Renia B. Hudson v. Aig National Insurance Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

10-63

RENIA B. HUDSON

VERSUS

AIG NATIONAL INSURANCE

COMPANY, ET AL.

**********

APPEAL FROM THE
TWELFTH JUDICIAL DISTRICT COURT
PARISH OF AVOYELLES, NO. 2009-2986-B
HONORABLE WILLIAM J. BENNETT, DISTRICT JUDGE

**********

JOHN D. SAUNDERS
JUDGE

**********

Court composed of John D. Saunders, Jimmie C. Peters, and Elizabeth A. Pickett,
Judges.

AFFIRMED.

Daniel G. Brenner
Bolen, Parker, Brenner & Lee, Ltd.
P. O. Box 11590
Alexandria, LA 71315-1590
(318) 445-8236
Counsel for Defendant Appellant:
AIG National Insurance Co.

Jerold Edward Knoll Jr. Esq.
Attorney at Law
P.O. Box 426
Marksville, LA 71351
(318) 253-6200
Counsel for Plaintiff Appellee:
Renia B. Hudson

Mary Helen Johnson
Johnson Law Firm, LLC
P. O. Box 468
Marksville, LA 71351
(318) 253-0935
Counsel for Plaintiff Appellee:
Renia B. Hudson

SAUNDERS, Judge.

This case involves an automobile accident where the insured filed suit against

her insurer under her uninsured/underinsured policy not only for the balance of her

policy, but also for penalties that were eventually awarded under La.R.S. 22:1973.

The trial court found that the insurer had acted arbitrarily, capriciously, and without

probably cause in denying the insured’s claim. As such, under La.R.S.

22:1973(B)(5), the trial court awarded the insured an amount double her damages as

a penalty to the insurer for its actions.

The insurer filed this appeal, alleging four assignments of error. We find no

credence in any of these assignments and, therefore, affirm the trial court. Further,

we assess all costs of this appeal to the insurer.

FACTS AND PROCEDURAL HISTORY:

This matter arises out of an automobile accident that occurred on March 20,

2008, involving Renia B. Hudson (Hudson), an AIG National Insurance Company

(AIG) insured, operating a 2004 Mazda Miata and Kasarah Sayer, who was driving

a 1994 GMC pick-up truck. The pick-up truck was owned by Timmy Sayer and

insured by State Farm Mutual Insurance Company (State Farm). The accident

occurred when Hudson was traveling on East Tunica Drive in Marksville, Louisiana,

and the Sayer vehicle pulled out of a gas station, striking Hudson’s vehicle broadside.

The accident occurred solely as a result of the fault of Kasarah Sayer.

The State Farm policy provided a $10,000.00/$20,000.00 liability limit.

Hudson filed a claim with State Farm on that policy and eventually signed a release

in favor of State Farm, Timmy Sayer, and Kasarah Sayer in exchange for the policy

limit of $10,000.00.

At the time of the accident, Hudson had a policy of uninsured/underinsured

motorist (UM) insurance coverage issued by AIG for a limit of $25,000.00. On

December 9, 2008, Hudson sent a demand letter to AIG for that limit. Attached to the

demand letter was Hudson’s medical profile, a certificate of coverage from State

Farm stating that the limits on Sayer’s policy of insurance were “10/20/25,” an

affidavit of coverage from Timmy Sayer stating that he had “no other liability

insurance . . . which would provide insurance benefits to [Hudson] for damages

sustained as a result of the collision on 03-20-08,” and a release executed by Hudson

in favor of Timmy Sayer, Kasarah Sayer, and State Farm in exchange for the policy

limits of ten thousand dollars.

Hudson’s medical profile included diagnostic tests taken of her cervical spine

at three different time frames following three different automobile accidents. The

first was taken in 2000, the second in 2005, and the third following the pertinent

accident, in 2008. The objective findings of those tests were that following the 2005

accident, Hudson showed no abnormalities related to her cervical spine, whereas,

after the 2008 accident, she had disc herniations at C4-5 and C5-6 and a disc bulge

at C3-4.

