Wooley v. Lucksinger
| Decision Date | 04 May 2007 |
| Docket Number | No. 2006 CA 1169.,No. 2006 CA 1168.,No. 2006 CA 1167.,2006 CA 1167.,2006 CA 1168.,2006 CA 1169. |
| Citation | 961 So.2d 1228 |
| Parties | J. Robert WOOLEY, Commissioner of Insurance for the State of Louisiana in his Capacity as Liquidator of Amcare Health Plans of Louisiana, Inc. v. 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 Company, Executive Liability Under Writers Greenwich Insurance Company, Amcareco, and Amcare Management Inc. J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, in his Capacity as Liquidator for Amcare Health Plans of Louisiana, Inc. v. Foundation Health Corporation, Foundation Health Systems, Inc., and Health Net, Inc. J. Robert Wooley, Commissioner of Insurance for the State of Louisiana, as Liquidator for Amcare Health Plans of Louisiana, Inc., in Receivership v. Pricewaterhousecoopers, LLP. |
| Court | Court of Appeal of Louisiana — District of US |
Edward J. Walters, Jr., Joseph E. Cullens, Jr., Baton Rouge, Counsel for Plaintiff — Appellee J. Robert Wooley, Commissioner of Insurance.
Guy M. Hohmann, Austin, TX, Counsel for Plaintiff — Appellee J. Robert Wooley, Commissioner of Insurance.
David M. Latham, Keary L. Everitt, New Orleans, Counsel for Third Party Defendant — Appellee Louisiana Department of Insurance.
Leon Gary, James C. Percy, Brandon K. Black, David M. Kerth, Baton Rouge, Counsel for Defendant — Appellant Health Net, Inc.
Robert B. Bieck, Jr., Sarah B. Belter, New Orleans, Counsel for Defendant — Appellant Health Net, Inc.
Before: CIACCIO, LANIER and CLAIBORNE, JJ.1
Defendant, Health Net, Inc. (Health Net), seeks appellate review of a judgment sustaining a peremptory exception raising the objection of no cause of action to its third party demand against the Louisiana Department of Insurance (DOI) and dismissing the third party demand with prejudice. For the following reasons, we affirm the judgment dismissing the third party demand and that portion of the judgment that dismissed the detrimental reliance cause of action with prejudice. The portion of the judgment pertaining to the third party demand for the governmental tort cause of action is amended to provide that the dismissal is without prejudice and it is ordered that the allegations contained therein are retained and considered as an affirmative defense.
These three consolidated actions were filed by J. Robert Wooley, Commissioner of Insurance for the State of Louisiana (Commissioner) in his capacity as liquidator of AmCare Health Plans of Louisiana, Inc. (AmCare-LA). These actions as finally amended alleged corporate mismanagement and accounting negligence and sought the enforcement of contractual guarantees and damages for contract fraud and tort gross negligence. Health Net owned AmCare-LA, AmCare Health Plans of Texas, Inc. (AmCare-TX), and AmCare Health Plans of Oklahoma, Inc. (AmCare-OK).2 Health Net was joined as one of many defendants. The Texas and Oklahoma insurance regulators in their capacities as receivers for AmCare-TX and AmCare-OK intervened in these actions.
Health Net answered the various petitions and filed cross claims, third party demands and reconventional demands. In particular, Health Net filed a third party demand against the State of Louisiana, by and through DOI. Health Net asserted that DOI "negligently enforced and/or negligently failed to enforce applicable laws and regulations," that because of this "the AmCare HMOs were made more deeply insolvent than they might have been had they been placed in receivership [sooner], thereby resulting in greater losses to the policyholders, creditors, shareholders (like Health Net) and the general public" and prayed for indemnity, contribution governmental tort damages and damages for detrimental reliance.
DOI responded by filing a peremptory exception raising the objection of no cause of action to each of these claims.
At the beginning of the trial of the exception, counsel for DOI stated the following:
With respect to the claims of contribution and indemnity in Health Net's opposition memorandum we received last week, Health Net states they do not oppose the exceptions of no cause of action on the grounds of contribution and indemnity. With that in mind, we would respectfully ask that a judgment be issued granting department of insurance's exception of no cause of action on the grounds of contribution and indemnity.
There was no objection by Health Net and the trial court responded, "So ordered."3
The hearing then proceeded with oral argument on the causes of action for negligence and detrimental reliance. After the matter was submitted, the trial court, for oral reasons assigned, sustained the exception. In its written judgment, the trial court dismissed all of Health Net's third party demand against DOI with prejudice.
These appeals followed.
