Dupree v. Lafayette Ins. Co..

• Decision Date: 30 November 2010
• Docket Number: No. 2009-C-2602.,2009-C-2602.
• Citation: 51 So.3d 673
• Parties: Charles DUPREE v. LAFAYETTE INSURANCE COMPANY.
• Court: Louisiana Supreme Court

51 So.3d 673

Charles DUPREE

v.LAFAYETTE INSURANCE COMPANY.

No. 2009-C-2602.

Supreme Court of Louisiana.

Nov. 30, 2010.

Bernard, Cassisa, Elliott & Davis, Howard Bruce Kaplan, Metairie, Wegmann & Adams, LLC, Orr Adams, Jr, William John Wegmann, Jr., Metairie, for Applicant.

Murphy, Rogers, Sloss & Gambel, Gary Joseph Gambel, Robert Hugh Murphy, Donald Ray Wing, New Orleans, Willis & Buckley, APC, Samuel Olliphant Buckley, III, Jennifer Willis, New Orleans, for Respondent.

GUIDRY, Justice.^*

**1 We granted Lafayette Insurance Company's writ application in this class action lawsuit arising out of Hurricane Katrina to determine whether the lower courts correctly applied the standards for analyzing class certification set forth in Louisiana Code of Civil Procedure art. 591 et seq. After reviewing the record and the applicable law, we conclude the lower courts, under the facts of this case, erred in finding that common questions of law or fact exist, that substantive questions common to members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available procedural methods for the fair and efficient adjudication of the controversy. Accordingly, for the reasons set forth below, we reverse the judgment of the trial court certifying the class.

FACTS AND PROCEDURAL HISTORY

On August 29, 2005, Hurricane Katrina struck the Gulf Coast, causing widespread damage as a result of both wind and storm surge. The named plaintiff and additional named representatives are residents of St. Bernard Parish, whose homes were insured under homeowner policies issued by the defendant, Lafayette Insurance **2 Company [hereinafter "Lafayette"]. The original petition filed by Charles Dupree on November 23, 2005, alleges the plaintiffs experienced wind damage to their properties as a result of the hurricane.¹ The petition further alleges the plaintiffs made timely claims under their respective Lafayette policies but Lafayette denied or expressed an intent to deny coverage for the wind damage, by contending incorrectly that the roof damage, structural damage, and other damage to their properties were flood related and not caused by a covered peril, namely wind. The petitionspecifically alleges Lafayette "systematically, intentionally and improperly denied [their] wind damage claims and [ ] purposely made up, fabricated and concocted unsupported (and sometimes incredible) theories, reasons and/or excuses for refusing to cover damage that was caused by wind." Orig. Pet., Para. VIII. The petition also alleges Lafayette "has misapplied the terms of its own policies by making improper deductions from [the plaintiffs'] claims." Id. The petition further alleges Lafayette sought to force and coerce the plaintiffs into accepting settlements on their claims that Lafayette knew were unfair, unrealistically low, and inaccurately reflected the damage caused by the wind or the cost of repairing the wind damage. The petition also alleges Lafayette took advantage of the plaintiffs' personal problems and adversity to make minimal and inadequate offers. The petition next alleges Lafayette took advantage of its superior bargaining position, breached its duty of good faith and fair dealing, and breached its affirmative duty to adjust claims fairly and timely "by misrepresenting pertinent facts relating to the insurance coverage provided...." Orig. Pet., Para. XI. These actions, the petition alleges, constituted bad faith and give rise to a cause of action for double damages, penalties, attorney's fees, expenses and costs under Louisiana law, including those under La.Rev.Stat. 12:1220.

**3 With regard to the class, the petition asserts that hundreds of residents were damaged and continue to be damaged as a result of Lafayette's conduct "in denying and/or misadjusting and/or coercing [the plaintiffs] into accepting inadequate settlements." Orig. Pet., Para. XIII. The petition asserts the predominate questions will be: (1) "Whether wind damage claims (a covered cause of loss) were systematically, intentionally and/or improperly denied and/or intentionally under-valued and under-assessed by [Lafayette];" and (2) "Common facts arising out of the concerted and centrally directed claims adjusting practices implemented by [Lafayette]." Orig. Pet., Para XIV. The First Supplemental and Amended Petition added Robert Barback, Dennis and Lucy Juneau, and Gordon Smith as named representatives.² The Supplemental Petition also sought compensatory damages, pre-judgment interest, and all costs including attorney fees.