AIG refused to pay under the policy, claiming that it first needed to receive a

recorded statement from Hudson. Suit was filed against AIG on January 9, 2009,

alleging that Hudson was entitled to not only her damages, but also to penalties from

AIG under La.R.S. 22:1220 and 22:658.1

Thereafter, Hudson’s deposition was taken by AIG on May 14, 2009. On May

21, 2009, AIG made an unconditional tender of $11,744.00. Hudson rejected the

tender, and AIG placed those funds in the registry of the court.

1
Louisiana Revised Statutes 22:658 and 22:1220 are currently cited as La.R.S. 22:1892
and 22:1973 respectively.

2

A bench trial was held on July 19, 2009. The trial court issued reasons for

ruling and judgment on September 15, 2009. In its judgment, the trial court awarded

Hudson $25,000.00 from AIG under the terms of the UM policy. Further, the trial

court awarded Hudson $50,000.00 in penalties under La.R.S. 22:1973(B)(5) due to

its finding that Hudson was an extremely credible witness, that AIG’s adjuster, Jeff

Chighizola, testified in a very coy and evasive manner, and that AIG had acted in an

arbitrary and capricious manner without just cause. AIG has appealed this judgment,

alleging the following four assignments of error:

ASSIGNMENTS OF ERROR:

1. The trial court committed manifest error in failing to grant AIG’s motion for
involuntary dismissal where no prima facie case was proven by Hudson to
satisfy the strict and narrowly construed requirements of the penal statutes
La.R.S. 22:1892 and La.R.S. 22:1973.

2. The trial court erred by granting penalties under La.R.S. 22:1973 where
Hudson filed suit alleging bad faith prior to any actual occurrence of what
Hudson alleges to be “bad faith” under the statute.

3. The trial court committed manifest error in granting La.R.S. 22:1973 damages
and penalties where the evidence does not support a finding of insurer bad
faith.

4. The trial court erred in calculating the La.R.S. 22:1973 and other “damages”
allegedly incurred by AIG’s alleged bad faith actions.

ASSIGNMENT OF ERROR NUMBER ONE:

In its first assignment of error, AIG contends that the trial court committed

manifest error in failing to grant its motion for involuntary dismissal where no prima

facie case was proven by Hudson to satisfy the strict and narrowly construed

requirements of the penal statutes La.R.S. 22:1892 and La.R.S. 22:1973. For the

following reason, we find no basis for this assignment.

Louisiana Code of Civil Procedure Article 1672(B) (emphasis added) states:

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In an action tried by the court without a jury, after the plaintiff has
completed the presentation of his evidence, any party, without waiving
his right to offer evidence in the event the motion is not granted, may
move for a dismissal of the action as to him on the ground that upon the
facts and law, the plaintiff has shown no right to relief. The court may
then determine the facts and render judgment against the plaintiff and in
favor of the moving party or may decline to render any judgment until
the close of all the evidence.

A trial court’s determination on a party’s motion granting an involuntary

dismissal is reviewed using the manifest error standard of review. Gauthier v. City

of New Iberia, 06-341 (La.App. 3 Cir. 9/27/06), 940 So.2d 915. Thus, for this court

to reverse a trial court’s granting of a motion for involuntary dismissal, we must find

that there lacks a factual basis for its determination, i.e., that the determination is

manifestly erroneous, clearly wrong, or unreasonable. See Stobart v. State, through

DOTD, 617 So.2d 880 (La.1993).

In the case before us, it is AIG, the party that made the motion for involuntary

dismissal that is assigning as error the denial of the motion. Our review of the

explicit language of applicable article is that the trial court “may decline to render any

judgment until the close of all the evidence.” La.Code Civ.P. art. 1672(B). Thus,

there is nothing for this court to review, as the denial of a motion for involuntary

dismissal is purely discretionary. See Townsend v. Delchamps, Inc., 94-1511 (La.App.

1 Cir. 10/6/95), 671 So.2d 513, writ denied, 95-2648 (La. 1/12/96), 667 So.2d 522;

Parker v. Winn-Dixie La., Inc., 615 So.2d 378 (La.App. 5 Cir. 1993); Riser v. Am.

