Bohn v. Louisiana Farm Bureau Mut. Ins. Co.
| Decision Date | 22 January 1986 |
| Docket Number | No. 17380-CA,17380-CA |
| Citation | 482 So.2d 843 |
| Parties | J. Mack BOHN and Sheila Bohn, Plaintiffs-Appellees, v. LOUISIANA FARM BUREAU MUTUAL INSURANCE COMPANY, Defendant-Appellant, and Bank of Morehouse, Intervenor-Appellee. |
| Court | Court of Appeal of Louisiana — District of US |
Bruscato, Loomis & Street by Anthony J. Bruscato, Monroe, for plaintiffs-appellees J. Mack Bohn and Sheila Bohn.
Porteous, Hainkel, Johnson & Sarpy by Michael K. Fitzpatrick and Peter M. Meisner, New Orleans, for defendant-appellant Louisiana Farm Mut. Ins. Co.
Rankin, Yeldell, Herring & Katz by Stephen J. Katz, Bastrop, for intervenor-appellee Bank of Morehouse.
Before JASPER E. JONES, SEXTON and LINDSAY, JJ.
In this action to recover proceeds from a fire and extended coverage insurance policy, plaintiffs, J. Mack Bohn and Sheila Bohn, appeal from a trial court judgment awarding judgment against Louisiana Farm Bureau and in favor of plaintiffs for $35,000 for contents loss, along with penalties and attorney's fees. The judgment also awarded intervenor, Bank of Morehouse, the mortgagee of the damaged property, $30,000 for damage to the residential structure, plus interest and attorney's fees. Additionally, the judgment recognized the privilege for attorney's fees pursuant to a contract of employment between plaintiffs and their attorney on all amounts awarded except the award in favor of the Bank of Morehouse, with penalties and attorney's fees. Louisiana Farm Bureau has also appealed. Intervenor, Bank of Morehouse, has answered the appeals of plaintiffs and defendant seeking an increase in attorney's fees.
Both the facts and the procedural history involved in this complicated and protracted litigation must be set forth in cumbersome detail.
On January 24, 1981, Danny Ray Gentry and Paula Janice Gentry granted a lease on their residence in Bastrop, Louisiana to J. Mack Bohn and Sheila W. Bohn. The lease agreement contained an option to purchase clause wherein it was provided that the tenant was given the option to purchase the property for the sum of $46,229.73 cash. Furthermore, the lease agreement provided that the tenant agreed to provide insurance on the property to protect against destruction by fire, wind storm or other casualty up to the full insurable value of the property. It was also agreed in the lease that the fire insurance policy would name the landlord as the owner thereof. This document was recorded.
Also on January 24, 1981, the parties to the lease agreement executed a counter letter which purported to transfer the interest of Danny Ray Gentry and Paula Janice Gentry in the subject property to J. Mack Bohn and Sheila Weir Bohn. This document reflects that no assumption deed was executed at the request of J. Mack Bohn and Sheila Weir Bohn. Instead, a lease with option to purchase was executed in an attempt by J. Mack Bohn and Sheila Weir Bohn to circumvent the requirements of Bastrop Federal Savings and Loan Association with regard to the assumption and approval of the prospective vendee by the Savings and Loan Association. The testimony reflects that the parties agreed that the Bohns would pay a monthly note to the Gentrys, who would in turn, pay the mortgage indebtedness to Bastrop Federal.
On June 1, 1982, J. Mack Bohn procured the instant insurance policy, with limits of liability of $70,000 for structural damages, $7,000 for damage to any appurtenant structures, $35,000 for loss of unscheduled personal property, and $14,000 in additional living expenses. Listed on the policy as first mortgagee is Bastrop Federal Savings, which at the time of the transfer held two mortgages on the property, the first mortgage in the amount of $36,800, and the second in the amount of $12,000.
On November 9, 1982, fire damaged the plaintiff's residence. The fire investigative report indicated that a five gallon galvanized gas can was found inside the residence in the dining room area near the kitchen table. A small amount of gasoline was found in the can. The report also indicated that the entrance door in the carport had a window pane in the lower left corner broken out. The glass fragment pattern indicated that the window pane was broken inward.
