Carl R. Guidry, Et Ux. v. State Farm Fire and Casualty Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-262

CARL R. GUIDRY, ET UX

VERSUS

STATE FARM FIRE AND CASUALTY COMPANY, ET AL.

**********

APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-2005-5487
HONORABLE PATRICK LOUIS MICHOT, DISTRICT JUDGE

**********

ULYSSES GENE THIBODEAUX
CHIEF JUDGE

**********

Court composed of Ulysses Gene Thibodeaux, Chief Judge, Marc T. Amy, and Phyllis
M. Keaty, Judges.

Amy, J., concurs in the result and assigns reasons.

Keaty, J., concurs in the result for the reasons assigned by Judge Amy.

AFFIRMED.

Kenny Layne Oliver
David Oliver Way
Oliver & Way, L.L.C.
P. O. Box 82447
Lafayette, LA 70598-2447
Telephone: (337) 988-3500
COUNSEL FOR:
Defendants/Appellees - Louisiana Farm Bureau Mutual Insurance
Company and Evelyn B. Smith

Ian Alexander MacDonald
Jones Walker
P. O. Drawer 3408
Lafayette, LA 70502-3408
(337) 262-9000
COUNSEL FOR:
Defendant/Appellant - Progressive Security Insurance Company

Michael Langdon Cave
Cave Law Firm, L.L.C.
3909 Plaza Tower Dr.
Baton Rouge, LA 70816
Telephone: (225) 292-3194
COUNSEL FOR:
Plaintiffs/Appellants - Carl R. Guidry and Barbara Guidry

THIBODEAUX, Chief Judge.

Carl Guidry was hit from behind in two vehicular rear-end collisions,

two weeks apart. He sued the drivers and their insurers for each accident, and he

sued his own insurance company for mishandling his underinsured driver claim.

Mr. Guidry settled with and dismissed the defendants in the first accident and

proceeded to trial against the defendants in the second accident, and against his

own insurance company. Mr. Guidry appeals the jury‟s resulting general damages

award of $10,000.00 as abusively low. Mr. Guidry‟s insurer also filed an appeal

from the awards against it for arbitrary and capricious claims handling. We do not

find an abuse of discretion and affirm the jury‟s awards in both instances.

I.

ISSUES

We must decide:

(1) whether the jury‟s award of general damages for the second
accident was abusively low; and

(2) whether Mr. Guidry‟s own insurance company was arbitrary
and capricious in its handling of Mr. Guidry‟s claims.

II.

FACTS AND PROCEDURAL HISTORY

On October 27, 2004, Carl Guidry and his granddaughter were rear-

ended by Amber Guidry (Amber). 1 Mr. Guidry‟s truck was slightly knocked

forward.

Two weeks later, on November 11, 2004, Mr. Guidry and his

granddaughter were again rear-ended, this time by Evelyn B. Smith (Smith). Mr.

Guidry had slowed for a vehicle turning in front of him. Ms. Smith testified that

1
The plaintiffs are not related to Amber Guidry, the defendant driver in the first accident.

she did not see him in time, and afraid of flipping her SUV if she braked too hard,

she hit him. Her SUV was towed, and Mr. Guidry sustained damage to his back

bumper and tailgate, requiring repairs in the amount of $3,500.00. Mr. Guidry had

neck and back pain after the first accident and neck, back, and shoulder pain after

the second accident.

Carl Guidry and his wife, Barbara Guidry, along with the parents of

their granddaughter, sued Amber and her insurer, State Farm Fire and Casualty

Company, for the October accident; and, they sued Smith and her insurer,

Louisiana Farm Bureau Mutual Insurance Company, for the November accident.

The plaintiffs subsequently amended their petition to add Mr.

Guidry‟s uninsured/underinsured motorist (UM) carrier, Progressive Security

Insurance Company, as a defendant.

Mr. Guidry and his wife settled with Amber and State Farm for the

first accident and proceeded against Smith and Farm Bureau for the second

accident. They proceeded against Progressive for both accidents. Following trial,

the jury found that Mr. Guidry did not suffer damages in the October accident with

Amber, who had settled for State Farm‟s policy limits of $10,000.00 and had been

released. The jury found that Mr. Guidry did suffer damages in the November

accident with Smith and awarded him medical damages of $19,859.40 and general

damages of $10,000.00, to be paid by Smith‟s insurer, Farm Bureau. It also

awarded Mr. Guidry‟s wife $2,500.00 for loss of consortium, to be paid by Farm

Bureau.

The jury further found that Mr. Guidry‟s UM insurer, Progressive, had

been arbitrary and capricious in handling Mr. Guidry‟s claims for general damages

and medical expenses. The jury awarded Mr. Guidry $50,000.00 for the breach of

2

duty and $10,000.00 in attorney fees, with respect to the November accident.2 The

trial judge awarded Mr. Guidry $100,000.00 in penalties against Progressive,

pursuant to La.R.S. 22:1973.

