93-552 La.App. 3 Cir. 3/9/94, Farmers-Merchants Bank and Trust Co. v. St. Katherine Ins.

• Decision Date: 09 March 1994
• Citation: 640 So.2d 353
• Parties: 93-552 La.App. 3 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 353

640 So.2d 353

93-552 La.App. 3 Cir. 3/9/94

FARMERS-MERCHANTS BANK AND TRUST COMPANY, Plaintiff-Appellant, v. ST. KATHERINE INSURANCE, et al., Defendants-Appellees.

No. W93-552.

Court of Appeal of Louisiana Third Circuit.

March 9, 1994.

Writ Denied May 13, 1994.

Mickey Remy Mason, Breaux Bridge, for Farmers-Merchants Bank & Trust Co.

Andrew Holleman Meyers, Lafayette, for St. Katherine Ins., et al.

George W. McHugh Jr., St. Martinville, for Cecelia Lumber.

Aaron Jay Allen, Lafayette, for Agnes Huval.

Mark E. Seamster, Hammond, for Voyager Ins.

Before DOUCET, YELVERTON and SAUNDERS, JJ.

[93-552 La.App. 3 Cir. 1] SAUNDERS, Judge.

The plaintiff-appellant, Farmers-Merchants Bank and Trust Company (hereinafter BANK), takes this writ of certiorari for supervisory review of the trial court's granting of defendant-appellee's Motion for Leave of Court and Time To Amend Answer. Appellant contends that the trial court erred on both procedural and substantive grounds: (1) the trial court abused its discretion in granting leave of court and giving defendant time to amend its answer and (2) the defendant made a judicial confession in its petition in a related concursus proceeding and should be bound by it under Civil Code article 1158 or the principle of preclusion.

For the reasons which follow, we affirm the trial court's ruling.

FACTS

Plaintiff-appellant, BANK, loaned money to Pat Huval and accepted as security against that loan the building and contents of Huval's place of business, Pat's Waterfront Restaurant. On October 3, 1987, a fire destroyed the restaurant and its contents. BANK filed suit on March 14, 1988, against various insurance companies including defendant-appellee, Voyager Property and Casualty Insurance Company [93-552 La.App. 3 Cir. 2] hereinafter VOYAGER), seeking recovery of insurance proceeds from their policy that covered the property. On May 9, 1988, VOYAGER answered the suit and generally denied the allegations of liability made by BANK and stated that any policy it may have issued was strictly an excess policy, i.e. it would provide coverage only in the event that all other insurance policies applicable to said claim were exhausted. In addition, VOYAGER denied all allegations of any arbitrary or capricious actions on their part and any damages BANK claimed therein.

On January 31, 1989, VOYAGER filed a Petition for Concursus Proceeding in which it agreed to deposit into the trial court's registry the amount of the policy for the funds to be released to the injured parties with the condition that VOYAGER not be liable for any more than the amount deposited. On April 4, 1990, the trial court granted BANK'S Motion for Summary Judgment, which ordered that BANK be allowed to withdraw the funds from the trial court's registry and that the amount withdrawn be credited to any other judgments rendered against VOYAGER. The trial court, however, did not establish the amount of VOYAGER'S liability and left the door open for VOYAGER to be held liable for more than the amount that they had deposited. VOYAGER appealed the trial court's judgment. This court held in case 570 So.2d 1186 (La.App. 3d Cir.1990) and 570 So.2d 1189 (La.App. 3d Cir.1990) that VOYAGER'S Petition for Concursus Proceeding stated a conditional tender of the insurance coverage. Specifically, VOYAGER deposited the funds and admitted liability only in the amount that it deposited and that they could not be held liable for more. This court agreed that the trial court erred in granting BANK'S Motion for Summary Judgment that exposed VOYAGER to greater liability than it had offered to the trial court in its Petition for Concursus Proceeding. We reversed the trial court's ruling and remanded the matter to the trial court for further proceedings.

Pursuant to our court's ruling, BANK filed an Exception of No Cause of Action to VOYAGER'S still pending Petition for Concursus Proceeding alleging that no concursus proceeding can be held with a conditional tender of the funds. On March 8, 1991, VOYAGER attempted to correct that procedural defect in its petition. On March 14, 1991, the trial court maintained BANK'S objection and denied VOYAGER'S Motion for Leave of Court to Amend its Petition for Concursus Proceeding. That ruling was affirmed by this court in an unpublished opinion, 608 So.2d 300 (La.App. 3d Cir.1992). The Louisiana Supreme Court denied writs on January 29, 1993.

