Hopkins v. Howard

• Decision Date: 05 April 2006
• Docket Number: No. 2005-CA-0732.,2005-CA-0732.
• Citation: 930 So.2d 999
• Parties: Sheila HOPKINS and Ronald Hopkins v. James P. HOWARD, Celadon Trucking Services, Inc. and Reliance National Insurance Company.
• Court: Court of Appeal of Louisiana — District of US

930 So.2d 999

Sheila HOPKINS and Ronald Hopkins v. James P. HOWARD, Celadon Trucking Services, Inc. and Reliance National Insurance Company.

No. 2005-CA-0732.

Court of Appeal of Louisiana, Fourth Circuit.

April 5, 2006.

Writ Denied June 23, 2006.

Stephanie B. Laborde, Angela W. Adolph, Milling Benson Woodward, L.L.P., Baton Rouge, Raymond C. Jackson, III, Allen & Gooch, Lafayette, Counsel for Defendant/Appellee the Louisiana Insurance Guaranty Association.

Daniel J. Caruso, James A. Burton, M. Davis Ready, Jeffrey J. Thomas, Simon Peragine Smith & Redfearn, LLP, New Orleans, Counsel for Defendant/Appellant Celadon Truck Services, Inc.

(Court composed of Judge PATRICIA RIVET MURRAY, Judge DENNIS R. BAGNERIS Sr., Judge MICHAEL E. KIRBY).

PATRICIA RIVET MURRAY, Judge.

This appeal is taken by the third party plaintiff, Celadon Trucking Services, Inc. ("CTSI"). CTSI appeals from the trial court's judgment dismissing the third party defendant, Louisiana Insurance Guaranty Association ("LIGA"), from this suit and awarding it defense costs, including attorney's fees. The principal issue presented is whether the trial court erred in its interpretation of La. R.S. 22:1379(3)(f), the net worth exclusion to the definition of a LIGA-covered claim. For the reasons that follow, we amend the judgment to delete the award of defense costs and, as amended, affirm.

FACTUAL, PROCEDURAL, AND STATUTORY BACKGROUND

The underlying facts in this case are undisputed. This case arises out of a rear-end collision that occurred in Orleans Parish on April 24, 1997. The accident occurred when the vehicle Sheila Hopkins was driving was rear ended by the truck James Howard was driving. At the time of the accident, Mr. Howard was acting in the course and scope of his employment with CTSI, and CTSI was insured under a commercial policy issued by Reliance National Insurance Company ("Reliance"). On October 9, 1997, Ms. Hopkins and her husband commenced this suit against Mr. Howard, CTSI, and Reliance.

In May 2001, the Commonwealth Court of Pennsylvania placed Reliance into rehabilitation. In October 2001, the Pennsylvania court declared Reliance insolvent and ordered it liquidated. Since Reliance's insured's (CTSI's) domicile was Indiana, claim files relating to pending claims against CTSI, including the Hopkins's claim, were tendered to the Indiana Insurance Guaranty Association ("IIGA"). Since Ms. Hopkins's domicile was Louisiana, IIGA forwarded this case to LIGA.¹ By letter dated July 31, 2003, LIGA notified IIGA that it was refusing to handle the claim, stating that "Louisiana has a Net Worth provision of $25 million, and the insured [(CTSI)] and affiliates exceed this figure. The Louisiana Guaranty Fund [(LIGA)] will not be involved in this case."² On August 14, 2003, the trial court issued an order dismissing Reliance from this suit and reserving the Hopkins's rights to pursue other parties to this litigation.

On July 15, 2004, CTSI and Mr. Howard filed a third party demand against LIGA, seeking indemnification and defense of this suit. LIGA answered the third party demand asserting as an affirmative defense the net worth exclusion, La. R.S. 22:1379(3)(f), and citing the recoupment provision, 22:1382(D). LIGA also filed a motion for summary judgment contending that there were no material issues of fact and that based on La. R.S. 22:1379(3)(f) it was entitled to judgment as a matter of law.

To understand the trial court's reasons for granting summary judgment in LIGA's favor, it is necessary to first provide a brief statutory background.

In 1969, the National Association of Insurance Commissioners ("NAIC") adopted a Model Act in an attempt to prevent insurance company failures from undermining the public's confidence in the insurance industry. The stated purpose of the Model Act was "to provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide an association to assess the costs of such protection among insurers." Model Act § 4 (1969). The NAIC recommended that each state establish an insurance insolvency fund to pay covered claims.

