Champion v. Farm Bureau Ins. Co.

• Decision Date: 17 November 1977
• Docket Number: No. 6143,6143
• Citation: 352 So.2d 737
• Parties: Von Elton CHAMPION, Plaintiff-Appellant, v. FARM BUREAU INSURANCE COMPANY, Defendant-Appellee.
• Court: Court of Appeal of Louisiana — District of US

Page 737

352 So.2d 737

Von Elton CHAMPION, Plaintiff-Appellant, v. FARM BUREAU INSURANCE COMPANY, Defendant-Appellee.

No. 6143.

Court of Appeal of Louisiana, Third Circuit.

Nov. 17, 1977.

Rehearing Denied Dec. 14, 1977.

Writ Refused Feb. 10, 1978.

Kelly & Ware by Donald G. Kelly, Natchitoches, for plaintiff-appellant.

Plauche, Smith, Hebert & Nieset by A. Lane Plauche, Lake Charles, for defendant-appellee.

Before HOOD, CULPEPPER and GUIDRY, JJ.

HOOD, Judge.

Von Elton Champion seeks to recover from Louisiana Farm Bureau Mutual Insurance Company (Farm Bureau) that part of a money judgment rendered against him which is in excess of the limits provided in a liability policy issued by defendant, plus damages and attorney's fees. Judgment was rendered by the trial court in favor of defendant. Plaintiff appealed. We affirm.

The issues presented are: (1) Did defendant breach its duty or contractual obligation to plaintiff by failing to settle a tort action then pending against Champion by paying to the claimant the maximum limits provided in the liability policy which defendant had issued to plaintiff? (2) Did defendant breach its contractual obligation to Champion by failing to defend him in the above tort action?

This suit is a sequel to the case of Walker v. Champion, 274 So.2d 840 (La.App. 3 Cir. 1973), which was later reversed by the Supreme Court. See Walker v. Champion, 288 So.2d 44 (La.1974).

In 1972, Terry Wayne Davis sustained injuries which resulted in the loss of an eye. A suit for damages was instituted in Davis' behalf by his natural tutrix, Mrs. Dimple Hardee Walker, against Barry DeBlieux, Champion and the latter's insurer, Farm Bureau. Davis was emancipated by marriage while the suit was pending. On September 15, 1972, the trial court rendered judgment in favor of Davis and against all defendants, in solido, for the sum of $100,000.00, but limiting the liability of Farm Bureau to the policy limits of $50,000.00, plus $500.00 in medical expenses, or a total of $50,500.00. The defendants appealed.

The appeal was argued before this court on January 29, 1973. We rendered judgment on March 12, 1973, amending the trial court judgment by reducing the award from $100,000.00 to the sum of $35,000.00. Davis applied for a rehearing which we denied on April 1, 1973. (See 274 So.2d 840).

On April 6, 1973, Davis gave Notice of Intention to apply to the Supreme Court for Writs, and he in fact filed his application for a Writ of Review on April 25, 1973. The writ was granted on May 29, and the case was argued before the Supreme Court on November 1, 1973. The Supreme Court, by judgment rendered on December 3, 1973, reversed the judgment of the Third Circuit Court of Appeal and reinstated the judgment of the district court. Defendants' application for a rehearing was denied a few weeks later.

Shortly after the Supreme Court judgment became final, defendant Farm Bureau paid the sum of $59,443.33 to Davis, as the full amount owed by Farm Bureau under its policy and under the judgment rendered against it, with interest and costs. Davis thereupon executed a receipt and release, relieving Farm Bureau from any further obligation under the judgment, but reserving his rights against the other defendants, DeBlieux and Champion.

Champion then made demand on Farm Bureau for the amount of the excess judgment which was rendered against him, and for attorney's fees and damages. Defendant rejected that demand, and the instant suit was filed by Champion on May 22, 1974. In the instant suit judgment was rendered by the trial court in favor of defendant, and Champion appealed. It is that appeal which is before us now.