Two appeals were filed in this matter: (1) Mr. Guidry appeals his

$10,000.00 general damage award against Smith and Farm Bureau as abusively

low; and (2) Progressive appeals the $160,000.00 assessed against it for its breach

of duty in handling the UM claims of Mr. Guidry.

For the following reasons, we affirm the general damage award

against Smith and Farm Bureau, and we affirm the awards against Progressive for

breach of duty, attorney fees, and penalties.

III.

STANDARD OF REVIEW

An appellate court may not set aside a trial court‟s findings of fact in

absence of manifest error or unless it is clearly wrong. Stobart v. State, Through

DOTD, 617 So.2d 880 (La.1993). A reviewing court must keep in mind that if a

trial court‟s findings are reasonable based upon the entire record, an appellate court

may not reverse those findings, even if it is convinced that, had it been sitting as

trier of fact, it would have weighed the evidence differently. Housley v. Cerise,

579 So.2d 973 (La.1991). The basis for this principle of review is grounded upon

the better capacity of the trial court to evaluate live witnesses and upon the proper

allocation of trial and appellate functions between the respective courts. Canter v.

Koehring Co., 283 So.2d 716 (La.1973).

2
Progressive states in its brief that, during trial, Mr. Guidry “dismissed” his UM claim for
the second accident, pointing us to Mr. Guidry‟s attorney‟s question to Mr. Guidry on direct
examination regarding a discussion of dropping the UM claim for the second accident. This
reference is ambiguous, as we find no such dismissal in the record, other than the dismissal of
Barbara Guidry‟s loss of consortium claim against Progressive for the second accident.

3

IV.

LAW AND DISCUSSION

Appeal of the Jury’s General Damage Award

Mr. Guidry contends that the jury‟s award of $10,000.00 for general

damages was abusively low where the November accident caused a partial tear of

the rotator cuff and AC joint impingement necessitating a Mumford Procedure,

aggravated pre-existing cervical and lumbar problems, and was a substantial factor

in causing an L4-5 disc herniation. Mr. Guidry further contends that: (1) medical

causation established by Mr. Guidry‟s treating physician was uncontroverted; (2)

the medical expense award included the treatment of the left shoulder injuries and

aggravations to the cervical and low back areas; and, (3) there was no evidence of

an intervening event.

Farm Bureau argues that the jury‟s modest award for pain and

suffering was due to the jury‟s conclusion that Mr. Guidry sustained only minor

aggravations of pre-existing conditions as a result of the November accident. It

contends that the jury properly weighed the credibility of Mr. Guidry and his

physicians regarding causation, given the incomplete history supplied by Mr.

Guidry and his use of narcotic pain medication from multiple pharmacies and

physicians for shoulder and back injuries since 1989.

Mr. Guidry was a chronic pain patient who had been disabled since

1989, when he fell on an offshore rig. He underwent surgery to his left shoulder.

Subsequently, Dr. Louis Blanda, an orthopedic surgeon with the Lafayette Bone &

Joint Clinic, performed a surgical fusion at L5-S1 that had to be re-grafted the

following year. The fusion appeared solid in some images and appeared failed in

others. Mr. Guidry continued to have back pain and was on pain management with

various pain management physicians from that time forward.

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Mr. Guidry was rear-ended in 1997 in an automobile accident. Dr.

Blanda treated him conservatively for a small disc herniation at C5-6; this included

physical therapy, pain medication, and various injection therapies.

In 2002, pursuant to a CT of the lumbar spine, Dr. Doreen Abadco

found a bulging disc at L4-5 and treated Mr. Guidry with nerve blocks.

Following the October 2004 accident, Mr. Guidry went to the

emergency room at Southwest Medical Center with complaints of neck and back

pain. His x-ray showed degenerative disc disease at L5-S1 and at C5-6 with a

straightening of the lordotic curve of the cervical spine involving neck spasm. The

Southwest emergency room physician diagnosed him with cervical and lumbar

strain, gave him pain medication, and told him to see an orthopedist if his problems

persisted.

Following the second accident in November, 2004, Mr. Guidry went

to the emergency room at Our Lady of Lourdes Hospital with neck and back pain.

He was examined, x-rayed, and told to see his primary doctor in a week. His x-

rays again showed degenerative disc disease at the prior fusion site, L5-S1, and at

C5-6.

For the subject accidents, Dr. Blanda first saw Mr. Guidry on

December 16, 2004, after a rescheduled appointment earlier in December. Mr.

Guidry complained of injury and pain in his neck, his left shoulder, and his lower

back. Dr. Blanda noted that Mr. Guidry had neck and back pain with numbness in

his legs after the first accident, and had shoulder pain and an increase in the neck

and back pain with continuing numbness in the legs after the second accident.

Objectively, Dr. Blanda found spasm in Mr. Guidry‟s neck and low back muscles.

Mr. Guidry had weakness upon lifting his left shoulder, called abduction; a feeling

of crepitus or a grinding, roughened sensation in his shoulder joint; and, diffuse

numbness and loss of grip strength in his left hand.

