Savoy's vehicle at the time of the accident. That claim, sometimes referred to hereinafter as “the liability claim, ” was ultimately settled. The plaintiff also asserted a claim for uninsured/underinsured motorist (“UM”) coverage under the policy that was issued to Genesis. Progressive refers to such circumstances, in which a liability claim is asserted under a Progressive policy and a UM claim is asserted under a different Progressive policy following a single motor vehicle accident, as a “dual loss scenario.”[1]

         The UM claim is the focus of this lawsuit. Not only does the plaintiff seek the recovery of UM benefits under the policy, she also seeks the recovery of penalties, attorneys' fees, and court costs under La. R.S. 22:1973 and/or 22:1892, alleging that Progressive acted in bad faith by failing to promptly pay her UM claim.

         In support of the instant motion for summary judgment, Progressive argued that the plaintiff's UM claim should be dismissed because the plaintiff breached the cooperation clause of the insurance policy that was issued by Progressive to Genesis, under which she is seeking UM coverage. In her opposition brief, the plaintiff argued that she did not breach the cooperation clause of the policy under which she is seeking UM coverage because she had submitted to Progressive all of the information necessary to evaluate her UM claim when she dealt with Progressive in its capacity as the liability insurer of the other vehicle involved in the accident. Progressive responded to the plaintiff's argument by establishing (a) that different adjusters handled the liability claim and the UM claim and (b) that a Progressive adjuster handling a UM claim is not authorized to obtain copies of the medical records produced during the adjustment of claims under other Progressive policies.

         The following facts are undisputed:

         Through her counsel, Ms. Placencio promptly notified Progressive of the accident and sought to recover under the automobile liability insurance policy issued by Progressive to Ms. Savoy.[2] That claim, which was assigned Claim No. 16-4214959, [3] was ultimately settled, [4] and Ms. Placencio's lawsuit against Ms. Savoy and Ms. Coleman was dismissed.[5]

         In correspondence to Progressive with regard to negotiating a settlement of the liability claim, [6] the plaintiff's counsel stated that the plaintiff wished to reserve any UM claim that might have under her own automobile insurance policy. However, there is no evidence in the record establishing that the plaintiff's counsel identified Progressive as Ms. Placencio's UM insurer or identified the Progressive policy issued to Genesis as the policy under which she was seeking to recover UM benefits.

         On or before February 21, 2017, the claimant's counsel sent a letter of representation to Progressive, notifying the company of the UM claim. That letter is not in the record, but Progressive's response, [7] dated February 21, 2017 and authored by Progressive UM adjuster Jay Toddy, acknowledged receipt of the letter and requested certain information. Progressive assigned Claim No. 17-5508647 to the UM claim.[8]

         The insurance policy that was issued to Genesis, under which Ms. Placencio seeks UM coverage, contains the following language regarding duties in the event of an accident or loss:

A person seeking coverage must:
1. cooperate with us [Progressive] in any matter concerning a claim or lawsuit; 27-12 at 1 (letter to Progressive dated February 13, 2017); Rec. Doc. 27-15 (letter to Progressive dated April 10, 2017); Rec. Doc. 27-16 at 2 (partial motion and order to dismiss the suit against Ms. Savoy, et al., with prejudice).
2. provide any written proof of loss we [Progressive] may reasonably require; 3. allow us [Progressive] to take signed and recorded statements, including sworn statements and examinations under oath. . . .
***
7. authorize us to obtain medical and other records. . . .[9]

         On February 22, 2017, Progressive issued its first reservation-of-rights letter regarding the UM claim.[10] The letter quoted the portion of the insurance policy that lists the insured's duties in case of an accident or loss and expressly requested that Ms. Placencio provide a recorded statement to assist in Progressive's coverage investigation. As noted above, the insurance policy states that, in the event of an accident or loss, a person seeking coverage must cooperate with Progressive, must allow Progressive to take signed and recorded statements, including sworn statements and examinations under oath, and must authorize Progressive to obtain medical and other records.[11]