Plaintiff alleges, as the basis for its principal demand, that on April 13, 1973, Davis offered to settle his entire claim against Champion and Farm Bureau for the policy limits, plus interest and costs, but that the offer was refused by Farm Bureau, the latter offering to pay no more than the amount of the Court of Appeal judgment. Champion contends that Farm Bureau breached its obligation under the policy, and that it was negligent, arbitrary and capricious in its failure and refusal to settle the claim within the policy limits. He claims that as a result of the insurer's negligence, plaintiff has suffered substantial damages. He prays for judgment against Farm Bureau for the aggregate sum of $211,081.81.

The evidence shows that the only opportunity which Farm Bureau had to settle Davis' claim for the policy limits of $50,500.00, was in response to an offer made by or in behalf of Davis on April 13, 1973. On that date, counsel for Davis wrote to Champion's attorney, as follows:

"My clients will, at this time, accept the policy limits of the insurer of Mr. Champion, Louisiana Farm Bureau Mutual Insurance Company, with interest on sums payable under the policy, and for payment of cost."

The above offer was made after the Third Circuit Court of Appeal had reduced the award of damages to $35,000.00, and before the Supreme Court reinstated the trial court award of $100,000.00. The offer was communicated to defendant's attorney, but Farm Bureau refused to pay more than the amount awarded by the Court of Appeal. Davis' offer to settle for policy limits thus was rejected.

Two offers to settle were made by Davis prior to the time the case was tried in the district court, but both of those offers were for more than the policy limits. One such offer was made on July 18, 1972, when Davis indicated that he would accept $75,000.00 as a compromise settlement. The other was made on August 25, 1972, when he offered to accept $85,000.00 in settlement of his claim. Champion testified, however, that in both instances he was unable or unwilling to pay the excess over the policy limits. The case thus could not have been settled even if Farm Bureau had been willing to pay its policy limits.

The record contains some letters from counsel for Farm Bureau to counsel for Champion, in which the former expressed the view several times before the case was eventually concluded that Davis' claim had a judgment value of about $15,000.00 to $20,000.00, and that a fair settlement figure of the claim would not exceed $20,000.00. As far as we have been able to determine, Champion did not disagree with that view at any time before judgment was rendered by the court of appeal.

Champion contends here that on or shortly after April 13, 1973, Farm Bureau breached its duty to him, and was negligent, arbitrary and capricious, in refusing to pay its policy limits of $50,500.00 to settle Davis' claim, even though there was outstanding at that time a final judgment of the Court of Appeal decreeing that Farm Bureau was liable only for $35,000.00.

A liability insurer is not required to settle a claim against its insured within the policy limits, under penalty of absolute liability for any excess judgment which may be rendered against the insured. The insurer, however, may be liable to its insured for the excess of the policy limits for which the insured is cast, where the insurer's failure to accept an offer of compromise within policy limits is not in good faith, or is arbitrary or capricious under the circumstances. Younger v. Lumbermens Mutual Casualty Company, 174 So.2d 672 (La.App. 3 Cir. 1965); Cousins v. State Farm Mutual Automobile Insurance Co., 294 So.2d 272 (La.App. 1 Cir. 1974).

A determination as to what constitutes a breach of contract, negligence or bad faith, depends on the facts and circumstances of each case, and a number of factors may be considered by the court in making that determination. Roberie v. Southern Farm Bureau Casualty Insurance Company, 250 La. 105, 194 So.2d 713 (1967).

In the instant suit, the trial judge found that Farm Bureau was not arbitrary, capricious or in bad faith in failing to settle Davis' claim under the April 13, 1973, offer, and that that insurer thus is not liable to Champion for the amount of the excess judgment. The judge said:

"This Court has studied the jurisprudence concerning quantum of eye injury cases prior to the Terry Wayne Davis case and finds that Farm Bureau was not arbitrary, capricious nor in bad faith in failing to settle Von Elton Champion's (Davis') claim for the policy limits."

We agree with the conclusions which were reached by the trial court.

When the judgment rendered in the Davis case was before us for review, we concluded that the award made by the trial judge was excessive and that the judge had abused his discretion in making that award. Numerous cases were cited by plaintiff and defendant to support their arguments as to quantum, but we...