Robin v. Allstate Ins. Co.

• Decision Date: 05 February 2003
• Docket Number: No. 02-689.,02-689.
• Citation: 844 So.2d 41
• Parties: Herbert and Mary A. ROBIN v. ALLSTATE INSURANCE CO.
• Court: Court of Appeal of Louisiana — District of US

844 So.2d 41

Herbert and Mary A. ROBIN v. ALLSTATE INSURANCE CO.

No. 02-689.

Court of Appeal of Louisiana, Third Circuit.

February 5, 2003.

Rehearing Denied May 28, 2003.

Judy Y. Barrasso, Stone, Pigman, Walther, et al, New Orleans, LA, for Defendant/Appellee: Allstate Ins. Co.

Larry Lane Roy, Preis, Kraft & Roy, Lafayette, LA, for Defendant/Appellee: Marie Candice Hattan.

Ped C. Kay III, Broussard & Kay, Lafayette, LA, for Plaintiffs/Appellants: Herbert Robin, Mary A. Robin.

Russel Oliver Primeaux, Kean, Miller, Hawthorne, DÁrmond, McCowan & Jarman, L.L.P., Baton Rouge, LA, for Defendant/Appellee: Computer Sciences Corp.

Court composed of ULYSSES GENE THIBODEAUX, MICHAEL G. SULLIVAN, and BILLY HOWARD EZELL, Judges.

EZELL, J.

This is an action by insureds against their liability insurer for damages sustained when a judgment in excess of the policy limits was rendered against the husband in a previous automobile tort action. The case involves issues of an insurer's duty to defend and settle a claim in addition to issues of whether a claim was timely filed against an attorney.

Herbert and Mary Robin filed suit against Allstate alleging that Allstate's actions in defending Mr. Robin in a previous matter exposed the Robins to just under $100,000 over and above the insurance policy's limits. Knepper v. Robin, 99-95 (La. App. 3 Cir. 11/17/99), 745 So.2d 1248,writ granted in part and denied in part, 99-3572 (La.2/18/00), 754 So.2d 955. Subsequently, the Robins filed a supplemental and amending petition naming Candace Hattan, the attorney who represented Allstate and Mr. Robin in the previous suit, as a defendant.

Knepper, 745 So.2d at 1250, sets out the facts for the underlying automobile accident which is the source of the present lawsuit as follows:

On June 15, 1994, Elizabeth Knepper, hereinafter "Plaintiff," was involved in an automobile accident with Herbert Robin, hereinafter "Defendant," which occurred on Interstate 10 in St. Martin Parish. Defendant was operating a Chevrolet Blazer, traveling in the eastbound passing lane, when his vehicle crossed the grass median and struck Plaintiff's Honda Civic, which was traveling in the westbound passing lane. Defendant's vehicle struck the side of Plaintiff's vehicle, sending her Honda Civic spinning. Defendant's truck was totaled, and Plaintiff's vehicle was smashed and fire damaged. Plaintiff was flown by helicopter from the scene of the accident to the Lafayette General Medical Center where she received treatment; she was not held overnight. She returned two days later complaining of left shoulder pain. She was ultimately treated by various doctors for TMJ, an extruded disc fragment in her lower back and depression.

Knepper was awarded $45,500 in general damages and $26,500 for future medical expenses. This court increased the damage awards by a total of $64,640, for a total damage award of $164,640. This court also awarded "$10,000 for costs and attorney's fees associated with proving Defendant's liability made necessary by Defendant's failure to admit the same." Id. at 1259. This award for costs and attorney's fees was reversed by the supreme court. Therefore, the final judgment was $64,640 in excess of the $100,000 policy limits issued by Allstate covering Mr. Robin's liability for this accident.

The present litigation commenced on November 16, 2000, when the Robins filed suit against Allstate for bad faith damages under La.R.S. 22:658 and 22:1220, breach of contract damages, and general tort damages. An amending petition was filed naming M. Candace Hattan and M. Candace Hattan, a Professional Law Corporation, as defendants on December 26, 2001.

Allstate filed an exception of no right of action claiming that Mrs. Robin's claims against it were not valid. This exception was heard on February 22, 2002, and was granted by the trial court. The trial court granted the exception and signed judgment on February 7, 2002. Hattan filed an exception of no cause of action to both of the Robins' claims arguing that La.R.S. 9:5605 applied and the peremptive period had run. The trial court also granted this exception on April 19, 2002, and signed a judgment accordingly on May 14, 2002.