         That same day, the plaintiff's counsel e-mailed Mr. Toddy and stated that Ms. Placencio was “under no obligation whatsoever” to give a recorded statement.[12] However, to demonstrate her client's willingness to assist Progressive, the e-mail requested that Mr. Toddy provide any questions in writing.[13]

         On February 23, 2017, Mr. Toddy e-mailed a list of thirteen questions regarding the UM claim to the plaintiff's counsel.[14]

         On March 16, 2017, Mr. Toddy sent an e-mail to the plaintiff's counsel, asking that the plaintiff provide answers to the written questions previously provided as well as other information including a copy of itemized medical bills and medical narratives related to the plaintiff's claimed injuries.[15]

         On March 24, 2017, Progressive issued its second reservation-of-rights letter.[16] The letter again quoted the policy's requirements of an insured in the event of an accident or loss and requested a recorded statement from Ms. Placencio.

         On May 4, 2017, Progressive issued its third reservation-of-rights letter.[17] The relevant policy provision was again quoted, a recorded statement was requested, and answers to the written questions provided by e-mail was also requested.

         On May 31, 2017, the suit against Ms. Savoy and Ms. Coleman was dismissed.[18]

         On June 7, 2017, Progressive issued its fourth reservation-of-rights letter.[19]The letter again quoted the relevant policy provision, again requested that Ms. Placencio give a recorded statement, and again requested Ms. Placencio's answers to the written list of questions previously provided.

         On July 7, 2017, Progressive issued its fifth reservation-of-rights letter.[20] The policy provision was again quoted, a recorded statement was again requested, and Ms. Placencio's answers to Progressive's written questions was again requested.

         On August 15, 2017, Progressive issued its sixth reservation-of-rights letter.[21]This letter again quoted the policy language regarding an insured's duties in the event of an accident, claim, loss, or suit, requested that Ms. Placencio give a recorded statement, and requested Ms. Placencio's answers to the written list of questions previously provided to her counsel.

         On August 17, 2017, the plaintiff's counsel sent a settlement demand letter to Mr. Toddy at Progressive, summarizing her injuries and demanding full policy limits of $100, 000.[22]

         On August 24, 2017, Progressive issued its seventh reservation-of-rights letter.[23] The insured's duties in the event of an accident or loss were again quoted, an examination under oath was requested, and several documents were requested, including signed medical authorizations, medical records for the past seven years, work records for the past seven years, a copy of settlements payments and releases executed in this matter, an affidavit from the owner and operator of the vehicle, and a copy of medical bills and records concerning the injuries sustained in the accident.

         On September 5, 2017, the plaintiff's counsel provided medical authorization forms to Progressive via e-mail.[24] One was a Progressive-supplied medical authorization that did not contain the last four digits of the plaintiff's social security number and was executed by the plaintiff's counsel rather than by the plaintiff.[25]The other authorizations were signed by the plaintiff and dated September 1, 2017 but only authorized the release of records for treatment dates after the date of the accident.[26]

         On September 6, 2017, Mr. Toddy sent an e-mail to the plaintiff's counsel in which Progressive requested the plaintiff's permission to obtain and access all prior injury claims Ms. Placencio had made with Progressive for the past seven years.[27]

         On September 22, 2017, Progressive issued its eighth reservation-of-rights letter.[28] This letter again quoted the policy provision regarding an insured's duties in the event of an accident or loss, and it requested that Ms. Placencio be examined under oath.

         On that same date, September 22, 2017, the plaintiff's counsel authorized Progressive to obtain any prior medical records found in the plaintiff's prior claims with Progressive, and Progressive immediately requested the prior claim records.[29]

         On September 29, 2017, the plaintiff filed this lawsuit.

         Before filing suit, the plaintiff did not provide a recorded statement, did not respond to the written questions e-mailed to her attorney by Progressive, and did not provide an examination under oath.

