Toerner v. Henry

• Decision Date: 15 February 2002
• Docket Number: No. 2000 CA 2934.,2000 CA 2934.
• Citation: 812 So.2d 755
• Parties: John G. TOERNER v. Elvira HENRY and Safeway Insurance Company of Louisiana.
• Court: Court of Appeal of Louisiana — District of US

812 So.2d 755

John G. TOERNER v. Elvira HENRY and Safeway Insurance Company of Louisiana.

No. 2000 CA 2934.

Court of Appeal of Louisiana, First Circuit.

February 15, 2002.

Rehearing Denied April 1, 2002.

Walter Antin, Jr., Hammond, Counsel for Plaintiff/Appellee John G. Toerner.

James Brady, Lafayette, Counsel for Defendants/Appellants Elvira Henry and Safeway Insurance Company of Louisiana.

Before: FITZSIMMONS, DOWNING, and LANIER¹, JJ.

FITZSIMMONS, J.

Plaintiff, Mr. John G. Toerner, and defendant, Elvira Henry, were involved in an accident. Ms. Henry's insurer, Safeway Insurance Company (Safeway), reimbursed Mr. Toerner's insurer for repairs to the Toerner vehicle. However, Mr. Toerner made an additional claim to Safeway for the diminished value of the vehicle that could not be repaired. Proof of the claim, including amounts related to repair, insurance, and "inherent" diminished value, was forwarded to Safeway on April 14, 1999. In response, Safeway did not inspect the vehicle, but did talk to the company that did the repair work. Safeway was told that the vehicle had been repaired. Based on that conversation and their interpretation of the proof of claim, Safeway concluded that the claims for diminished value were related to faulty repair work and denied the claim. Mr. Toerner filed suit and alleged that his vehicle suffered diminished value notwithstanding the repair.

After a trial, the trial court held in favor of plaintiff, Mr. Toerner. The trial court accepted the testimony of Mr. Toerner's expert over evidence submitted by the defendants. Essentially, Mr. Toerner's expert testified that the "core support" of the vehicle was damaged. Even though it had been properly repaired, the expert opined that a repaired "core support" resulted in a diminished market value for the vehicle.

By judgment dated August 1, 2000, the trial court awarded $2500 for diminished value, with interest from the date of judicial demand. Additionally, the trial court found that Safeway failed "to adequately investigate" and arbitrarily and capriciously failed to pay the claim timely. In the same judgment, the trial court awarded $1500 for attorney fees under La. R.S. 22:658 for failure to pay the claim timely, $5000 for penalties under La. R.S. 22:1220 for failure to pay timely, the costs of the proceedings, and legal interest on the fees and penalties from the date of judgment.

Defendant, Safeway, moved for a new trial on the issue of penalties and attorney fees awarded under La. R.S. 22:1220 and 658. Safeway argued that neither statute Provided a legal basis for the award, under the facts of the instant case. Mr. Toerner did not file a motion for a new trial. In his opposition to Safeway's motion, he merely argued that he should be awarded additional penalties as damages. After a hearingaithe trial court denied the motion for new trial. In its reasons for the denial, the court found that Safeway "refused to initiate a loss adjustment" as required by law. See La. R.S. 22:658 A(3). The trial court cited La. R.S. 22:658 B(1) as its authority for the attorney fees previously awarded in the August 1st judgment. Mr. Toerner's argument for additional penalties was also denied.

Defendants, Safeway and Ms. Henry, appealed. They argue that the trial court erred in its award of attorney fees and penalties. Mr. Toerner answered the appeal. He asks for additional damages, penalties, and attorney fees. He also argues that the legal interest on the penalties and fees was due from the date of the judicial demand, not the date of the judgment. We reverse the award of penalties and attorney fees.

CLAIM UNDER LA. R.S. 22:658

The specific provisions of La. R.S. 22:658 governing failure to pay a claim timely do not apply to this particular claim. The claimant here is not an insured and no written agreement or settlement was reached. See La. R.S. 22:658 A(1) & (2). However, Mr. Toerner argues that La. R.S. 22:658 A(3) does provide a third party cause of action for penalties when an insurer fails to initiate an investigation timely. That section relied on provides that:

(3) Except in the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim and of a claim for reasonable medical expenses within fourteen days after notification of loss by the claimant. . . . Failure to comply with the provisions of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1220.

A plain reading of section 658 A(3) requires only that the process be initiated. In other words, reasonable steps to gather necessary information on the claim must be begun within 14 days.² See McClendon v. Economy Fire & Casualty Insurance Company, 98-1537, p. 7 (La.App. 3 Cir. 4/7/99), 732 So.2d 727, 731. Certainly, the simple opening of a file is insufficient, but the statute does not require that the claim be thoroughly investigated and settled within 14 days.

It was undisputed that Safeway received the proof of claim, spoke with the repair shop, reviewed the file, and concluded that the diminished value claim was actually a claim for faulty repairs. Although the insurer did not visually inspect the vehicle, the record does not reasonably support a finding that the insurer failed to "initiate loss adjustment" within fourteen days. A failure to inspect the vehicle is not a failure to initiate. The scant information supplied in Mr. Toerner's initial claim for diminished value also distinguishes Safeway's responsive investigatory steps from a clear "failure" to "initiate loss adjustment" within fourteen days. La. R.S. 22:658 A(3).

Therefore, regardless of which section of La. R.S. 22:658 the trial court relied on, we find that the trial court legally erred. Under the facts of this particular case, La. R.S. 22:658 provides no basis for the penalty and attorney fees awarded by the trial court.

CLAIM UNDER LA. R.S. 22:1220

The Louisiana Supreme Court has held that the broad-based duty owed by an insurer, found in section 1220 A, cannot be used to amplify the exclusive list of sanctioned acts in section 1220 B. Theriot v. Midland Risk Insurance Company, 95-2895 (La.5/20/97), 694 So.2d 184; see Vaughn v. Franklin, 2000-0291, p. 16 (La. App. 1 Cir. 3/28/01), 785 So.2d 79, 91, writ denied, 2001-1551 (La.10/5/01), 798 So.2d 969. However, the supreme court did recognize that section 1220 B contained certain limited causes of actions for penalties by third party claimants. Theriot, 95-2895 at pp. 15-16, 694 So.2d at 193. When a statute provides for penalties, the statutory language is strictly construed. Theriot, 95-2895 at p. 4, 694 So.2d at 186; Vaughn, 2000-0291 at p. 16, 785 So.2d...