David Duhon v. State Farm Mutual Automobile Ins. Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

06-1413

DAVID W. DUHON

VERSUS

STATE FARM MUTUAL AUTOMOBILE
INS. CO.

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APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF IBERIA, NO. 101170-E
HONORABLE KEITH R. J. COMEAUX, DISTRICT JUDGE

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J. DAVID PAINTER
JUDGE

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Court composed of John D. Saunders, Glenn B. Gremillion, and J. David Painter,
Judges.

AFFIRMED.

April Petry Defelice
David Groner, P.L.C.
P.O. Box 9207
New Iberia, LA 70562-9207
Counsel for Plaintiff-Appellant:
David W. Duhon

Katherine Paine Martin
Gretchen Heider Mayard
Katherine P. Martin, P.L.C.
P.O. Box 81338
Lafayette, LA 70598-1338
Counsel for Defendant-Appellee:
State Farm Mutual Automobile Ins. Co.

PAINTER, Judge.

Plaintiff, David W. Duhon (Duhon), filed suit for breach of contract against

Defendant, State Farm Mutual Automobile Insurance Company (State Farm), seeking

damages, penalties, and attorney’s fees based on State Farm's failure to pay a claim

made for losses incurred due to the alleged theft of Duhon’s vehicle. Duhon now

appeals the trial court’s grant of summary judgment in favor of State Farm,

dismissing his claim for penalties and attorney’s fees. For the following reasons, we

find no error in the trial court’s conclusion that State Farm did not act in bad faith in

choosing to investigate the validity of Duhon’s claim and, therefore, was not arbitrary

and capricious. Accordingly, we affirm the trial court’s judgment in all respects.

FACTUAL AND PROCEDURAL BACKGROUND

Duhon owned a 2002 Ford F150 Harley Davidson special edition pick-up truck

with liability, collision, and comprehensive coverage issued by State Farm. Duhon

alleges that on the evening of May 22, 2003, this truck was stolen from the parking

lot of Koto Restaurant in Baton Rouge while he was inside the restaurant. The truck

was equipped with Ford’s passive anti-theft system (PATS) and a code alarm system.

The PATS requires that a key containing a chip programmed for the vehicle’s

computer be used to operate the vehicle. Apparently, the vehicle will not start

without the programmed chip. The code alarm, if set, disables the vehicle’s starter

system.

Duhon, a resident of New Iberia, claimed that he had stopped in Baton Rouge

on his way home from a shopping trip to New Orleans. Duhon reported the theft to

the Baton Rouge Police Department at 6:45 p.m. that same day and to his insurer,

State Farm, the next day.

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On May 27, 2003, Duhon signed an affidavit under oath verifying that his truck

was stolen. On or about June 5, 2003, State Farm received information from an

anonymous person indicating that Duhon had asked this person to steal the truck and

burn it. State Farm also received information from the Louisiana State Police that

Troy Donovan had informed the police that Duhon had asked him to dispose of the

truck three weeks before the alleged theft.

State Farm then conducted an investigation, which included obtaining Duhon’s

cell phone records for the day of the alleged theft, taking two recorded statements

from Duhon, and taking Duhon’s examination under oath. The cell phone records

called Duhon’s account of his activities on the day of the alleged theft into question.

Specifically, the cell phone records showed that Duhon made twenty-seven phone

calls between 8:36 a.m. and 3:39 p.m. on May 22, 2003, all of which calls were

routed through New Iberia towers. Between 3:42 p.m. and 3:50 p.m., Duhon made

three calls which were routed through a St. Martinville tower. There were nine calls

routed through a Baton Rouge tower between 5:24 p.m. and 7:11 p.m. Based on this

information, State Farm concluded that Duhon could not have been in New Orleans

when he said that he was. State Farm then took a second recorded statement from

Duhon. During this statement, State Farm learned that Duhon could not identify the

mall at which he was allegedly shopping or give any directions to it and that Duhon

did not purchase anything, including gas, and had no receipts for that day. Duhon

claimed he was in New Orleans on the day in question and arrived in Baton Rouge

between 4:00 p.m. and 4:30 p.m. He also stated that after he reported his truck stolen

to the police, he went to a gas station across the street from the restaurant and got a

ride home from an unknown man who was traveling to Lafayette. However, this

version of events was directly contradicted by the cell phone records.

