Theriot v. Midland Risk Ins. Co.

• Decision Date: 20 May 1997
• Citation: 694 So.2d 184
• Parties: 95-2895 La
• Court: Louisiana Supreme Court

Page 184

694 So.2d 184

95-2895 La. 5/20/97

Dianna M. THERIOT, Individually and on Behalf of Her Minor Daughter, Gina M. Theriot v. MIDLAND RISK INSURANCE COMPANY, et al

No. 95-C-2895.

Supreme Court of Louisiana.

May 20, 1997.

Byron Andrew Richie, Charles Vernon Richie, Richie & Richie, Shreveport, for Applicant.

Christopher Paul Ieyoub, Plauche, Smith & Nieset, Clayton Arthur Larsh Davis, James David Cain, Jr., Hunter William Lundy, Lake Charles, for Respondent.

Christopher R. Lawler, Metairie, Bryan Scott Skillman, New Orleans, for amicus curiae Allstate Ins. Co., National Association of Independent Insurance.

Timothy G. Schafer, New Orleans, for amicus curiae United Service Automobile Association.

Cliffe Edward Laborde, III, Lafayette, for amicus curiae Louisiana Association Defense Counsel.

Elizabeth Baker Murrill, Baton Rouge, for amicus curiae Louisiana Trial Lawyers Association.

ON REHEARING

[95-2895 La. 1] MARCUS, Justice. ^*

Gina Theriot, a minor, was injured and her vehicle rendered a total loss when her car was struck in the rear by a truck driven by Brian Gaspard. At the time of the collision, Theriot had stopped her car to avoid colliding with a Camaro driven by Harry Thornton, which had spun out of control in the roadway ahead during a heavy rain. Dianna Theriot, mother of Gina Theriot, made a claim individually and on behalf of Gina Theriot for property damage, expenses and personal injuries against the insurers of both Thornton and Gaspard.

Thornton's insurer, Midland Risk Insurance Company, took the position that the accident was caused by the superseding fault of Gaspard, the driver of the vehicle that rear-ended Theriot's car. Gaspard's insurer, Shelter Insurance Company, took the position that Thornton was at fault for having lost control of his vehicle, thereby setting in motion the chain of events that led to the collision. Both insurers agreed that Gina Theriot bore no responsibility for the accident.

Being unable to agree on the proper allocation of fault between their respective insureds, Midland offered to pay ten percent of the property damage claim and Shelter offered to pay thirty percent of the claim. Plaintiff rejected both offers and [95-2895 La. 2] pursued her claims in court against Gaspard, Thornton, and their respective insurers for damages resulting from the collision. She also sought damages and penalties pursuant to La. R.S. 22:1220, asserting that both insurers had breached a statutory duty to adjust her claim fairly and promptly and to make reasonable efforts to settle the claim.

The insurers answered denying that La. R.S. 22:1220 imposes duties that run directly in favor of third-party claimants such as the plaintiff in this case and alternatively argued that the statute provides a cause of action only for violations of the specific acts listed in La. R.S. 22:1220, B. Plaintiff admitted that Midland had not committed any of the enumerated acts listed in Subsection B, but claimed that Midland was nevertheless liable for violating broad general duties set forth in Subsection A of the statute. She further asserted that the list of prohibited acts in Subsection B is illustrative only.

After a trial on the merits, the trial judge apportioned fault equally between Gaspard and Thornton for causing the accident. He awarded general and special damages incurred as a result of the collision but refused to make any award pursuant to La. R.S. 22:1220. ¹ On plaintiff's appeal from the refusal to award damages and penalties pursuant to La. R.S. 22:1220, the court of appeal reversed, concluding that Midland had breached a broad affirmative duty imposed by the statute in favor of both insureds and third-party claimants to make reasonable efforts toward the settlement of all claims. The court of appeal further concluded that the list of prohibited actions in La. R.S. 22:1220, B is illustrative rather than exclusive. It awarded damages and penalties in the amount of $6000.00 against Midland only. ² Upon the application of Midland, we granted certiorari ³ and affirmed the ruling of the court of [95-2895 La. 3] appeal.