5

Dr. Blanda ordered an MRI of Mr. Guidry‟s neck and left shoulder

and a CT scan of the lumbar spine. The CT scan showed arthritic changes at the

prior fusion site, L5-S1, with a central broad-based disc herniation and spinal

stenosis at L4-5, the level above the prior fusion. The MRI of the cervical spine

indicated a small central focal subligamentous herniation of the disc at C6-7. The

MRI of the left shoulder showed arthritic spurs at the AC joint and was suspicious

for a partial tear of the rotator cuff.

In January of 2005, Dr. Blanda recommended surgical decompression

and instrumentation at L4-5 and rotator cuff repair for the shoulder. He required a

deposit of $27,721.46 for his estimated surgical services, but never received

insurance authorization for the surgeries.

Dr. Blanda next saw Mr. Guidry in May of 2005. He still had neck,

low back, and left shoulder pain, but reported that the back was somewhat

improved. He asked about a referral since his pain management physician was

moving his practice to Baton Rouge. Dr. Blanda was still waiting for authorization

for the recommended surgeries.

Dr. Blanda saw Mr. Guidry in November of 2005. His left shoulder

was still painful and weak, and he wanted the procedure done. With ongoing pain

management, his neck and back symptoms had stabilized to a tolerable level. Dr.

Blanda wanted an updated MRI before determining what type of surgery should be

done. Mr. Guidry continued to treat with pain management specialists but did not

see Dr. Blanda again until September of 2008.

In October of 2008, Dr. Blanda reviewed new MRI‟s of the low back

and the left shoulder, as well as an x-ray of the shoulder. The x-ray showed

arthritis of the AC joint and the ball and socket part of the shoulder. It also showed

calcitic tendonitis, or calcification of the rotator cuff, which, as Dr. Blanda

explained, is the body‟s way of trying to heal the tear. The calcium deposits can

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also produce pain. The MRI of the shoulder now showed the calcifications instead

of a tear and more arthritis and impingement on the rotator cuff. Instead of a

rotator cuff repair, Dr. Blanda now recommended a Mumford Procedure, which is

the removal of the tip of the clavical, or collarbone, to relieve the pain in the AC

joint as well as the pressure in the impingement. The Mumford Procedure was

performed on December 22, 2008, and was successful in relieving Mr. Guidry‟s

shoulder pain. It was paid for my Medicare/Medicaid.

Dr. Blanda testified that disc herniations were caused by lifting,

bending, twisting, and any sudden flexion or extension. He indicated that a fairly

common cause of sudden flexion or extension is being hit from behind in a low-

impact, rear-end vehicular accident; the cause does not have to be a bone-breaking

blow or blunt trauma type of accident. Dr. Blanda indicated that most people

injure the rotator cuff by falling or bracing themselves to prevent a fall which is the

same mechanism as holding on to a steering wheel and being rear-ended.

Dr. Blanda stated that Mr. Guidry‟s pre-existing low back problems

had limited him to light or sedentary activity, and the new problems increased the

pain and his whole body physical impairment by ten to fifteen percent due to the

new back injury. Dr. Blanda assessed the aggravation of the pre-existing neck

injury at ten percent and the shoulder injury at around twenty percent as it involves

the physical functioning of the arm as well.

Dr. Blanda stated that, while it was difficult to sort out which accident

caused which injury, he thought that the October accident started the process with

the L4-5 disc herniation, aggravating low back problems and causing numbness in

the legs; it also initiated the neck problems, aggravating an asymptomatic

condition in the neck. Dr. Blanda opined that the November accident further

aggravated the back and neck problems and caused the need for a new surgery of

the left shoulder.

7

Dr. Blanda was aware that Mr. Guidry had used various pain

management physicians over the years and that he had been discharged once

before the subject accidents and once after the subject accidents for simultaneously

using the services of two pain management physicians. He testified, however, that

he had treated Mr. Guidry orthopedically for twenty-one years and did not consider

him to be a liar and had never had that issue with him. Dr. Blanda explained that

pain management therapists try to do what is necessary to make a patient

comfortable for a better quality of life. He made a distinction between addiction

and a dependence on pain medication needed for quality of life issues.

The only other physician to testify was Dr. Michael Duval, an

orthopedic surgeon in Lafayette who examined Mr. Guidry‟s left shoulder on

behalf of Farm Bureau on December 2, 2008, over four years after the accidents,

but before the Mumford Procedure performed by Dr. Blanda. Dr. Duval testified

that he specialized in shoulders and did not examine Mr. Guidry‟s neck or back.

He described the 2004 accidents as low impact events which would not cause a

rotator cuff tear. He did not find symptoms of a rotator cuff tear in 2008.