Med. Int’l, Inc., 620 So.2d 372 (La.App. 5 Cir. 1993); Blount v. Peabody Shoreline

Geophysical, 439 So.2d 565 (La.App. 1 Cir. 1983). Accordingly, we find no merit

to this assignment of error.

ASSIGNMENT OF ERROR NUMBER TWO:

In its second assignment of error, AIG asserts that the trial court erred by

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granting penalties under La.R.S. 22:1973 where Hudson filed suit alleging bad faith

prior to any actual occurrence of what Hudson alleges to be “bad faith” under the

statute. We find that AIG’s assertion is without merit.

Louisiana Revised Statutes 22:1973 states, in pertinent part, the following:

A. An insurer, including but not limited to a foreign line and
surplus line insurer, owes to his insured a duty of good faith and fair
dealing. The insurer has an affirmative duty to adjust claims fairly and
promptly and to make a reasonable effort to settle claims with the
insured or the claimant, or both. Any insurer who breaches these duties
shall be liable for any damages sustained as a result of the breach.

B. Any one of the following acts, if knowingly committed or
performed by an insurer, constitutes a breach of the insurer’s duties
imposed in Subsection A:

....

(5) Failing to pay the amount of any claim due any person
insured by the contract within sixty days after receipt of
satisfactory proof of loss from the claimant when such
failure is arbitrary, capricious, or without probable cause.

....

C. In addition to any general or special damages to which a
claimant is entitled for breach of the imposed duty, the claimant may be
awarded penalties assessed against the insurer in an amount not to
exceed two times the damages sustained or five thousand dollars,
whichever is greater. Such penalties, if awarded, shall not be used by the
insurer in computing either past or prospective loss experience for the
purpose of setting rates or making rate filings.

AIG argues that the trial court erred in granting penalties to Hudson because

she filed suit on January 7, 2009, within sixty days of December 9, 2008, the date that

the trial court determined AIG had received “satisfactory proof of loss” under La.R.S.

22:1973. AIG’s argument posits a question that is legal in nature, i.e. does the sixty-

day time period under La.R.S. 22:1973(B)(5) have to toll prior to a plaintiff filing a

suit alleging entitlement to penalties under that statute.

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Appellate review of questions of law is simply to determine whether the
trial court was legally correct or legally incorrect. If the trial court’s
decision was based on its erroneous interpretation or application of the
law, rather than a valid exercise of discretion, such incorrect decision is
not entitled to deference by the reviewing court.

Domingue v. Bodin, 08-62, pp. 2 (La.App. 3 Cir. 11/5/08), 996 So.2d 654, 657
(quoting Citgo Petroleum Corp. v. Frantz, 03-88, pp.3-4 (La.App. 3 Cir. 6/403), 847
So.2d 734, writ denied, 03-1911 (La. 10/31/03), 857 So.2d 484 (citations omitted)).

“When a law is clear and unambiguous and its application does not lead to absurd

consequences, the law shall be applied as written and no further interpretation may

be made in search of the intent of the legislature.” La.Civ.Code art. 9.

We find the language of La.R.S. 22:1973(B)(5) to be both unambiguous and

clear. That explicit language does not require the sixty-day period to have run prior

to a plaintiff filing suit in order for that plaintiff to recover the statutory penalties.

Further, rejecting AIG’s proposed prerequisite leads to no absurd consequences. It

is common practice by plaintiffs to file suit and request compensation for legal rights

that are more likely than not to manifest themselves in the future. For example, a

plaintiff can properly file suit for future medical expenses, loss of enjoyment of life,

or loss of consortium. As such, we find no merit in AIG’s argument.

ASSIGNMENT OF ERROR NUMBER THREE:

In its third assignment of error, AIG states that the trial court committed

manifest error in granting La.R.S. 22:1973 damages and penalties where the evidence

does not support a finding of insurer bad faith.

