Sitaram, Inc. v. Bryan Ins. Agency, Inc.

• Decision Date: 19 September 2012
• Docket Number: No. 47,337–CA.,47,337–CA.
• Citation: 104 So.3d 524
• Parties: SITARAM, INC., Plaintiff–Appellee v. BRYAN INSURANCE AGENCY, INC., Defendant–Appellant.
• Court: Court of Appeal of Louisiana — District of US

104 So.3d 524

SITARAM, INC., Plaintiff–Appellee

v.BRYAN INSURANCE AGENCY, INC., Defendant–Appellant.

No. 47,337–CA.

Court of Appeal of Louisiana, Second Circuit.

Sept. 19, 2012.

Daniel G. Brenner, Alexandria, LA, for Appellant.

Brian E. Crawford, Monroe, LA, Ramsey L. Ogg, Samuel T. Singer, Winnsboro, LA, for Appellee.

Before BROWN, WILLIAMS and LOLLEY, JJ.

WILLIAMS, J.

[2 Cir. 1]Defendant, Bryan Insurance Agency, Inc. (“Bryan”), appeals a district court judgment denying its peremptory exception of prescription. Bryan also appeals the court's grant of a motion for partial summary judgment in favor of plaintiff, Sitaram, Inc., and the denial of Bryan's motion for summary judgment. For the following reasons, we affirm.

FACTS

Plaintiff, Sitaram, Inc., is the owner of the Best Western Motel in Winnsboro, Louisiana. The motel complex consists of three separate buildings: a 17–unit motel, a restaurant and an office. All three buildings are located at one address: 4198 Front Street, Winnsboro, Louisiana.

In January 2004, plaintiff, through its president/agent, Allen Patel, contacted defendant to inquire about purchasing a standard flood insurance policy (“SFIP”) to cover the motel complex.¹ Mr. Patel spoke to Suzette Henderson, an employee of Bryan. According to the deposition testimony of both Mr. Patel and Ms. Henderson, Mr. Patel was seeking to secure flood insurance, to the maximum extent allowed, to cover the entire motel complex. Mr. Patel was informed that the maximum coverage allowed for flood insurance was $500,000 for the building and $100,000 for the contents of the building. Mr. Patel testified that he informed Ms. Henderson that the motel complex consisted of three separate buildings; however, Ms. Henderson testified that she did not learn that the motel complex had three [2 Cir. 2]buildings until approximately April, 2004. Nevertheless, Ms. Henderson completed an application, on Mr. Patel's behalf, to obtain flood insurance coverage through Audubon Insurance Group (“Audubon”).

According to federal insurance regulations, a separate flood insurance policy was required for each of the three buildings. Only one application was completed for the motel complex; only one policy was procured; therefore, only one of the three buildings—the motel building—was insured. Ms. Henderson admitted that she was unaware that federal flood insurance regulations required a separate application/policy for each building to be covered. Ms. Lea Cole Brown, the vice president/manager of Bryan, also testified that she did not know that a separate policy was needed to procure flood insurance for each of the three buildings.

The application in question was completed and signed by Ms. Henderson and Mr. Patel on January 27, 2004. The SFIP was ultimately purchased from Audubon and was renewed in 2005, 2006, and 2007. In 2008, the SFIP was renewed by New Hampshire Insurance Company (“New Hampshire”). Ms. Henderson testified that the policy was subject to “automatic renewals,” meaning no new application was required to be completed for insurance renewals. However, she testified that she contacted Mr. Patel every year, prior to each renewal, to inquire about possible changes in coverage.

In September 2008, all three buildings sustained flood damage as a result of Hurricane Gustav, and plaintiff filed a claim for damage to the three buildings under the SFIP. New Hampshire denied the claim for flood [2 Cir. 3]damage to two of the buildings (the restaurant and office), stating that coverage was not available for all three buildings because only one application had been completed concerning the property; therefore, it only owed for damages to one of the buildings (the motel structure).²

On June 5, 2009, plaintiff filed the instant lawsuit against Bryan, alleging that the insurance agency breached its duty “to procure full insurance coverage for all of plaintiff's business operations [.]” Subsequently, plaintiff moved for partial summary judgment, arguing that defendant was solely liable for failing to procure a separate policy of flood insurance for each of the three buildings. In response, defendant filed a peremptory exception of prescription, arguing that the one-year prescriptive period and three-year peremptory period had lapsed. In the alternative, defendant moved for summary judgment, arguing that the loss incurred by plaintiff resulted from Mr. Patel's negligence in “failing to read and understand the clear terms of the policy application that he signed.”