Dr. Duval opined that Mr. Guidry had osteoarthritis of the ball and

socket joint (back of shoulder) and arthritis of the AC joint (front of shoulder; end

of collar bone) and said that his Hawkins test, which is an elbow to nose test, was

positive for AC joint pain. He stated that numbness in the hands is a symptom of a

herniated cervical disc but not of a rotator cuff injury or a shoulder impingement,

as shoulder pain does not refer past the elbow. Dr. Duval said that he would not

expect to see an aggravation of arthritis from a low impact rear-end accident.

Dr. Duval admitted that he did not know the speed of the vehicles in

either accident and that he had spent only ten to fifteen minutes with Mr. Guidry.

Dr. Duval also stated that, when he evaluated Mr. Guidry, he was examining him

for an opinion on a rotator cuff repair, which is not the surgery that was later

8

performed. Dr. Duval stated that Dr. Blanda subsequently performed a Mumford

procedure, which addressed the AC joint arthritis, and he admitted that he did not

know the outcome of that surgery. He opined that a trauma can aggravate, but did

not cause, Mr. Guidry‟s shoulder problems. Dr. Duval testified, however, that

bracing oneself with an arm, as if bracing for a fall, can cause an aggravation to a

pre-existing arthritic condition. He admitted that he had examined Mr. Guidry

over four years after the subject accidents and that the treating physician does have

a better perspective on a patient‟s good days and bad days because of having

treated the patient over time.

“As a general rule, the treating physician‟s testimony should be given

more weight than that of a doctor who examines a claimant for diagnostic purposes

only.” Knox v. Calcasieu Parish Police Jury, 04-1497, p. 8 (La.App. 3 Cir.

4/27/05), 900 So.2d 1128, 1134 (quoting Clark v. State Farm Ins. Co., 520 So.2d

860, 864 (La.App. 3 Cir. 1987)).

There is no doubt that Mr. Guidry, with his history of prior injuries,

surgeries, and conditions, was an eggshell plaintiff. In fact, he had been disabled

for fifteen years when these accidents occurred in 2004, and he had been in pain

management for a long time. However,

[t]he defendant‟s liability for damages is not mitigated by
the fact that the plaintiff‟s pre-existing physical infirmity
was responsible in part for the consequences of the
plaintiff‟s injury by the defendant. It is clear that a
defendant takes his victim as he finds him and is
responsible for all natural and probable consequences of
his tortious conduct.

Bienemann v. State Farm Mut. Auto. Ins. Co., 08-1045, p. 4 (La.App. 3 Cir.

2/4/09), 3 So.3d 621, 623 (quoting Lasha v. Olin Corp., 625 So.2d 1002, 1005

(La.1993)).

Here, Mr. Guidry settled with the driver from the October accident,

Amber Guidry, and with her insurer, State Farm, prior to trial. The jury made no

9

award for that accident, stating on the verdict form that there were no injuries.

This is contrary to Dr. Blanda‟s impression, but Mr. Guidry did not appeal that

portion of the verdict. Mr. Guidry‟s appeal addresses the second rear-end collision

by Smith in November, which is insured by Farm Bureau.

On the day of the second accident, November 11, 2004, but prior to

the accident at 3:45 p.m., Mr. Guidry went to his pain management physician, Dr.

Paul Hubbell, with complaints of low back pain. He reported that Mr. Guidry was

medically stable, was tolerating his medications well, was able to do his

housework and tend to minor activities, and that Mr. Guidry reported “an improved

quality of life.” Mrs. Guidry testified that after the accident, Mr. Guidry could not

sleep, wash his own hair, or reach items overhead. The jury found that Mr. Guidry

was injured in the second accident and awarded him $10,000.00 in pain and

suffering, and $19,859.40 for past medical expenses, to be paid by Smith‟s insurer,

Farm Bureau.

Mr. Guidry appeals only the $10,000.00 general damage award as

abusively low. His counsel cites various cases and suggests that the jury should

have awarded damages for pain and suffering between $50,000.00 and

$150,000.00. However, the cited cases do not involve a plaintiff who was already

disabled with as extensive pre-existing injuries as those of Mr. Guidry. In general,

an appellate court reviews an award of damages for an abuse of discretion and may

only raise or lower the award to the nearest reasonable amount. Coco v. Winston

Indus., Inc., 341 So.2d 332 (La.1976). While we find that the jury‟s award of

$10,000.00 for general damages in Mr. Guidry‟s case was low, we cannot say that

it was abusively low for the aggravation injuries that the jury assessed to Farm

Bureau for the second accident.

10

Progressive’s Appeal

Progressive was Mr. Guidry‟s UM carrier at the time of both

accidents. It paid no amounts for Mr. Guidry‟s medical care resulting from either

accident. The jury found that Progressive had breached its duty in handling the

claims of Mr. Guidry with respect to the November accident and awarded him

$50,000.00 in general and special damages, plus $10,000.00 in attorney fees. The

trial judge awarded Mr. Guidry $100,000.00 in penalties, citing La.R.S. 22:1973.3

Progressive contends that it was not arbitrary and capricious in

handling Mr. Guidry‟s claims and that the jury and trial judge erred in awarding

him any sums because: there was no evidence that Mr. Guidry communicated an

intent to claim medical payments; there was a good faith dispute regarding whether

Mr. Guidry sustained any injuries in either accident; and, the jury‟s award was well

within Farm Bureau‟s policy limits. We disagree. After a thorough review of the

record and applicable law, we find that there was a reasonable factual basis in the

record for the jury‟s awards, and the statutes support the award by the trial judge.

