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Gautreaux v. Louisiana Farm Bureau Casualty Insurance Co.

Court of Appeals of Louisiana, Third Circuit

October 2, 2019

JOSEPH HARVEY GAUTREAUX, ET AL.
v.
LOUISIANA FARM BUREAU CASUALTY INSURANCE CO.

          APPEAL FROM THE SIXTEENTH JUDICIAL DISTRICT COURT PARISH OF ST. MARTIN, NO. 81835 HONORABLE ANTHONY THIBODEAUX, DISTRICT JUDGE.

          Charles C. Garrison Caffery, Oubre, Campbell & Garrison, LLP, COUNSEL FOR DEFENDANT/APPELLANT: Louisiana Farm Bureau Casualty Insurance Co.

          Wayne J. Lee Stone, Pigman, Walthers, Wittmann L.L.C., COUNSEL FOR DEFENDANT/APPELLANT: Louisiana Farm Bureau Casualty Insurance Co.

          Andrew L. Plauche, Jr. Plauche, Maselli, Parkerson LLP, COUNSEL FOR DEFENDANT/APPELLANT: Louisiana Farm Bureau Casualty Insurance Co.

          George Febiger Riess, COUNSEL FOR PLAINTIFFS/APPELLEES: Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, Wilfred Meaux.

          Kenneth W. DeJean DeJean Law Firm, COUNSEL FOR PLAINTIFFS/APPELLEES: Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, Wilfred Meaux.

          Kenneth David St. Pe St. Pe Law Firm, COUNSEL FOR PLAINTIFFS/APPELLEES: Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beau champ, Wilfred Meaux.

          Stephen B. Murray, Jr. Murray Law Firm, COUNSEL FOR PLAINTIFFS/APPELLEES: Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, Wilfred Meaux.

          John Randall Whaley Whaley Law Firm, COUNSEL FOR PLAINTIFFS/APPELLEES: Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, Wilfred Meaux.

          Court composed of Sylvia R. Cooks, John E. Conery, and Van H. Kyzar, Judges.

          VAN H. KYZAR JUDGE.

         Defendant, Louisiana Farm Bureau Casualty Insurance Company (Farm Bureau), appeals a ruling of the trial court granting Plaintiffs' Motion for Class Certification. Plaintiffs, Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, and Wilfred Meaux, assert that Farm Bureau's reliance on a particular automated computer system to value vehicle total loss claims violates La.R.S. 22:1892(B)(5) and La.R.S. 22:1973 and is being used to systematically underpay insureds. Plaintiffs sought class certification for their claims against Farm Bureau, which was granted. For the following reasons, we affirm the ruling of the trial court.

         FACTS AND PROCEDURAL HISTOY

         Plaintiffs were all insured by Farm Bureau and received payment of the considered cash value for a total loss vehicle calculated with the help of an automated computer system called Mitchell Work Center Total Loss (WCTL). Plaintiffs brought the current class action challenging Farm Bureau's use of Mitchell WCTL in valuing first-party vehicle total loss claims, claiming the use of this system fails to comply with the specific requirements of La.R.S. 22:1892(B)(5) and constitutes a breach of Farm Bureau's duty of good faith and fair dealing in violation of La, R.S. 22:1973. Plaintiffs assert that the Mitchell WCTL system is unfairly low in its valuation of vehicles and filed suit in an attempt to recover for alleged underpayment of individual insurance claims.

         On September 2, 2014, Mr. Gautreaux filed a Petition for Property Damages, Penalties, Attorney's Fees, and for Class Certification. In the Petition, Gautreaux alleged: (1) that his 2008 Ford pickup truck had been totaled as the result of an accident; (2) that the NADA valuation for his truck was $28, 450.00 and that his Mitchell WCTL valuation was $23, 790.98; (3) that Farm Bureau "refused to negotiate in good faith on the difference between the Mitchell Vehicle Valuation Report and the NADA values"; (4) "that the Mitchell Vehicle Valuation Report used by Louisiana Farm Bureau Casualty Insurance Company is unfairly low in its evaluations of vehicle values and that Louisiana Farm Bureau Casualty Insurance Company is aware of this fact"; (5) that Farm Bureau uses the Mitchell WCTL to "intentionally undervalue total loss vehicles through the use of obscure 'adjustments' which systematically reduce values," violating La.R.S. 22:1973; (6) that Farm Bureau "knew or should have known that other valuation systems such as NADA book values or Kelly Blue Book values are the generally accepted valuation tools" and that the Mitchell valuation "does not represent either the actual cash value of the vehicle or the fair market retail value"; (7) that Farm Bureau "violated its duty to adjust claims fairly" under La.R.S. 22:1892(B)(5) and/or La, R.S. 22:1973 because Mitchell WCTL "is not a 'generally recognized used motor vehicle industry source'" for the purposes of La.R, S. 22:1892(B)(5); and (8) that Farm Bureau "employs a system which specifically misleads their insureds, intentionally undervalues their claims, intentionally refuses to negotiate, all of which constitute fraud and unfair trade practices."

