Gregory Seal v. Louisiana Farm Bureau Mutual Insurance Company

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2021 CA 0988

GREGORY SEAL

VERSUS

LOUISIANA FARM BUREAU MUTUAL INSURANCE COMPANY

DATE OF JUDGMENT: MAR 16 2022

ON APPEAL FROM THE NINETEENTH JUDICIAL DISTRICT COURT
NUMBER 670599, SECTION 22, PARISH OF EAST BATON ROUGE
STATE OF LOUISIANA

HONORABLE TIMOTHY E. KELLEY, JUDGE

Brandon A. Brown Counsel for Plaintiff -Appellant
Baton Rouge, Louisiana Gregory Seal

Mark T. Assad Counsel for Defendant -Appellee
Baton Rouge, Louisiana Louisiana Farm Bureau Mutual
Insurance Company
R. Heath Savant
Baton Rouge, Louisiana

BEFORE: GUIDRY, HOLDRIDGE, AND CHUTZ, JJ.

Disposition: REVERSED AND REMANDED.

W F—
I,

fl,-- 17

CHUTZ, J.

Plaintiff-appellant, Gregory Seal, appeals the trial court' s summary

judgment dismissal of his claims against defendant -appellee, Louisiana Farm

Bureau Mutual Insurance Company ( LFB), in which he sought damages from the

insurer after the loss of his home by fire.

FACTUAL AND PROCEDURAL HISTORY

The following facts are undisputed in this appeal. On June 30, 2017, a house

owned by Seal, located at 27220 Nobles Cemetary Road in Franklinton, Louisiana

the Nobles Cemetary Rd property), was destroyed by fire. The house had been

continuously insured by LFB since December 13, 2005, when it was originally

constructed. When Seal subsequently made a claim for the losses he sustained on

June 30, 2017, he was advised that his homeowner' s policy had been cancelled.

On June 19, 2018, Seal instituted this lawsuit, naming LFB as a defendant,

averring that " any attempted cancellation of the [ LFB homeowner' s policy] was

invalid and violated the terms and conditions of the policy." LFB subsequently

answered the lawsuit and filed a motion for summary judgment. After a hearing on

the motion, the trial court found LFB had complied with the statutory requirements

for the cancellation and granted summary judgment, dismissing all of Seal' s claims

against LFB. A judgment in conformity with the trial court' s oral ruling was signed

on May 4, 2021. After the trial court denied his motion for new trial, Seal

appealed.

DISCUSSION

A motion for summary judgment is a procedural device used when there is

no genuine issue of material fact for all or part of the relief prayed for by a litigant.

A summary judgment is reviewed on appeal de novo with the appellate court using

the same criteria that govern the trial court' s determination of whether summary

judgment is appropriate, i.e., whether there is any genuine issue of material fact,
2

and whether the movant is entitled to judgment as a matter of law. Beer Indus.

League ofLouisiana v. City ofNew Orleans, 2018- 0280 ( La. 6/ 27/ 18), 251 So. 3d

380, 385- 86.

The Code of Civil Procedure places the burden of proof on the party filing a
motion for summary judgment. See La. C. C. P. art. 966( D)( 1). The mover can meet

this burden by filing supporting documentary evidence. La. C. C.P. art. 966( A)(4).

The mover' s supporting documentary evidence must prove the essential facts

necessary to carry its burden. Thus, in deciding a motion for summary judgment,

we must first determine whether the supporting documents presented by the mover

are sufficient to resolve all material fact issues. Jenkins v. Hernandez, 2019- 0874

La. App. 1st Cir. 6/ 3/ 20), 305 So. 3d 365, 370- 71, writ denied, 2020- 00835 ( La.

