Holt v. State Farm Fire & Cas. Co.

• Decision Date: 30 November 2010
• Docket Number: No. 09-30795,09-30795
• Citation: 627 F.3d 188
• Court: U.S. Court of Appeals — Fifth Circuit
• Parties: Eric HOLT, Plaintiff-Appellee, v. STATE FARM FIRE & CASUALTY CO., Defendant-Appellant.

627 F.3d 188

Eric HOLT, Plaintiff-Appellee,

v.STATE FARM FIRE & CASUALTY CO., Defendant-Appellant.

No. 09-30795.

United States Court of Appeals, Fifth Circuit.

Nov. 30, 2010.

Michael Charles Darnell (argued), Muray, Darnell & Associates, New Orleans, LA, for Holt.

Henry Gerard Terhoeve, Stephen Dale Cronin (argued), Guglielmo, Marks, Schutte, Terhoeve & Love, Baton Rouge, LA, for Defendant-Appellant.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BARKSDALE, STEWART and SOUTHWICK, Circuit Judges.

CARL E. STEWART, Circuit Judge:

We are asked in this appeal to consider whether a prescriptive statute in Louisiana retroactively applies to Plaintiff-Appellee Eric Holt's cause of action. Holt's home in New Orleans, Louisiana suffered extensive fire damage in January 2007, and he sought to recover payment under his homeowners policy with Defendant-Appellant State Farm Fire & Casualty Company (State Farm). Dissatisfied with State Farm's response to his claim, Holt filed suit against the insurer in February 2008. Between the time Holt's cause of action arose in January 2007 and his lawsuit in February 2008, the state legislature amended the applicable prescriptive statutes in the Louisiana insurance code. Previously, an insured had only 12 months from loss to file a suit; the amendment extended the prescriptive period to 24 months. State Farm moved the district court for summary judgment, arguing that Holt's suit was time barred and that he could not benefit from the extended prescription period. The district court denied the motion, concluding that the amended prescription period applied retroactively to Holt's claim. We affirm.

I.

A.

Holt was out of town when his property suffered extensive fire damage on or about January 17, 2007. When Holt returned to New Orleans and discovered the fire in February 2007, he contacted State Farm about his loss. State Farm refused to pay the claim. Holt sued State Farm in Louisiana trial court on February 12, 2008, and State Farm thereafter removed the suit to federal district court. Holt sought payment under his homeowners policy, as well as statutory penalties, general and specific damages, attorney's fees, and costs. State Farm denied liability. The insurance company also argued that Holt's claim was prescribed under both the contract and Louisiana insurance law.

In October 2008, State Farm moved for summary judgment on the basis of its prescription argument. State Farm argued that both the insurance policy and Louisiana insurance law required that Holt file his lawsuit within 12 months of January 17, 2007, the date his house suffered fire damage. Thus, because Holt's lawsuit was filed in February 2008, it was time barred. Holt opposed the motion, arguing that he benefitted from the 2007 amendment to the Louisiana insurance laws that extended the applicable prescription period from 12 months to 24 months. The amendment, Act 43 of 2007 (Act 43), became effective in mid-2007. Holt argued that because Act 43 went into effect before his cause of action had prescribed, the statute retroactively applied to his suit and extended the prescription period, thereby rendering his lawsuit timely filed. StateFarm countered that Act 43 could not be applied retroactively for two reasons: (1) it was a substantive law, and therefore, under Louisiana law, had prospective application only; and (2) even if it were not a substantive law and therefore capable of being applied retroactively, such application was unconstitutional. The district court denied State Farm's motion for summary judgment, concluding that Act 43 applied retroactively to Holt's claim. Finding that its order involved a controlling question of law as to which there was a substantial ground for difference of opinion, the district court certified the prescription issue for immediate appeal to this court. We granted State Farm leave to appeal, and have jurisdiction under 28 U.S.C. § 1292(b).

B.