3
Louisiana Revised Statutes 22:1973 provides in pertinent part:
A. An 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.

11

Mr. Guidry had three vehicles insured through Progressive and paid

over $1,200.00 in annual premiums. His coverage on the 1997 Ford truck that he

was driving when rear-ended in October and November of 2004 was not in dispute.

His medical pay coverage under the policy was $5,000.00 per accident. The UM

portion of his policy provided him $25,000.00 in coverage for each accident.

Hence, Mr. Guidry‟s own policy provided a total $60,000.00 of coverage for both

accidents.

The testimony of Progressive‟s representative, Vickie Hale-Benson,

established that Progressive had received notice of Mr. Guidry‟s 2004 accidents

and began investigating the coverage by September of 2006, within the period

required to file a UM claim. Ms. Hale-Benson testified that she had spoken to Mr.

Guidry‟s attorney on several occasions about resolving the claims but she

considered those settlement discussions, not written demands for specific amounts.

In general, if the insured has shown that he was not at fault, that the

other driver was uninsured or underinsured, and that he was in fact damaged, the

insurer cannot avoid liability when the insured is unable to prove the exact extent

of his general damages; rather, the insurer must tender the reasonable amount due

as a sign of its good faith and its willingness to comply with the duties imposed

upon it under the insurance policy. McDill v. Utica Mut. Ins. C., 475 So.2d 1085

(La.1985). “This amount would be unconditionally tendered to the plaintiff not in

settlement of the case, but to show their good faith in the matter and to comply

with the duties imposed upon them under their contract of insurance with the

insured. The amount that is due would be a figure over which reasonable minds

could not differ.” Id. at 1091-92. An insurer must take substantive and affirmative

steps to accumulate the facts necessary to evaluate a claim; merely opening a file is

not sufficient. McClendon v. Economy Fire & Cas. Ins. Co., 98-1537 (La.App. 3

Cir. 4/7/99), 732 So.2d 727.

12

Here, Progressive opened its file in September of 2006 but did not

depose Mr. Guidry‟s treating physician and orthopedist, Dr. Blanda, until June 13,

2008, almost two years later.

Progressive knew in September of 2006 that Mr. Guidry‟s policy

covered both accidents; that Dr. Blanda had previously recommended surgery; and

that State Farm had paid its policy limits of $10,000.00 for the first accident.

Progressive noted in July of 2007 that it needed to sort out causation

between the two accidents, but it would be another year before they deposed Dr.

Blanda. It still had not obtained Farm Bureau‟s policy or determined how much

coverage Smith had for the second accident. Its notes indicate that it was waiting

for Farm Bureau to put up money for the second accident, but Progressive did not

obtain Farm Bureau‟s coverage amount for the second accident until July of 2008.

Nor did Progressive tender any of the medical pay coverage of

$5,000.00 per accident that Mr. Guidry had paid a premium for in his policy,

separate from the UM coverage of $25,000.00 per accident. Progressive also knew

that Mr. Guidry‟s granddaughter had been injured when her knee hit the dashboard

in the second accident, and that she had resolved her claims and would not be

seeking UM coverage from Progressive.

When Dr. Blanda was finally deposed on June 13, 2008, he indicated

that he wanted updated MRI‟s before recommending surgery again. However, he

opined that the first accident started the new spinal problems and that the second

accident aggravated those and caused the shoulder to become symptomatic.

Progressive did not schedule a second opinion medical examination (IME) of Mr.

Guidry to refute any of Dr. Blanda‟s assessments. Dr. Blanda‟s records showed

that Mr. Guidry, who had been in pain management since 1989, said he could not

live with the pain that he was experiencing in January of 2005, after the 2004

13

accidents. Yet, Progressive noted in its records that there was no change in Mr.

Guidry‟s pre and post-MVA complaints.

Progressive had known at least since March of 2008 that Mr. Guidry

had been disabled in the old work accident and did not have money for the L4-5

and left shoulder surgery that Dr. Blanda had recommended in January of 2005. It

knew that he had property damage of $3,000.00 to his truck (Mr. Guidry testified

that his truck repairs were $3,500.00), and noted that there were at least

aggravation injuries from the accidents. But Progressive did not offer a tender or

file a subrogation suit to recover its tender, even after it had evidence of causation.