The trial court found that AIG’s actions in adjusting Hudson’s claim violated

La.R.S. 22:1973(B)(5) which states that an insurer can be responsible for penalties

if it fails “to pay the amount of any claim due any person insured by the contract

within sixty days after receipt of satisfactory proof of loss from the claimant when

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such failure is arbitrary, capricious, or without probable cause.” Whether a refusal

to pay under La.R.S. 22:1973(B)(5) is “arbitrary, capricious, or without probable

cause” and warrants granting an insured penalties takes into account what facts are

known by the insurer at the time of its action. Reed v. State Farm Mut. Auto. Ins. Co.,

03-107 (La. 10/21/03), 857 So.2d 1012. This determination is a factual issue,

therefore, the applicable standard of review is that of manifest error. Id. As such, we

will look to the record to determine whether it supports the trial court’s decision to

award Hudson penalties.

The trial court found that “satisfactory proof of loss” was received by AIG on

December 9, 2008. AIG contends that this finding was in error. AIG bases its

contention that there was not “satisfactory proof of loss” on December 9, 2008, on the

fact that Hudson had not yet given it her recorded statement as required by the

contract between them. While AIG is correct that the language of the policy between

it and Hudson necessitated that Hudson give AIG her recorded statement, Hudson’s

lack of cooperation in this regard does not prohibit her from proving that AIG

received “satisfactory proof of loss” without that statement.

Rather, our supreme court was quite explicit as to what “satisfactory proof of

loss” entails in Reed, 857 So.2d at 1022 (quoting McDill v. Utica Mutual Insurance

Co., 475 So.2d 1085, 1089 (La.1985)(alteration in original)) wherein it stated:

“Satisfactory proof of loss” in a claim pursuant to UM coverage is
receipt by the insurer of “sufficient facts which fully apprise the insurer
that (1) the owner or operator of the other vehicle involved in the
accident was uninsured or under insured; (2) that he [or she] was at
fault; (3) that such fault gave rise to damages; and (4) establish the
extent of those damages.”

On December 9, 2008, counsel for Hudson sent counsel for AIG a demand

letter with attached documents. Those attached documents included Hudson’s

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medical profile, a certificate of coverage from State Farm stating that the limits on

Sayer’s policy of insurance were “10/20/25,” an affidavit of coverage from Timmy

Sayer stating that he had “no other liability insurance . . . which would provide

insurance benefits to [Hudson] for damages sustained as a result of the collision on

03-20-08,” and a release executed by Hudson in favor of Timmy Sayer, Kasarah

Sayer, and State Farm in exchange for the policy limits of ten thousand dollars.

Our review of these documents support the trial court’s finding that the

December 9, 2008 letter established “satisfactory proof of loss” under the criteria

stated in Reed. State Farm’s certificate of insurance, Timmy Sayer’s affidavit, and the

release establish the first criterium that “the owner or operator of the other vehicle

involved in the accident was uninsured or under insured.” Id.

The police report submitted as Plaintiff’s exhibit number 3 was readily

available to AIG prior to December 9, 2008. It listed the Sayer vehicle as “Vehicle

1” and Hudson’s vehicle as “Vehicle 2.” The report includes the following:

Vehicle 1 stated that she was exiting out of the Shell Station
parking lot to head west on Tunica Dr. when a vehicle stopped traffic in
the far right lane to let her in and didn’t see Vehicle 2 coming from the
far left land and hit the passenger back side of Vehicle 2.

Vehicle 2 stated that she was traveling straight ahead on Tunica
Dr. about to approach the light [at] Tunica and Acton Rd. and Vehicle
1 came from out [of] the parking lot of the Shell [Station] and struck the
back passenger side of her vehicle.

Further, the police report listed a violation by the driver of the Sayer vehicle

as “failure to yield” and listed her condition as “inattentive.” The police reported no

deficiencies by Hudson. This report establishes that AIG had knowledge of the

second criterium under Reed, that the driver of the other vehicle was at fault.

Finally, the trial court determined that the final two criteria under McDill, i.e.,

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that Sayer’s “fault gave rise to damages” and that Hudson can “establish the extent

of those damages,” were met by AIG’s possession of Hudson’s complete medical

profile. We find this determination reasonable.