The sole question presented in this appeal is whether Act 43, which extended the applicable prescription period in this case, applies retroactively to Holt's cause of action. Act 43 amended the prescriptive periods in two Louisiana insurance statutes: La.Rev.Stat. §§ 22:629(B) and 691(F). ¹ The previous version of § 22:629(B) provided that for specified types of insurance, including fire, an insurance policy could not limit a right of action against an insurer to less than 12 months after the inception of the loss. Similarly, the previous version of § 22:691(F) provided that a suit for recovery under the standard fire insurance policy in Louisiana had to commence within 12 months after the inception of the loss. Act 43 changed the prescriptive periods in both statutes from 12 months to 24 months. It went into effect on August 15, 2007.²

Finally, Holt's homeowners policy, which provided fire insurance to his property at all relevant times, specified that with respect to lawsuits against the insurer, "[t]he action must be started within one year after the date of loss or damage." The policy also stated that when a policy provision conflicted with the applicable state law, the state law would govern.

II.

We review a district court's grant or denial of summary judgment de novo, applying the same standard as the district court. Am. Int'l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 259-60 (5th Cir.2003) . Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The facts and evidence must be taken in the light most favorable to the non-movant. Am. Int'l Specialty, 352 F.3d at 260.

When, as here, jurisdiction is based on diversity, we apply the substantive law of the forum state. Erie R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). To determine Louisiana law, we look to the final decisions of Louisiana's highest court. Am. Int'l Specialty, 352 F.3d at 260. In the absence of a final decision by that court addressing the issue at hand, a federal court must determine, in its best judgment, how the state's highest court would resolve the issue if presented with it. Id. As the Louisiana Supreme Court has not addressedthe retroactive applicability of Act 43, the district court had to make an " Erie guess"; on appeal, we do the same, de novo.

III.

Article 6 of the Louisiana Civil Code sets out the governing rule of statutory construction applicable to this case. That article, titled "Retroactivity of laws," states:

In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretative laws apply both prospectively and retroactively, unless there is legislative expression to the contrary.

A court's application of Article 6 requires a two-fold inquiry.³

Cole v. Celotex Corp., 599 So.2d 1058, 1063 (La.1992). First, the court must ascertain whether in the enactment, the legislature expressed its intent regarding retroactive or prospective application. If the legislature did so, the judicial inquiry ends. If the legislature did not, the court must then classify the enactment as substantive, procedural, or interpretive.⁴

Id. at 1063. Substantive laws "either establish new rules, rights, and duties or change existing ones." Prejean v. Dixie Lloyds Ins. Co., 655 So.2d 303, 308 (La.1995). Procedural laws, in contrast, "describe the method of enforcing, processing, administering or determining rights, liabilities or status." Id. Thus, if a statute "merely prescribes the method of enforcing a right which previously existed or maintains redress for invasion of rights, it is classified as procedural." Id. Interpretive laws "merely establish the meaning that the interpretive statute had from the time of its enactment." Id.

As is clear from its text, Article 6 expressly authorizes the retroactive application of laws that a court deems procedural or interpretive. Indeed, the Louisiana Supreme Court over thirty years ago stated that according to its "consistent interpretation" of the Louisiana laws, procedural laws generally "will be given retroactive effect in the absence of language showing a contrary intention." Lott v. Haley, 370 So.2d 521, 523 (La.1979). "This jurisprudential rule is subject to the exception that procedural ... laws are not accorded retroactive effect where such retroactivity would operate unconstitutionally to disturb vested rights." Id.

In determining whether Act 43 applies retroactively to Holt's cause of action, we start with the first prong of the Article 6 inquiry: whether the legislature expressed its intent regarding retroactive or prospective application. A review of Act 43 shows that it does not contain a clear and unmistakable expression of such legislative intent. We thus proceed to the second prong of the inquiry to determine whether Act 43 is substantive, procedural, or interpretive.

In Louisiana, statutes of limitation are generally treated as procedural laws. Chance v. Am. Honda Motor Co., 635 So.2d 177, 178 (La.1994); see also Lott, 370 So.2d at 523 (same). Under this "well established principle of statutory interpretation," statutes of prescription generally apply to all actions instituted after theeffective date, even though the cause of action may have accrued before the enactment of the legislation. Chance, 635 So.2d at 178. The Louisiana Supreme Court has specified two exceptions to this rule of retroactivity for prescriptive statutes: the statute is not retroactive where such application would (1) strip a party of a vested right, or (2) revive an already prescribed cause of action. Lott, 370 So.2d at 523-24. With respect to the first, when a party acquires a right either to sue for a cause of action or to defend himself against one, that right becomes a vested property right and is protected by due process guarantees. Falgout v. Dealers Truck Equip. Co., 748 So.2d 399, 407 (La.1999). With respect...