94 0004 La.App. 1 Cir. 12/22/94, Hogan v. State Farm Auto. Ins. Co.
| Decision Date | 22 December 1994 |
| Citation | 649 So.2d 45 |
| Parties | 94 0004 La.App. 1 Cir |
| Court | Court of Appeal of Louisiana — District of US |
Mickey S. deLaup, Metairie, for plaintiffs/appellants.
Lynn H. Frank, New Orleans, for defendant/appellee.
Before EDWARDS, SHORTESS and LeBLANC, JJ.
[94 0004 La.App. 1 Cir. 2] LeBLANC, Judge.
Plaintiffs appeal a summary judgment dismissing their suit against defendant, State Farm Mutual Automobile Insurance Company (State Farm), seeking compensatory and punitive damages under California law for State Farm's alleged bad faith refusal to pay any portion of its policy limits. Plaintiffs' primary arguments on appeal are that the trial court erred in allowing State Farm to amend its answer to assert the affirmative defense of credits and in granting summary judgment to State Farm on the basis of this defense.
This litigation arises out of the death of Kenneth L. Hogan. On March 16, 1980, Mr. Hogan, a resident of California allegedly in Louisiana for business reasons, was struck by an automobile as he was walking on Front Street in Slidell, Louisiana. He died five days later. On November 26, 1980, Rena Hogan, Mr. Hogan's widow, and his three major daughters filed a wrongful death action against a number of defendants, including: Mr. Oliver Owens, the driver of the automobile that struck Mr. Hogan; Dairyland Insurance Company (Dairyland), Mr. Owens' liability insurer; and State Farm, Hogan's uninsured motorist carrier. Owens and Dairyland were dismissed from the litigation on September 20, 1982, following Dairyland's payment of its policy limits of $5,000.00 to plaintiffs.
Also during September of 1982, affidavits were filed into the record by Rena Hogan and her attorney, Stephen N. Elliott, establishing that a settlement of a worker's compensation claim against Mr. Hogan's alleged employer, Midwestern Distribution, Inc. (Midwestern), had been reached. It is undisputed that the settlement amount was $10,000.00.
In October of 1982, plaintiffs' claims against another insurer, Excalibur Insurance Company (Excalibur), which allegedly provided uninsured motorist coverage to the decedent, were settled [94 0004 La.App. 1 Cir. 3] for $10,000.00, following which Excalibur was dismissed from the suit. Eventually, all defendants except State Farm were dismissed.
On February 26, 1985, plaintiffs amended their petition seeking penalties, interest and reasonable attorney's fees, alleging that State Farm "... arbitrarily and capriciously refused and/or failed to pay its policy limit or a portion thereof 'without strings attached' and has refused to negotigate (sic) settlement of this matter in good faith." Plaintiffs later amended the petition again, alleging bad faith by State Farm and seeking compensatory and punitive damages under California law.
In April of 1985, State Farm deposited $10,000.00 into the court registry and sought a summary judgment in its favor. State Farm contended that the $10,000.00 payment satisfied its obligations under the policy; State Farm asserted that its policy limits were $15,000.00 and that, pursuant to California law, State Farm was entitled to deduct the $5,000.00 payment by Dairyland (representing payment by the alleged tortfeasor) from its obligation to the insured.
At this point in the litigation, the parties agreed that California law was applicable to the issue of State Farm's contractual liability under the policy. 1 However, the trial court denied State Farm's motion for summary judgment finding unresolved issues regarding the policy limits, whether State Farm owed legal interest and whether it was liable for penalties and attorney's fees.
On December 3, 1985, judgment was rendered allowing plaintiffs to withdraw the $10,000.00 that had been deposited into the court registry without prejudicing their claims against State Farm. In July of 1986, State Farm again filed a motion for summary judgment, [94 0004 La.App. 1 Cir. 4] contending the $10,000.00 payment had satisfied its obligation under the policy. Plaintiffs opposed the motion, contending State Farm should not be entitled to deduct the $5,000.00 payment by the tortfeasor from the $15,000.00 policy limits, and arguing that additional sums were owed to plaintiffs for punitive damages, attorney's fees and interest. During December of 1986, the trial court rendered judgment, denying State Farm's motion for summary judgment, concluding in its reasons for judgment that there were unresolved issues regarding legal interest and imposition of attorney's fees.