10/ 20/ 20), 303 So. 3d 315. A fact is material if it potentially ensures or precludes

recovery, affects a litigant' s ultimate success, or determines the outcome of the

legal dispute. A genuine issue is one as to which reasonable persons could

disagree; if reasonable persons could reach only one conclusion, there is no need

for trial on that issue and summary judgment is appropriate. Walker v. City of

Independence Police Dept, 2018- 1739 ( La. App. 1st Cir. 2/ 7/ 20), 296 So3d 25,

90

Factual inferences reasonably drawn from the evidence must be construed in

favor of the party opposing a motion for summary judgment, and all doubt must be

resolved in the opponent' s favor. Thompson v. Or. for Pediatric and Adolescent

Medicine, L.L.C, 2017- 1088 ( La. App. 1st Cir. 3/ 15/ 18), 244 So. 3d 441, 445, writ

denied, 2018- 0583 ( La. 6/ 1/ 18), 243 So. 3d 1062. Because it is the applicable

substantive law that determines materiality, whether a particular fact in dispute is

material can only be seen in light of the substantive law applicable to the case.

Pumphrey v. Harris, 2012- 0405 ( La. App. 1st Cir. 11/ 2/ 12), 111 So. 3d 86, 89.

3

An insurance policy is a contract between the insured and insurer and has the

effect of law between them. Gorman v. City of Opelousas, 2013- 1734 ( La. 7/ 1/ 14),

148 So. 3d 888, 892.' When the words of an insurance contract are clear and

explicit and lead to no absurd consequences, courts must enforce the contract as

written and may make no further interpretation in search of the parties' intent. Id.2

Words and phrases in an insurance policy are to be construed using their plain,

ordinary, and generally prevailing meaning unless the words have acquired a

technical meaning. Maldonado v. Kiewit Louisiana Co., 2013- 0756 ( La. App. 1 st

Cir. 3/ 24/ 14), 146 So. 3d 210, 218. 3

The burden of proving a policy has been cancelled is upon the party alleging
it. See 2 Couch on Ins. §30: 19. In other words, when an insurer seeks to avoid

coverage through summary judgment, it is incumbent on the insurer to prove the

basis for its avoidance of coverage. See Halphen v. Borja, 2006- 1465 ( La. App.

I st Cir. 5/ 4/ 07), 961 So. 2d 1201, 1204, writ denied, 2007- 1198 ( La. 9/ 21/ 07), 964

So. 2d 338 ( insurer bore burden of proving uninsured/ underinsured benefits did not

apply to plaintiff' s claim).

According to the salient provisions of the homeowner' s policy at issue in

this case, LFB " may cancel by mailing written notice to the named insured shown

in the Declarations at the address shown in this policy with ... at least 30 days

notice." SECTIONS I AND II —CONDITIONS, 4( c)( 3). Since the homeowner' s

policy had been in effect and renewed for more than three years, the policy

provided that LFB " may cancel ... if the insured risk has undergone a material

change." SECTIONS I AND II —CONDITIONS, 4( e)( 3). The homeowner' s

policy does not define the phrase " the insured risk has undergone a material

See La. C. C. arts. 1906 and 1983.

I See La. C. C. art. 2046.

3 See La. C. C. art. 2047.
E

change." Thus, under the unambiguous terms of the insurance agreement, this

specified basis of cause to cancel the homeowner' s policy was antecedent to LFB' s

right to undertake the cancellation!

In addition to the homeowner' s policy terms, La. R.S. 22: 887 addresses

cancellation of insurance policies, stating in relevant part:

A. Cancellation by the insurer of any policy which by its terms
may be cancelled at the option of the insurer ... may be effected as to
any interest only upon compliance ... of the following:

1)( a)
Written notice of such cancellation must be actually
delivered or mailed to the insured or to his representative in charge of
the subject of the insurance not less than thirty days prior to the
effective date of the cancellation ....

B. The mailing of any such notice shall be effected by
depositing it in a sealed envelope, directed to the addressee at his last
address as known to the insurer or as shown by the insurer' s records,
with proper prepaid postage affixed, in a letter depository of the

United States Post Office....

C. The affidavit of the individual making or supervising such a
mailing, shall constitute prima facie evidence of such facts of the
mailing as are therein affirmed....

H. Notice of cancellation or nonrenewal given by the insurer in
accordance with this Chapter shall be deemed sufficient. The producer
shall not be required to give any separate or additional notice of
cancellation or nonrenewal.

