Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Landry v. Covington Specialty Insurance Co.

United States District Court, E.D. Louisiana

March 11, 2019

DONNIE LANDRY, ET AL.
v.
COVINGTON SPECIALTY INSURANCE COMPANY, ET AL.

         SECTION "B" (3)

          ORDER AND REASONS

         Defendants Covington Specialty Insurance Company and RSUI Group, and defendant Houston Specialty Insurance Company filed the instant two motions for summary judgment. Rec. Docs. 39, 40. Plaintiffs timely filed a response in opposition to both motions as well as a motion for voluntary dismissal. Rec. Docs. 44, 50. Defendants filed reply memoranda. Rec. Docs. 52, 54, 59. For the reasons discussed below, IT IS ORDERED that the motions for summary judgment are GRANTED, dismissing claims against moving defendants with prejudice.

         IT IS FURTHER ORDERED that plaintiffs' motion to dismiss without prejudice is DISMISSED as moot.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         This case arises out of a contract executed between JoAnna Landry and Robert Dinger, as representative of R&N Pool Service, Inc d/b/a Dinger pools, for the construction of a custom swimming pool, hot tub, deck, and outdoor patio at plaintiffs' home in Houma, Louisiana. Rec. Doc. 1-2 at 3. Plaintiffs claim that Mr.

         Dinger and R&N Pool Services performed the work specified under the contract in an improper, negligent, and unworkmanlike manner and seek compensation for physical damage to their property and past and future mental and emotional suffering. Id. at 6. Plaintiffs filed suit in Louisiana state court in January 2018 directly against defendant insurance companies, “[d]ue to the insured's bankruptcy discharge.” Rec. Doc. 1-2 at 2 (citing La. Rev. Stat. § 22:1269).

         Defendant insurance companies Covington Specialty Insurance Group (“Covington”), Houston Specialty Insurance Group (“HSIC”), and RSUI Group Inc. (“RSUI”) removed the case to federal court on the basis of diversity jurisdiction in March 2018, stating that no defendant is a citizen of Louisiana. Rec. Doc. 1. Plaintiffs moved to remand, arguing that the defendants assume their insured's Louisiana citizenship under Louisiana's Direct Action Statute (“DAS”), and therefore diversity of citizenship did not exist. Rec. Doc. 9. Defendants argued that they do not assume Mr. Dinger and R&N's Louisiana citizenship because plaintiffs' claims sound in contract and not in tort, meaning that Louisiana's Direct Action Statute (“DAS”) does not apply. Rec. Docs. 11, 15. This Court agreed with defendants and denied plaintiffs' motion to remand, finding that defendants did not take on the Louisiana citizenship of the insured because “[p]laintiffs' claims sound only in contract and Louisiana's direct action statute is inapplicable.” Rec. Doc. 35 at 5.

         Plaintiffs sought to file an amended complaint adding three non-diverse defendants to the lawsuit: R&N Pool Service, Inc, R&N Dinger, Inc, and Vincent Watson, Sr. Rec. Doc. 19. Plaintiff asserted that they had mistakenly believed that Mr. Dinger's two businesses, R&N Pool Service, Inc. and R&N Dinger, Inc., had been discharged in bankruptcy as well as Mr. Dinger personally. Id. at 2. The Magistrate Judge denied plaintiffs' motion, finding that failing to identify a party was not a mistake of law, plaintiff was dilatory in seeking to amend, and plaintiffs would not be prejudiced by denial because claims against the non-diverse parties filed in state court may be prescribed. Rec. Doc. 36 at 6.

         Defendants filed the instant motions for summary judgment, arguing that plaintiffs have no viable claims remaining because this Court previous ruled that their claims sound solely in contract, which is not a basis for proceeding against an insurer pursuant to the Louisiana Direct Action Statute, and there is a lack of privity between plaintiff and defendants.[1] Rec. Docs. 39, 40. Plaintiffs timely filed a response in opposition requesting that the Court abstain from exercising its jurisdiction because of a parallel state court proceeding against both the insured and the defendant-insurers and arguing in the alternative that defendants' motion for summary judgment should be denied. Rec. Doc. 44. Plaintiffs additionally state that they have filed a motion for voluntary dismissal without prejudice in conjunction with their opposition to the instant motions due to their pending lawsuit in Louisiana state court. Rec. Doc. 50. In their replies, defendants argue that the requirements for abstention have not been met and that plaintiffs' motion for voluntary dismissal is not appropriate at this late stage of the proceedings. Rec. Docs. 52, 54.

