King v. Illinois Nat. Ins. Co.

• Citation: 9 So.3d 780
• Decision Date: 03 April 2009
• Docket Number: No. 2008-C-1491.,2008-C-1491.
• Parties: Karen KING v. ILLINOIS NATIONAL INSURANCE COMPANY, et al.
• Court: Louisiana Supreme Court

9 So.3d 780

Karen KING v. ILLINOIS NATIONAL INSURANCE COMPANY, et al.

No. 2008-C-1491.

Supreme Court of Louisiana.

April 3, 2009.

Rehearing Denied May 22, 2009.

The Sentell Law Firm, C. Sherburne Sentell, III, Minden, For Applicant.

Degan, Blanchard & Nash, Sidney Wallis Degan, III, Travis Louis Bourgeois, Baton Rouge, For Respondents.

GUIDRY, Justice.

We granted certiorari in this matter to address the res nova issue of whether an individual's unexercised right to institute litigation through the filing of a lawsuit can be seized by a writ of fieri facias. For the reasons that follow, we find the court of appeal properly concluded a cause of action on which suit has not yet been filed is a strictly personal right and, as such, not subject to seizure. Accordingly, the court of appeal's ruling reversing the trial court and granting summary judgment in favor of and dismissing the defendants, Illinois National Insurance Company (hereafter, "Illinois National") and American International Group, Inc., a/k/a AIG Specialty Auto (hereafter, "AIG"), is affirmed.

FACTS AND PROCEDURAL HISTORY

Rendering of Excess Judgment

On January 13, 1998, Annessa Monique Theus, while operating a vehicle insured by Illinois National, made a left turn in front of and collided with a vehicle in which the plaintiff, Karen King, was a guest passenger. Less than four months after the accident, the plaintiff provided to AIG, Illinois National's independent adjuster, medical documentation evidencing soft tissue and extensive dental injuries sustained when she was thrown into the windshield of the vehicle she was occupying.¹ The plaintiff was subsequently unsuccessful in her proactive efforts to settle her bodily injury claim with Illinois National for the $10,000.00 policy limits in exchange for a full release of the insurer and Ms. Theus from any further liability.

Following a bench trial on the merits, Ms. Theus was assessed total liability for the accident. The plaintiff was awarded a judgment in the amount of $74,111.86.² Since Illinois National was given a $10,000.00 credit representing the policy limits tendered shortly before the trial, an excess judgment was rendered against Ms. Theus in the amount of $64,111.86. On appeal, the general damages portion of the award was increased by an additional $15,000.00, thereby making the excess amount owed by Ms. Theus $79,111.86. King v. Illinois Nat'l Ins. Co., 34,473 (La. App. 2 Cir. 2/28/01), 782 So.2d 1104.

Issuance of Writ of Fieri Facias

Subsequently, this Court denied supervisory writ applications filed by the plaintiff seeking an increase in the general damage award and Ms. Theus contesting the issue of liability. See King v. Illinois Nat'l Ins. Co., 01-1244 (La.6/22/01), 794 So.2d 788 and 01-1245 (La.6/22/01), 794 So.2d 788, respectively. Thereafter, in accordance with Louisiana Civil Procedure article 2253, the plaintiff formally requested the Webster Parish Clerk of Court to issue a writ of fieri facias in an attempt to collect on the excess judgment rendered against Ms. Theus. The following day, the plaintiff obtained a writ of fieri facias directing the Sheriff of Webster Parish to seize, among other things:

All rights, causes of action, or other claims that Annessa Monique Theus may have against Illinois National Insurance Company for its failure to protect her from personal liability by settling Karen K. King's claim within the policy limits and obtaining a full release for Annessa Monique Theus. This is an excess claim that Annessa Monique Theus has against her own insurance company, Illinois National Insurance Company, and all rights and incidental actions that Annessa Monique Theus may have to bring legal action against Illinois National Insurance Company related to the automobile accident that took place on January 13, 1998 in Minden, Webster Parish, Louisiana. The rights herein seized include, but are not limited to, the right to sue Illinois National Insurance Company in the name of and on behalf of Annessa Monique Theus.

(Emphasis added.)

Subsequently, on July 24, 2001, the Webster Parish Sheriff filed a notice indicating that the property described in the writ had been seized.³

On June 13, 2002, the plaintiff, in her alleged capacity as transferee of Ms. Theus's inchoate rights⁴, instituted suit against Illinois National and AIG for damages, penalties, and attorney's fees due Ms. Theus under Louisiana Revised Statutes 22:658 and 22:1220. Essentially, the plaintiff alleged the defendants subjected Ms. Theus to the excess judgment through the breach of their contractual obligations to adjust promptly and in good faith the plaintiff's bodily injury claim through the defendants' adamant refusal to settle within the policy limits in exchange for Ms. Theus's release from liability.