In July of 2008, Progressive‟s notes indicate that it evaluated its worst

case exposure at $34,000.00; it calculated $2,500.00 per month for general

damages, times twelve months, based upon Mr. Guidry‟s visits with Dr. Blanda

only, plus $4,000.00 in medical expenses with Dr. Blanda. Progressive received,

for the first time, verbal confirmation that Smith‟s policy with Farm Bureau was

for $300,000.00. It noted that Farm Bureau was going to try the case, even though

at this point there was still nothing to refute Dr. Blanda‟s testimony finding

causation in both accidents.

In August of 2008, Mr. Guidry made a total demand of $50,000.00 for

both accidents, inclusive of the medical pay amounts. He informed Progressive

that he was returning to Dr. Blanda for new MRI‟s. Progressive made no good

faith tender of any amount. In September of 2008, Mr. Guidry amended his suit

against Progressive to add a claim for arbitrary and capricious claims handling. In

October, Dr. Blanda obtained new MRI‟s showing that the rotator cuff tear had

calcified; he then recommended a Mumford Procedure, instead of a rotator cuff

repair.

In early December of 2008, over four years after the accidents, Farm

Bureau, not Progressive, deposed Dr. Duval regarding the second opinion

14

examination of Mr. Guidry‟s shoulder that he had performed for Farm Bureau. Dr.

Duval did not agree that there had been a rotator cuff tear or relate the shoulder

injury to either accident; he did not assess the back and neck injuries at all.

In mid-December of 2008, Dr. Blanda performed the Mumford

Procedure as explained above. It was paid for by Medicare/Medicaid.

In May of 2009, Mr. Guidry‟s counsel informed Progressive that Mr.

Guidry had undergone the shoulder procedure and again asked for $50,000.00 to

resolve all claims. Progressive knew that Mr. Guidry was not at fault for either

accident and that both Amber and Smith were at fault for rear-ending Mr. Guidry

in the respective accidents. Progressive did not tender any amount.

In July of 2009, Progressive filed a motion for summary judgment

seeking relief on the issue of arbitrary and capricious claims handling, stating that

Dr. Blanda was not recommending surgery. Dr. Blanda‟s deposition, used in

support, was over a year old. In fact, Dr. Blanda had performed the shoulder

procedure six months earlier, in December of 2008, and Progressive had known

about the surgery at least by April of 2009. In opposing Progressive‟s motion for

summary judgment, Mr. Guidry‟s attorney attached medical summaries showing

over $16,642.61 in medical bills alone. Progressive‟s July 2009 motion for

summary judgment was denied. Still, it tendered no good faith amount for any of

Mr. Guidry‟s medical care, not even one of the $5,000.00 medical pay amounts.

In January of 2010, Mr. Guidry‟s counsel asked for $35,000.00 to

settle his claims. At the time of trial in June of 2010, no tender had been made,

and Mr. Guidry had received nothing for the second accident or the related medical

expenses, surgery, and general damages.

Progressive had never scheduled depositions with, or called, any of

Mr. Guidry‟s pain management physicians, but it knew of Dr. Hubbell‟s report of

November 11, 2004, stating that Mr. Guidry was medically stable before the

15

November accident later that same day. Progressive had medical authorizations

from Mr. Guidry for all of his medical records, which reflected that he was in

unrelievable pain in January of 2005, and that he continued to have unrelieved

shoulder pain until the surgery in December of 2008. Progressive‟s notes indicate

that it knew that Mr. Guidry was disabled and could not afford surgery. It had

evidence of aggravation injuries and causation but made no good faith effort to

investigate or assist its insured with his medicals. It did not even tender the

$5,000.00 medical pay coverage after the Mumford Procedure.

The jury ultimately found that Mr. Guidry suffered injuries and

awarded him damages that finally paid for the Mumford Procedure that relieved

his shoulder pain over four years after the accident. Based upon all of the

foregoing, we conclude that the jury was not unreasonable in finding that

Progressive breached its duty to Mr. Guidry by failing to pay the amount of any

claim within sixty days and by failing in its duty to timely investigate the

accidents.

Progressive argues that Mr. Guidry did not prove that he suffered

actual general or special damages by Progressive‟s failure to tender policy amounts

and cites Sultana Corp. v. Jewelers Mutual Insurance Co., 01-2059 (La.App. 1 Cir.

12/31/02), 837 So.2d 134. That case, however, was reversed. Proving actual

damages is not a prerequisite to an assessment of penalties under La.R.S. 22:1973,

formerly R.S. 22:1220. In reversing the first circuit and in deciding a split among

the circuit courts regarding proof of damages, the Louisiana Supreme Court in

Sultana Corp. v. Jewelers Mutual Insurance Co., 03-360 (La. 12/03/03), 860 So.2d

1112, articulated as follows:

As to the other circuit courts of appeal who have
addressed the question of whether proof of actual
damages is a prerequisite to the award of penalties,
Midland Risk Ins. Co. v. State Farm Mut. Auto. Ins. Co.,
93-1611 (La.App. 3 Cir. 9/21/94), 643 So.2d 242, best

16

illustrates the countervailing position that a showing of
damages is not required. The Third Circuit stated:

Section 1220(A) legislatively imposes
a duty of good faith and fair dealing on
insurers. Section 1220(B) enumerates
certain acts, which if knowingly committed
or performed by an insurer, constitute a
breach of its duty of good faith and fair
dealing.

