Leo Kenneth Sonnier and Geneva Sonnier v. Louisiana Farm Bureau Mutual Ins. Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

05-1006

LEO KENNETH SONNIER
AND GENEVA SONNIER

VERSUS

LOUISIANA FARM BUREAU MUTUAL
INSURANCE CO., ET AL.

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APPEAL FROM THE
THIRTY-FIRST JUDICIAL DISTRICT COURT
PARISH OF JEFFERSON DAVIS, NO. C-36-04
HONORABLE WENDELL R. MILLER, DISTRICT JUDGE

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OSWALD A. DECUIR
JUDGE

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Court composed of Oswald A. Decuir, Jimmie C. Peters, and Elizabeth A. Pickett,
Judges.

REVERSED AND REMANDED.

Michael R. Garber
Attorney at Law
1801 Ryan Street
Lake Charles, LA 70601
(337) 494-5500
Counsel for Plaintiffs/Appellants:
Leo Kenneth Sonnier
Geneva Sonnier

Frank M. Walker Jr.
Plauche, Smith & Nieset
P. O. Box 1705
Lake Charles, LA 70602
(337) 436-0522
Counsel for Defendants/Appellees:
Southern Farm Bureau Casualty Insurance Company
Louisiana Farm Bureau Casualty Insurance Company
Louisiana Farm Bureau Mutual Insurance Company

Judy L. Burnthorn
Ashley E. Gilbert
Deutsch, Kerrigan & Stiles, L.L.P.
755 Magazine Street
New Orleans, LA 70130
(504) 581-5141
Counsel for Defendant/Appellee:
Herb Doucet

DECUIR, Judge.

Plaintiffs appeal a judgment of the trial court dismissing their claims on

defendants’ motion for summary judgment alleging the issue was res judicata. For

the reasons that follow, we reverse.

FACTS

Kenneth and Geneva Sonnier purchased homeowners insurance from Louisiana

Farm Bureau Mutual Insurance Company. They requested replacement cost

coverage, but were informed by their agent, Herb Doucet, that replacement cost

coverage was not available in Cameron Parish. Each year at renewal, they again

requested replacement cost coverage and were told it was unavailable.

Subsequently, their home became infested with black mold. Ultimately, the

Sonniers settled with Farm Bureau for their policy limits of $68,000.00. The cost to

replace their home exceeds $200,000.00. At the time of settlement, the Sonniers were

informed that Farm Bureau did, in fact, offer replacement cost coverage.

Consequently, the Sonniers filed suit against Doucet and his errors and omissions

insurer for failure to inform them of the available coverage.

Defendants filed a motion for summary judgment alleging that the issue was

res judicata by virtue of the release signed by the Sonniers. The trial court agreed

and granted the motion for summary judgment. The Sonniers lodged this appeal.

RES JUDICATA

The Sonniers contend the trial court erred in finding their claim barred by res

judicata and granting defendants’ motion for summary judgment.

In Bailey v. Martin Brower Co., 94 1179, p. 3 (La.App. 1 Cir. 4/7/95), 658

So.2d 1299, 1301, the court succinctly summarized the application of res judicata to

releases as follows:

While the doctrine of res judicata is ordinarily premised on a final
judgment, it also applies where there is a transaction or settlement of a
disputed or compromised matter that has been entered into by the
parties. A release of claim or claims, when given in exchange for

consideration, is a compromise and constitutes the basis for a plea of res
judicata. [Matthew v. Melton Truck Lines, Inc., 310 So.2d 691, 693
(La.App. 1st Cir.1975)]; Spencer v. Howard, Weil, Labouisse &
Friedrichs, Inc., 543 So.2d 547, 550 (La.App. 4th Cir.), writ denied, 546
So.2d 1217 (La.1989); Thompson v. Bank of New Orleans and Trust
Company, 422 So.2d 230, 231 (La.App. 4th Cir. 1982). However, the
authority of the thing adjudged resulting from the release extends to only
those matters the parties expressly intended to settle. Matthew v. Melton
Truck Lines, Inc., 310 So.2d at 693.

The release at issue in this case provides that the Sonniers release Farm Bureau

and its agents, employees, etc. “from any and all liability under policy No. H0308223

on any and all claims, demands and rights of action arising out of, or which may

hereafter arise out of, an accident” that occurred at the Sonniers’ home on the

specified date.