The district court denied defendant's peremptory exception of prescription, stating:

[T]he peremptive period under La. R.S. 9:5606, began to run on the date the defendant discovered that the policy in question did not cover all three buildings and communicated that discovery to plaintiff. This is the date the attempted act, omission or neglect is discovered or should have been discovered by plaintiff under La. R.S. 9:5606. And not from the date the policy was first acquired or the date it was last renewed. Certainly, plaintiff had no reason to file a lawsuit against Bryan [2 Cir. 4]until the loss suffered by all three buildings occurred.

The court also denied defendant's motion for summary judgment, stating:

[P]laintiff, Sitaram, through Mr. Patel, sought flood insurance coverage on the entirety of the motel premises. Mr. Patel indicated in his deposition that he wanted the maximum coverage available for the motel premises consisting of the three buildings. Mr. Patel indicated that he did not have a background in insurance and had no knowledge about flood insurance programs or any other special requirements pertaining to flood insurance. Mr. Patel indicated in his deposition that he relied on the Agent, Bryan, to provide him with the coverage that he requested. There's an indication also in the record that the insurance was readily available if a separate policy had been issued for each of the buildings. But the agent, Bryan, did not know about the separate policy requirements according to the employees of Bryan. There is also an indication from the record that Bryan never notified plaintiff [that] the requested coverage was not obtained because Bryan thought it had placed the proper coverage. In other words, the Bryan employees thought that the one policy covered all three buildings. The employees indicated that they had no knowledge whatsoever that three policies were required.

* * *

The defendant, Bryan, was under a legal duty to procure the flood insurance coverage on all three buildings as allegedly requested by plaintiff. From the deposition testimony, it is clear that plaintiff was seeking flood insurance coverage on all three buildings. And Bryan employees were unaware of the SFIP requirement of one policy, one building[,] coverage in this case.

It is also clearly shown in the deposition testimony that within two or three months after the first standard flood insurance application was completed, Bryan had information that there were three separate buildings located on the motel premises owned by plaintiff. Thereafter, four additional policies were issued providing flood insurance coverage for only the motel building in question.

* * *

[T]his court finds that under the peculiar facts of this case, the duty of the defendant to provide appropriate coverage for three buildings trumps plaintiff's duty to read and understand the policy and the application [2 Cir. 5]provisions limiting coverage to one building.

* * *

The court granted plaintiff's motion for partial summary judgment, stating:

[P]laintiff has shown sufficient proof that there is no issue of material fact that number one, there was an undertaking or an agreement by the defendant to procure flood insurance on all three buildings and number two, there was a failure by the defendant to provide such coverage for all three buildings and a failure of the defendant to notify plaintiff promptly that defendant had failed to obtain the requested coverage. And number three, that the actions of the defendant warranted an assumption by the plaintiff that all three buildings were properly insured.

Defendant now appeals.

DISCUSSION

Prescription

Defendant contends the district court erred in failing to sustain its peremptory exception of prescription. Defendant argues that the “alleged act, omission, or neglect” occurred in January, 2004, when the application for the first SFIP was completed; therefore, the action prescribed in January, 2005. Additionally, the lawsuit was not filed until June, 2009, more than five years after the “alleged act, omission or neglect”; thus, the action is extinguished by peremption.

A party urging an exception of prescription has the burden of proving facts to support the exception unless the petition is prescribed on its face. Cichirillo v. Avondale Industries, Inc., 2004–2894 (La.11/29/05), 917 So.2d 424;Sanders Family LLC No. 1 v. Sanders, 46,476 (La.App.2d Cir.12/14/11), 82 So.3d 434,writ denied,[2 Cir. 6]2012–0414 (La.4/9/12), 85 So.3d 702. The applicable prescriptive period is determined by the character of the action disclosed in the pleadings. Starns v. Emmons, 538 So.2d 275 (La.1989); Johnson v. Ledoux, 42,090 (La.App.2d Cir.5/16/07), 957 So.2d 911,writ denied,2007–1482 (La.10/5/07), 964 So.2d 946.

LSA–R.S. 9:5606 provides, in pertinent part:

A. No action for damages against any insurance agent, broker, solicitor, or other similar licensee under this state, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide insurance services shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered. However, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the...