Penalties are imposed to discourage
certain types of conduct by an insurer. The
language in Section 1220(C) does not
expressly require that a claimant suffer
damages before recovering penalties.
Moreover, if this requirement was so, the
statute‟s purpose more often would be
thwarted. Claimants may decide not to file
claims against insurers if the disputed
amount or the damages are not substantial.
As an end result, the misconduct which the
legislature obviously intended to curb or
deter would thrive. Thus, we find if an
insurer commits any one of the acts
enumerated in Section 1220(B), penalties
may be imposed without a showing of
damages.

Midland, 643 So.2d at 244.

Sultana, 860 So.2d at 1118. The Sultana court then stated:

[W]e find the Third, Fourth, and Fifth Circuits‟ holdings
with regard to the interpretation and application of
LA.REV.STAT. ANN. § 22:1220(C) correct and more
reconcilable with the Legislature‟s enactment of this
statute. Such an understanding squares well with the
principle that an insurer‟s duty of fair dealing emanates
from the contractual and fiduciary relationship between
the insured and insurer.

. . . Requiring the insured or claimant to prove
general or special damages as a prerequisite to the award
of penalties as advocated in the First Circuit, even though
the insured or claimant has not so claimed, interjects a
requirement not provided in the statute.

Sultana, 860 So.2d at 1118-19 (citations omitted).

In Hudson v. AIG Nat. Ins. Co., 10-63 (La.App. 3 Cir. 6/2/10), 40

So.3d 484, AIG, the UM carrier, made a tender of $11,744.00, which was

17

essentially too little and too late and was rejected as arbitrary and capricious.

Pursuant to La.R.S. 22:1973(B)(5), the trial court awarded $25,000.00 in damages,

and pursuant to La.R.S. 22:1973(C), it awarded double that amount, or $50,000.00,

in penalties. We affirmed, citing Sultana.

More recently, in Wegener v. Lafayette Insurance Co., 10-810 (La.

3/15/11), 60 So.3d 1220, a Katrina wind-and-flood-damage case, the Louisiana

Supreme Court reiterated its finding under Sultana, and again quoted with approval

the reasoning and language set forth by this court in Midland, that penalties may be

imposed under La.R.S. 22:1220(C) (now 22:1973(C)) without a showing of

damages. In Wegener, the jury interrogatories were found to have misled the jury

to the extent that it was prevented from dispensing justice on the issue of mental

anguish damages and penalties under La.R.S. 22:1220, and the case was remanded

for a new trial.

Specifically, in Wegener, Interrogatory 9 asked whether the plaintiffs

suffered mental anguish damages due to one insurer‟s conduct. If the jury

answered “YES,” it was instructed to proceed to Interrogatory 10, relative to the

amount of mental anguish damages, and then to Interrogatory 11, relative to

penalties. However, if the answer was “NO” as to mental anguish damages under

Interrogatory 9, the jury was instructed to skip Interrogatories 10 and 11.

Consequently, the jury, which did not award mental anguish damages under

Interrogatory 9, skipped Interrogatories 10 and 11. The Wegener court stated that,

“because penalties are permissive pursuant to La.R.S. 22:1220 [22:1973] even if

no damages have been awarded as a result of the breach, the structure of the Jury

Interrogatories in this case resulted in legal error.”

Accordingly, based upon the foregoing, Mr. Guidry does not have to

prove actual damages resulting from the breach, and we cannot say that the jury

abused its discretion in awarding $50,000.00 to Mr. Guidry for Progressive‟s

18

breach of its insurer‟s duty to timely investigate the claims of its insured causing

Mr. Guidry to wait four years for a surgery that ultimately relieved his shoulder

injuries. Likewise, the trial court did not abuse its discretion in awarding double

that amount under La.R.S. 22:1973(C) for penalties due to Progressive‟s arbitrary

and capricious conduct.

Progressive also argues that, pursuant to Sher v. Lafayette Insurance

Co., 07-2441 (La. 4/08/08), 988 So.2d 186, nonpecuniary damages are only

available if the insurer intended to aggrieve the feelings of the insured.

Progressive not only misstates Sher, but it attempts to strip that court‟s holding

completely bare of its contextual foundation. Sher involved Katrina-based

property loss and breach of a commercial insurance contract which covered only

economic loss. The plaintiff unsuccessfully sought mental anguish damages under

La.Civ.Code art. 1998. That article provides that nonpecuniary losses “may be

recovered,” not “may only be recovered,” when the contract is intended to gratify a

nonpecuniary interest, such as creative work, and the obligor knew or should have

known that its failure to perform would cause that kind of loss. See La.Civ.Code

art. 1998 (emphasis added). It addresses conventional obligations and contracts

and does not provide the only circumstances in which nonpecuniary damages can

be awarded. Under La.R.S. 22:1973, an insurer is liable for any damages, general

or special, sustained as a result of the breach. La.R.S. 22:1973(A) and (C).

