26,887 La.App. 2 Cir. 6/21/95, Williams v. Louisiana Indem. Co.

• Decision Date: 21 June 1995
• Parties: 26,887 La.App. 2 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 739

658 So.2d 739

26,887 La.App. 2 Cir. 6/21/95

Mary WILLIAMS, Plaintiff-Appellee, v. LOUISIANA INDEMNITY COMPANY, Claiborne Insurance Company, and Assurance Ltd., Defendants-Appellants.

No. 26,887-CA.

Court of Appeal of Louisiana,

Second Circuit.

June 21, 1995.

David L. White, Bossier City, for appellants.

John Milkovich, Carola Milkovich, Shreveport, for appellee.

Before SEXTON, NORRIS and LINDSAY, JJ.

SEXTON, Judge.

Plaintiff sued her insurer for damages arising from the insurer's denial of insurance coverage for her wrecked vehicle. From a judgment in favor of the plaintiff awarding her damages for the value of the vehicle, the value of a replacement vehicle, attorney fees, penalties and interest thereon from the date of judicial demand, defendant appeals. We amend and affirm.

Mary Williams purchased a 1983 Camaro in July of 1989 from Rountree Olds in Shreveport for $3,995. The following year, on August 13, 1990, Ms. Williams was involved in a single-car accident in which the vehicle was totalled. Ms. Williams sought payment from her insurer, Louisiana Indemnity Company (LIC), who denied coverage, claiming that her policy had been cancelled due to her failure to pay a $17 monthly premium increase. Ms. Williams subsequently sued LIC as well as the insurance agency, Claiborne Insurance Agency ("Claiborne"), and the insurance premium finance company, Assurance, Ltd. ("Assurance"). Before trial, Claiborne and Assurance settled with Ms. Williams.

The trial court found that LIC had improperly cancelled Ms. Williams' policy and awarded her $3,600 for the vehicle, $800 for damages related to the purchase of a replacement vehicle, $6800 in attorney fees and $440 in penalties for failure to timely pay or investigate the claim, interest, and costs. Because Ms. Williams settled with the other two defendants prior to trial, the court reduced the judgment against LIC by two-thirds, resulting in a judgment for $3,880. Interest was awarded on the remaining one third from the date of judicial demand. Defendant filed a suspensive appeal alleging that the lower court erred as follows:

1. In finding that the appellee's vehicle was valued at $3600 at the time of the loss;

2. In awarding $800 for a replacement vehicle;

3. In awarding $6800 in attorney fees; and

4. In awarding legal interest on the award for penalties and attorney fees from the date of judicial demand.

The appellant does not question the trial court's finding that the policy was in force.

Ms. Williams obtained the LIC insurance policy in May of 1990 through the Claiborne Insurance Agency of Homer, Louisiana. The insurance premium was financed by Assurance, a premium finance company. Ms. Williams paid $200 down on the policy and was instructed to make all insurance payments to Assurance with a payment booklet they provided.

In late June of 1990, Ms. Williams received an invoice from Claiborne indicating that her insurance premium had been increased by $17 per month and to remit that amount. Although not at issue on appeal, defendants contended at trial that it cancelled the policy issued to Ms. Williams because of her failure to pay the additional $17. The trial court found that Ms. Williams did in fact make the payment to Assurance on July 2, 1990, and that Assurance reinstated the policy on July 6, 1990. The court stated that Ms. Williams had cured any default of payment within 10 days of notice of cancellation.

The trial court found that the value of the vehicle was $3,600, considering Ms. Williams monthly car note of $150 and 24 payments. LIC alleges on appeal that this is error and that the plaintiff did not prove the pre-accident market value of the vehicle. LIC contends that there was no evidence presented at trial regarding the market value of the 1983 Camaro and, therefore, the plaintiff is only entitled to nominal damages of $500. This assignment of error is without merit.

Testimony by an owner of a car as to its value can be sufficient proof with which to sustain an award. Trial courts have great discretion in determining property damage awards. Smith v. English, 586 So.2d 583, 591-92 (La.App. 2d Cir.1991), Sexton, J., dissenting on other grounds, writ denied, 590 So.2d 80 (La.1991). The plaintiff presented uncontroverted evidence that the vehicle was purchased the previous year for $3995, the vehicle was in excellent condition, and the amount of her monthly notes. We cannot say that the trial court abused its discretion in finding that the vehicle was worth $3,600.

