Wooley v. Lucksinger
| Decision Date | 29 April 2011 |
| Docket Number | 2009–C–0585,2009–C–0586.,Nos. 2009–C–0571,2009–C–0584,s. 2009–C–0571 |
| Parties | J. Robert WOOLEY, as Commissioner of Insurance for the State of Louisianav.Thomas S. LUCKSINGER, Michael D. Nadler, Stephen J. Nazarenus, Scott Westbrook, Michael K. Jhin, William F. Galtney, John P. Mudd, Executive Risk Indemnity, Inc., Executive Risk Management Associates, Executive Risk Specialty Insurance Co., Executive Liability Underwriters and Greenwich Insurance Co., AmCareco, Inc., AmCare Management, Inc.J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, In his Capacity as Liquidator of AmCare Health Plans of Louisianav.Foundation Health Corporation, Foundation Health Systems, Inc., Health Net, Inc.J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, As Liquidator for AmCare Health Plans of Louisiana, Inc., In Receivershipv.Price Waterhouse Coopers, LLP. |
| Court | Louisiana Supreme Court |
OPINION TEXT STARTS HERE
Robert Elton Arceneaux, Metairie, The McKernan Law Firm, J.J. McKernan, George & Brothers, LLP, R. James George, for Applicant (No. 2009–C–571).Lemmon Law Firm, Harry T. Lemmon, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Robert B. Beick, Jr., Leon Gary, Jr., James Conner Percy, Sarah Bree Belter, David Matthew Kerth, Brandon Kelly Black, Walters, Papillion, Thomas, Cullens, LLC, Edward Joseph Walters, Jr., Joseph Elton Cullens, Jr., Stephen Layne Lee, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Respondent (No. 2009–C–571).Robert Elton Arceneaux, Metairie, Lemmon Law Firm, Harry T. Lemmon, New Orleans, George & Brothers, LLP, R. James George, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Applicant (No. 2009–C–584).James D. Caldwell, Attorney General, Dominique Jones Sam, Assistant Attorney General, Mary Olive Pierson, Robert Elton Arceneaux, Metairie, George & Brothers, LLP, R. James George, Breazeale, Sachse & Wilson, LLP, Claude Favrot Reynaud, Jr., Jeanne Camille Comeaux, Peter J. Butler, Jr., Everitt, Pratt & Latham & Donovan, LLC, David Michael Latham, Keary L. Everitt, William Lawton Pratt, New Orleans, Albert I. Donovan, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, David Matthew Kerth, Leon Gary, Jr., Robert B. Bieck, Jr., Sarah Bree Belter, James Conner Percy, Brandon Kelly Black, Koederitz Law Firm, LLC, Gary Paul Koederitz, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, Perry, Atkinson, Balhoff, Mengis & Burns, LLC, Robert Joseph Burns, Jr., Phelps Dunbar, LLP, George Bartlett Hall, Jr., Kelsey Kornick Funes, Seale, Smith, Zuber & Barnette, William C. Kaufman, III, Taylor, Porter, Brooks & Phillips, LLP, Patrick David Seiter, Harry Joseph Philips, Jr., Robert Wylie Barton, Amy Collier Lambert, The Long Law Firm, LLP, James Wendell Clark, David Laurence Guerry, Daniel D. Holiday, III, Adams & Reese, LLP, Verne Thomas Clark, Jr., The McKernan Law Firm, J.J. McKernan, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Respondent (No. 2009–C–584).Robert Elton Arceneaux, Metairie, George & Brothers, LLP, R. James George, Lemmon Law Firm, Harry T. Lemmon, New Orleans, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Applicant (No. 2009–C–0585).Adams & Reese, LLP, Verne Thomas Clark, Jr., James D. Caldwell, Attorney General, Dominique Jones Sam, Assistant Attorney General, Lemmon Law Firm, Harry T. Lemmon, New Orleans, Mary Olive Pierson, Robert Elton Arceneaux, Metairie, George & Brothers, LLP, R. James George, Breazeale, Sachse & Wilson, LLP, Jeanne Camille Comeaux, Claude Favrot Reynaud, Jr., Peter J. Butler, LLC, Peter J. Butler, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, James Conner Percy, David Matthew Kerth, Leon Gary, Jr., Robert B. Bieck, Jr., Sarah Bree Belter, Brandon Kelly Black, Koederitz Law Firm, LLC, Gary Paul Koederitz, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, Perry, Atkinson, Balhoff, Mengis & Burns, LLC, Robert Joseph Burns, Jr., Phelps Dunbar, LLP, George Bartlett Hall, Jr., Kelsey Kornick Funes, Seale, Smith, Zuber & Barnette, William C. Kaufman, III, Taylor, Porter, Brooks & Phillips, LLP, Patrick David Seiter, Harry Joseph Philips, Jr., Amy Collier Lambert, Robert Wylie Barton, The Long Law Firm, LLP, James Wendell Clark, David Laurence Guerry, Daniel D. Holiday, III, he McKernan Law Firm, J.J. McKernan, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Respondent (No. 2009–C–0585).Robert Elton Arceneaux, Metairie, Lemmon Law Firm, Harry T. Lemmon, New Orleans, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Applicant (No. 2009–C–0586).James D. Caldwell, Attorney General, Dominique Jones Sam, Assistant Attorney General, Mary Olive Pierson, Robert Elton Arceneaux, Metairie, Breazeale, Sachse & Wilson, LLP, Claude Favrot Reynaud, Jr., Jeanne Camille Comeaux, Peter J. Butler, Jr., Everitt, Pratt & Latham & Donovan, LLC, David Michael Latham, Keary L. Everitt, William Lawton Pratt, New Orleans, Albert I. Donovan, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, David Matthew Kerth, Leon Gary, Jr., Robert B. Bieck, Jr., Sarah Bree Belter, James Conner Percy, Brandon Kelly Black, Koederitz Law Firm, LLC, Gary Paul Koederitz, Walters, Papillion, Thomas, Cullens, LLC, Joseph Elton Cullens, Jr., Edward Joseph Walters, Jr., Stephen Layne Lee, Perry, Atkinson, Balhoff, Mengis & Burns, LLC, Robert Joseph Burns, Jr., Phelps Dunbar, LLP, George Bartlett Hall, Jr., Kelsey Kornick Funes, Seale, Smith, Zuber & Barnette, William C. Kaufman, III, Taylor, Porter, Brooks & Phillips, LLP, Patrick David Seiter, Harry Joseph Philips, Jr., Robert Wylie Barton, Amy Collier Lambert, The Long Law Firm, LLP, James Wendell Clark, David Laurence Guerry, Daniel D. Holiday, III, Adams & Reese, LLP, Verne Thomas Clark, Jr., The McKernan Law Firm, J.J. McKernan, The Morgan Law Firm, Kimberly Slay Morgan, Baton Rouge, for Respondent (No. 2009–C–586).CLARK, Justice.1
[2009-0571 (La. 2] This matter comes before the court pursuant to four writ applications filed by the plaintiffs, consolidated here for review. At issue are questions of fact and law arising in tort and contract causes of action.
In the trial court, the Louisiana Commissioner of Insurance filed three separate lawsuits against several defendants on behalf of a failing health maintenance organization. One of the lawsuits sounded in contract, the other two sounded in tort. The Oklahoma Commissioner of Insurance and a receiver appointed by the Texas Commissioner of Insurance intervened as plaintiffs in the tort cases on behalf of affiliated health maintenance organizations, organized and doing business in those states, which had similar tort causes of action against the defendants. The three lawsuits—which alleged causes of action in negligence, negligent misrepresentation, conspiracy, fraud, breach of fiduciary duty, unfair or deceptive acts or practices, and contractual liability—were consolidated. Prior to trial, all of the defendants, except one, settled with the plaintiffs. The consolidated matters were tried to both the bench and jury against the sole remaining defendant. Both the judge and jury found in favor of the plaintiffs on the tort and contract causes of action and awarded damages.
The defendant appealed. Finding errors of law which interdicted both the bench and jury findings of fact in the tort claims, the court of appeal conducted a de novo review of the record and reversed the judgments which had been rendered in favor of the plaintiffs and the awards of damages. The court of appeal, in a separate opinion, affirmed the liability of the defendant in the contract matter, but amended the trial court's judgment to reduce the amount of the award. This court granted certiorari to determine the correctness of the court of appeal's rulings.
At the outset we acknowledge this court's recitation of the facts is very [2009-0571 (La. 3] different from those discussed in the court of appeal opinion which we now review. Our study of the record convinces us the court of appeal fundamentally misunderstood the facts underlying these complex business transactions and the issues presented. However, we believe the court of appeal's confusion of the issues and failure to understand the facts are somewhat understandable. The record of these three consolidated cases is extensive, consisting of the pleadings in all three cases, a large number of documents and exhibits, and transcripts from numerous pretrial hearings and a lengthy trial.2 The business transactions, and their accompanying accounting treatment, are unusual. Most important in the consideration of the reasons for the court of appeal's failure of understanding is the fact that what is at the core of these matters is a sophisticated deception which fooled even those individuals tasked with regulating the type of transaction at issue.
The operative facts of the tortious conduct to be described are common to all of the claims asserted by the plaintiffs. From the evidence presented at trial, the judge and jury could find the following facts.
Prior to 1997, Foundation Health Corporation (“Foundation”), a Delaware corporation with its principal place of business in California, owned all of the stock [2009-0571 (La. 4] of three health maintenance organizations (“HMOs”). These subsidiary HMOs were known as Foundation Health, a Louisiana Health Plan, Inc., a Louisiana corporation operating in the State of Louisiana (“the...
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