Taranto v. La. Citizens Prop. Ins. Corp.. D/B/A La. Citizens Coastal Plan.

• Decision Date: 20 May 2011
• Docket Number: No. 2010–C–0105.,2010–C–0105.
• Parties: Sherry Coleman TARANTO, Dean Coleman and William S. Coleman, Jr.v.LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION d/b/a Louisiana Citizens Coastal Plan.
• Court: Louisiana Supreme Court

62 So.3d 721

Sherry Coleman TARANTO, Dean Coleman and William S. Coleman, Jr.

v.LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION d/b/a Louisiana Citizens Coastal Plan.

No. 2010–C–0105.

Supreme Court of Louisiana.

March 15, 2011.Rehearing Denied May 20, 2011.

Bienvenu, Foster, Ryan & O'Bannon, Douglas Matthew Kleeman, John W. Waters, Jr., Kristin Grace Mosely–Jones, New Orleans, LA, Hailey, McNamara, Hall, Larmann & Papale, LLP, John Tilghman Culotta, Darren Albert Patin, Metairie, LA, for Applicant.Richard Charles Trahant, Jack Edward Morris, Metairie, LA, Shearman–Denenea, John Henry Denenea, Jr., New Orleans, LA, for Respondent.JOHNSON, Justice.¹

[2010-0105 (La. 1] We granted this writ application to determine whether the Plaintiffs' lawsuit, seeking damages from the Louisiana Citizens Property Insurance Corporation, that was filed nearly three years after Hurricane Katrina, is prescribed. The Fourth Circuit Court of Appeal held that the prescriptive period was interrupted by a timely filed class action petition against the insurer, which included the Plaintiffs as putative class members. Taranto v. Louisiana Citizens Property Ins. Corp., 09–0413 (La.App. 4 Cir. 12/16/09), 28 So.3d 543. For the reasons that follow, we hold that despite the language of the LCPIC insurance policy, which mandated a one year suit limitation, the Plaintiffs' lawsuit was timely filed because prescription was suspended upon the [2010-0105 (La. 2] timely filing of the pending class action suits, which included the Plaintiffs as putative class members.

FACTS AND PROCEDURAL HISTORY

On August 29, 2005, Hurricane Katrina completely devastated parts of New Orleans, Louisiana and the surrounding areas, and for the purpose of this case, the home of Sherry Coleman Taranto, Dean Coleman, and William S. Coleman, Sr. (hereinafter referred to as “Plaintiffs”), located at 25259 Chef Menteur Highway. In response to the extraordinary circumstances associated with Hurricanes Katrina and Rita, the Louisiana Legislature enacted House Bill 1289 and House Bill 1302, known as Acts 2006, Nos. 739 ² and 802, which extended the prescriptive period within which insureds were allowed an additional year to file certain claims under their insurance policies for losses incurred by the storms.³ In May of 2006, the Louisiana [2010-0105 (La. 3] Citizens Property Insurance Corporation (“LCPIC”) unilaterally extended the period in which its insureds could file lawsuits concerning their Hurricane Katrina damage to September 4, 2007. On June 27, 2008, the Plaintiffs filed a petition against their insurer, LCPIC, seeking payment of their policy limits and damages, including damages for emotional distress and mental anguish. The Plaintiffs alleged, in pertinent part, that (1) the Plaintiffs' property and home were covered by a policy of insurance issued by LCPIC; (2) the property was completely destroyed on August 29, 2005, as a result of Hurricane Katrina; (3) the Plaintiffs presented proof of loss and made demand for payment of the policy limits; and (4) LCPIC refused to pay the policy limits. In the Petition for Damages, the Plaintiffs argued that the LCPIC's internal operating manual, called “Louisiana Citizens Claims Program and Procedure Guide,” from April 2005, included a ten (10) year time limitation to commence actions for first party losses.

In response, LCPIC filed an Exception of Prescription, arguing that the suit was not filed within one year of loss and that the extended period of prescription provided by legislation had also expired. The trial court granted the Defendant's Exception of Prescription and dismissed the Plaintiffs' claims with prejudice, finding that the Plaintiffs failed to timely file their suit despite the legislative enactment that extended the time to file. The trial court found that the Plaintiffs could not rely on LCPIC's operating manual because it contained a “typographical error indicating ten years to file litigation.” The trial court held that the Plaintiffs could not have had a “meeting of the minds” regarding a ten-year suit limitation period when the Plaintiffs undisputably were not aware of the internal manual until they received it in discovery. [2010-0105 (La. 4] Specifically, the trial court ruled that

the operating manual ... was an in-house document that contained a typo ... indicating ten years to file litigation. This Court finds that the Plaintiffs' insurance policy set forth a one-year prescriptive period for the filing of claims. In addition, the legislative enactment allowed additional time for parties to file suit related to Hurricane Katrina damage. As such, Plaintiff cannot rely on an internal document produced during discovery to expand the prescriptive period.