Defendants argue that this release terminated all the Sonniers’ claims. The

Sonniers contend that the release covers only liability under the specific policy

contract. It is well settled that a general release will not bar recovery for those

aspects of a claim not intended to be covered by the release. La.Civ.Code art. 3073;

Henderson v. Stansbury, 372 So.2d 1253, 1254 (La.App. 3 Cir. 1979). Accordingly,

we must determine whether the Sonniers and Farm Bureau intended to include the

claim at issue in the release.

We first look to the terms of the release in order to ascertain the parties’ intent.

Three phrases in the release are critical to our evaluation. The first is “liability under

policy No. H0308223,” and the second is “on any and all,” and the third is “action

arising out of.” The trial court focused on the latter phrase in concluding that res

judicata applied. We find this focus to be misplaced. The clear language releases

Farm Bureau and its agents from liability “under” the policy. The second phrase

connects the first to the third and defines which claims are settled under the policy.

Had this phrase started with “and” rather than “on,” the trial court would be correct

and all liability under the policy and all liability arising out of the accident would

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have been settled. This is not the case, and, as a result, the release applies only to

liability “under” the policy “on” claims arising out of the accident.

We find that the language of the release is clear and unambiguous, and,

therefore, we need not look elsewhere for the parties’ intent. Accordingly, we find

that the release covered only liability under the policy. The Sonniers’ claim against

Doucet arises out of the agent/broker relationship and is independent of the policy.

See Karam v. St. Paul Fire & Marine Ins. Co., 281 So.2d 728 (La.1973).

PEREMPTION

Doucet argues that even if the Sonniers’ claim is not res judicata, it is barred

by the peremptive period provided in La.R.S. 9:5606. We disagree.

Louisiana Revised Statutes 9:5606, Actions for professional insurance agent

liability, reads as follows:

A. No action for damages against any insurance agent, broker,
solicitor, or other similar licensee under this state, whether based upon
tort, or breach of contract, or otherwise, arising out of an engagement to
provide insurance services shall be brought unless filed in a court of
competent jurisdiction and proper venue within one year from the date
of the alleged act, omission, or neglect, or within one year from the date
that the alleged act, omission, or neglect is discovered or should have
been discovered. However, even as to actions filed within one year from
the date of such discovery, in all events such actions shall be filed at the
latest within three years from the date of the alleged act, omission, or
neglect.

B. The provisions of this Section shall apply to all persons
whether or not infirm or under disability of any kind and including
minors and interdicts.

C. The peremptive period provided in Subsection A of this
Section shall not apply in cases of fraud, as defined in Civil Code
Article 1953.

D. The one-year and three-year periods of limitation provided in
Subsection A of this Section are peremptive periods within the meaning
of Civil Code Article 3458 and, in accordance with Civil Code Article
3461, may not be renounced, interrupted, or suspended.

Louisiana Civil Code Article 3458 defines peremption as “a period of time

fixed by law for the existence of a right.” Further, under that article, “[u]nless timely

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exercised, the right is extinguished upon the expiration of the peremptive period.”

“Peremption may not be renounced, interrupted, or suspended.” La.Civ.Code art.

3461.

Doucet contends that his failure to notify the Sonniers of the availability of

coverage occurred in 1998 and is, therefore, perempted. The Sonniers’ petition,

however, indicates that they were not notified that coverage was available until

January of 2003. The last time the policy was renewed was 2002, and, therefore, in

2002, they allege Doucet’s misrepresentation deprived them of the coverage they

desired. The Sonniers filed suit on January 2, 2004.

Doucet argues that even if that is the case, a continuing tort does not defeat

peremption. The Sonniers contend that it is not a continuing tort but instead each

time they sought replacement coverage at renewal and were denied is a separate act.

We agree. The insurance contract is subject to renewal or cancellation each year.

Therefore, the alleged misrepresentations each year by Doucet impacted the Sonniers’

decision whether to reenter the contractual relationship and constituted a separate act.

In order to defeat Doucet’s claim of peremption, the Sonniers must have filed

suit within one year of finding out about the availability of the coverage in January

of 2003 and within three years of Doucet’s last failure to notify them of the coverage

in 2002. The Sonniers’ January 2, 2004 filing falls within both periods. Accordingly,

we find that the Sonniers’ claim regarding the failure to notify them of the availability

of replacement cost coverage is not perempted. We refer the issue of peremption of

the remaining claims to the merits.

DECREE

For the foregoing reasons, the judgment of the trial court is reversed and the

case remanded for further proceedings. All costs of these proceedings are taxed to

Appellees.

REVERSED AND REMANDED.

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