         On October 16, 2014, Farm Bureau filed Peremptory Exceptions of Res Judicata, No Cause of Action, and No Right of Action. Therein, Farm Bureau asserted the defense of accord and satisfaction, citing the fact that, contrary to Mr. Gautreaux's allegations in the Petition, he and Farm Bureau had engaged in extensive negotiations and reached an agreement on the amount to be paid. It asserted that on September 17, 2013, Farm Bureau issued a check in the amount of $25, 193.98 to Mr. Gautreaux, and the check was designated "In Full Payment For: TOTAL LOSS DAMAGES TO 2008 Ford F-250 VIN-2024." Mr. Gautreaux accepted the check, endorsed it, deposited it into his account, and signed the title to the vehicle over to Farm Bureau.

         On May 26, 2017, Plaintiffs filed a Supplemental and Amending Petition adding Susie Lagneaux, Yvette Beauchamp, Loretta Jane Meaux, and Wilfred Meaux as Plaintiffs. On September 8, 2017, Farm Bureau filed Peremptory Exceptions of Res Judicata, No Cause of Action, and No Right of Action as to the claims of Loretta and Wilfred Meaux. In its exceptions, Farm Bureau contended that, like Mr. Gautreaux, Mr. Meaux had engaged in negotiations with Farm Bureau with regard to the payments issued to him for his vehicle and that Mr. Meaux had agreed to accept the amounts paid to him. On December 1, 2014, a check in the amount of $2, 143.61 was issued to Mr. Meaux for his repairs, and on December 11, 2014, a check in the amount of $8, 251.15 and designated "IN FULL PAYMENT OF OWNER RETAINED TOTAL LOSS" was issued to Mr. Meaux. In addition to accepting the checks, Mr. Meaux signed a release acknowledging receipt of payment from Farm Bureau and further releasing Farm Bureau from any further liability in connection with the claim. Both Mr. Gautreaux and Mr. Meaux maintain that they were underpaid for their losses.

         On October 24, 2017, the trial court denied the exceptions of Res Judicata, No Cause of Action, and No Right of Action as to the claim of Mr. Gautreaux, to which this court thereafter denied Farm Bureau's application for a supervisory writ. Gautreaux. v. La. Farm Bureau Cas. Ins. Co., 18-575 (La.App. 3 Cir. 6/1/18), 245 So.3d 1046. The supreme court further denied writs. Gautreaux v. La. Farm Bureau Cas. Ins. Co., 18-576 (La. 6/1/18), 243 So.3d 571.

         On November 29, 2017, the trial court denied the exceptions of Res Judicata, No Cause of Action, and No Right of Action as to the claims of Loretta and Wilfred Meaux. This court denied supervisory writs on April 6, 2018. Gautreaux v. La. Farm Bureau Cas. Ins. Co., 17-1174 (La.App. 3 Cir. 4/6/18), (unpublished writ opinion). The supreme court denied Farm Bureau's writ application. Gautreaux v. Louisiana Farm Bureau Cas. Ins. Co., 18-575 (La. 6/1/18), 245 So.3d 1046.

         A hearing on Plaintiffs' motion for class certification was held on April 18 and 19, 2018. The trial court heard extensive arguments of counsel and received many exhibits into evidence. It also heard testimony from numerous witnesses, including multiple expert witnesses. After thorough closing arguments from counsel, the trial court took the matter under advisement.

         The trial court issued comprehensive, written Reasons for Judgment on July 23, 2018. A formal judgment was rendered on August 23, 2018, in favor of Plaintiffs, granting Plaintiffs' motion for class certification, designating Joseph Harvey Gautreaux, Susie Lagneaux, Yvette Beauchamp, and Wilfred Meaux as class representatives with the definition of the class to be certified as "[a] 11 persons insured by Louisiana Farm Bureau Casualty Insurance Company who have made a claim for first party total loss, which claim Louisiana Farm Bureau Casualty Insurance Company evaluated using Mitchell WorkCenter Total Loss, from July 1, 2013 to the present date (date of class action notice]." Farm Bureau, thereafter, instituted this appeal, setting forth the following assignments of error:

(1) The Trial Court erred in certifying the Plaintiffs' class because Plaintiffs have not satisfied the commonality, typicality and adequacy of class definition requirements under [La.Code Civ.P.] Article 591(A). In addition, the class does not meet the predominance requirement under Article 591(B)(3) and contravenes the Article 591(C) prohibition against class certification of claims or defenses that are dependent on individualized proof. The Plaintiffs' claims and Louisiana Farm Bureau's defenses cannot be adjudicated on a class-wide basis using common operative facts because the claims and defenses applicable to each putative class member involve issues that must properly be evaluated on an individual basis.
(2) The Trial Court erred in certifying a class defined as "all persons insured by Louisiana Farm Bureau Insurance Company who have made a claim for a first-party total loss, which claim Farm Bureau Insurance Company evaluated using Mitchell WorkCenter Total Loss ("WCTL") from July 1, 2013 to the present date [date of class notice]." The Petition expressly seeks recovery for persons who were "underpaid" as a result of the use of the Mitchell WorkCenter Total Loss program, but the class definition includes persons who suffered no such alleged underpayment. In addition, La.R.S. 22:1892 does not provide any penalty for a failure to comply with Section (B)(5). Thus, the only possible recovery lies under La.R.S. 22:1973, which requires that each Plaintiff prove both (1) an actual failure to timely pay the amount due and (2) that the failure was arbitrary, capricious, and without probable cause. Plaintiffs propose to establish the existence and quantum of damage by comparing the amount paid by Louisiana Farm Bureau to National Automobile Dealers Association ("NADA") valuations. La.R.S. 22:1892(B) does not require the use of NADA values and NADA does not even purport to identify the actual cash value of any vehicle. Determinations of liability, the fact of damage and the quantum of damage cannot be made using common operative evidence. Thus, every claim requires adjudication on an individual (rather than class-wide) basis.
(3) This Court erred in failing to address both Louisiana Farm Bureau's defenses of accord and satisfaction and compromise, as well as Plaintiffs' assertions of fraud and duress (none of which can be tried on a class-wide basis). The Trial Court's contrary statement that the case "does not involve" allegations of fraud was patently erroneous. Because these issues were not addressed by the Trial Court, they should be considered de novo on appeal.

         DISCUSSION

         Plaintiffs propose recovery under La.R.S. 22:1973 and 22:1892. Louisiana Revised Statutes 22:1973 declares that insurers have an affirmative duty to adjust claims fairly and promptly as part of their more generalized duties of good faith and fair dealing owed to insureds. An insurer who breaches these duties is liable for any damages sustained as a result of the breach. La.R.S. 22:1973. Louisiana Revised Statutes 22:1892 provides that an insurer shall pay to any insured the full amount of a claim due within thirty days of proof of loss from the insured. Insurers are liable for penalties if such payments are not made within thirty days of satisfactory proof of loss if said failure is found to be arbitrary and capricious or without probable cause. Broussardv. Natl Union Fire Ins. Co. of Louisiana, 94-1445 (La.App. 3 Cir. 4/5/95), 653 So.2d 816. Plaintiffs are attempting to show that these statutes have been violated by Farm Bureau on a class-wide basis by its use of the Mitchell WCTL system, allegedly contrary to the requirements of La.R.S. 22:1892(B)(5).

         "The class action is a nontraditional litigation procedure permitting a representative with typical claims to sue or defend on behalf of, and stand in judgment for, a class of similarly situated persons when the question is one of common or general interest to persons so numerous as to make it impracticable to bring them all before the court." Ford v. Murphy Oil U.S.A., Inc., 96-2913, p. 4 (La. 9/9/97), 703 So.2d 542, 544, reh'g granted in part, 96-2913 (La. 10/10/97), 710 So.2d 235. "The purpose and intent of class action procedure is to adjudicate and obtain res judicata effect on all common issues applicable not only to the representatives who bring the action, but to all others who are 'similarly situated,' provided they are given adequate notice ... and do not timely exercise the option of exclusion." Id. "The only issue to be considered by the trial court when ruling on certification, and by this Court on review, is whether the case at bar is one in which the procedural device is appropriate," and in doing so, "the court is not concerned with whether the plaintiffs have stated a cause of action or the likelihood they ultimately will prevail on the merits, but whether the statutory requirements have been met." Baker v. PHC-Minden, L.P., 14-2243, p. 10 (La. 5/5/15), 167 So.3d 528, 537 (citing Risen v. Carlisle and Jacquelin, 417 U.S. 156, 94 S.Ct. 2140 (1974)).

         The burden of proof to certify and maintain a class action and the standard of appellate review of a trial court decision granting or denying certification of the class action is succinctly set forth as follows:

In order for class certification to be proper, "the burden is on the plaintiffs to establish that the statutory criteria for a class certification are met." Duhe v. Texaco, Inc., 99-2002, p. 11 (La.App. 3 Cir 2/7/01), 779 So, 2d 1070, 1078, writ denied, 01-637 (La.4/27/01), 791 So.2d 637; see also Clark v. Trus Joist MacMillian, 02-676, 02-512 (La.App. 3 Cir. 12/27/02), 836 So.2d 454, 459, writ denied, 03-275 (La.4/21/03), 841 So.2d 793 ("Plaintiffs must establish by preponderance of the evidence that each of the elements for class certification has been met."). However, "[t]he district court has wide discretion in deciding whether to certify a class and the decision will not be overturned absent a finding of manifest error or abuse of discretion." Roberson v. Town of Pollock, 05-332, p. 9 (La.App. 3 Cir. 11/9/05), 915 So.2d 426, 432, writ denied, 06-213 (La.4/24/06), 926 So.2d 550. Further, "[t]he court should err on the side of maintaining the class action since the judge may always modify or amend the class at any time prior to a ...

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