The objection of no cause of action is raised by the peremptory exception. La. C.C.P. art. 927 A(4). An exception is a means of defense to an action, other than a denial or avoidance of the demand, used by a defendant to retard, dismiss or defeat the demand. La. C.C.P. art. 921. In particular, the function of the peremptory exception is to have the plaintiff's action declared legally nonexistent or barred by effect of law. La. C.C.P. art. 923. A civil action is a written demand filed in a court of competent jurisdiction that seeks the enforcement of a legal right (cause of action). La. C.C.P. art. 421. A civil action must state a cause of action or it will be dismissed. La. C.C.P. art. 934. A cause of action arises to permit a civil action when there has been a failure to perform an obligation and the obligation can be enforced by judicial relief. La. C.C.P. art. 423. Performance of an obligation may consist of giving, doing, or not doing something. La. C.C. art. 1756. Thus, to state a cause of action in the initial pleading in a civil action, the obligee (plaintiff) must allege facts that, if proven, would show (1) the obligation involved; (2) the breach of the obligation; and (3) judicial relief can be granted.5 Finally, a cause of action "has been defined as `an act by defendant which gives a plaintiff a right to invoke judicial interference on his behalf and as `the operative facts which give rise to the plaintiff's right to judicially assert the action against the defendant."' (Footnotes omitted.) F. Maraist & H. Lemmon, 1 La. Civ. Law Treatise, Civil Procedure, § 6.7(2), pp. 126-27 (1999) and the cases cited therein.
No evidence may be introduced at any time to support or controvert the objection that the petition fails to state a cause of action. La. C.C.P. art. 931. For purposes of the objection, all facts pleaded are accepted as true. Davis v. Town of St. Gabriel, 2001-0031, p. 10 (La.App. 1 Cir. 2/15/02), 809 So.2d 537, 543, writs denied, 2002-0771, 2002-0803 (La.10/14/02), 827 So.2d 420. If the law does not grant the remedy sought under the facts alleged, the objection should be sustained. Badeaux v. Southwest Computers Bureau, Inc., 2005-0612, 2005-0719, p. 7 (La.3/17/06), 929 So.2d 1211, 1217; Industrial Companies, Inc. v. Durbin, 2002-0665, pp. 6-7 (La.1/28/03), 837 So.2d 1207, 1213.
Louisiana Code of Civil Procedure article 934 provides as follows:
When the grounds of the objection pleaded by the peremptory exception may be removed by amendment of the petition, the judgment sustaining the exception shall order such amendment within the delay allowed by the court. If the grounds of the objection raised through the exception cannot be so removed, or if the plaintiff fails to comply with the order to amend, the action, claim, demand, issue, or theory shall be dismissed.
In Alexander and Alexander, Inc. v. State, through the Div. of Admin., 486 So.2d 95, 100 (La.1986), appears the following:
Under the provisions of La.Code of Civ. Proc. art. 934, it is mandatory that the trial judge permit an amendment to the petition when the grounds of the objection pleaded by the exception are of such a nature [as] might be removed by amendment.
As a general rule, the first `shall' in La.Code of Civ.Proc. art. 934 requires that the adverse party be given an opportunity to amend where there is a conceivable possibility that a cause of action may be stated. However, the right to amend is not so absolute as to permit the same when such amendment would constitute a vain and useless act.
The judgment maintaining the exception of no cause of action in this case contains no order granting plaintiffs leave to amend their petition. We are of the opinion that, given the opportunity to amend, there is a possibility that plaintiff may be able to state a cause of action against defendants, and that the trial judge should have allowed such amendment. We will remand with the instructions that an order issue permitting plaintiffs to amend their petition, if they can, to state a cause of action, within a delay deemed reasonable by the trial court. [Citations omitted and emphasis added.]
The following are the pertinent allegations of fact in Health Net's restated answer and third party demand.6
Health Net affirmatively pleads that it is entitled to setoff any recovery or award made against it in these proceedings to recover or apportion damages arising from the acts or omissions of Plaintiffs and/or other parties that caused in whole or in part the insolvency of Plaintiffs.
* * *
Recovery, if any, by Plaintiffs should be barred or reduced by the proportionate fault of (1) Plaintiffs, (2) other defendants and/or (3) third parties to the extent said parties caused or contributed to the alleged acts, events, incidents or happenings, and the alleged injuries or damages.
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WOOLEY v. LUCKSINGER
...of regulator fault as an affirmative defense. The background for this assignment of error is found in Wooley v. Lucksinger, et al., 2006-1167 (La. App. 1 Cir. 5/4/07), 961 So.2d 1228, an earlier ruling in this case by the ad hoc panel. Health Net sought appellate review of a judgment sustai......
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Wooley v. Lucksinger
...of regulator fault as an affirmative defense. The background for this assignment of error is found in Wooley v. Lucksinger, et al., 2006–1167 (La.App. 1 Cir. 5/4/07), 961 So.2d 1228, an earlier ruling in this case by the ad hoc panel. Health Net sought appellate review of a judgment sustain......
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Murphy Cormier Gen. Contractor, Inc. v. State
...period because, legally, MCGC has no claims for detrimental reliance pursuant to Wooley v. Lucksinger, 06–1167 (La.App. 1 Cir. 5/4/07), 961 So.2d 1228. Instead, DHH argues that a one-year tort prescriptive period applies; thus, MCGC's damages should be limited to a one year period prior to ......