In support of its motion for summary judgment, LFB attached excerpts from

the depositions of Seal; an LFB field underwriter, Adina Davis; and, an LFB

regional underwriter manager, Lauren Thomas. A certified copy of the

homeowner' s policy issued to Seal for the Nobles Cemetary Rd property was also

attached. Attachments to Thomas' s deposition excerpts, including a copy of a

4 We note other salient provisions in the homeowner' s policy include in the Declarations that
tlhe described residence premises covered by this policy is located at the above address, unless
otherwise stated." The address of the Nobles Cemetery Rd property is set forth and the
description further provides as the location " WASHINGTON PARISH ( FIRE DISTRCT 4)."
Rlesidence premises" is defined as " the one family dwelling, other structures and grounds ...
where you reside and which is shown as the residence premises in the Declarations."
DEFINITIONS, Additionally, "[ iln this policy, ` you' and ` your' refer to the named
13( a).
insured shown in the Declarations." And an " insured" is defined, among other things, as " you
and residents of your household who are ... your relative." DEFINITIONS & DEFINITIONS,
5( a).
5

Notice of Cancellation dated February 15, 2017, addressed to Seal at the Nobles

Cemetary Rd property, were also considered as part of LFB' s motion for summary
judgment.'

The last item attached to LFB' s motion was the affidavit of Property Policy

Services Manager, Lisa O' Quinn, who attested that she was responsible for

evaluating and maintaining the status of homeowner' s insurance coverage for

insured properties in Louisiana, including the payment of premiums, underwriting
issues, and the cancellation of homeowner' s policies. O' Quinn stated that on

February 15, 20171 LFB sent a notice of cancellation to Seal at the address of the

Nobles Cemetary Rd property, advising that it was necessary to discontinue his

homeowner' s insurance protection and that the cancellation was effective at 12: 01

A.M., March 17, 2017.' O' Quinn also identified a document, entitled " PROOF OF

MAIL," signed by the postmaster that showed a letter addressed to Seal at the

Nobles Cemetary Rd property among the list of letters that LFB sent out on

February 15, 2017.

In the deposition excerpts, LFB established that due to a fire in 2015

affecting one of the out buildings on Seal' s premises, LFB Field Underwriter Davis

inspected the Nobles Cemetary Rd property to ensure that the building had been

removed or replaced. While she was inspecting the premises, Seal advised her

that he hadn' t been staying in the home and that his son who battled addiction ...

resided in the home." She recalled having looked inside the house through a

window and that " the home didn' t appear to be lived in." She elaborated, " There

5
Additionally, the record contains a declaration sheet, dated February 17, 2017, indicating that
There
the term of Seal' s homeowner' s policy " SHALL BE CANCELLED AS OF 03/ 17/ 2017."
is nothing in the record to show whether that declaration sheet was sent to or received by Seal.
6 Although O' Quinn stated the February 15, 2017 notice advised Seal that the policy " was being
Upon the written
cancelled for underwriting reasons," it did not. See La. R.S. 22: 887A( 1)( b) ("
request of the named insured, the insurer shall provide to the insured in writing the reasons for
cancellation of the policy. There shall be no liability and no cause of action shall arise against
any insurer ... for any action taken by them to provide the reasons for cancellation as required by
this Subparagraph.").
6

was a few items scattered around and about in the home. There wasn' t any order or
structure and minimal furniture." Davis acknowledged that she did not know if

there was electrical service supplied to the property.

According to the excerpts offered by LFB of Thomas' s deposition

testimony, among the reasons LFB can cancel a policy is if there has been a

material change in the risk being insured. While acknowledging the policy does not
define " a material change of risk," Thomas stated that LFB " normally consider[ s]

it] a material change in the risk when the occupancy changes from being occupied

by the named insured to being ... vacant or occupied by someone else." Based on

Davis' s report sent after the inspection, LFB determined that Seal was not living in
the home anymore.' Thomas conceded that she did not know the source of Davis' s

conclusion that the home was no longer owner occupied and offered no other

information for LFB' s conclusion that the house was no longer occupied by Seal
other than Davis' s inspection report.