In the motion for class certification filed on March 31, 2006, pursuant to La.Code Civ. Proc. art. 592, the plaintiffs sought a class to be defined as "All persons whose property, located in Louisiana and covered by an insurance policy issued by defendant, sustained wind damage in connection with Hurricane Katrina on or about 29 August 2005 and whose claim for wind related damage to their property has been denied, in toto or partially, or misadjusted by Lafayette Insurance Company and/or its adjusters and/or other representatives." ³ The plaintiffs asserted the proposed class satisfied the prerequisites set forth in Louisiana Code of Civil Procedure Articles 591(A) and (B). A hearing on the class certification issue was conducted on July 10, **4 11, and 14, 2008. The matterwas submitted for decision after receipt of all post-trial memoranda, and on August 13, 2008, the trial court rendered a judgment granting the plaintiffs' motion for class certification, certifying a class that included commercial policies. Lafayette filed a Motion for New Trial or alternatively to limit the class to homeowner's policies, which the trial court granted.

The trial court, after amending its initial judgment to delete commercial policies, certified the class and issued the following class definition:

All persons whose property is located in St. Bernard, Plaquemines, Orleans, St. Tammany, Jefferson, St. Charles, Tangipahoa and Terrebonne Parishes Louisiana and covered by a homeowner's insurance policy issued by Lafayette Insurance Company, sustained wind damage in connection with Hurricane Katrina on or about the 29th of August 2005 and whose policy for benefits related to wind damage to their property has been denied in toto or partially misadjusted by Lafayette Insurance Company and/or its representatives by:

1. By using repair estimates, whether derived by Xactimate or other means to use pre-Katrina pricing information to adjust claims that are lower than the higher post Katrina prices of goods and services.

2. By excluding in the repair or replacement estimates for roofs damaged by failing to include the cost of overhead and/or profit where a General Contractor is to be used or circumstances require, the inclusion of overhead and profit.

3. By failing to include the cost of permits and sales tax in repair estimates used to adjust claims.

4. By failing to properly adjust additional living expense's loss [sic] when the relocation or displacement resulting from windstorm required the insured to relocate and thereby incurred additional living expense.

5. By failing to properly adjust civil authority claims to recognize that the coverage is available when the damage to adjacent property from wind results in the civil authority to prohibit entry or occupancy of the insured property, whether the insured property itself is damaged by wind or not.

6. By failing to pay claims within the prescribed statutory period of 30 or 60 days after satisfactory proof of loss when such loss is arbitrary, capricious and without probable cause.

Lafayette appealed the trial court's ruling, and the court of appeal affirmed. **5 Dupree v. Lafayette Ins. Co., 09-0321 (La.App. 4 Cir. 10/14/09), 41 So.3d 483. The appellate court found no reversible error in certifying the class; however, it did find a "problem" with the definition of the class, and it remanded the case to the trial court with instructions to remove the language "when such is arbitrary, capricious and without probable cause" from Item 6 in the trial court's class definition.⁴ We granted Lafayette's writ application to review the correctness of the lower courts' rulings. Dupree v. Lafayette Ins. Co., 09-2602 (La.5/21/10), 36 So.3d 220.

APPLICABLE LAW

The requirements for a class action in Louisiana have been thoroughly discussed in several recent decisions of this court.See Brooks v. Union Pacific R. Co., 08-2035 (La.5/22/09), 13 So.3d 546; Banks v. New York Life Ins. Co., 98-0551 (La.7/2/99), 737 So.2d 1275 (on rehearing); Ford v. Murphy Oil U.S.A., Inc., 96-2913 (La.9/9/97), 703 So.2d 542. The legislature in 1997 extensively revised Louisiana Code of Civil Procedure Article 591 et seq., essentially adopting current federal law, Fed. Rule Civ. Proc. 23, and codifying this court's class certification jurisprudence.⁵ Because this suit was filed in 2006, this court is called upon to apply **6 the revised Louisiana codal articles on class actions.

As we recently explained in Brooks, a class action is a nontraditional litigation procedure that permits a representative with typical claims to sue or defend on behalf of, and stand in judgment for, a class of similarly situated persons when the question is one of common interest to persons so numerous as to make it impracticable to bring them all before the court. 08-2035, pp. 10-11, 13 So.3d at 554 (citing Ford, 98-2913, 703 So.2d at 544). The purpose and intent of the class action procedure is to adjudicate and obtain res judicata effect on all common issues applicable not only to persons who bring the action, but also to all others who are "similarly situated." Id.

Whether a class action meets the requirements imposed by law involves a "rigorous analysis." Brooks, 08-2035, p. 10, 13 So.3d at 554. Such an analysis, this court has explained, requires the trial court "to evaluate, quantify and weigh the relevant factors to determine to what...