In November of 1990, State Farm again filed a motion for summary judgment. In support of this motion, State Farm argued that California law "allowed [it] to deduct from the face value of its UM coverage any amounts that the UM claimant receives (1) from the tort-feasor, (2) from a worker's compensation plan, and (3) from other UM carriers." More specifically, State Farm argued that its liability pursuant to the uninsured motor vehicle coverage should not only be reduced by the $5,000.00 sum which was paid by Dairyland, the alleged tortfeasor's liability insurer, but should also be reduced by the sum of $10,000.00, the amount received by Mrs. Hogan from Midwestern, in settlement of her suit for worker's compensation benefits. State Farm further argued that its liability should be reduced by payments made to plaintiffs pursuant to other insurance policies providing uninsured motorist coverage. Thus, State Farm argued that it was also entitled to a reduction as a result of the $10,000.00 payment to plaintiffs by Excalibur, another insurer which allegedly provided UM coverage.
Since the payments made by Dairyland, Midwestern Distribution and Excalibur totalled more than $15,000.00 and were all paid to plaintiffs during 1982, State Farm urged that its obligation to plaintiffs was extinguished during that year. State Farm contended that it actually did not have any obligation to plaintiffs under [94 0004 La.App. 1 Cir. 5] the policy when the $10,000.00 payment was made during 1985; it asserts that the money was paid in error. 2 Although State Farm denied that any interest was owed to plaintiffs, it argued that if any interest was due to plaintiffs, the $10,000.00 payment to plaintiffs in 1985 was more than enough to satisfy any obligation due for interest. State Farm did not seek return of any part of the $10,000.00 payment.
By judgment dated April 1, 1991, the trial court granted State Farm's motion for summary judgment and dismissed plaintiffs' claims with prejudice. Plaintiffs appealed arguing the amount tendered by State Farm in 1985 was insufficient to satisfy its obligations under the policy. This Court reversed, concluding the trial court erred in considering the issue of credits since State Farm had not affirmatively plead this defense. Hogan v. State Farm Auto. Ins. Co., 607 So.2d 747 (La.App. 1st Cir.1992). We further held that:
When no consideration is given to State Farm's claim for credits for the amounts paid by Midwestern and Excalibur, the record clearly establishes that State Farm's potential liability under the UM policy is $10,000.00 (the $15,000.00 policy limits reduced by the $5,000.00 payment by Dairyland), which amount has already been paid by State Farm into the court registry and received by plaintiffs. Although State Farm has already paid this sum to plaintiffs, we note that no interest on this sum was tendered into the court registry or paid to plaintiffs. Louisiana jurisprudence clearly establishes that legal interest is due on amounts due under a UM policy from the date of judicial demand until tender of the amount due under the policy. Accordingly, we conclude that State Farm's $10,000.00 tender in 1985, with no additional amount to cover the legal interest that would have accrued on that sum from the date of judicial demand, November 26, 1980, was insufficient to satisfy its obligations to plaintiffs. Accordingly, based on the record before us, we conclude that the summary judgment was not proper and we remand for further proceedings consistent with this opinion.
(Citations and footnotes omitted). 607 So.2d at 751-752.
[94 0004 La.App. 1 Cir. 6] ACTION OF TRIAL COURT
Upon remand, the trial court granted State Farm's motion for leave to amend its answer to plead the affirmative defenses of credit and extinguishment. Upon amending its answer, State Farm filed another motion for summary judgment. Plaintiffs responded with a motion to strike the amended answer and an opposition to the motion for summary judgment. While refusing to concede it owed any additional amount to plaintiffs, State Farm deposited $9,392.38 into the court registry to cover any interest which might be due, pending the outcome of its motion for summary judgment, in what it described as a "good faith" effort to resolve this matter. Plaintiffs were subsequently allowed to withdraw these funds.
On January 29, 1993, the trial court denied State Farm's motion for summary judgment, finding there were unresolved issues regarding the amount of interest owed and whether State Farm owed punitive damages under California law. The court also denied plaintiffs' motion to strike State Farm's amended answer. Pursuant to motion by State Farm, the trial court thereafter granted a new trial on State Farm's motion for summary judgment. After a second hearing, the trial court rendered summary judgment in favor of State Farm, relying on Rangel v. Interinsurance Exchange, 4 Cal.4th 1, 14 Cal.Rptr.2d 783, ...
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