LFB urged that because its supporting documents showed that LFB

considers the failure of an insured to maintain a home as owner occupied to

constitute a material change of risk and Davis' s testimony supports a finding that

the house was not lived in by Seal, the policy was correctly cancelled pursuant to

the policy' s terms. Additionally, since LFB demonstrated that it notified Seal of

the cancellation in conformity with the statutory requirements set out in La. R.S.

22: 887, it sustained its burden of establishing it effectively cancelled the

homeowner' s policy as of March 17, 2017. Since Seal' s homeowner' s policy was

cancelled over three months before the fire, LFB urges that it demonstrated

through the attachments to its motion that there was no coverage on June 30, 2017,

and it is entitled to summary judgment dismissal of all of Seal' s claims.

Thomas referred to Davis as " Adina Fisher" in her deposition testimony.
7

In response to LFB' s showing, Seal offered his complete deposition

testimony as well as that of Davis and Thomas along with the attachments to the

depositions. Although most of the attached items replicated those offered by LFB,

Seal' s offering also included the inspection report completed by Davis dated

February 1, 2017. With this responsive showing, Seal avers that there remain

outstanding issues of material fact as to whether LFB' s attempted cancellation of

the homeowner' s policy was a valid one or if it violated of the terms and

conditions of the policy.

In his deposition testimony, Seal stated that he had lived in the Nobles

Cemetary Rd property continuously from the day it was built until it burned down

in 2017. During those years, he had two significant others who resided with him at

different times. The last one moved out in 2016. In June 2017, his eldest son,

Dylan, who was approximately 25, resided with him. His two minor children also

lived with him pursuant to a 50/ 50 shared custody arrangement with the children' s

mother. Seal explained that he had rental property located about 100 yards from his

Nobles Cemetary Rd property and that his parents lived in a house which was

across a field about 200 yards away from his home, which is where he has been

living since the fire.

Seal testified that the Nobles Cemetary Rd property was mortgaged, his

payments on the mortgage were delinquent leading into 2017, and the bank was

foreclosing. But Seal maintained and it is undisputed that the bank had escrowed

the premiums for the insurance and the policy was fully paid at the time of the

cancellation. Seal recalled having learned after the fire that the bank had been

reimbursed the unused portion of the premium.

Seal denied he was ever advised by LFB that his homeowner' s policy was

being cancelled either verbally or in writing. Although he confirmed the accuracy
of the address and admitted that he was unaware of the postal service having held

his mail, Seal specifically stated he had not seen the February 15, 2017 notice of

cancellation at any time before his home was destroyed by fire. He testified that he

regularly checked his mailbox in February 2017, describing how it was located

down the driveway on the side of the Nobles Cemetary Rd roadway. After the June
30, 2017 fire, Seal made a claim over the phone. He received a call from a

representative of LFB who advised Seal that the homeowner' s policy had been

cancelled and that he had been notified of the cancellation by letters.

In her complete deposition testimony, in addition to the testimony set forth

in the excerpts offered by LFB, Davis provided the following information. As a

field underwriter, she had to assess risks and make sure the risks LFB was insuring

met the insurer' s company guidelines. If not, LFB would advise the insureds that

they were not meeting its guidelines or LFB would adjust the insureds' policies in

an attempt to meet the risks. The company' s underwriting guidelines, published on

the LFB website, were only accessible with company permission and not to the

public generally.

Davis testified that when she inspected the property on February 1, 2017,

she was accompanied by Dakota Fitzgerald, the Washington Parish Agency

Manager for LFB. Davis explained that the agent who sold the homeowner' s

policy to Seal had retired and that Fitzgerald had taken over the " book of business

for [ the retired] agent," which apparently included Seal' s account. After

identifying her February 1, 2017 inspection report, Davis said that she remembered

the inspection of the Nobles Cemetary Rd property, but agreed that looking at the

report helped to refresh her memory and that she had read it in preparation for the

deposition.

Davis recalled that at the time of the inspection, she looked at the sides, the

front, and the back of the home, and that Fitzgerald knocked on the door. After a

short while, Seal drove up and asked Davis and Fitzgerald what they were doing
0

and who they were. Fitzgerald explained the purpose of LFB' s visit, and according

to Davis, Seal advised her that he had not been staying in the home but that his

adult son, who battles drug addiction, resided in the home. Davis testified that Seal

provided no other details about his use of the property. She had no idea why Seal

had not been staying in the home, did not talk to anyone else —not even Dylan Seal

about Seal' s living situation, and did not go inside the home. Davis admitted she

had no information on whether the house received electrical, water, or other utility

services, pointing out that she did not have access to that information. Although

she took nine photographs of the premises, they are not included in the record.