Prior to granting the exception of no cause of action, the Robins filed a second supplemental and amending petition on April 16, 2002, adding Allstate as a defendant in the then pending action against Hattan. Allstate then filed exceptions of res judicata and no right of action. These exceptions were heard on July 12, 2002, with the court granting both exceptions. The appeal from this judgment was lodged with this court after the other judgments were appealed, but the appeals have been consolidated. There are the three judgments before us on appeal.

NO RIGHT OF ACTION

An exception of no right of action is used to raise the question whether a plaintiff belongs to a particular class in whose exclusive favor the law extends a remedy for which a cause of action exists, or to raise the issue whether plaintiff has the right to invoke a remedy which the law extends only conditionally. Greenbriar Nursing Home, Inc. v. Pilley, 93-2059 (La.5/23/94), 637 So.2d 429; La.Code Civ.P. art. 681.

Many theories of recovery were asserted by the Robins in their claim against Allstate for the damages they allege they suffered because of Allstate's actions in failing to settle the original suit and subjecting them to excess exposure. The trial court granted an exception of no cause of action finding that Mrs. Robin had no right of action against Allstate. The Robins argue that Mrs. Robin has urged various theories of recovery based in both contract and tort that are available to her even though she was not the named defendant in the Knepper suit. They argue that as long as a policy existed between the Robins and Allstate, Allstate was bound to protect both Mr. and Mrs. Robin's interests and provide whatever services were necessary to protect those interests. They further suggest that neither La.R.S. 22:658 nor La.R.S. 22:1220 provide that the insured seeking damages pursuant to these statutes had to be a named defendant in a lawsuit. The Robins also argue that Mrs. Robin is able to recover damages as a third-party beneficiary pursuant to La.R.S. 22:1220(C). Aside from the contract claims, the Robins claim that Mrs. Robin is entitled to recover tort damages for intentional infliction of emotional distress, loss of consortium, misrepresentation, abuse of process/malicious prosecution, and damage to the community pursuant to La.Civ.Code art. 2315.

Mrs. Robin's claims arise out the fact that an excess judgment was rendered against her husband exposing the community to liability. Therefore, the issue is whether Mrs. Robin has a right of action against Allstate since the community is exposed to payment of an excess judgment. We will first look to the contract of insurance entered into between Allstate and the Robins as the source of Allstate's obligations to the Robins, recognizing that an insurance contract is the law between the parties. La.Civ.Code art.1983; Pareti v. Sentry Indem. Co., 536 So.2d 417 (La. 1988).

Allstate contractually agreed to provide a legal defense for liability claims asserted against an insured person as follows: "We will defend an insured person sued as the result of an auto accident, even if the suit is groundless or false. We will choose the counsel. We may settle any claim or suit if we believe it is proper." The courts have defined these duties to an insured as follows:

Under the terms of its protection and indemnity policy, the insurer contractually agreed to provide a legal defense for liability claims against the insured within the scope of the policy. The insurer's duty to defend suits brought against its insured is determined by the allegations of the plaintiff's petition, with the insurer being obligated to furnish a defense unless the petition unambiguously excludes coverage. Accordingly, the insurer's obligation to defend suits against its insured is generally broader than its obligation to provide coverage for damage claims. Thus, if, assuming all of the allegations of the petition to be true, there would be both coverage under the policy and liability of the insured to the plaintiff, the insurer must defend the insured regardless of the outcome of the suit. An insured's duty to defend arises whenever the pleadings against the insured disclose even a possibility of liability under the policy.

Steptore v. Masco Const. Co., Inc., 93-2064, pp. 8-9 (La.8/18/94), 643 So.2d 1213, 1218 (citations omitted).

Additionally, the law recognizes that the insurer's obligation to exercise good faith in defending the insured also includes a duty to settle within policy limits if necessary to protect the insured's financial interests against excess damages beyond the insurance coverage. Smith v. Audubon Ins. Co., 95-2057 (La.9/5/96), 679 So.2d 372.

Mr. Robin was the only party sued in the underlying tort suit. Mrs. Robin was never a party to that litigation. Therefore, pursuant to the terms of the policy, and recognizing that the Allstate policy did not provide coverage to Mrs. Robin under the circumstances of the Knepper matter, we find Allstate did not have an obligation to defend or settle the claim on behalf of Mrs. Robin. The contract is clear that this obligation only extends to an insured who is sued because of an automobile accident.

We agree that Mrs. Robin is an insured under the policy, but no duties were owed to Mrs. Robins as an insured unless she was sued. The fact that the community may be ultimately liable for this excess judgment does not give Mrs. Robins any greater rights under the contract than any other insured would have.

La.R.S. 22:658 and 22:1220

The Robins also asserted a claim for bad faith damages pursuant to La.R.S. 22:658 and 22:1220. The Robins agree that there has to be an underlying claim against the insurer in order to recover under these...