On March 11, 1993, Voyager filed a Motion for Leave of Court to Amend Answer based on information that it obtained during depositions taken of BANK'S employees. Generally, VOYAGER insured property in which BANK, i.e. mortgagee, took a security [93-552 La.App. 3 Cir. 3] interest only when the owner, i.e. mortgagor, of the property failed to do so or allowed its policy to lapse. In this way, BANK'S security interest was always protected. In BANK employees' depositions, VOYAGER learned that the mortgagor of the property allowed its insurance policy on the property to lapse only temporarily and that the mortgagor's insurance policy on the property had been reinstated at the time of the fire. Based on that information, VOYAGER contends that they did not insure the property and requested leave of court and time to amend its answer accordingly. This case comes back to this court for the third time on a writ of certiorari asking for supervisory review of the trial court's ruling granting VOYAGER'S Motion for Leave of Court and Time To Amend Its Answer to BANK'S original petition. This court granted supervisory writs to review the trial court's ruling.

I. Issues Presented

1) Whether the trial court abused its discretion in granting leave of court and giving defendant time to amend its answer. 2) Whether VOYAGER made a judicial confession in its petition in a related concursus proceeding and should it be bound by it under LSA-C.C. art. 1158 or the principle of preclusion.

II. Law and Argument--Issue I

Pursuant to LSA-C.C.P. 1001, "[a] defendant shall file his answer within fifteen days after service of citation upon him...." In addition, "[a] defendant may amend his answer once without leave of court at any time within ten days after it has been served. Otherwise, the petition and answer may be amended only by leave of court or by written consent of the adverse party." LSA-C.C.P. art. 1151. ¹ The Louisiana Code of Civil Procedure does not provide any specific limitations upon the discretion of the trial court to permit amendment of pleadings.

Louisiana courts have formulated criteria that they should consider when ruling on motions requesting leave of court and time to amend pleadings. Amendment of pleading should be liberally allowed, provided that movant is acting in good faith, amendment is not sought as delaying tactic, opponent will not be unduly prejudiced, and trial of issues will not be unduly delayed. Beard v. Circle K, Inc., 554 So.2d 825 (La.App. 1st Cir.1989).

[93-552 La.App. 3 Cir. 4] "Our law is well settled that amendments to pleadings should be permitted where they tend to further justice, cause no injury and are without prejudice to the right of the other party. Should the other party plead surprise, he may obtain time to prepare adequate defense. Our modern-day tendency is to relax the technical rules of pleading in order to arrive at the truth, afford a litigant his day in court and avoid a miscarriage of justice."

Messersmith v. Messersmith, 229 La. 495, 86 So.2d 169, 178 (1956). "As the late Judge Robert Ellis of the First Circuit noted, 'prior to the time for the trial, it must be an uncommon case to justify denial of a motion to amend.' " Judge Albert Tate, Jr., Amendment of Pleadings in Louisiana, 43 TUL.L.REV. 211, 217 (1969).

Our courts have also recognized that reference to the federal materials is helpful and valid in determining whether a litigant should be allowed to amend his petition. See, Wallace v. Hanover Insurance Company of New York, 164 So.2d 111, 117 (La.App. 1st Cir.1964), writ denied, 165 So.2d 486 (La.1964).

A review of federal jurisprudence, as pointed out by appellant, indicates that the federal courts' concerns about amending pleadings are similar to those of Louisiana courts. For example, the federal courts require that leave of court be granted to amended answers where the mover can provide reasonable excuse for delay. See, Quaker State Oil Refining v. Garrity Oil Co. 884 F.2d 1510 (1st Cir.1989); see also, Hayes v. New England Millwork Distributors, Inc., 602 F.2d 15 (1st Cir.1979). In making their rulings, federal courts look to bad faith or absentmindedness and the resulting costs and delays incurred by the non-moving party. See, Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir.1981); see also, Zenith Radio Corp., v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971).

"In reversing as an abuse of discretion a trial court's failure to permit amendment, the United States Supreme Court in Foman v. Davis [371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) ] stated that leave to amend should always be given '[i]n the absence of any apparent or declared reason--such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.' With regard to the discretion the rule vests in the trial judge, the court further notes, 'outright refusal to grant the leave without any justifying reason appearing for the denial is not an exercise of discretion; it is merely abuse of that discretion and inconsistent with the spirit of the Federal Rules."

Tate, supra at 218.

The district court has broad discretion in ruling on motions to amend pleadings and its decision to grant or deny a motion should not be disturbed on appeal absent abuse of discretion. Roberts v. Murphy Oil Corp., 577 So.2d 308 (La.App. 4th Cir.1991...