Davis agreed that once Seal told her that " he wasn' t living in the house[,] that gave

her] the information to know [ the house] was no longer owner occupied" and

t]here was no need to get other information" since he had admitted he " wasn' t

living there."

A close scrutiny of the February 1, 2017 inspection report prepared by Davis

shows the following. The dwelling condition, premises condition, and the electrical

condition are checked as " Unacceptable." The paint condition, roof condition, and

out building condition were checked as " Acceptable." " Yes" was checked for

Trash Debris." And " Decline Renewal," rather than the other options of

Approved" or " Rejected," was checked under " Recommendation." An area

entitled " Comments" stated the following:

Shop has been removed. Insured has materials, post have been put up
but not yet completed. Insured advised that he hasn' t stayed in the
home in 12 months and doesn' t occupy the home full time. Son now
resides in the home and battles addiction. Pool is empty and the
upkeep of the premises is poor. Several items spread out and there' s a
broken window on the dwelling. Recommend cancelling due to the
home not being [ sic].

In addition to the excerpted testimony provided by LFB, Thomas' s complete

deposition revealed that LFB bases its determination of whether a home is

what the circumstances are." Thomas stated that LFB
occupied by an owner on "

10

usually communicates with the agent and " if they tell us no, the person is no longer

living there, then we tell them we have to cancel the policy." If, however, the agent

advises that the owner is " visiting so- and- so in another country" and will be back

at a specific time, LFB normally does not do anything. If the circumstances

indicate it is a changing situation, LFB will " follow up sometimes." But according

to Thomas, LFB does not " randomly cancel policies because people are not living

there seven days a week." She explained that LFB usually works alongside the

agent to communicate what action needs to be taken and that it is the agent who

communicates with the insured. Thomas was unable to identify any efforts made

by LFB to communicate with Seal about his living situation and found nothing in

Seal' s homeowner' s policy file indicating any efforts had been undertaken.

According to Thomas, in addition to the notice LFB had sent to Seal, a

notice of cancellation was also sent to the bank that held the mortgage on the

Nobles Cemetary Rd property. Without specifying a date, Thomas noted that a

refund of the unused portion of the premium was sent to the bank and Seal, but it

was addressed to the bank since it was the party to whom the money was owed.

Based on the showing made, we find outstanding issues of material fact

preclude summary judgment. Although Davis indicated in her testimony that Seals

stated " he hadn' t been staying in the home and that his son ... resided in the

home," her inspection report further elaborated that Seals had advised that he had

not " stayed in the home in 12 months and doesn' t occupy the home full time." But

Seals testified that he lived in the home continuously from the time he constructed

it until the house was destroyed by fire in. June 2017. This conflict in the

evidentiary showings requires resolution by the trier of fact.

Moreover, even if a trier of fact were to find LFB' s representatives more

credible than Seal, summary judgment is nevertheless inappropriate on the

showing made. Under the unambiguous terms of the insurance policy, a specific
11

basis for cancellation of the policy by LFB was required under the language of the

policy. It is undisputed that the suggested basis that " the insured risk has

undergone a material change" is neither defined nor elaborated upon with

examples or instances in the policy. Given Seal' s testimony that between 2006

until 2017, he resided in the home, at times with another person, including one of

two significant others, Dylan, and/ or his minor children, Davis' s testimony and the

February inspection report could support a finding that a change in the manner in

which Seal resided in the home had occurred. But the record is devoid of evidence

showing that this manner of residency by Seal resulted in a material. change in the

insured risk to LFB.