Plaintiffs instituted this action on February 28, 1983 to recover the proceeds from the fire and extended coverage insurance policy plus penalties and attorney's fees from their insurer, Louisiana Farm Bureau Mutual Insurance Company. The defendant, Louisiana Farm Bureau, answered plaintiffs' petition affirmatively alleging that plaintiff's claim should be barred because the fire was of incendiary origin, and because the plaintiffs were guilty of fraud in that plaintiffs had attempted to deceive defendants as to the cause of the fire and the value of property claimed to be damaged. Subsequently, Bastrop Federal Savings and Loan Association intervened in this action alleging that it was the holder of the first and second mortgages on the property, was named as loss payee in the insurance policy and was, as a consequence, entitled to be paid for damages to the structure from the proceeds of the fire and extended coverage policy along with penalties and attorney's fees.
On June 14, 1983, Darl Markham pleaded guilty to attempted simple arson with intent to defraud. Markham testified that Danny Gentry offered him $1,000 to burn down plaintiffs' residence. Markham stated that after the fire, Gentry paid him $100. Louisiana Farm Bureau amended its answer to delete arson as a defense.
Following a lengthy trial, the trial court rendered written reasons for judgment concluding that although defendant's evidence "strongly suggested" fraud with regard to many individual items listed in plaintiff's contents claim, plaintiff's contents list exceeded the policy limit, $35,000, by some $10,000, and that defendant had failed to show an overvaluation to this extent. The trial court found that the amount of structural damage incurred was $30,000. Additionally, the trial court held that defendant acted arbitrarily and capriciously in failing to tender any payment to plaintiffs or intervenor at least from the date that defendant amended its answer to delete arson as a defense, September 1, 1983, and was consequently liable for penalties and attorney's fees. Plaintiffs' claim for additional living expenses was rejected.
After written reasons for judgment were filed, Bank of Morehouse was substituted as intervenor in this proceeding as it had purchased, pursuant to an act of assignment and transfer, the two promissory notes secured by the first and second mortgages on the subject property, as well as all claims and rights of action of intervenor, Bastrop Federal Savings and Loan Association, and its successor, Pelican Homestead and Savings Association.
Following the rendition of written reasons for judgment, counsel for plaintiffs filed a rule alleging that the fee due counsel for plaintiffs should be paid in preference to any and all other interests or claims in this matter. Later, counsel for plaintiffs intervened into the lawsuit asserting the privilege for attorney's fees pursuant to LSA-R.S. 9:5001, and alleged that the attorney's fees should be ranked as first privilege both on the amount of the judgment in favor of petitioners and, also on the amount of the judgment in favor of Bastrop Federal Savings and Loan Association and Louisiana Farm Bureau Mutual Insurance Company. Regarding these filings, the court held that plaintiffs' counsel had a privilege and priority of payment out of the award to plaintiffs, but that the preference and priority did not extend to the award made to intervenor for the structural damages to the insured premises.
The judgment herein was signed on December 4, 1983 but was not filed until January 17, 1984. Subsequent to the signing, but prior to the filing of the judgment, plaintiffs filed a pleading styled "Motion" alleging that the Bank of Morehouse filed suit by executory process against the Gentrys, seeking a writ of seizure and sale, and requesting that the sale be made without appraisement. The motion alleged that the property was sold for cash without benefit of appraisement to the Bank of Morehouse for $35,000. The motion further alleged that the property was then sold by cash deed to the Gentrys for $61,700. Through this motion, it was asserted that the Bank of Morehouse had no continuing interest in and to this policy of insurance or the proceeds therefrom because the mortgage had been extinguished and was fully satisfied and discharged.
Bank of Morehouse then filed an opposition to this motion alleging that plaintiffs' motion did not set forth any facts which showed that the claim was extinguished, arguing that the mortgagee was entitled to the proceeds of the policy due to the extent of his mortgage debt due at the time of the loss.
Subsequent to the filing of the judgment on January 17, 1984 and the reception of evidence on that same date with respect to intervenor's foreclosure on the subject property, plaintiff moved for a partial new trial on the same basis as that asserted in the pleading styled "Motion." The "Motion" and the motion for partial new trial were both thereafter denied and this appeal ensued.
As authorized by LSA-C.C.P. Art. 2163, 1 plaintiffs have filed in this court an "Peremptory Exception of No Right or Cause of Action." This exception basically reiterates the claims raised by plaintiffs in post-trial motions, i.e., that intervenor, Bank of Morehouse, has neither a cause of action nor a right of action herein because the mortgage indebtedness covering the property in question has been fully liquidated and extinguished due to foreclosure proceedings filed by the Bank of Morehouse, in which the property was seized and sold without benefit of appraisal. Thus, the threshold issue in this litigation is the effect of the foreclosure without benefit of appraisement on...
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