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Fils v. Starr Indemnity & Liability Co.

Court of Appeals of Louisiana, Third Circuit

February 4, 2019



          Bart Bernard COUNSEL FOR PLAINTIFF/APPELLANT: Harold Fils

          D. Scott Rainwater, Rachel Kovach Taylor, Wellons, Politz & Duhe, APLC COUNSEL FOR DEFENDANT/APPELLEE Starr Indemnity & Liability Insurance Company

          Court composed of Sylvia R. Cooks, Billy Howard Ezell, and D. Kent Savoie, Judges.



         Plaintiff-appellant, Harold Fils, filed this Motion for Rehearing, asking this court to reconsider our prior ruling affirming the trial court's judgment that bad faith claims against insurers are subject to a one-year prescriptive period.[1] We granted Plaintiff's Motion for Rehearing. After further review, we now hold the appropriate prescriptive period for bad faith claims arising out of a contract of insurance is the ten-year prescriptive period found in La.Civ.Code art. 3499.

         Plaintiff claimed injuries and personal damages as a result of an August 28, 2013 accident and filed suit on August 27, 2015, against Starr Indemnity & Liability Insurance Company seeking additional UM benefits. Plaintiff alleged his medical expenses alone exceeded the $45, 000.00 amount tendered to him by Starr. Asserting that Starr was acting in bad faith, Plaintiff supplemented his petition on January 26, 2017, to seek penalties and attorney fees pursuant to La.R.S. 22:1973 and La.R.S. 22:1892 for Starr's alleged bad faith refusal to pay his UM claim. Plaintiff's original petition had not included any allegations of bad faith on the part of Starr.

         In response, Starr filed a peremptory exception of prescription, maintaining the bad faith claim was barred by the prescriptive period of one year from the time suit was filed seeking damages under the UM policy provisions. The trial court ruled in favor of Starr and maintained the exception of prescription as to the bad faith claims asserted in Plaintiff's First Supplemental and Amending Petition. The bad faith claims were dismissed with prejudice, and the court designated that ruling as a final, appealable judgment. In our previous opinion, we held the trial court did not err in finding a one-year prescriptive period applied to Plaintiff's bad faith claims against Starr.

         I. Review of Applicable Jurisprudence.

         Even before the creation of a statutory cause of action for the bad faith handling of claims by an insurer, courts have imposed liability for an insurer's failure to act in good faith in the interests of its insureds. The Louisiana Supreme Court in Roberie v. Southern Farm Bureau Casualty Insurance Co., 250 La. 105, 194 So.2d 713, 716 (1967), found the insurer was liable for its failure to inform its insurer as to settlement negotiations and the insurer's failure to provide "information and advice on the point of his potential liability." The insurer rejected a settlement demand unilaterally when the potential liability exceeded the policy limits. As a result, the court found the insurer liable to its insured for the amount in excess of the policy limits that he was required to pay as part of the judgment in the original litigation.

         In 1970, La.R.S. 22:1220 [now La.R.S. 22:1973] was enacted. It created a statutory cause of action for bad faith by an insurer. Discussing the duties imposed on the insurer by La.R.S. 22:1220, the supreme court in Theriot v. Midland Risk Ins. Co., 95-2895, pp. 5-6 (La. 5/20/97), 694 So.2d 184, 187 (emphasis added), stated "the statute recognizes the jurisprudentially established duty of good faith and fair dealing owed to the insured, which is an outgrowth of the contractual and fiduciary relationship between the insured and insurer." Louisiana Revised Statutes 22:658 [now La.R.S. 22:1892] provided additional causes of action for an insurer's violations of good faith and fair dealing, including a bad faith failure to settle claims. Neither statute sets forth a specific prescriptive period.

         In 1989, the appellate court in Cantrelle Fence and Supply Co. v. Allstate Insurance Co., 550 So.2d 1306 (La.App. 1 Cir. 1989), writ denied, 559 So.2d 123 (La.1990), applied the ten-year prescriptive period of La.Civ.Code art. 3499 to the insurer's claim under La.R.S. 22:658 [now La.R.S. 22:1892]. The court stated "[f]inding no other prescriptive period specifically established for La.R.S. 22:658 actions, we apply the prescriptive period of ten years, established by La.[Civ.Code] art. 3499." Cantrelle, 550 So.2d at 1308.

         Similarly, in 1991, the court in Keith v. Comco Insurance Co., 574 So.2d 1270 (La.App. 2 Cir.), writ denied, 577 So.2d 16 (La.1991), found the ten-year prescriptive period was applicable to an insurer's bad faith failure to settle under La.R.S. 22:1220 [now La.R.S. 22:1973]. The court stated as follows:

An action against an insurer for failure to defend a claim or settle within policy limits is in contract. Wooten v. Central Mut. Ins. Co., 182 So.2d 146 (La.App. 3d Cir.1964); Comment, "Duty of Insurer to Settle," 30 La.L.Rev. 622, 628-633 (1970). It ...

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