Taxicab Ins. Store, LLC v. Am. Serv. Ins. Co.

• Decision Date: 12 July 2017
• Docket Number: No. 2017-CA-0004.,2017-CA-0004.
• Parties: TAXICAB INSURANCE STORE, LLC v. AMERICAN SERVICE INSURANCE COMPANY, INC., Regions Insurance, Inc., Michael Joseph Harrington, and Charlotte Louise Leblanc
• Court: Court of Appeal of Louisiana — District of US

224 So.3d 451

TAXICAB INSURANCE STORE, LLC

v.AMERICAN SERVICE INSURANCE COMPANY, INC., Regions Insurance, Inc., Michael Joseph Harrington, and Charlotte Louise Leblanc

No. 2017-CA-0004.

Court of Appeal of Louisiana, Fourth Circuit.

JULY 12, 2017

LARRY S. BANKSTON, JENNA H. LINN, BANKSTON & ASSOCIATES, LLC, 8708 Jefferson Hwy., Suite A, Baton Rouge, Louisiana 70809, Counsel for Plaintiff/Appellant

LARRY FELDMAN, JR., VICKIE A. ELMER, MARK J. CHANEY III, McGLINCHEY STAFFORD, PLLC, 601 Poydras Street, Suite 1200, New Orleans, Louisiana 70130, Counsel for Defendant/Appellee, American Service Insurance, Inc.

WILLIAM D. SHEA, ADAMS AND REESE, LLP, 450 Laurel Street, Suite 1900, Baton Rouge, Louisiana 70801, Counsel for Defendants/Appellees, Regions Insurance, Inc., Charlotte Louise Leblanc and Michael Joseph Harrington

(Court composed of Chief Judge James F. McKay III, Judge Rosemary Ledet, Judge Sandra Cabrina Jenkins )

JAMES F. MCKAY III, CHIEF JUDGE

Plaintiff, Taxicab Insurance Store, LLC ("TIS"), seeks appellate review of the trial court's September 20, 2016 judgment, granting the exceptions of no cause of action and no right of action filed by American Service Insurance Company, Inc. ("ASIC"), Michael J. Harrington ("Harrington"), Charlotte Louise LeBlanc ("LeBlanc"), and Regions Insurance Inc. ("Regions") (collectively referred to as "the defendants"), dismissing TIS's action in its entirety, with prejudice. For the reasons set forth below, we affirm.

STATEMENT OF FACTS AND PROCEDURAL HISTORY

In 2011, TIS began operating as a producer for Imperial Fire and Casualty Insurance Company ("Imperial"), providing commercial automobile insurance policies to taxicab drivers in Louisiana. Thereafter, ASIC also began issuing insurance policies to taxicab drivers in the greater New Orleans area. Regions, Harrington, and LeBlanc acted as producers for ASIC.

TIS filed a petition for damages and a supplemental/amending petition against the defendants.¹ Therein, TIS claims that the defendants were working together to solicit business from TIS's customers by offering illegal insurance policies at unapproved premium rates. The petition maintains that the defendants specifically marketed the illegal policies to TIS's customers, representing that ASIC could offer lower rates and better coverage. TIS asserts that the defendants were aware that the rates were not approved by the Insurance Commissioner, and that certain unapproved discounts and products were being offered to the taxicab insureds in violation of the law.² TIS further alleges a significant loss of business as a result of the defendants' actions.

The petition for damages, as amended, asserts the following eight counts, or causes of action, against the defendants: 1) tort; 2) fraud; 3) tortious interference with a contract; 4) tortious interference with a business relationship; 5) violations of the Louisiana Unfair Trade Practices Act ("LUTPA"), La. R.S. 51:1401, et seq. ; 6) violations of the Louisiana Anti–Trust Act, La. R.S. 51:122 and 123; 7) unjust enrichment; and alternatively, 8) declaratory relief, asserting that La. R.S. 51:1406(1) is unconstitutional.

In response to TIS's supplemental and amending petition, the defendants filed exceptions of no cause of action and no right of action, arguing, generally, that the alleged violations of the Insurance Code cannot support a private cause of action for damages because the Insurance Commissioner has exclusive jurisdiction to enforce the Insurance Code. More specifically, the defendants argued in support of the exceptions that: 1) TIS does not have a claim for tort, fraud, or unjust enrichment because it does not allege that the defendants made any representations or had any duty to TIS; 2) TIS does not have a tortious interference with a contract claim because there was no contract between TIS and the defendants; 3) TIS does not have a tortious interference with a business relationship claim because the petition fails to allege facts to show malice or ill-will or that the defendants prevented any party from dealing with TIS; 4) TIS does not have a LUTPA claim because such claims are subject to the exclusive jurisdiction of the Louisiana Insurance Commissioner; and 5) TIS does not have an anti-trust claim because it does not allege the existence of a horizontal or vertical agreement and does not allege facts that would support a monopoly claim.

The matter was heard on September 9, 2016. In a judgment dated September 20, 2016, the trial court granted the defendants' exceptions of no cause of action and no right of action and dismissed the action in its entirety, with prejudice.³ TIS timely appealed.