An insurance plan serves the purpose of transferring the risk or uncertainty

of a loss from the insured to the insurance company in return for a premium; what

the insured seeks is certainty of protection from economic loss, whether or not the

event insured against takes place. The premium charged by the insurer for

assuming the risk of loss is based upon the principle of risk distribution. Although

as a practical matter it is virtually impossible for the insurer to predict with

certainty whether the loss insured against will occur in fact to a specific structure,

it may be possible for it to predict with a high degree of accuracy that a certain

group of similar risks will suffer a specific incidence of loss; this predictive ability

is what makes a risk distribution possible. The insurer assumes a large number of

risks and divides the total loss occurring to the entire group proportionally among

the risk pool. See The Increase -of Hazard
- Clause in the Standard Fire Insurance

Policy, 76 Harv. L. Rev. 1472, 1475 ( 1963).

If this ideal hypothesis is sound, when the insured property is so changed

that the insurer would place it in a risk pool in which the proportional payments are

higher, the insured who is still allowed to claim the benefit of the existing policy is

receiving more than the benefit of his bargain. He is being indemnified either at the
12

expense of other policyholders or at the expense of the insurer out of capital or

profits. 76 Harv. L. Rev. at 1475- 76. Thus, it may be concluded that a vacant home

can present an increased risk of loss for a fire insurer due to the danger of

accidental fires started by vagrants or small children or caused by the lack of care
of the premises. 76 Harv. L. Rev. 1479.

LFB has offered no evidence to support its underwriting guideline as
testified to by Thomas, i. e., that LFB " normally consider[ s] [ it] a material change

in the risk when the occupancy changes from being occupied by the named insured
to being ... occupied by someone else." This record simply fails to demonstrate

that the risk pool has changed as a result of the manner in which Seal resided in the

Nobles Cemetary Rd property as recorded and testified to by Davis. Additionally,
Thomas testified that cancellation of a policy due to the absence of an insured from

the insured location depended on " what the circumstances are." The extent of

Seal' s less than " fulltime" occupation of the home in which his adult son resided

was not fully developed, which is an evidentiary showing required of LFB as

mover on the motion and the party who bears the burden of proving entitlement to

cancellation of the policy in accordance with its terms.' Mindful that as drafter of

the homeowner' s policy, LFB consented to cancellation only in specified instances

including " if the insured risk has undergone a material change," we conclude that

outstanding material facts remain as to whether the manner in which Seal resided

at the Nobles Cemetary Rd property materially changed the insured risk to LFB.

s Absent evidence demonstrating the nature of Dylan' s drug addiction and the risks associated
with occupation of a home by him, we cannot say that this circumstance necessarily resulted in a
material change in the insured risk to LFB. See Erie Ins. Exch. v. Com., Ins. Dept, 129
Pa.Cmwlth. 120, 123; 564 A.2d 1312, 1313- 14 ( 1989) ( insurer presented no evidence that
insured' s conviction of possession of marijuana with intent to distribute would necessarily result
in a substantial increase of risk to the insurance company).

13

Accordingly, the trial court erred in granting a summary judgment dismissal of all
of Seal' s claims against LFB.

DECREE

For these reasons, the appealed judgment is reversed and the matter is

remanded to the trial court. Appeal costs are assessed against defendant -appellee,

Louisiana Farm Bureau Mutual Insurance Company.
REVERSED AND REMANDED.

9 In light of Seal' s testimony denying having received a notice of cancellation from LFB, we
question the trial court' s conclusion that LFB sustained its burden of proving no genuine issues
remained under an application of La. R.S. 22: 887. See Manh An Bui v. Farmer' s Ins. Exch.,
2010- 1571 ( La. App. 1st Cir. 6/ 10/ 11), 68 So. 3d 656, 660, writ denied, 2011- 1505 ( La.
10/ 12/ 11), 74 So. 3d 212 ( material issue of fact raised by affidavit alleging non -receipt when
insurer only offers affidavit alleging proper mailing). See also Easom v. Foremost Ins. Co., 2012 WL 5457376, at * 4 ( W.D. La. Nov. 1, 2012) ( suggesting Louisiana courts tend to treat the
question of whether the presumption of delivery has been rebutted as a question appropriate for
determination by the fact -finder). But because we have concluded outstanding issues of material
fact remain on the propriety of the antecedent basis for LFB' s cancellation under the terms of the
homeowner' s policy, we pretermit such a discussion.

14