Upon Midland's application, we granted a rehearing to review our prior holding. ⁴ The sole issue before us on rehearing is the proper interpretation and application of La. R.S. 22:1220. Specifically, we are called upon to answer two questions: 1) does La. R.S. 22:1220 create a right of action for damages and penalties in favor of third-party claimants?; and 2) if so, is the list of prohibited acts contained in La. R.S. 22:1220, B an exclusive or illustrative list of the activities for which damages and penalties can be awarded under the statute?

The function of statutory interpretation and the construction to be given to legislative acts rests with the judicial branch of the government. Touchard v. Williams, 617 So.2d 885 (La.1993). The starting point in the interpretation of any statute is the language of the statute itself. Touchard, 617 So.2d at 888. Ambiguous text is to be interpreted according to the generally prevailing meaning of the words employed. La. Civ.Code art. 11. Their meaning may be sought by consulting other laws on the same subject matter. Succession of Baker, 129 La. 74, 55 So. 714 (1911). Where a part of an act is to be interpreted, it should be read in connection with the rest of the act and all other related laws on the same subject. Thibaut v. Board of Com'rs of Lafourche Basin Levee Dist., 153 La. 501, 96 So. 47 (1923).

We have long held that the paramount consideration in interpreting a statute is ascertaining the legislature's intent and the reasons that prompted the legislature to enact the law. Garrett v. Seventh Ward General Hosp., 95-0017 (La.9/22/95); 660 So.2d 841; Touchard, 617 So.2d at 888. Legislative intent is the fundamental question in all cases of statutory interpretation; rules of statutory construction are designed to ascertain and enforce the intent of the statute. State v. Piazza, 596 So.2d 817 (La.1992).

[95-2895 La. 4] One particularly helpful guide in ascertaining the intent of the legislature is the legislative history of the statute in question and related legislation. Malone v. Cannon, 215 La. 939, 41 So.2d 837 (1949). Laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the same subject. City of New Orleans v. Board of Sup'rs., 216 La. 116, 43 So.2d 237 (1949). We give harmonious effect to all acts on a subject when reasonably possible. Piazza, 596 So.2d at 819.

We have generally held that statutes subjecting insurers to penalties are to be considered penal in nature and should be strictly construed. Hart v. Allstate Ins. Co., 437 So.2d 823 (La.1983). We have also recognized that laws in derogation of established rights and principles are to be strictly construed. Where there is any doubt about the intent or meaning of a law in derogation of long accepted rules, the statute is given the effect that makes the least rather than the most change in the existing body of the law. Touchard, 617 So.2d at 892. Moreover, the time honored maxim, expressio unius et exclusio alterius is yet another helpful guide. It teaches us that when the legislature specifically enumerates a series of things, the legislature's omission of other items, which could have been easily included in the statute, is deemed intentional. State v. Louisiana Riverboat Gaming Com'n., 94-1872, 1914 (La.5/22/95); 655 So.2d 292. And we have held that the legislature is presumed to act with full knowledge of well settled principles of statutory construction. Monteville v. Terrebonne Par. Con. Gov't, 567 So.2d 1097 (La.1990).

With these established principles of statutory interpretation in mind, we turn our attention to La. R.S. 22:1220 which provides in pertinent part:

§ 1220. Good faith duty; claims settlement practices; cause of action; penalties

A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.

[95-2895 La. 5] B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer's duties imposed in Subsection A:

(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.

(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.

(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of the insured.

(4) Misleading a claimant as to the applicable prescriptive period.

(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after the receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.

C. In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater. Such penalties, if awarded, shall not be used by the insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings.

....

The first question presented for our review, whether or not the statute creates a right of action directly in favor of third-party claimants, was implicitly answered in our decision in Manuel v. La. Sheriff's Risk Mgmt. Fund, 95-0406 (La.11/27/95); 664 So.2d 81. The issue before us in Manuel was whether La. R.S. 22:1220, passed in 1990, could be used to...