Hudson’s medical profile sent to AIG on December 9, 2008, included the

results of diagnostic tests conducted in 2000, 2005, and 2008, all of which focused

on Hudson’s cervical area of her spine. The diagnostic test performed in 2000 was

done so after Hudson was in an automobile accident. It showed a “very small focal

left C5-6 disc bulge.” The diagnostic test performed in 2005 was also done after

Hudson was in automobile accident. It showed “no acute osseous abnormality in the

cervical spine” and “calcification along the anterior annular margin and/or

longitudinal ligaments at C4-5 and C5-6, consistent with mild degenerative disease.”

Finally, the diagnostic test performed in 2008, after the accident relevant to the case

before us, revealed “disc herniations at C4-5 and C5-6” and “mild posterior bulging

of the annulus fibrosis at C3-4.” Moreover, a nerve conduction study was done after

the 2008 accident and it revealed “right median motor neuropathy at the wrist.”

These objective findings of increased damage to Hudson’s cervical area of her

spine can reasonably be found, as the trial court did, to establish that Sayer’s “fault

gave rise to damages” and that Hudson can “establish the extent of those damages.”

Id. At its most minor, the 2008 accident can objectively be seen to have caused a new

disc herniation at C4-5, an exacerbation of Hudson’s bulging disc at C5-6 into a disc

herniation, and a new bulging disc at C3-4. Given that the four criteria in Reed can

reasonably be found to have been met, the trial court’s determination that AIG had

“satisfactory proof of loss” on December 9, 2008, is not manifestly erroneous.

It is not disputed that AIG did not make an unconditional tender to Hudson

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until May 21, 2009. This is well in excess of the threshold “within sixty days after

receipt of satisfactory proof of loss” as stated in La.R.S. 22:1973(B)(5). The

language of La.R.S. 22:1973(C) is as follows: “[i]n addition to any general or special

damages to which a claimant is entitled for breach of the imposed duty, the claimant

may be awarded penalties assessed against the insurer in an amount not to exceed two

times the damages sustained or five thousand dollars, whichever is greater.” This is

exactly what the trial court did in this case, and we find no error in awarding Hudson

penalties under La.R.S. 22:1973 once it was established that AIG failed to pay

Hudson within sixty days of receiving “satisfactory proof of loss.”

ASSIGNMENT OF ERROR NUMBER FOUR:

In its final assignment of error, AIG argues that the trial court erred in

calculating the La.R.S. 22:1973 and other “damages” allegedly incurred by AIG’s

alleged bad faith actions. We find this argument is completely without merit.

Our supreme court, in Stobart, 617 So.2d at 882, stated the following:

A court of appeal may not set aside a trial court’s or a jury’s
finding of fact in the absence of “manifest error” or unless it is “clearly
wrong.” Rosell v. ESCO, 549 So.2d 840 (La.1989). This court has
announced a two-part test for the reversal of a factfinder’s
determinations:

1) The appellate court must find from the record that a reasonable
factual basis does not exist for the finding of the trial court, and

2) the appellate court must further determine that the record
establishes that the finding is clearly wrong (manifestly erroneous).

AIG’s first argument in this assignment of error is that the trial court committed

manifest error in awarding Hudson loss of earnings for $7,080.56. AIG bases its

argument on two statements made by Hudson. The first is where she testified that she

could have gone back to work at the casino if she had obtained a release from her

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treating physician. The second is where Hudson testified that she was working on her

grocery business during the time she sought lost wages.

Regarding whether she could return to work, AIG points to the following

testimony of Hudson to assert that the trial court was manifestly erroneous in

awarding Hudson lost wages:

Q Okay. Let me ask you about your testimony that you didn’t return
to the casino because you had been terminated. Now first of all
we have established that you did not ask Dr. Goux for a letter [on]
June 4th where you were applying for your new business license.
You didn’t go to Dr. Goux and ask him for a letter to allow you
to go back to work?

A Not at that point no.

Q Okay. And you are aware that since you were on leave at that time
you could have gone back to work with the casino. They would
have taken you back had you gotten a release from Dr. Goux?