The court of appeal reversed the trial court's ruling, holding that the prescriptive period was interrupted by the timely filing of a class action against LCPIC in which the Plaintiffs were putative class members. In Pitts v. Louisiana Citizens Property Ins. Corp., 08–1024 (La.App. 4 Cir. 1/7/09), 4 So.3d 107, writ denied, 09–286 (La.4/3/09), 6 So.3d 772, the Fourth Circuit held that under LSA–C.C.P. art. 596, the filing of class action suits against LCPIC, i.e., Buxton v. LCPIC, 06–8341, Civil District Court, Orleans Parish and Chalona v. LCPIC, 08–0257 (La.App. 4 Cir. 6/11/08), 3 So.3d 494, suspended or interrupted the running of prescription against Ms. Pitts' property damage claims since Ms. Pitts was found to be a putative class member when the original class action petitions were filed. In summary, that court determined that prescription was interrupted on August 25, 2006, as to all putative class members, including Ms. Pitts, who had not opted-out of the class.

LCPIC filed a writ of certiorari, and this Court granted the writ application. Taranto v. Louisiana Citizens Property Ins. Corp., 10–105 (La.4/16/10), 31 So.3d 1068.

DISCUSSION

The issue before this Court is whether the Plaintiffs' lawsuit had prescribed when it was filed after the expiration of the suit limitation period provided in the policy of insurance and after the expiration of the extended deadline enacted by the Louisiana Legislature despite other pending class actions against LCPIC involving Hurricane Katrina claims, which purportedly included Plaintiffs as putative class [2010-0105 (La. 5] members.

In reviewing a peremptory exception of prescription, the standard of review requires an appellate court to determine whether the trial court's finding of fact was manifestly erroneous. Carter v. Haygood, 04–0646, p. 9 (La.1/19/05), 892 So.2d 1261, 1267. Jurisprudence provides that statutes involving prescription are strictly construed against prescription and in favor of the obligation sought to be extinguished. Bailey v. Khoury, 04–0620 (La.1/20/05), 891 So.2d 1268, 1275. On the issue of prescription, the mover bears the burden of proving prescription. Pitts, supra. However, if the petition is prescribed on its face, then the burden of proof shifts to the Plaintiff to negate the presumption by establishing a suspension or interruption. Bailey, 891 So.2d at 1275.

There are two procedural devices used in Louisiana to bar valid substantive claims which have not been timely filed, namely prescription and peremption. Dozier v. Ingram Barge Co., 96–1370 (La.App. 4 Cir. 1/28/98), 706 So.2d 1064, 1066. According to our civilian tradition, prescription is defined as a means of acquiring real rights or of losing certain rights as the result of the passage of time. Marjorie Nieset Neufeld, Prescription and Peremption—The 1982 Revision of the Louisiana Civil Code, 58 Tul. L.Rev. 593 (November 1983) (citing to Baudry–Lacantinerie & Tissier as well as Aubry & Rau).⁴ The article suggests, in pertinent part:

Traditionally, prescription has been divided into two categories: acquisitive prescription ... and liberative prescription, which is a mode of resisting a claim by virtue of the claimant's inaction over an established period of time. Accordingly, the Louisiana Civil Code of 1870 provided that “prescription is a manner of acquiring the ownership of property, or discharging debts, by the effect of time, and under the [2010-0105 (La. 6] conditions regulated by law.”Id. at 594–595.

In Cichirillo v. Avondale Industries, Inc., 04–C–2894, 04–C–2918 (La.11/29/05), 917 So.2d 424, this Court determined that the fundamental purpose of the prescription statutes is “to afford a defendant economic and psychological security if no claim is made timely and to protect the defendant from stale claims and from the loss or non-preservation of relevant proof.” According to the Louisiana Civil Code, there are only three forms of prescription: acquisitive, liberative, and prescription of nonuse. See LSA–C.C. art. 3445. This Court defines the term “liberative prescription” as a “period of time fixed by law for the exercise of a right.” State ex. rel. Div. of Admin. v. McInnis Bros. Constr., 97–0742 (La.10/21/97), 701 So.2d 937, 939. The Civil Code states that “there is no prescription other than that established by legislation” and “prescription runs against all persons” unless an exception is established by legislation. LSA–C.C. arts. 3457, 3467.

Louisiana jurisprudence recognizes three theories upon which a Plaintiff may rely to establish that prescription has not run: suspension, interruption, and renunciation.⁵ Marco Demma v. Automobile Club Inter–Insurance Exchange, 08–2810 (La.6/26/09), 15 So.3d 95, 98. Although sometimes used interchangeably, the concepts of “interruption” and “suspension” are distinguishable. The Louisiana Civil Code article 3462 provides in pertinent part “[p]rescription is interrupted when the owner commences action against the possessor, or when the obligee commences action against the obligor, in a court of competent jurisdiction and venue.” ⁶ If [2010-0105 (La. 7] prescription is interrupted, the time that has run is not counted, and prescription commences to...