Three days after the accident, plaintiff purchased a replacement vehicle, an old Thunderbird, for $800. The trial court awarded the plaintiff $800 for damages "related to her having to buy a replacement vehicle." Defendant merely complains on appeal that there is no authority for this award and that the trial court erred. On the other hand, plaintiff contends that the insurance policy does not exclude coverage for damages caused by loss of use of the vehicle and that damages for the loss of use of a vehicle need not be limited to the rental of a substitute vehicle.

LSA-R.S. 22:1220A imposes a duty of good faith and fair dealing in performance of the insurance contract. See also LSA-C.C. Art. 1983. Breach of this duty by the insurer renders it liable for any damages, foreseeable or not, that are a direct consequence of its failure to perform. LSA-C.C. Art. 1997; LSA-R.S. 22:1220A. Specifically, LSA-R.S. 22:1220B(5) provides that the failure by the insurer "to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause" constitutes a breach of the statutory duty of good faith and fair dealing if knowingly committed or performed by the insurer.

In the instant case, the trial court found that the refusal of LIC to pay the claim of the plaintiff and the failure to investigate the claim once it had received satisfactory proof of loss was arbitrary and capricious. The court imposed statutory penalties under LSA-R.S. 22:658. It declined, however, to impose the additional double damages penalty authorized by LSA-R.S. 22:1220C, although it recognized the availability of such an award and noted that it had awarded additional damages incurred by the plaintiff, including attorney fees, the expert witness fee, as well as the cost of the replacement vehicle.

In Modisette v. American Integrity Insurance Company, 297 So.2d 498 (La.App. 2d Cir.1974), we affirmed a trial court award of $500 for inconvenience, anguish, and the like for the wrongful cancellation of a health and accident insurance policy under facts substantially similar to the case at bar, albeit a different kind of insurance policy.

Plaintiff suggests that the $800 damages awarded by the trial court related to plaintiff having to buy a replacement vehicle constitute an award for loss of use of her totalled vehicle. Damages for loss of use of a "totalled" car are recoverable only for a reasonable time after the plaintiff learns that the car is a total loss. A car is a total loss when the cost of repairing it exceeds its pre-accident value. Bonner v. Louisiana Indemnity Co., 607 So.2d 915 (La.App. 2d Cir.1992). This court has held that a reasonable time to replace the destroyed vehicle is a period of 30 days after discovery that the car is a total loss. Bonner, supra; Prothro v. Dillahunty, 488 So.2d 1163 (La.App. 2d Cir.1986).

The measure of loss-of-use damages is normally the cost of renting a substitute vehicle until a replacement vehicle is purchased. This award, however, need not be restricted to rental. Alexander v. Qwik Change Car Center, Inc., 352 So.2d 188 (La.1977). In Alexander, the supreme court found no abuse of discretion in the trial court's award of $1000 for loss of use of a totally destroyed automobile where it was obvious that the plaintiff had suffered considerable inconvenience and mental anguish from the loss of use of his automobile.

In the instant case, the trial court based its $800 award on damages related to the plaintiff having to buy a replacement vehicle on the cost of that vehicle. Inasmuch as the plaintiff suffered the aggravation, mental distress, and inconvenience of losing the use of her vehicle and having to replace that vehicle with an inferior vehicle due to the denial of coverage by the insurer, we find no abuse of the great discretion vested in the trial court in the award of $800 as general damages. Modisette, supra.

The trial court found that LIC improperly cancelled Ms. Williams' policy and improperly denied her claim by failing to investigate the facts relating to the cancellation when it realized there was a dispute regarding Ms. Williams' payment of the insurance premiums. Accordingly, the trial court awarded $6800 in attorney fees pursuant to LSA-R.S. 22:658. The court found that LIC received satisfactory proofs of loss and failed to pay the claim within 60 days or conduct an investigation regarding the facts of its denial of the claim.

Defendant does not contest the award of attorney fees, but alleges that the $6800 award is excessive in light of the fact that it exceeds the amount of damages awarded to the plaintiff. Defendant contends a reasonable award would be $1500.

Plaintiff submits the attorney fee award is not excessive and is justified considering the amount of work performed. Plaintiff's brief provides a lengthy, detailed description of the legal work in the case. Additionally, plaintiff argues that in cases such as this, where the denial of insurance benefits appears arbitrary, the attorney fee award is penal in nature and need not be proven. Shepard v. State Farm, 545 So.2d 624 (La.App. 4th Cir.1989), writs denied, 550 So.2d 627 and 550 So.2d 628 (La.1989).

The plaintiff's attorney documented the total amount of hours spent on this case by himself and his partner. He spent 52.515 hours on the...