In 1970, the Louisiana Legislature adopted La. R.S. 22:1375-1394 (the "LIGA Law"). Although not expressly stated therein, the LIGA Law was taken almost verbatim from the Model Act, including the statement of purpose quoted above. Backhus v. Transit Casualty Co., 549 So.2d 283, 289 (La.1989). LIGA fulfills its purpose through the mechanism of paying covered claims, which are defined by statute. Despite the broadly stated purpose, "the Legislature has not deemed LIGA to be an all-purpose guarantor." Carey J. Guglielmo, The ABC's of LIGA, 53 La. L.Rev. 1759, 1763 (1993). Indeed, "the limitations of liability specified in the LIGA Law—the LIGA deductible, the liability cap, etc.—more often than not result in somebody losing money." Id. at 1762.

In 1999, the Louisiana Legislature added a new limitation on LIGA's liability: a net worth exclusion. Act No. 475 of 1999 enacted the following net worth exclusion to the definition of a "covered claim":

"Covered claim" shall not include any claim by any insured whose net worth exceeds twenty-five million dollars on December thirty-first of the year immediately preceding the date of the determination of the insolvency of the insurer. However, an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis. An insured for the purposes of this provision shall not include any state or local governmental agency or subdivision thereof.

La. R.S. 22:1379(3)(f)(as enacted by Act No. 475 of 1999)(emphasis supplied).³ We refer to an insured whose net worth exceeds the statutory cap as a "high net worth" insured.

Act No. 475 of 1999 was a comprehensive package that included not only the above net worth exclusion, but also two other provisions; to-wit: (i) a recoupment provision that allows LIGA to recover for claims it paid on behalf of a high net worth insured, La. R.S. 22:1382(D); and (ii) an exemption from LIGA assessment for premiums paid by a high net worth insured, La. R.S. 22:1382(A)(3)(f). Act No. 109 of 2004 made parallel changes to all three of the statutes included in the package. The 2004 amendment, among other things, added a definition of the term "affiliate" to La. R.S. 22:1379(3)(f), the net worth exclusion.⁴

Citing the 2004 amendment, the trial court granted LIGA's motion for summary judgment. The trial court in its written reasons for judgment reasoned as follows:

1. Act 109 of the 2004 Regular Legislative Session, defining the term "affiliate" in Louisiana Revised Statutes 22:1379(3)(f) and 22:1382(A)(3)(f), is interpretive and therefore is to be given retroactive application.

2. Act 109 of the 2004 Regular Legislative Session defines "affiliate" to include any person or entity who controls or is controlled by or is under common control with the insured, whether through the ownership of voting securities or otherwise. This definition includes a parent company of the insured.

3. Accordingly, Celadon Group, Inc., the parent company of Celadon Trucking Services, Inc., is an "affiliate" of Celadon Trucking Services, Inc.

4. Therefore, the net worth on December 31, 2001⁵ of Celadon Group, Inc., along with all of the other affiliates of Celadon Trucking Services, Inc., calculated on a consolidated basis, is the appropriate standard to determine whether the aggregate net worth of Celadon [Trucking Services, Inc.] and its affiliates exceeds $25,000,000.00.

5. LIGA has proved, to the satisfaction of the Court, that the net worth of Celadon Group, Inc., alone, far exceeds the $25,000,000 net worth exception to the definition of a "covered claim" as to LIGA, contained in Louisiana Revised Statute 22:1379(3)(f).

Citing La. R.S. 22:1382(D), as amended in 2004, the trial court further found that CTSI is "obligated to reimburse LIGA for the reasonable costs incurred in the defense of this claim, including attorney['s] fees, administrative costs, court costs, and all costs associated with bringing the instant Motion."

CTSI has appealed the judgment, arguing that the trial court erred in retroactively applying the 2004 amendments to the LIGA statutes.

STANDARD OF REVIEW

"Favored in Louisiana, the summary judgment procedure `is designed to secure the just, speedy, and inexpensive determination of every action' and shall be construed to accomplish these ends." King v. Parish Nat'l Bank, 2004-0337, p. 7 (La.10/19/04), 885 So.2d 540, 545 (quoting La. C.C.P. art. 966(A)(2)). An appellate court reviews a trial court's decision granting summary judgment de novo using the same standard applied by the trial court in deciding the motion for summary judgment. Schmidt v. Chevez, 2000-2456, p. 4 (La.App. 4 Cir. 1/10/01), 778 So.2d 668, 670. According to this standard, a summary judgment shall be granted if 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 material fact, and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B); Schmidt, 2000-2456 at p. 3, 778 So.2d at 670. This case does not turn on whether there is a matter of material fact; rather, this case turns on the meaning given to the wording of a statute. See Louisiana Horsemen's Benevolent and Prot. Ass'n 1993, Inc. v. Fair Grounds Corp., 2002-1928, p. 3 (La.4/9/03), 845 So.2d 1039, 1041.

DISCUSSION

As to the award for reimbursement of costs, including attorney's fees, court and associated costs, we agree with CTSI that the 2004 amendment authorizing LIGA's recovery of defense costs, including attorney's fees,...