A If it was before my ninety days [were] up yes.

Q June 4th was?

A But I couldn’t go back then.

Q All right. Cause [sic] you were unable to do anything at all?

A And not at that point no.

Our reading of this testimony is quite different than that of AIG. In brief, AIG

asserts that “Hudson stated she could have gone back to work at the casino if she had

obtained a release from Dr. Goux.” While this statement, in a vacuum, is accurate,

as Hudson said that had she asked Dr. Goux for a release, she could have gone back

to work at that time, it is a gross misrepresentation of her testimony. Hudson clearly

states in the next few lines that she did not get a release from Dr. Goux at that time

because she could not have done anything at work had she gone back. Thus, this

argument made by AIG falls woefully short of demonstrating how the trial court was

11

manifestly erroneous.

Next, AIG argues that the trial court was manifestly erroneous in awarding

Hudson past lost wages from March 5, 2008, to June 23, 2008, due to her opening a

fruit stand/grocery store during that time period. Again, we find that AIG’s argument

lacks merit.

While it is true that Hudson did attempt to open a fruit stand/grocery store

during the time that she claimed lost wages, Hudson did testify that the business was

open for less than one month and that she received no wages from its operation. AIG

points out that if Hudson was able to fill out the paperwork necessary to open the

business and was able to carry crates of produce in operating the business, she was

able to go back to work. AIG even had a witness, Michael Lopez, testify that he had

seen Hudson carrying crates while operating her business and that those crates looked

very heavy. However, Hudson testified that Dr. Goux had placed a lifting restriction

for her of ten pounds and that neither the paperwork or any of the boxes or crates she

was seen carrying were over ten pounds.

In its reasons for judgment, the trial court stated that “Renia Hudson presented

to the Court as a witness and testified in an extremely calm, credible and impressive

manner.” Given that the trial court was in a superior position to this court regarding

this issue, we must give deference to its findings.

“[W]here two permissible views of the evidence exist, the factfinder’s choice

between them cannot be manifestly erroneous or clearly wrong.” Stobart, 617 So.2d

at 883. This is exactly the situation presented on this issue, and the trial court chose

to give credence to Hudson’s testimony. Accordingly, we find no manifest error by

the trial court in awarding Hudson past lost wages.

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Finally, AIG argues that the trial court erroneously applied La.R.S. 22:1973.

It bases it argument on an assertion that the clear language of La.R.S. 22:1973 is such

that Hudson had to prove that she suffered actual damages as a result its failure to

tender within sixty days in order to receive penalties. AIG highlights and

unabashedly cites language from Sultana Corp. v. Jewelers Mutual Insurance Co.,

01-2059 (La.App. 1 Cir. 12/31/02), 837 So.2d 134, in an attempt to bolster its

position. However, our supreme court, in Sultana Corp. v. Jewelers Mutual

Insurance Co., 03-360 (La. 12/3/03), 860 So.2d 1112, reversed our first circuit and

found exactly the opposite to be the law in this state., i.e. that proof of actual damages

suffered due to the delay in tendering payment to an insured is not a prerequisite to

the recovery of penalties for an insurer’s breach of statutory duties. AIG’s brief does

include a citation to, but no quotation from, our supreme court’s opinion in Sultana

Corp. Thus, we find AIG’s argument is meritless and disingenuous.

CONCLUSION:

AIG raised four assignments of error. They are: that the trial court committed

manifest error in failing to grant AIG’s motion for involuntary dismissal, that he trial

court erred by granting penalties under La.R.S. 22:1973 where Hudson filed suit

alleging bad faith prior to any actual occurrence of what Hudson alleges to be “bad

faith” under the statute, that the trial court committed manifest error in granting

La.R.S. 22:1973 damages and penalties where the evidence does not support a finding

of insurer bad faith, and that the trial court erred in calculating the La.R.S. 22:1973

and other “damages” allegedly incurred by AIG’s alleged bad faith actions.

We found no merit to any of these assignments. Thus, we affirm the trial

court’s judgment, and assess all costs of this appeal to AIG.

13

AFFIRMED.

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