United States District Court, W.D. Louisiana, Shreveport Division
L. HORNSBY U.S. MAGISTRATE JUDGE
Hathaway Homestate Insurance Company issued a policy of
commercial auto insurance to MLJ Trucking, LLC. Two of
MLJ's trucks suffered property damage in separate
accidents. MLJ made two property damage claims against the
policy. Berkshire paid both claims, but MLJ filed this suit
against Berkshire to seek penalties under Louisiana statutes
for alleged unlawful delay in making the payments. Before the
court is Berkshire's Motion for Summary Judgment (Doc.
27) that raises separate attacks on the two claims. For the
reasons that follow, Berkshire's motion will be denied.
alleged in its petition that its 2014 Peterbilt truck was
damaged in an accident on July 31, 2017. MLJ reported the
accident to Berkshire that same day. Berkshire assessed the
damage to the truck on August 8, 2017 to be $40, 752.84, less
a $1, 000 deductible. MLJ alleges that Berkshire did not pay
the amount of the loss until November 28, 2017, which was
more than 90 days later. Petition, ¶¶ 3-6. MLJ
alleges that the late payment entitles it to penalties under
La. R.S. 22:1892(B)(1) that required payment within 30 days
of proof of loss and La. R.S. 22:1973 that required payment
within 60 days of proof of loss. ¶¶ 7-9.
represents that its policy covered only those autos described
on the declarations page, which referred to an attached
schedule of insured autos. Claim No. 1 presented by MLJ was
for a 2014 Peterbilt truck bearing VIN 1XPXDP0X9ED233253. The
actual VIN on the truck was 1XPXDP0X5ED233251. Berkshire
represents that the truck on which the claim was based was
not identified or scheduled anywhere in the policy.
recover statutory penalties against an insurer under
Louisiana law, the insured must have a valid underlying
substantive claim upon which insurance coverage is based.
Matthews v. Allstate Ins. Co., 731 F.Supp.2d 552,
566 (E.D. La. 2010), cited with approval in Naquin v.
Elevating Boats, LLC, 817 F.3d 235, 240 (5th Cir. 2016).
Berkshire's sole attack on Claim No. 1 is that the lack
of coverage for the Peterbilt truck bearing VIN ending in 253
is fatal to the claim for penalties because there was no
valid underlying claim against the policy with respect to
Berkshire eventually paid Claim No. 1, so one might think
there could be more to the story. And there is. The summary
judgment materials submitted by MLJ indicate that MLJ
purchased trucks from a Mr. Turnipseed, who had insurance on
those trucks thorough the Pace Insurance Agency. Mrs.
Jackson, a principal in MLJ, testified that MLJ asked Pace to
place the insurance on the trucks in its name. When MLJ later
made a claim, it was discovered that there was a discrepancy
in the VIN for one of the trucks. Mrs. Jackson testified that
the VIN information had been provided to the insurer by Pace,
and she did not know how Pace obtained the information. Her
entire input had been to orally request that the Turnipseed
trucks that MLJ purchased be scheduled on MLJ's policy.
Berkshire's claims notes indicate that on August 16,
2017, less than three weeks after the claim was made, its
claims personnel learned that Mr. Turnipseed had confirmed
that he sold VIN 251 to MLJ, and VIN 253 had been traded in
to a dealer.
evidence indicates that the parties to an insurance policy
intended for it to provide certain coverage, but the
insurance agent made a clerical error on the declarations
page, the policy can be reformed to reflect the true intent
of the parties. Parol evidence is admissible to show mutual
error even though the express terms of the policy are clear.
The party seeking reformation sometimes has the burden of
proving a mutual error by clear and convincing evidence, but
it need only satisfy a preponderance of the evidence burden
to reform a policy in a manner that does not substantially
affect the risk assumed by the insurer. Samuels v. State
Farm Mutual Auto Ins. Co., 939 So.2d 1235 (La. 2006).
what happened in Samuels when everyone involved
admitted that there had been a clerical error by the agent
who mistakenly identified an umbrella policy as a
homeowner's policy and used an incorrect policy number on
a renewal policy. The Supreme Court of Louisiana unanimously
held that reformation was required, given the uncontested
evidence of mutual error, so that the coverage reflected the
true intent of the parties.
summary judgment record in this case gives rise to a genuine
dispute as to whether the Berkshire policy should be reformed
to reflect that the truck that is the subject of Claim No. 1
is covered by the policy. The evidence discussed above
indicates that was the intent of both MLJ and the Pace
agency, but a mistake was made in the listing of the VIN, and
the mistake does not appear to have affected the risk assumed
by Berkshire. Berkshire even admitted during discovery that
it “paid this disputed claim as an act of good faith
based upon the determination that MLJ's failure to
schedule truck No. 1 was inadvertent and in order to attempt
to avoid litigation.”
motion for summary judgment anticipated a reformation
argument. It made a brief assertion that penalties should
nonetheless be unavailable because its conduct should be
judged based on the facts known at the time of its action.
This issue was not fully briefed. And MLJ's opposition
suggests that the origin of the VIN mistake was in the sales
contract between Turnipseed and MLJ, and Pace notified the
Berkshire claims adjuster of the error as early as August 16,
2017. Berkshire did not pay the claim until November 28,
2017, which was more than 90 days after the clerical error
was corrected. Given these facts, Berkshire has not
demonstrated that it is entitled to summary judgment with
respect to Claim No. 1.
alleged in its petition that its 2015 Peterbilt truck was
damaged in an accident on August 8, 2017. MLJ reported the
accident to Berkshire the next day. Berkshire assessed the
loss as $47, 673.84, less a $1, 000 deductible, but MLJ did
not receive a check until October 21, 2017. MLJ alleges that
it is entitled to ...