Dupont Building, Inc. v. Wright & Percy Ins., Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-1449

DUPONT BUILDING, INC.

VERSUS

WRIGHT AND PERCY INSURANCE, A TRADENAME OF
BANCORPSOUTH INSURANCE SERVICES, INC. AND CHARLES
M. WARD

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APPEAL FROM THE
THIRTY-EIGHTH JUDICIAL DISTRICT COURT
PARISH OF CAMERON, NO. 10-17585
HONORABLE PENELOPE RICHARD, JUDGE

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J. DAVID PAINTER
JUDGE

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Court composed of Oswald A. Decuir, Jimmie C. Peters, and J. David
Painter, Judges.

AFFIRMED.

David P. Bruchhaus
Chad E. Mudd
M. Keith Prudhomme
410 E. College St.
Lake Charles, LA 70605
Counsel for Plaintiff-Appellant:
Dupont Building, Inc.

J. Michael Veron
J. Rock Palermo, III
Turner D. Brumby
P.O. Box 2125
Lake Charles, LA 70602
Counsel for Defendants-Appellees:
Wright & Percy Insurance, BanccorpSouth Insurance Services,
and Charles M. Ward

Charles P. Carriere, III
Haeuser Bldg., Ste. 207
8200 Hampson St.
New Orleans, LA 70118
Counsel for Defendants-Appellees:
Wright & Percy Insurance, BanccorpSouth Insurance Services,
and Charles M. Ward

Robert J. David, Jr.
P.O. Box 51268
Lafayette, LA 70505
Counsel for Defendant-Appellee:
American International Specialty Lines Insurance Company

PAINTER, Judge

Plaintiff, Dupont Building, Inc. (Dupont Building), appeals the

dismissal of its action against Defendants, Wright & Percy Insurance

(Wright & Percy), BanccorpSouth Insurance Services (Banccorp), Charles

M. Ward, and American International Specialty Lines Insurance Company,

pursuant to an exception of prescription. For the following reasons, we

affirm the judgment of the trial court.

FACTS

Ricky Guidry and his wife purchased Dupont Building from Jim

Dupont. Jim Dupont retained ownership of the buildings in which the

business was housed and leased them to Dupont Building. After sustaining

losses as a result of Hurricane Rita, Dupont Building filed suit against

Defendants alleging that Ward, its insurance agent, negligently failed to

obtain wind and hail damage coverage for the business’s personal property.

Defendants filed an exception of prescription, which the trial court granted

finding that the prescriptive period began to run between March 1, 2002 and

June 13, 2002, when, if the policies had been read, Plaintiff would have been

aware that there was no insurance coverage for wind or hail damage to

business personal property. Plaintiff appeals. Defendants answer the appeal,

asking that in the case the exception of prescription is overturned, this court

review the trial court’s denial of their motion for summary judgment on

liability filed at the same time as the exception of prescription.

DISCUSSION

On appeal, Plaintiff raises the following issues:

1. Did Dupont Building have a close, trusting relationship
with its insurance agent Charles Ward?

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2. Can an insurance agent ever be liable for his
misrepresentations and negligent actions regarding
coverage after the insured has received the insurance
policy and declarations page?
3. Do the negligent misrepresentations of an insurance
agent regarding coverage interrupt the running of
prescription after an insured has been provided the
insurance policy and declaration page?

The trial court in its written reasons for judgment correctly

summarized the applicable law and the underlying facts and addressed these

issues as follows:

Louisiana Revised Statute 9:5606 provides

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. La.R.S. 9:5606.

It is undisputed that Dupont Building had insurance
coverage on business personal property, including windstorm
coverage, with Fulcrum Insurance Company, for the period of
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January 1, 2001 until January 1, 2002. Thereafter, Fulcrum
decided not to renew the policy with Dupont Building, but
because it failed to provide timely notice of the intent not to
renew, Fulcrum extended the policy until March 1, 2002. Mr.
Ward testified by way of deposition that he had difficulty
finding and obtaining similar coverage at an affordable price for
Dupont Building. At this time, Mr. Ward testified that he and
Mr. Guidry had a conversation regarding windstorm and flood
coverage. He testified that Mr. Guidry had indicated that he had
an evacuation plan in place in the event of a hurricane. The
subsequent policy that Mr. Ward obtained for Dupont Building
excluded windstorm coverage for the building and contents.[1]
However, the buildings were owned by Jim Dupont at the
time[,] and the lease between the Guidrys and Mr. Dupont
required the Guidrys to maintain windstorm coverage on the
buildings. When Mr. Ward notified Mr. Guidry that Mr. Dupont
was requiring windstorm coverage on the buildings, Mr. Guidry
instructed Mr. Ward to “go ahead and put it on the buildings.”
Mr. Ward purchased the windstorm coverage through Louisiana
Insurance Underwriting Plan which had an effective date of
June 13, 2002. The declaration sheet indicates the four
buildings that were covered under the policy. Each subsequent
renewal of the policy thereafter did not provide any windstorm
coverage for the business personal property owned by the
plaintiffs.

Mr. Guidry testified by way of deposition that he trusted
Mr. Ward, and that he had given him authority to act on his
behalf to obtain the insurance coverage that he needed.
However, he testified that he never read any of his insurance
policies, and he never read any of the declaration pages for the
policies. Regarding the evacuation plan, Mr. Guidry testified
that he and Mr. Ward discussed an evacuation plan, but Mr.
Ward advised him not to move a lot of items to another location
because the insurance was only on certain premises. Mr. Guidry
testified that this lead him to believe that he was covered.