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State Farm alleged that Duhon’s claim included some of the National Insurance

Crime Bureau Indicators of Vehicle Theft Fraud: (1) the vehicle was new or late

model with no lien holder, (2) the vehicle was recently purchased, and (3) the vehicle

was customized. Based on these allegations and the contradictions in Duhon’s

account of his whereabouts, State Farm conducted an examination under oath of

Duhon on July 15, 2003.

State Farm’s investigation also revealed some discrepancies concerning the

whereabouts of the second key to Duhon’s vehicle. In one of his recorded statements,

Duhon said that he left one of the windows slightly rolled down because it was hot

outside. He went on to say that the second key must have been in the truck when it

was stolen because he remembered leaving it there on one occasion when he had

opened the truck for his mother. In his examination under oath, Duhon testified that

he locked the truck before he entered the restaurant. With regard to the second key,

Duhon testified that it was misplaced – he kept that key on the counter of his home,

but one day, he noticed that it wasn’t there anymore. He testified that he did not

worry about its whereabouts because he only needed one key to start the vehicle. In

his deposition, Duhon testified that he distinctly remembered setting the alarm,

hearing it chirp, and checking the doors to be sure they were locked before entering

the restaurant.

Duhon filed suit against State Farm alleging breach of contract. Duhon filed

a motion for summary judgment alleging that there was no genuine issue of material

fact with regard to State Farm’s breach of the insurance contract and its failure to pay

the amount of the claim within thirty days after receipt of satisfactory proof of loss,

and, therefore, State Farm was subject to penalties and attorney’s fees. State Farm

filed a cross motion for summary judgment alleging that it was entitled to judgment

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as a matter of law because Duhon could not meet his burden of proving that the loss

was an accidental loss or theft and could not prove that State Farm was arbitrary and

capricious in denying coverage. The trial court denied Duhon’s motion for summary

judgment and partially denied State Farm’s cross motion on the basis that credibility

determinations were necessary to decide the issues. However, the trial court granted

State Farm’s motion with respect to the issue of penalties and attorney’s fees,

specifically finding that State Farm had not acted in bad faith in choosing to

investigate the validity of Duhon’s claim rather than simply paying it without

question. Accordingly, the trial court dismissed Duhon’s claim for penalties and

attorney’s fees for failure to pay the claim within thirty days. The judgment was

designated as a partial final judgment. Duhon’s claim for breach of contract remains.

Duhon then filed a motion for new trial based on Morris v. Safeway Ins. Co.

of La., 03-1361 (La.App. 1 Cir. 9/17/04), 897 So.2d 616. The motion for new trial

was denied, and this appeal followed.

DISCUSSION

“Appellate courts review grants of summary judgment de novo, using the same

criteria that govern the trial court's consideration of whether summary judgment is

appropriate, that is, whether there is a genuine issue of material fact and whether the

mover is entitled to judgment as a matter of law.” Supreme Services and Specialty

Co., Inc. v. Sonny Greer, Inc., 04-1400, p. 3 (La.App. 3 Cir. 5/3/06), 930 So.2d 1077,

1080. A summary judgment is appropriate where the “pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to material fact, and that mover is entitled to

judgment as a matter of law.” La.Code Civ.P. art. 966(B). The burden of proof is on

the mover;

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[h]owever, if the movant will not bear the burden of proof at trial on the
matter that is before the court on the motion for summary judgment, the
movant's burden on the motion does not require him to negate all
essential elements of the adverse party's claim, action, or defense, but
rather to point out to the court that there is an absence of factual support
for one or more elements essential to the adverse party's claim, action,
or defense. Thereafter, if the adverse party fails to produce factual
support sufficient to establish that he will be able to satisfy his
evidentiary burden of proof at trial, there is no genuine issue of material
fact.

La.Code Civ.P. art. 966(C)(2).