         Defendants argue that plaintiffs have no viable claims because their claims sound solely in contract, which is not a basis for proceeding against an insurer pursuant to the Louisiana Direct Action Statue. Rec. Doc. 39-1 at 1. Defendants further argue that because there is no privity between plaintiffs and defendants, plaintiffs have no claim for breach of contract. Rec. Doc. 40-1 at 4. Defendants assert that this Court previously recognized that the plaintiffs' petition affirmatively establishes that the underlying cause of action for their claim against defendants is premised on the insured's breach of contract. Rec. Doc. 39-1 at 5. However, plaintiffs' cause of action against defendants is under Louisiana's Direct Action Statute (“DAS”), which grants a procedural right of action against an insurer where the plaintiff has a substantive cause of action against the insured. Id. Defendants state that the DAS does not authorize direct action against insurers based solely on a breach of contract, but rather gives a special right of action specifically to injured tort victims. Id. at 5-6. Given this Court's previous finding that plaintiffs' claims sound solely in contract, and the lack of privity between plaintiffs and defendants, defendants argue that plaintiffs have no viable claim against them. Rec. Doc. 40-1 at 6. Plaintiffs advise the Court that they have filed a new state court lawsuit against both the insured and the defendant insurance companies, based on their recent discovery of the insured's regained solvency and resumption of business activity. Rec. Doc. 44 at 1. Plaintiffs therefore request that the Court abstain from exercising its jurisdiction in this matter due to the parallel pending state court proceeding under the Supreme Court's doctrine of Colorado River Abstention. Id. Alternatively, plaintiffs assert that they have filed a motion for voluntary dismissal without prejudice pursuant to Fed.R.Civ.P. 41(a)(2), which they request this Court grant along with a denial of the instant motions. Id. at 2. Finally, defendants argue that the instant motions for summary judgment should be denied because they are premature due to outstanding discovery requests, and because plaintiffs have viable claims under the direct-action statute which have not yet been prescribed. Id.

         Defendants argue that abstention is not warranted because this case is not parallel to the newly filed state court case and no exceptional circumstances are present. Rec. Doc. 54 at 2-3. Defendants assert that there is not an identity of parties as the state court case names the insured as a defendant while the present case does not. Id. at 2. Defendants note that the supposedly duplicative litigation is of plaintiffs' own making because plaintiffs mistakenly assumed the R&N entities were insolvent and therefore failed to include them as defendants in their original complaint in this case as required under the DAS. Rec. Doc. 52 at 6. Additionally, the only issue before the Court in the present case is whether plaintiffs have a viable contract claim against defendants, whereas the state court proceedings are also premised on tortious and negligent conduct of the insured. Id. at 3. Therefore, defendants assert that the state court proceeding is not a parallel action to this federal proceeding and Colorado River abstention is not appropriate. Id. Furthermore, defendants argue that the factors relevant to determining whether the ‘exceptional circumstances' exist weigh in favor of denying abstention. Id. at 3-4. Defendants also argue that the instant motions are not premature as outstanding discovery requests are not pertinent and would not alter the result. Rec. Doc. 54 at 5. Finally, defendants assert that voluntary dismissal pursuant to Fed.R.Civ.P. 41(a)(2) is not warranted at this stage, given that this case was filed nearly a year ago and substantial motion practice has occurred. Rec. Doc. 52 at 9. Defendants argue that a ruling on the instant summary judgment motions is appropriate. Id.

         LAW AND ANALYSIS

         Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). A genuine issue of material fact exists if the evidence would allow a reasonable jury to return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When the movant bears the burden of proof, it must “demonstrate the absence of a genuine issue of material fact” using competent summary judgment evidence. Celotex, 477 U.S. at 323. But “where the non-movant bears the burden of proof at trial, the movant may merely point to an absence of evidence.” Lindsey v. Sears Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994). When the movant meets its burden, the burden shifts to the non-movant, who must show by “competent summary judgment evidence” that there is a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). All reasonable inferences must be drawn in favor of the nonmovant, but “a party cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” See Sec. & Exch. Comm'n v. Arcturus Corp., 912 F.3d 786, 792 (5th Cir. 2019).

         Plaintiffs have no viable claims against defendants because their claims sound solely in contract and there is a lack of privity between plaintiffs and defendants. This Court previously found that “[p]laintiffs' claims sound only in contract and Louisiana's direct action statute is inapplicable. Rec. Doc. 35 at 5. We held that the negligent acts and omissions alleged in plaintiffs' complaint “all relate to Dinger's construction of the pool, which was governed by the contract between [p]laintiffs and Dinger.” Id. Although we recognized that “the violation of a contract can potentially give rise to claims in contract and in tort, ” we ultimately held that “the alleged duties that were breached are both explicitly and implicitly set forth in the contract between the parties and there are no general tort duties alleged which do not arise as a result of the existence of the contract.” Id. at 6. (internal quotations omitted). The Court sees no basis for revising this holding, and plaintiffs have offered no arguments other than to assert that the defendant insurance companies “are liable for damages resulting from the specified tortious and negligent conduct of the insured.” Rec. Doc. 44 at 10. As the Court previously held, plaintiffs' claims all arise because of their contract with Mr. Dinger and therefore do not sound in tort. Rec. Doc. 35 at 5. Therefore, the Court maintains its prior holding that the Direct Action Statute, which only applies tort victims, is inapplicable to plaintiffs' claims. See Rec. Doc. 35 at 5; Holland Am. Ins. Co. v. Succession of Roy,777 F.2d 992, 994-995 (5th Cir.1985) (holding that “the Louisiana Direct Action Statute applies only to torts and not to contract disputes”) (internal citation omitted). Since plaintiffs cannot proceed against defendants under the Direct Action Statute on their contractual claims, plaintiffs have no viable basis for their claims against defendants. There is no genuine dispute as to the fact that a contract did not exist between plaintiffs and defendants. Neither party alleges that such a contract existed. The contract that formed the basis for the underlying dispute in this case was between plaintiffs and ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.