Mr. Guidry also relies on a conversation that he had with
Mr. Ward after Hurricane Katrina and prior to Hurricane Rita
where Mr. Ward advised him that he “had full hurricane
coverage for the buildings and business personal property of
Dupont Building, Inc.” However, Mr. Ward does not
acknowledge this conversation. Mr. Guidry also relies on
conversations with Mr. Ward after Hurricane Rita. He stated
that Mr. Ward informed him that he had coverage on his
business personal property. Further, that they traveled to
Cameron together shortly after Hurricane Rita to inspect the
damages and discussed making a claim. Mr. Ward testified that
he believed at the time he accompanied Mr. Guidry to
[1]
Ward further indicated that Guidry originally rejected both wind and flood coverage. It is undisputed
that Guidry did not have flood coverage at the time of Hurricane Rita.
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Cameron, that the business personal property was covered. It
was only later when his computers were up and running that he
reviewed the policy and realized that there was a windstorm
exclusion on the business personal.

The inquiry for the court is when Dupont Building knew
or should have known of the alleged actions, omissions or
neglect. Under Louisiana law, an insured has a duty to read his
insurance policy and know its provisions. Stephens v. Audubon
Ins. Co., 665 So.2d 683, 686 (La.App. 1 [Cir.] 2/6/95) (citing
Matthews v. Business Men’s Assur. Co. of America, 478 So.2d
634, 637 (La.App. 2 Cir 1985)); Perkins v. Shelter Ins. Co., 540
So.2d 488 (La. App. 1 Cir. 1989). Fidelity Homestead Ass’n v.
Hanover Ins. Co., 458 F.Supp.2d 276, 280 (E.D.La.,2006). In
general renewals of insurance policies do not operate to restart
peremption. Fidelity Homestead Ass’n v Hanover Ins. Co., 458
F.Supp.2d 276 (2006)

Plaintiffs rely on the case of Louisiana Home Builders
Ass’n Self-Insurers’ Fund v. Adjustco, Inc., 633 So.2d 630
(La.App. 1 Cir. 1993), writ denied, 94-234 (La. 3/18/94), 634
So 2d 857, for the proposition that it had no duty to read or
examine the policy because they had a close trusting
relationship with Mr. Ward. However, in Louisiana Home
Builders, the plaintiffs had a close, trusting relationship with
defendant, they relied on defendant for insurance expertise and
they paid defendant for this expertise. Id. at 635. Here, although
Mr. Guidry and Mr. Ward each testified that they were good
friends, Mr. Guidry did not seek out Mr. Ward for his insurance
expertise, he was mandated to use Mr. Ward under the contract
with Jim Dupont. Further, Mr. Ward was not hired as an
insurance consultant to advise plaintiffs on the insurance
coverages they needed. He was an agent who worked off
commission.

Defendants rely on the recent Louisiana Supreme Court
case of Isidore Newman School v. J. Everett Eaves, Inc., 42
So.3d 352 (La. 7/6/10). In that case, the Supreme Court in
finding that the agent did not breach a duty owed to the plaintiff
stated the following:

An agent has a duty of reasonable diligence to
advise the client, but this duty has not been expanded to
include the obligation to advise whether the client has
procured the correct amount or type of insurance
coverage. It is the insured’s responsibility to request the
type of insurance coverage, and the amount of coverage
needed. It is not the agent’s obligation to spontaneously
or affirmatively identify the scope or the amount of
insurance coverage the client needs. It is also well settled
that it is insured’s obligation to read the policy when
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received, since the insured is deemed to know the policy
contents. Isidore Newman School v. J. Everett Eaves,
Inc., 42 So.3d 352, 359.

Based on the above language, defendants argue that it
was up to Mr. Guidry to request the coverages that he needed
and that he had an obligation to read the policy[,] which he
readily admitted that he did not do. Defendants argue that since
Mr. Guidry failed to read his policy[,] he is deemed to know the
contents of the policy based on the Isidore case.

Similarly, the Western District Court, in finding that
plaintiffs had failed to state a claim against State Farm, stated:

In sum, agents do not have a duty to independently assess
insureds’ needs and recommend coverage. Similarly,
agents do not have a duty to advise clients whether they
are underinsured. Clients, not agents, are responsible for
reading their policies and communicating their insurance
needs. Cameron Parish School Bd. v. State Farm Fire
and Cas. Co., 560 F.Supp.2d 485,489 (W.D.La., 2008).

The critical time frame here is when the Fulcrum policy
expired and when Mr. Ward obtained insurance through another
provider which did not contain windstorm coverage for the
buildings and contents. Once Jim Dupont made the parties
aware that there was no windstorm coverage on the buildings,
the parties should have been aware that there was no windstorm
coverage on the business personal property. The subsequent
renewals of the policy did not restart peremption. Plaintiffs had
knowledge or should have had knowledge between March 1,
2002 and June 13, 2002, that it did not have windstorm
coverage on its business personal property. Thus, plaintiff’s suit
filed on September 18, 2006, is untimely as it occurred more
than one year from the date plaintiffs knew or should have
known that the policy did not contain windstorm coverage on
the business personal property and more than three years from
the alleged act, omission or neglect.

Our review convinces us that the trial court correctly addressed the

issues in this case and correctly dismissed the matter pursuant to

Defendants’ exception of prescription. Having so found, we need not

consider Defendants’ answer to the appeal.

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CONCLUSION

For these reasons, the judgment of the trial court is affirmed. Costs of

this appeal are assessed to Plaintiff, Dupont Building, Inc.

AFFIRMED.

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