Ranzino v. Allstate Ins. Co.

• Decision Date: 27 May 1968
• Docket Number: No. 7377,7377
• Citation: 210 So.2d 907
• Parties: Cecil C. RANZINO v. ALLSTATE INSURANCE COMPANY.
• Court: Court of Appeal of Louisiana — District of US

Page 907

210 So.2d 907

Cecil C. RANZINO v. ALLSTATE INSURANCE COMPANY.

No. 7377.

Court of Appeal of Louisiana, First Circuit.

May 27, 1968.

Robert W. Smith of Seale, Smith, Baine & Phelps, Baton Rouge, for appellant.

Frank P. Simoneaux of Breazeale, Sachse & Wilson, Baton Rouge, for appellee.

Before LANDRY, REID and BAILES, JJ.

LANDRY, Judge.

This appeal by defendant Allstate Insurance Company (Allstate), is from the judgment of the trial court in favor of appellant's insured, Cecil C. Ranzino, decreeing said insured entitled to damages, penalties and attorney's fees for appellant's asserted arbitrary failure to timely settle a claim for collision damages to plaintiff's automobile. The single issue presented by this appeal is whether the award of penalties and attorney's fees was proper. We find that the trial court incorrectly allowed penalties and attorney's fees and reverse its judgment in this respect.

The dispute herein stems from a difference of opinion regarding the extent of the damages to plaintiff's vehicle. Defendant contends the automobile, a 1965 Plymouth sedan, which had been driven only 5,018 miles, was repairable. Plaintiff considers the car a total loss.

Plaintiff prayed for judgment against his insurer in the sum of $3,429.84 (the alleged worth of the automobile), less salvage value, together with legal interest from date of judicial demand and 12% Penalty on the amount claimed, together with attorney's fees.

The trial court held the damages repairable for the sum of $1,630.17 (the higher of two estimates submitted). On this basis, he awarded plaintiff judgment in the sum of $1,580.17 (the amount of the higer estimate less $50.00 deductible provided for in the policy). In addition, the trial court allotted a penalty of 12% Of the award and attorney's fees in the sum of $850.00. Allstate complains only of the award of penalty and attorney's fees. Plaintiff has neither appealed nor answered the appeal.

It is conceded the outcome of this litigation is controlled by the provisions of LSA-R.S. 22:658, which in essence provides that insurers shall be liable for a 12% Penalty and attorney's fees for failure to pay a claim of its insured within 60 days of submission of proof and demand therefor whenever such failure is found to be arbitrary, capricious or without probable cause.

Plaintiff testified in substance that immediately following the accident in which his car was damaged, the automobile was towed to the shop of a local dealer in Baton Rouge, Louisiana. Shortly thereafter, plaintiff discussed the status of his claim with defendant's representative, Robertson, who had been assigned the task of appraising the damage to the vehicle. When informed that the damages approximated $1,600.00, plaintiff advised Robertson that plaintiff no longer wanted the damaged car but desired a new vehicle . Plaintiff testified fruther that he had his attorney notify defendant of plaintiff's willingness to negotiate a settlement whereby plaintiff and defendant would each contribute several hundred dollars in excess of the repair estimate and the aggregate sum thus obtained would be used to purchase a new automobile for plaintiff. In addition, plaintiff conceded Allstate's willingness to repair the vehicle based on its estimate of $1,630.17, but that plaintiff did not wish the car to be repaired because he thought it too extensively damaged. The inescapable conclusion to be drawn from plaintiff's testimony is that an offer of $1,630.17 by defendant in settlement of the claim would have been declined.

Plaintiff's attorney testified to making several telephone calls in which he discussed with Robertson the possibility that plaintiff and Allstate would each contribute an amount above the repair estimate in order that plaintiff might purchase a new automobile after salvaging the insured vehicle. Counsel also stated Robertson responded that Allstate could not pay any amount in excess of the estimated cost of repairs to the car. Counsel further testified that substantially the same response was obtained from Robertson's superior, a Mr. Rea.

Defendant's representative Robertson stated he is employed by Allstate as an adjuster. He considered that the vehicle could be repaired for the amount of his estimate. While he could not recall the details of his one or more telephone conversations with plaintiff's counsel, Robertson remembered having received a letter from the attorney advising that plaintiff desired a new automobile. Robertson did not recall plaintiff taking the position that plaintiff did not wish the car repaired while Robertson was in the process of making his appraisal.

Charles Rea, a supervisor for Allstate, testified that he was advised by Robertson of plaintiff's dissatisfaction with Robertsons's repair estimate. In an effort to satisfy plaintiff, Rea instructed Robertson to have the damages estimated by an independent appraiser. It developed that the calculation of the independent estimator was lower than, Robertson's. Rea recalled conversations with plaintiff's attorney in which Rea took the position the damages were repairable and that Allstate would pay for the repairs on the basis of Robertson's appraisal even though it was the higher.

From the foregoing summary of the pertinent testimony, it is readily apparent that plaintiff was of the opinion his vehicle was a total loss, consequently he desired a new automobile. Conversely, Allstate took the position the vehicle could be repaired and restored to its former condition. It further appears that at all times Allstate was ready and willing to have the vehicle repaired but plaintiff would not give the required authorization.

LSA-R.S. 22:658 sanctions the imposition of the penalties therein provided only in those cases where the refusal or failure of the insurer to pay within the prescribed time is arbitrary, capricious or without probable cause. Being penal in nature, the statute must be strictly construed. Nichols v. Iowa Mutual Insurance Company, 232 La. 856, 95 So.2d 338. Whether a failure or refusal to pay constitutes a violation of the applicable statute is, of course, a question of fact to be determined in the light of the circumstances of each individual case.

In McMahon v. Manufacturers Casualty Insurance Co., 277 La. 777, 80 So.2d 405, it was held that refusal to pay a loss under circumstances virtually identical to those in the case at hand was not arbitrary, capricious or without probable cause. We quote approvingly from the decision as follows:

'The evidence as a whole convinces us that prior to the filing of this suit, during the period from the date of the accident to October 26, 1953, there were considerable negotiations between the plaintiff and defendant's agent. These negotiations involved an attempt on the part of both plaintiff and defendant to arrive at some measure of damages satisfactory to and acceptable by both. We do not find, nor do we infer therefrom, that these negotiations were conducted in bad faith. The many contacts had between the parties certainly manifested a desire for settlement on the part of the defendant rather than conduct which would constitute arbitrariness, capriciousness or want of probable cause condemned by the statute. ...