         The liability claim was handled by Progressive adjusters Ashley Zelaya and Joel Langford.[30] The UM claim was handled by Progressive adjusters Jay Toddy and Belinda Merritt.[31]

         Law and Analysis

         A. Summary Judgment Standard

         Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate when there is no genuine dispute as to any material fact, and the moving party is entitled to judgment as a matter of law. A fact is material if proof of its existence or nonexistence might affect the outcome of the lawsuit under the applicable governing law.[32] A genuine issue of material fact exists if a reasonable jury could render a verdict for the nonmoving party.[33]

         The party seeking summary judgment has the initial responsibility of informing the court of the basis for its motion and identifying those parts of the record that demonstrate the absence of genuine issues of material fact.[34] If the moving party carries its initial burden, the burden shifts to the nonmoving party to demonstrate the existence of a genuine issue of a material fact.[35] All facts and inferences are construed in the light most favorable to the nonmoving party.[36]

         If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by pointing out that there is insufficient proof concerning an essential element of the nonmoving party's claim.[37] The motion should be granted if the nonmoving party cannot produce evidence to support an essential element of its claim.[38]

         B. Louisiana Law Applies

         A federal court sitting in diversity must apply state substantive law and federal procedural law.[39] Because this Court has subject-matter jurisdiction over this action under 28 U.S.C. § 1332, this is a diversity case and Louisiana's substantive law must be applied.[40] To determine Louisiana law, federal courts look to the final decisions of the Louisiana Supreme Court.[41] When the state's highest court has not decided an issue, the court must make an “Erie guess” as to how the state supreme court would decide the issue.[42] In making such a guess, the federal court may rely upon state appellate court decisions, unless persuasive data convinces the court that the state supreme court would decide the issue differently.[43] When making an Erie guess concerning Louisiana law, the Fifth Circuit relies upon “(1) decisions of the [Louisiana] Supreme Court in analogous cases, (2) the rationales and analyses underlying [Louisiana] Supreme Court decisions on related issues, (3) dicta by the [Louisiana] Supreme Court, (4) lower state court decisions, (5) the general rule on the question, (6) the rulings of courts of other states to which [Louisiana] courts look when formulating substantive law and (7) other available sources, such as treatises and legal commentaries.”[44]

         C. Interpretation of an Insurance Policy

         Under Louisiana law, an insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Louisiana Civil Code.[45] The role of a court interpreting the terms and provisions of an insurance policy is to determine the common intent of the parties.[46] “If the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written.”[47]

         D. The Cooperation Clause

         Many insurance policies, like the one at issue in this lawsuit, contain clauses requiring the insured to cooperate with the insurer in providing information relevant to the insured's claim. A cooperation clause protects the insurer against fraud by enabling it to obtain relevant information concerning the claimed loss while the information is fresh.[48] “The underlying purpose of a cooperation clause is to allow the insurer to obtain the material information it needs from the insured to adequately investigate a claim of loss prior to the commencement of litigation proceedings.”[49]Under Louisiana law, an insured's compliance with the provisions of an insurance policy is a condition precedent to recovery.[50] Therefore, an insured's failure to cooperate may be held to be a material breach of the policy and a defense to an insured's lawsuit on the policy.[51] More particularly, an insured's failure to submit to an examination under oath or its refusal to produce requested documentation may violate the policy's cooperation clause.[52] But the cooperation clause is not merely an “escape hatch” that an insurer may use when an insured fails to comply with trivial policy requirements.[53] Instead, a failure to cooperate precludes recovery when the insured engages in a “protracted, willful, and apparently bad faith refusal” to comply with a cooperation clause.[54] Whether the cooperation clause has been breached is a serious matter, and the dismissal of a suit before trial based on the breach of a cooperation clause has been described as a “draconian remedy which [courts] do not favor.”[55]

         An insurer seeking the dismissal of a lawsuit on a motion for summary judgment based on the insurer's alleged failure to comply with the policy's cooperation clause must meet a heavy burden and clearly demonstrate noncompliance by the insured.[56] The insurer must demonstrate that it (1) made a diligent effort to obtain the information requested from the insured, and (2) that the failure of the insured to provide such information was both material and prejudicial.[57] In particular, the burden is on the insurer to prove actual prejudice.[58]Whether an insured breached the duty of cooperation is a factual inquiry.[59]

         Therefore, a valid dispute concerning whether the insured breached the policy's cooperation clause will preclude summary judgment in the insured's favor.

         D. Does the Cooperation Clause Apply to ...


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