Segura v. Frank

• Decision Date: 14 January 1994
• Citation: 630 So.2d 714
• Parties: 93-1271 La
• Court: Louisiana Supreme Court

Page 714

630 So.2d 714

93-1271 La. 1/14/94

Andrea E. SEGURA v. Melissa A. FRANK, et al.

Matthew REY v. Wendy GUIDRY, et al.

Nos. 93-C-1271, 93-C-1401.

Supreme Court of Louisiana.

Jan. 14, 1994.

John A. Keller, Lafayette, Ben L. Day, Carey J. Guglielmo, Baton Rouge, for applicant in No. 93-C-1271.

William F. Page, Jr., Lafayette, Michael P. Corry, Joseph E. Windmeyer, Metairie, for respondent in No. 93-C-1271.

Ben L. Day, Baton Rouge, Jeffery P. Lozes, New Orleans, for applicant in No. 93-C-1401.

Jacqueline R.A. Campbell, Thomas E. Campbell, Metairie, for respondent in No. 93-C-1401.

[93-1271 La. 1] KIMBALL, Justice. ^*

The issue in these consolidated cases is whether either of two amendments to La.R.S. 22:1386, the "nonduplication of recovery" provision of Louisiana's Insurance Guaranty Association Law, apply to claims arising from accidents which occurred prior to the effective dates of the amendments. The courts of appeal reached opposite conclusions in these cases, while other appellate courts have rendered conflicting decisions on the same issue as well. We granted writs to resolve the split of opinion among the circuits.

FACTS

On August 1, 1989, Matthew Rey was injured when his car was struck by an automobile driven by Wendy Guidry. Rey filed suit on July 30, 1990 against Guidry, Dixie Lloyds [93-1271 La. 2] Insurance Company as Guidry's liability insurer, and Allstate Insurance Company as Rey's uninsured motorist (UM) carrier. After Dixie Lloyds was liquidated on December 20, 1990, Rey amended the petition to name the Louisiana Insurance Guaranty Association (LIGA) as Dixie Lloyds' successor.

Andrea Segura was injured on March 12, 1990 when she was struck in a pedestrian crosswalk by an automobile driven by Russell Goodie and owned by Melissa Frank. Segura filed suit on March 4, 1991 against Goodie, Frank, American Manufacturers Mutual Insurance Company (American) as Segura's UM carrier, and LIGA as successor to Dixie Lloyds, the liability insurer of the Frank vehicle on the date of the accident.

In both cases, LIGA argued La.R.S. 22:1386, as amended by Act 130 of 1990 and which had become effective on September 7, 1990, ¹ required the plaintiffs to exhaust their UM coverages before recovering against LIGA. Both trial courts disagreed with LIGA, applied the law as it existed prior to the amendment, and held LIGA primes the plaintiffs' UM insurers. LIGA appealed both judgments, this time arguing in the alternative that even if Act 130 of 1990 did not apply to plaintiffs' claims, Act 237 of 1992 did apply. The 1992 Act had again amended and reenacted La.R.S. 22:1386 with only one change pertinent to these cases: Section 3 of the Act provided that the amendment applied to all covered claims pending on the effective date of the Act, June 10, 1992. ² LIGA thus argued on appeal the 1992 amendment applied to plaintiffs' "pending" claims and therefore its obligations to plaintiffs were subordinate to the obligations of plaintiffs' UM insurers. In response to LIGA's arguments, American and Allstate argued retroactive application of either Act 130 of 1990 or Act 237 of 1992 would violate the due process and contract clauses of the federal and state constitutions by impairing their contractual obligations under the UM policies and by disturbing Rey's and Segura's vested rights against LIGA.

In Segura v. Frank, ³ the Louisiana Third Circuit Court of Appeal affirmed the judgment of the trial court. Rejecting LIGA's argument that Act 130 of 1990 applied, the court concluded [93-1271 La. 3] the 1990 amendment was substantive and therefore should apply prospectively only. ⁴ The court reasoned that Segura's claim against Dixie Lloyds was a vested property right which arose prior to the effective date of the 1990 amendment. Thus, reasoned the court, retroactive application of the amendment to the date of the accident would disturb Segura's vested right in a cause of action against LIGA as Dixie Lloyds' successor. ⁵ To avoid that result, the court applied the prior version of La.R.S. 22:1386 as interpreted by this court in Hickerson v. Protective National Insurance Co., 383 So.2d 377, 379 (La.1980), where we construed the law "to deem LIGA the insurer with all the obligations of the insolvent insurer." The Segura court further reasoned that this case was analogous to the situation in St. Paul Fire and Marine Insurance Co. v. Smith, 609 So.2d 809, 813 (La.1992), where we classified as substantive an amendment which was "an obvious legislative attempt to change the law as construed by this court."

