Alexander v. General Acc. Fire & Life Assur. Corp., Ltd.

• Decision Date: 17 October 1972
• Docket Number: No. 11935,11935
• Citation: 268 So.2d 285
• Parties: Jack D. ALEXANDER, Plantiff-Appellee, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, LTD., Defendant- Appellant.
• Court: Court of Appeal of Louisiana — District of US

Page 285

268 So.2d 285

Jack D. ALEXANDER, Plantiff-Appellee, v. GENERAL ACCIDENT FIRE AND LIFE ASSURANCE CORPORATION, LTD.,

Defendant- Appellant.

No. 11935.

Court of Appeal of Louisiana, Second Circuit.

Oct. 17, 1972.

Mayer & Smith by Caldwell Roberts, Shreveport, for defendant-appellant.

J. C. Smith, Shreveport, for plaintiff-appellee.

Before AYRES, HEARD and HALL, JJ.

AYRES, Judge.

This is an action by the owner of an automobile to recover from his insurer the value of the car which is alleged to be a total loss from having been submerged in Toledo Lake. Charges for storage of the car were also sought as were penalties and attorney's fees for an alleged arbitrary refusal to pay the claim.

The car, to which a trailer was attached, rolled into the lake as plaintiff endeavored to load a boat on the trailer. The car remained afloat with its rear end above the water for approximately 30 minutes, after which it drifted some 20--30 feet from shore and sank in 15 feet of water, where it remained two hours or more while efforts were pursued to retrieve it.

After trial, the court found that the car was a total loss, for which plaintiff was awarded $4,150.00. The court further found that failure to pay the claim was arbitrary, capricious, and without probable cause, and awarded penalties at the rate of 12% On the aforesaid sum and $1,000.00 as attorney's fees. Defendant was allowed a credit of $321.00, which was determined by subtracting storage charges against defendant in the amount of $679.00 from the sum of $1,000.00 received as the salvage value of the automobile.

From a judgment in accordance with the aforesaid, defendant appealed.

Defendant-appellant assigns as error actions of the trial court in these respects: (1) in failing to find that plaintiff had breached the provisions of the insurance contract requiring an appraisal of plaintiff's loss; (2) in concluding that the car was a total loss; (3) in its determination of the car's value immediately preceding the accident; (4) in awarding penalties and attorney's fees; and (5) in assessing excessive storage charges.

As his first assignment of error, defendant contends that plaintiff is not entitled to any recovery under the policy on the ground that plaintiff breached his insurance contract by his failure and refusal, on demand, to submit to an appraisal of the loss allegedly sustained by him. Defendant maintains that an insured may not bring an action against an insurer until the insured complies fully with all the terms of the policy. To support the contention that plaintiff is not entitled to recover, defendant relies on the following policy provisions:

'No action shall lie against the company unless, as a condition precedent thereto, the insured shall have fully complied with all the terms of this policy, nor until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial by or written agreement of the insured, the claimant and the company.

'No action shall lie against the company unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this policy nor, under Part III, until thirty days after proof of loss is filed and the amount of loss is determined as provided in this policy.

'If the insured and the company failed to agree as to the amount of loss, either may, within 60 days after proof of loss is filed, demand an appraisal of the loss. In such event the insured and the company Shall each select a competent appraiser, and the appraisers Shall select a competent and disinterested umpire. The appraisers Shall state separately the actual cash value and the amount of loss and failing to agree Shall submit their differences to the umpire. An award in writing of any two shall determine the amount of loss. The insured and the company Shall each pay his chosen appraiser and shall bear equally the other expenses of the appraisal and umpire.

'The company shall not be held to have waived any of its rights by any act relating to appraisal.' (Emphasis supplied.)

In addition, defendant cites the following cases as authority that a clause in an insurance contract requiring appraisal of a loss is valid and enforceable. Hart v. Springfield Fire & Marine Ins. Co., 136 La. 114, 66 So. 558 (1914); Branch v. Springfield Fire & Marine Ins. Co., 198 La. 720, 4 So.2d 806 (1941); Martin v. Home Ins. Co., 16 La.App. 216, 133 So. 773 (1931); Girard v. Atlantic Mutual Insurance Company, 198 So.2d 444 (La.App., 4th Cir. 1967).

Asserting the invalidity of defendant's contentions, plaintiff maintains that the aforesaid policy provisions are ineffective in view of the declarations of the Insurance Code, LSA-R.S. 22:629, as amended and reenacted by Acts 1958, No. 125, which, so far as pertinent, recite:

'No insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state, shall contain any condition, stipulation, or agreement:

'Depriving the courts of this state of the jurisdiction of action against the insurer; . . .

Plaintiff moreover relies upon and urges as applicable Bergeron v. Gassen, 185 So.2d 106 (La.App., 4th Cir. 1966), and the provisions of LSA-R.S. 22:1406D(5) which state:

'The coverage required under this Subsection may include provisions for the submission of claims by the assured to arbitration; provided, however, that the submission to arbitration shall be optional with the assured, shall not deprive the assured of his right to bring action against the insurer to recover any sums due him under the terms of the policy, and shall not purport to deprive the courts of this state of jurisdiction of actions against the insurer.'

In the Bergeron case our brethren in the Fourth Circuit observed:

'Bergeron's policy with Gulf provides for arbitration of uninsured motorist claims. Compulsory arbitration is no longer permissible under Louisiana law. LSA-R.S. 22:1406; Spillman v. United States Fidelity And Guaranty Co., La.App., 179 So.2d 454; Macaluso v. Watson, La.App., 171 So.2d 755. However, insurance contracts may validly contain arbitration clauses, and LSA-R.S. 22:1406 specifically provides that Submission of a matter to arbitration is optional with the insured.' (Latter emphasis supplied.)

185 So.2d 106, 108.

At the outset, we note that the Bergeron case, as well as those cited in the passage quoted above, and LSA-R.S. 22:1406 are inapplicable to the present case, since the statute and the cases deal with arbitration of claims made under the uninsured motorist coverage provided for by LSA-R.S. 22:1406. In contrast, the present action was brought under the comprehensive coverage provisions for physical damage (excluding that caused by collisions). The principal dispute between plaintiff and defendant was whether the car was a total loss or repairable.

We find the appraisal clause in this policy, which contains the mandatory word 'shall' throughout, is violative of the provisions of LSA-R.S. 22:629 in that it has the effect of depriving the courts of this State of jurisdiction in an action against an insurer. The first three cases cited by defendant and listed above are inapplicable, since they were all decided prior to the enactment in 1948 of ...