Sevier v. U.S.F. & G.

• Decision Date: 26 February 1986
• Docket Number: No. 17565-CW,17565-CW
• Citation: 485 So.2d 132
• Parties: W.P. SEVIER, et al., Plaintiffs-Appellees, v. U.S.F. & G., GAB Business Services, Inc., and F.A. Wiegmann, Individually, Defendants-Appellants. 485 So.2d 132
• Court: Court of Appeal of Louisiana — District of US

Page 132

485 So.2d 132

W.P. SEVIER, et al., Plaintiffs-Appellees, v. U.S.F. & G., GAB Business Services, Inc., and F.A. Wiegmann Individually, Defendants-Appellants.

No. 17565-CW.

485 So.2d 132

Court of Appeal of Louisiana Second Circuit.

Feb. 26, 1986.

Rehearing Denied March 27, 1986.

Theus, Grisham, Davis & Leigh by Brian E. Crawford, Monroe, for defendants-appellants, U.S.F. & G., GAB Business Services, Inc., and F.A. Weigmann.

James David Caldwell, Tallulah, for plaintiffs-appellees, W.P. Sevier, Dorothy Sevier Elliott, Sherill Sevier Pirone and Richard P. Sevier.

Before HALL, JASPER E. JONES, FRED W. JONES, Jr., SEXTON and LINDSAY, JJ.

SEXTON, Judge.

After his home was damaged by fire, plaintiff, W.P. Sevier, ¹ instituted this action to recover certain proceeds from a homeowner's policy containing the statutorily provided fire requirements. During the course of this litigation, defendant filed certain exceptions, including an exception of prematurity, alleging that plaintiff had not complied with the requirements of the insurance policy prior to institution of this suit. The exception was overruled after a hearing. The defendant applied to this court for issuance of a stay order and supervisory writs to examine the propriety of the trial court's refusal to maintain the exception, and on the basis of that application, the stay order and supervisory writs were granted. Having found merit in relator's argument, we hereby make the previously granted writ of certiorari peremptory.

The following chronology of events is pertinent to this discussion. On February 11, 1984, a partial fire loss was sustained at the residence of W.P. Sevier in Madison Parish, Louisiana. At the time of the loss, defendant, United States Fidelity & Guaranty Company (hereinafter referred to as USF & G), provided fire and extended insurance coverage to W.P. Sevier and his wife, Martha Sevier.

This claim was referred to defendant, GAB Business Services, Inc. (hereinafter referred to as GAB) by USF & G for adjustment on February 13, 1984. Defendant, F.A. Wiegmann, an employee of GAB, was designated as adjuster of this fire loss claim. Weigmann inspected the premises on February 13, 1984 and prepared "a scope of repairs," an itemization of the nature and type of material and labor required to refurbish the damaged property. On that day, Wiegmann agreed to accept an estimate for the repairs to the dwelling from Humble Construction Company of Monroe. Humble estimated the cost of repair to be $89,569.59. The date that Wiegmann received the estimate from Humble is in dispute. Plaintiffs claim that the estimate was received on or about February 23, while defendants claim it was on or about February 28, 1984. Additionally, Wiegmann gave Humble clearance to begin cleanup operations on the site, which began the week of February 13, 1984. Actual reconstruction, however, did not begin at that time, due to the fact that Wiegmann and Humble disagreed as to the extent and cost of the repairs.

Wiegmann also sought an estimate of repairs and replacement from the Traxler Construction Company which provided an estimate on March 12, 1984 in the amount of $59,000. This estimate was forwarded to plaintiffs through their attorney.

On March 23, 1984, Wiegmann received a demand from plaintiffs' attorney for settlement of the fire loss claim for damage to the dwelling for the full sum of $88,167.10.

On April 23, 1984, Wiegmann received a second demand from counsel for plaintiffs. This correspondence contained an additional estimate of repairs completed by Cupit Construction Company for $88,716.00. Wiegmann consulted with his principals, and it was determined that, due to the large difference between the estimates of repairs submitted by Humble and Cupit and the estimate submitted by Traxler Construction, the appraisal provisions of the insurance contract would be invoked. Demand for appraisal was forwarded to plaintiffs by defendants on April 25, 1984. Defendants were informed May 1, 1984 of plaintiffs' refusal to comply with the provisions of the insurance policy regarding appraisal.