Regarding LIGA's alternative argument that the 1992 amendment applied, the court of appeal first noted Act 237 of 1992 had not yet been passed at the time of the proceedings in the trial court, therefore the Act "could not have been considered by the trial judge, much less applied to these proceedings." The court reasoned that "in the normal scheme of events" the applicability of the 1992 amendment should not be argued for the first time on appeal. Despite this reasoning, the court went on to find that "in any event" the trial court's judgment "relieved American of responsibility for the first $10,000 of plaintiff's damages and to that extent constitutes an adjudicated claim." The court concluded that "under the particular circumstances of this case, the claim in this matter is not a 'pending claim' within the purview of Section 3 of Act 237 of 1992."

[93-1271 La. 4] In the second case, Rey v. Guidry, ⁶ the Louisiana Fifth Circuit Court of Appeal reversed the trial court's judgment. Contrary to the reasoning of the third circuit in Segura, the fifth circuit in Rey determined both amendments to La.R.S. 22:1386 were procedural and interpretive rather than substantive. According to the fifth circuit, the amended statute is procedural because it "does not diminish Rey's right to recovery, merely establishes a new procedure for his recovery." Additionally, the court found the amendments did not create a new rule but simply established legislative intent as to the meaning of the statute from its inception. The amendments therefore were interpretive "[i]n light of the jurisprudence interpreting the earlier version of the Statute," referring to this court's decision in Hickerson.

The court in Rey also determined that the "time for vesting of rights" was the date of Dixie Lloyds' insolvency, which occurred after the 1990 amendment's effective date, as opposed to the date of the accident, which occurred prior to that date. ⁷ Finding that "any right Rey may have had against LIGA on the date of the accident was conditional, contingent that Dixie Lloyds be liquidated before a claim against LIGA would be viable," the court concluded Rey had no vested right in a cause of action against LIGA on the effective date of the 1990 amendment. Thus, Rey's vested rights would not be impaired by application of the amended statute to his claim.

Finally, the Rey court determined Rey's claim was "pending" in the trial court on the effective date of Act 237 of 1992 and therefore the 1992 amendment applied retroactively to his claim pursuant to Section 3 of the Act. ⁸ The court reasoned that because "LIGA was statutorily created, and embodied by sovereign authority of our State to limit economic exposure when it is necessary to protect the security of our citizenry," the legislature's enactment of Act 237 of 1992, including the retroactivity provision in Section 3, was a legitimate exercise of the state's [93-1271 La. 5] protective powers. Applying La.R.S. 22:1386(A) as amended by the 1992 Act, the court held Allstate's UM coverage primes LIGA's coverage of Rey's claim.

Allstate applied to this court for review of the fifth circuit's decision in Rey; LIGA applied for review of the third circuit's decision in Segura. We granted both applications and consolidated the two cases. ⁹

LAW

The Louisiana Insurance Guaranty Association Law (LIGA Law) ¹⁰ states its purpose as follows:

The purpose of this Part is to provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies and to allow the association to provide financial assistance to member insurers under rehabilitation or liquidation, and to provide an association to assess the cost of such operations among insurers.

La.R.S. 22:1376.

To achieve the LIGA Law's stated purpose, the legislature created LIGA as a private nonprofit unincorporated legal entity governed by a board of directors and composed of "member insurers." La.R.S. 22:1380(A). "Member insurer" is defined as any person who "[i]s licensed and authorized to transact insurance in this state" and who has written at least one policy of insurance since September 1, 1970, the effective date of the LIGA Law. La.R.S. 22:1379(5). All member insurers "shall be and remain members of the association as a condition of their authority to transact insurance in this state." La.R.S. 22:1380(A).

La.R.S. 22:1382 defines LIGA's powers and duties in pertinent part as follows:

A. The association shall:

(1)(a) Be obliged to the extent of the covered claims existing prior to the determination of the insurer's insolvency, or arising after such determination....

(2) Be deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties, and obligations of the insolvent insurer as if the insurer had not become insolvent....

At the time of each accident in these cases, La.R.S. 22:1379(3) defined a "covered claim" as

[93-1271 La. 6] an unpaid claim, including one for unearned premiums by or against the insured or agent, which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this Part applies issued by an...