On appeal, TIS sets forth eight assignments of error, asserting that the trial court erred in granting the exceptions, and in finding that TIS failed to set forth a cause and/or right of action against the defendants for: 1) tort, 2) fraud; 3) tortious interference with a contract; 4) tortious interference with a business relationship; 5) unfair trade practices; 6) anti-trust violations; 7) unjust enrichment; and 8) declaratory relief concerning the constitutionality of La. R.S. 51:1406(1). For the reasons set forth below, we find no merit in these assignments of error.

LAW AND ANALYSIS

Standard of Review

In Zeigler v. Housing Authority of New Orleans , 2015-0626, pp. 4-5 (La. App. 4 Cir. 3/23/16), 192 So.3d 175, 178, this Court reiterated the standard of review regarding exceptions of no cause of action and no right of action, as follows:

"Exceptions of no cause of action present legal questions, and are reviewed under the de novo standard of review." Phillips v. Gibbs , 2010-0175, p. 3 (La. App. 4 Cir. 5/21/10), 39 So.3d 795, 797. This exception is designed to test the legal sufficiency of a petition by determining whether a party is afforded a remedy in law based on the facts alleged in the pleading. Id. , 2010–0175 at p. 3, 39 So.3d at 797–98. "All well-pleaded allegations of fact are accepted as true and correct, and all doubts are resolved in favor of sufficiency of the petition so as to afford litigants their day in court." Foti v. Holliday , 2009-0093, p. 5 (La. 10/30/09), 27 So.3d 813, 817. "The burden of demonstrating that a petition fails to state a cause of action is upon the mover." Id., citing Ramey v. DeCaire , 2003-1299, p. 7 (La. 3/19/04), 869 So.2d 114, 119.

Likewise, "[p]eremptory exceptions raising the objection of no right of action are reviewed de novo on appeal as they involve questions of law." Fortier v. Hughes , 2009-0180, p. 2 (La. App. 4 Cir. 6/17/09), 15 So.3d 1185, 1186. "The exception of no right of action tests whether the plaintiff has a real and actual interest in the action." Weber v. Metro. Cmty. Hospice Found., Inc ., 2013-0182, p. 4 (La. App. 4 Cir. 12/18/13), 131 So.3d 371, 374, citing La. C.C.P. art. 927(5). The function of the exception is to determine whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the lawsuit. Louisiana Paddlewheels v. Louisiana Riverboat Gaming Com'n , 94-2015, p. 4 (La. 11/30/94), 646 So.2d 885, 888. "The exception of no right of action assumes that the petition states a valid cause of action for some person and questions whether the plaintiff in the particular case is a member of the class that has a legal interest in the subject matter of the litigation." Indus. Companies, Inc. v. Durbin , 2002-0665, p. 12 (La. 1/28/03), 837 So.2d 1207, 1216.

Cause of Action/Count 1 (Tort)

TIS alleges that the defendants owed a duty to compete fairly and honestly and to comply with the rules prescribed by the Louisiana Insurance Code. La. R.S. 22:12 provides that "[n]o person shall be authorized to transact or shall transact a business of insurance in this state without complying with the provisions of this Code." The petition alleges that the defendants breached their duty to comply with the state's insurance regulations, claiming that the defendants, in issuing unlawful insurance contracts, intentionally violated the Insurance Code in order to commandeer business away from TIS.

The Insurance Commissioner is charged with the enforcement of the Insurance Code. See La. R.S. 22:11. La. R.S. 22:13(A) lists the remedies for violations of the provisions of the Insurance Code, which includes penalties assessed by the Commissioner. The Insurance Code, however, does not provide for a private right of action for violations. See Clausen v. Fidelity and Deposit Company of Maryland , 95-0504, p. 4 (La. App. 1 Cir. 8/4/95), 660 So.2d 83, 86.

In Louisiana, legal responsibility in tort is determined by application of a duty/risk analysis. This analysis requires the plaintiff to prove four distinct elements: (1) existence of a duty owed by the defendant to the plaintiff; (2) a breach of that duty; (3) the breach is a cause in fact of damage; and (4) actual damage was sustained by the plaintiff. Private Connection Property, Inc. v. Fox Cars , LLC, 2008-1129, p. 9 (La. App. 4 Cir. 2/10/09), 6 So.3d 866, 872 (citing Becnel v. Grodner , 2007-1041, p. 3 (La. App. 4 Cir. 4/2/08), 982 So.2d 891, 894 ).

In the present case, the only duty alleged to have been breached by the defendants is their violations of the Insurance Code. The petition does not assert a legal relationship between TIS and the defendants, and it fails to establish the existence of a duty owed to TIS. Thus, TIS's tort claim fails as a matter of law.

Cause of Action/Count II (Fraud)

TIS alleges that the defendants committed fraud by knowingly issuing illegal policies to taxicab drivers, and by intentionally misrepresenting and/or suppressing the truth to the taxicab drivers regarding the policies. It is further alleged that this misrepresentation was done with the intention of obtaining an unjust advantage, while luring business away from TIS.

To state a cause of action for fraud, the following three elements must be alleged: " ‘(1) a misrepresentation of material fact, (2) made with the...