Suit was filed June 14, 1984, against USF & G, GAB and F.A. Weigmann, seeking the recovery of the cost of repairs to the structure plus penalties, attorney's fees, interest from date of judicial demand and other damages. Defendants thereafter filed the exception of prematurity which is the subject of this writ application. Parenthetically, we note that reconstruction of the Sevier residence had been completed at the time this matter was heard by the trial court.

After a hearing on the exception of prematurity, a judgment was rendered denying that exception.

The merits of relator's claim that the exception of prematurity was improvidently overruled hinges on whether or not plaintiffs fulfilled the requirements of this policy prior to institution of this action.

a. "Suit. No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after the inception of the loss."

b. "When loss payable. The amount of loss for which this Company may be liable shall be payable sixty days after proof of loss, as herein provided, is received by this Company and ascertainment of the loss is made either by agreement between the insured and this Company expressed in writing or by the filing with this Company of an award as herein provided."

c. "Appraisal. In case the insured and this Company shall fail to agree as to the actual cash value or the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then, on request of the insured or this Company, such umpire shall be selected by a judge of a court of record in the state in which the property covered is located. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, shall submit their differences, only, to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties equally."

The terms and conditions of the instant insurance policy track the language of LSA-R.S. 22:691, which provides the statutory requirements for fire insurance policies.

Respondents claim that the policy requirements were fulfilled as the request for appraisal was untimely since it was made more than sixty days after February 23, 1984, the date which respondents claim that "proof of loss" was submitted in the form of Humble's estimate. Relator argues in opposition that a formal proof of loss has never been filed with USF & G and further argues that if the Humble bid is construed to be a "proof of loss," it was not received by USF & G until February 28, 1984, making the April 25, 1984 request for appraisal timely.

Before a discussion of the relative merits of relators and respondents positions is appropriate, we must note and address a broader legal issue which is squarely presented within the context of these facts, i.e., whether the appraisal clause of fire insurance policies mirroring LSA-R.S. 22:691 are enforceable.

In Doucet v. Dental Health Plans Management Corporation, 412 So.2d 1383 (La.1982), the Louisiana Supreme Court noted that the classification of a contract as an insurance contract renders the arbitration provisions of that contract unenforceable under LSA-R.S. 22:629 which provides in pertinent part:

Sec. 629. Limiting actions; jurisdiction

A. No insurance contract delivered or issued for delivery in this state and covering subjects located, resident, or to be performed in this state or any group health and accident policy insuring a resident of this state, regardless of where made or delivered shall contain any condition, stipulation, or agreement:

* * *

(2) Depriving the courts of this state of the jurisdiction of action against the insurer....

This pronouncement in Doucet is dicta however, because the contract construed therein was found not to be an insurance contract and the pertinent arbitration provision was given effect. Nevertheless, the Supreme Court in Doucet cited with approval the Fourth Circuit decision of Macaluso v. Watson, 171 So.2d 755 (La.App. 4th Cir.1965), appeal after remand, 188 So.2d 178 (La.App. 4th Cir.1966), which struck down a mandatory arbitration provision contained in an uninsured motorist coverage provision of an automobile insurance policy. Later, in Girard v. Atlantic Mutual Insurance Company, 198 So.2d 444 (La.App. 4th Cir.1967), the Fourth Circuit distinguished Macaluso v. Watson, when construing the appraisal provision of the statutorily provided fire insurance policy. The court reasoned that the stipulation providing for an appraisal was not a true arbitration provision which divested the court of jurisdiction, as the appraisal was still subject to the scrutiny of the court. After an extensive discussion of the jurisprudence relative to the distinctions between arbitration and appraisal provisions, the Fourth Circuit noted that the Supreme Court has specifically held that stipulations for appraisals are valid, but that the estimation is not binding on the parties in the event that the appraisers and umpire fail to discharge their duty of ascertaining the "actual cash value and loss," and in that instance, the appraisal would be subject to scrutiny by the court. Thus, the Fourth Circuit concluded that the appraisal provisions worked no divestiture of a court's jurisdiction.

However, the...