Motion for Summary Judgment

On August 24, 2007, the defendants filed a motion for summary judgment seeking dismissal of the plaintiff's action on the basis that no genuine issue of material fact exists. Specifically, the defendants urged the plaintiff did not have a cause of action against them to seek recovery of the excess judgment or recover penalties and attorney's fees. The defendants maintained any inchoate rights Ms. Theus possessed to bring an action against them were neither transferable, nor subject to involuntary seizure, pursuant to a writ of fieri facias. In opposition, the plaintiff advanced, because Ms. Theus's claims against the defendants may be transferred by assignment, they could be subject of seizure by writ of fieri facias. Following a hearing, the trial court denied the motion for summary judgment, citing in its oral reasons the existence of a genuine issue of material fact as to whether the plaintiff had actually acquired the rights of Ms. Theus to file the petition and whether the defendants inappropriately failed to settle the plaintiffs earlier claim.

The court of appeal reversed the trial court's denial of summary judgment and dismissed the plaintiff's action. King v. Illinois Nat'l Ins. Co., 43,237 (La.App. 2 Cir. 6/4/08), 986 So.2d 839. In doing so, the appellate court maintained, since Ms. Theus's potential cause of action against the defendants was not subject of a pending lawsuit, the parties erred in relying on, as the controlling law in the case, Louisiana Civil Code article 2652 relative to the assignment of litigious rights.⁵ In addressing the legality of the seizure of an inchoate right, the court of appeal referenced treatise commentary suggesting that a mere potential claim for damages can be seized even before the cause of action becomes subject of a pending lawsuit. The court specifically referred to the discussion of Professors William Shelby McKenzie and H. Alston Johnson, III pertaining to an insured's claim against his insurer for excess exposure, which provides an "insured's claim may be seized and asserted by the judgment creditor." 15 W.S. McKenzie & H.A. Johnson, Louisiana Civil Law Treatise: Insurance Law and Practice, Excess Liability Procedures § 222 (3d ed.2006). The court of appeal also acknowledged Professor A.N. Yiannopoulos's discussion of the common pledge of creditors, maintaining that "[i]t would seem the creditor should be allowed to seize or exercise any right of the debtor which may qualify as patrimonial unless this right is strictly personal." 2 A.N. Yiannopoulos, Louisiana Civil Law Treatise: Property § 197 (4th ed.2001). Based on its review, the court of appeal recognized the absence of any case law directly supporting the position of Professors McKenzie and Johnson. It also found Professor Yiannopoulos's conditional language reflected the lack of clear and definitive jurisprudence on the subject.

While conceding the lack of clear guidance from Louisiana jurisprudence, the court of appeal concluded a mere right to potentially bring a lawsuit is a non-transferable, strictly personal right and, as such, not subject to seizure by a writ of fieri facias. Accordingly, the trial court judgment was reversed and the plaintiff's petition dismissed.

We granted certiorari to review the correctness of the court of appeal's ruling granting summary judgment in favor of the defendants. King v. Illinois Nat'l Ins. Co., 08-1491 (La.10/10/08), 993 So.2d 1271.

DISCUSSION

Standard of Review

Appellate review of the granting of a motion for summary judgment is de novo, using the identical criteria that govern the trial court's consideration of whether summary judgment is appropriate. Bonin v. Westport Ins. Corp., 05-0886, p. 4 (La.5/17/06), 930 So.2d 906, 910; Schroeder v. Bd. of Sup'rs of La. State Univ., 591 So.2d 342, 345 (La.1991). A motion for summary judgment is a procedural device used when there is no genuine issue of material fact. The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action and shall be construed to favorably accomplish these ends. La. C.C.P. art. 966(A)(2). A motion for summary judgment is properly granted only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue of material fact, and the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966; Duncan v. USAA Ins. Co., 06-0363, p. 4 (La.11/29/06), 950 So.2d 544, 546-547. A fact is material if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. Hines v. Garrett, 04-0806, p. 1 (La.6/25/04), 876 So.2d 764, 765 (citing Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La.7/5/94), 639 So.2d 730, 751). A genuine issue of material fact is one as to which reasonable persons could disagree; if reasonable persons could reach only one conclusion, there is no need for trial on that issue and summary judgment is appropriate. Hines, 876 So.2d at 765-766.

Because the court of appeal granted summary judgment based...