Following its reasoning in Manuel v. Louisiana Sheriff’s Risk

Management, 95-406 (La. 11/27/95), 664 So.2d 81, and the Federal Fifth Circuit‟s

reasoning in Dickerson v. Lexington Ins. Co., 556 F.3d 290 (5th Cir. 2009), the

Louisiana Supreme Court in Wegener, 60 So.3d 1220, explained that the good faith

duties of an insurer under La.R.S. 22:1220 (now R.S. 22:1973) are separate and

distinct from its duties under the insurance contract. The Wegener court

specifically held that Article 1998 has no applicability in a claim for mental

19

anguish damages under La.R.S. 22:1220 (22:1973), which permits „“any general or

special damages‟ with no limitation or additional requirement other than the breach

of duty by the insurer.” Wegener, 60 So.3d at 1230. Hence, the court in Wegener

found that the trial court‟s inclusion of a jury instruction requiring proof of intent

was legal error.

Progressive argues that the jury‟s award of $10,000.00 for attorney

fees was unsupported where there was no evidence in the record that Mr. Guidry

incurred attorney fees or the value of those fees. This argument has no merit. The

record contains twelve volumes of documents and is replete with evidence of Mr.

Guidry‟s attorney‟s representation for six years. The fees awarded are certainly

reasonable and appropriate under Rule 1.5 of the Rules of Professional Conduct,

where the factors to be considered include time, labor, experience, skill, results

obtained, and whether there is a contingency payment method.

V.

CONCLUSION

Based upon the foregoing, the Judgment of the trial court is affirmed

in all respects. Costs of these appeals are assessed to the plaintiff and to

Progressive, respectively.

AFFIRMED.

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NUMBER 11-262

COURT OF APPEAL, THIRD CIRCUIT

STATE OF LOUISIANA

CARL R. GUIDRY, ET UX

VERSUS

STATE FARM FIRE AND CASUALTY COMPANY, ET AL.

AMY, J., concurring in the result.

Like the majority, I find that an affirmation is required in this case.

However, in my view, the damages and penalties awarded pursuant to La.R.S.

22:1973 must be affirmed under the wording of the statute alone. I do not find that

this is a case controlled by Sultana Corp. v. Jewelers Mut. Ins. Co., 03-0360 (La.

12/3/03), 860 So.2d 1112.

Louisiana Revised Statutes 22:1973 distinctly provides for damages

sustained due to a breach of the duty of good faith and fair dealing, under

Paragraph A, and for penalties due to that breach, under Paragraph C.

In my view, the record supports the jury’s $50,000 award for damages due to

the breach of duties owed under La.R.S. 22:1973(A). As cited by the majority, Mr.

Guidry sustained medical expenses and experienced pain, suffering, and frustration

associated with the multi-year delay in treatment. Thus, the plaintiff presented

proof of these damages and the award of damages in the amount of $50,000 is

supported.

As for the penalty provision, La.R.S. 22:1973(C) separately provides for

penalties not to exceed “two times the damages sustained” or “five thousand

dollars, whichever is greater.” In this case, and as stated above, the record

supports the view that Mr. Guidry sustained $50,000 of general and special

damages under Paragraph (A). Thus, the $100,000 penalty awarded in this case is

permissible under the La.R.S. 22:1973(C) as it is “two times the damages

sustained[.]” I do not find that this type of award could be supported absent proof

of actual damages insofar as the damages are necessary for the calculation. On this

point, I depart from the majority’s reference to Sultana, 860 So.2d 1112.

The facts of Sultana, 860 So.2d at 1118, are at odds with the present matter

insofar as the plaintiff in the supreme court case was “entitled to seek general or

special damages from its insurer[,]” but it “chose not to seek such damages[.]”

Although the plaintiff in Sultana did not seek or prove actual damages, the

supreme court found that a penalty was still available under La.R.S. 22:1974(C).

In my view, such an award would be under the alternative, $5,000 award under

Paragraph (C) as the calculation necessary for the arguably greater award would be

impossible without proof of the amount of damages sustained. In reaching its

conclusion, the supreme court in Sultana favorably cited this court’s opinion in

Midland Risk Ins. Co. v. State Farm Mut. Auto. Ins. Co., 93-1611 (La.App. 3 Cir.

9/21/94), 643 So.2d 242, a case in which only the $5,000 penalty was at issue.

In this case, since the plaintiffs proved and were awarded general and special

damages, I believe that the $100,000 penalty is permissible insofar as it is “two

times the damages sustained.” The majority’s reference to proof of actual damages

being unnecessary is irrelevant under these facts since the record contains proof of

damages. Thus, I would affirm the damages and penalties in light of the evidence

in the record and under the terms of La.R.S. 22:1973(A) and (C).

For these reasons, I concur in the result.

2