Louisiana Code of Civil Procedure article 967(B) provides:

When a motion for summary judgment is made and supported as
provided above, an adverse party may not rest on the mere allegations
or denials of his pleading, but his response, by affidavits or as otherwise
provided above, must set forth specific facts showing that there is a
genuine issue for trial. If he does not so respond, summary judgment,
if appropriate, shall be rendered against him.

The threshold question in our review of the trial court’s grant of summary

judgment, then, is whether there is any genuine issue of material fact regarding

whether State Farm had a reasonable basis for challenging Duhon’s claim. In

determining whether or not a fact is material, we are guided by Broussard v. Jester,

04-18, p. 4 (La.App. 3 Cir. 6/16/04), 876 So.2d 940, 942, writ denied, 04-1787 (La.

10/15/04), 883 So.2d 1056, wherein this court has stated:

Material facts are those which potentially ensure or preclude recovery,
affect a litigant’s ultimate success, or determine the outcome of the legal
dispute. Hardy v. Bowie, 98-2821 (La. 9/8/99), 744 So.2d 606. If there
is a genuinely disputed issue of material fact summary judgment is not
appropriate. La.Code Civ.P. art. 966(c)(1).

In determining whether an issue is “genuine” for purposes of a
summary judgment motion, courts cannot consider the merits, make
credibility determinations, evaluate testimony, or weigh evidence.
Simon v. Fasig-Tipton Co. of New York, 524 So.2d 788 (La.App. 3 Cir.),
writs denied, 525 So.2d 1049 (La.1988).

We agree with State Farm that the trial court in this case correctly distinguished

between a genuine issue of material fact regarding whether Mr. Duhon can prevail on

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the merits at trial and a genuine issue of material fact as to whether State Farm had

a reasonable basis for defending the claim. In its reasons for judgment, the trial court

stated:

This [C]ourt has carefully reviewed the facts presented by both
the parties. Of notable concern to the court is the conflict between
plaintiff’s testimony that he had traveled to New Orleans and back with
the clear evidence that cell phone calls were made during this exact
time[,] which calls were routed through New Iberia towers and St.
Martinville towers. While this evidence alone does not prove that
plaintiff’s truck was or was not stolen, it certainly calls into question the
credibility of plaintiff. Further, State Farm has presented evidence
regarding the near impossibility of stealing a car with the type of alarm
system plaintiff had installed on his truck. Plaintiff testified that he did
activate the alarm when he parked the truck in the restaurant parking lot.

This case before us is exactly the type of case that jurisprudence
warns against utilizing summary judgment. The case is fact sensitive,
but more importantly, the outcome of the case will turn on the credibility
of witnesses. The Court believes it is necessary to hear the evidence
during trial and have the opportunity to ascertain the credibility of the
witnesses, in particular, the plaintiff.

The Court, however, does find it appropriate to grant the
Summary Judgment of State Farm as to the issue of arbitrary and
capricious failure to pay. The facts presented make it obvious that this
is not a clear cut theft or loss of a vehicle. State Farm has not acted in
bad faith in choosing to investigate the validity of the stolen vehicle
rather than simply paying the claim without question.

We disagree with Duhon’s assertions that the trial court made credibility

determinations in finding that State Farm was not arbitrary and capricious. The trial

court correctly noted that whether or not the vehicle was stolen requires a credibility

determination and denied the motions for summary judgment in that respect. The

determination of whether State Farm was arbitrary and capricious in its handling of

Duhon’s claim does not require a credibility determination or weighing of the

evidence in this case. The evidence shows that State Farm conducted an investigation

of the claim which revealed several inconsistencies in Duhon’s story. Duhon

presented no evidence to show that State Farm was arbitrary and capricious.

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DECREE

After reviewing the record and for the above-stated reasons, we agree with the

trial court’s conclusion that State Farm was neither arbitrary nor capricious in its

refusal to pay Duhon’s claim within the statutory period. There is no error in the

dismissal of Duhon’s claim for penalties and attorney’s fees for failure to pay his

claim within thirty days. Accordingly, we affirm the trial court’s judgment in all

respects. We cast Plaintiff-Appellant, David W. Duhon, with all costs of this appeal.

AFFIRMED.

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