Mary Phyllis Soileau v. Smith True Value and Rental

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-1594

MARY PHYLLIS SOILEAU

VERSUS

SMITH TRUE VALUE AND RENTAL, ET AL.

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APPEAL FROM THE
THIRTEENTH JUDICIAL DISTRICT COURT
PARISH OF EVANGELINE, NO. 69,770-B
HONORABLE THOMAS F. FUSELIER, DISTRICT JUDGE

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SHANNON J. GREMILLION
JUDGE

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Court composed of Jimmie C. Peters, Elizabeth A. Pickett, and Shannon J.
Gremillion, Judges.

REVERSED AND RENDERED.

W. Glenn Soileau
Jacques P. Soileau
Soileau & Soileau
P. O. Box 344
Breaux Bridge, LA 70517
(337) 332-4561
COUNSEL FOR PLAINTIFF/APPELLEE:
Mary Phyllis Soileau

Anthony C. Dupre
Attorney at Law
P. O. Drawer F
Ville Platte, LA 70586
(337) 363-3804
COUNSEL FOR DEFENDANT/APPELLEE:
Smith True Value and Rental

Bradley C. Myers
John F. Jakuback
Kean, Miller, Hawthorne, D’Armonf, McCowand & Jarman
P. O. Box 3513
Baton Rouge, LA 70821
(225) 387-0999
COUNSEL FOR DEFENDANT/APPELLEE:
Risk Management, Inc.

Peter F. Caviness
Steven J. Bienvenu
Dauzat, Falgoust, Caviness & Bienvenu, L.L.P.
P. O. Box 1450
Opelousas, LA 70571
(337) 942-5812
COUNSEL FOR DEFENDANT/APPELLEE:
Louisiana Municipal Risk Management

J. Michael Percy
Andrew P. Texada
Stafford, Stewart & Potter
P. O. Box 1711
Alexandria, LA 71309
(318) 487-4910
COUNSEL FOR DEFENDANTS/APPELLEES:
Deere and Company
John Deere Limited

Richard J. Petre, Jr.
Onebane Law Firm
P. O. Box 3507
Lafayette, LA 70502
(337) 237-2660
COUNSEL FOR DEFENDANT/APPELLEE:
Smith’s Hardware

Charles M. Lanier, Jr.
Mary Beth Meyer
Christovich & Kearney, LLC
601 Poydras Street, Suite 2300
New Orleans, LA 70130
(504) 561-5700
COUNSEL FOR DEFENDANT/APPELLANT:
Hartford Insurance Company

Karen Day White
Louisiana Municipal Association
700 North Tenth Street, Suite 440
Baton Rouge, LA 70802
(225) 334-5001
COUNSEL FOR DEFENDANT/APPELLEE:
Louisiana Municipal Association

Rodney Janis
Wilson Elser Moskowitz Edelmen & Dicker LLP
222 Lakeview Avenue, Suite 500
West Palm Beach, FL 33401
(561) 515-4010
COUNSEL FOR DEFENDANT/APPELLEE:
Smith’s Hardware

GREMILLION, Judge.

The plaintiff, Mary Phyllis Soileau, and the defendant, Hartford Insurance

Company, appeal a jury verdict in Soileau‟s favor. For the following reasons, we

reverse the trial court‟s denial of Hartford‟s exception of no right of action, grant

judgment in its favor, and dismiss it from the action.

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, Mary Phyllis Soileau, sustained serious injuries following a

November 2007 accident in which a John Deere front-end loader detached from a

John Deere tractor and fell on her leg, shattering it. Soileau filed suit in April 2008,

against Deere & Company (Deere), the Town of Mamou, and Harry Smith Jr.,

Claire Smith, Smith‟s Hardware (collectively Smith‟s), and Smith‟s insurer,

Hartford Insurance Company. Smith‟s rented the John Deere equipment to the

Town of Mamou, for whom Soileau was working supervising the cleaning out of

canals with the front-end loader at the time the accident occurred.

Extensive litigation ensued. In May 2009, Soileau entered into a “high/low”

agreement with Hartford in which she received a certain amount of money up front

in exchange for Hartford‟s liability being capped at its policy limit of

$2,500,000.00 regardless of the jury‟s verdict. The agreement was executed on

May 20, 2009, and released Smith‟s of any personal obligation to Soileau.

Soileau settled with Deere in August 2010, and proceeded to trial against

Smith‟s and Hartford. A jury trial was held over five days in October 2010. On

the fourth day of trial, Soileau moved in open court to dismiss the Smiths

personally and their company, Smith‟s Hardware. That same day, Hartford moved

for a directed verdict based on its policy language that obligated it to pay only

those sums that the insured becomes legally obligated to pay. The trial court

denied the motion. Hartford also filed a peremptory exception of no right of action,

arguing that pursuant to the Louisiana Direct Action Statute, La.R.S. 22:1269,

dismissal of Smith‟s terminated Soileau‟s action against it. The trial court denied

Hartford‟s exception.

The jury found in favor of Soileau, apportioning Smith‟s with 15% of the

fault, Mamou with 15%, and Deere with 70%. It awarded damages totaling

$9,429,758.81. The trial court entered judgment against Hartford casting it with

15% of the damages, amounting to $1,074,463.82 (Hartford received a credit for

sums it already paid pursuant to the high/low compromise agreement). The trial

court further cast Hartford with 50% of Soileau‟s court costs.

Hartford, thereafter, filed a motion for judgment notwithstanding the verdict

or, alternatively, for new trial, re-urging that Soileau had no claim against it under

the language of its policy and under the direct action statute once Smith‟s was

dismissed. Soileau also filed a motion for judgment notwithstanding the verdict

regarding fault apportionment. The trial court denied Hartford‟s and Soileau‟s

motions. Hartford and Soileau now appeal.

ISSUES

Hartford assigns as error:

1. The trial court erred as a matter of law when it failed to
dismiss Hartford after plaintiff dismissed Hartford‟s insureds,
with prejudice, and extinguished the cause of action forming
the basis for pursuing a direct action against Hartford.

2. The trial court erred as a matter of law when it allowed
plaintiff to proceed against Hartford, alone, after plaintiff
unconditionally dismissed Hartford‟s insureds, with
prejudice, and none of the statutory bases under the
Louisiana Direct Action Statute for bringing a direct action
against an insurer alone applied.

3. The jury and the trial court erred as a matter of fact and law
in finding Hartford liable to plaintiff when the terms of its
insurance policy provide that Hartford is only liable for
damages its insureds are legally obligated to pay and its

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insureds were dismissed and could not be liable to pay
anything to plaintiff.

4. The jury‟s award of $7.5 million in General Damages is
unreasonable and abusively high in light of the record
reviewed in its entirety.

5. The jury‟s verdict awarding $7.5 million in General
Damages should be reversed because the award was tainted
by an improper appeal to the jury‟s prejudice against
insurance companies that prevented the jury from doing
justice. Plaintiff‟s counsel dismissed Hartford‟s insureds in
front of the jury and then, against the Court‟s warning,
elicited testimony from plaintiff that she did not want to
collect any money from the insureds and that money would
be recovered solely from their insurance company, Hartford.
Plaintiff‟s counsel then improperly informed the jury that
plaintiff would not be able to collect money for any fault it
assessed against Deere, the settling manufacturer, thereby
encouraging the jury to increase its award of damages.

6. The jury‟s award of $750,000 in future medical expenses is
speculative and supported neither by medical testimony of
specific care that will be needed nor of the probable cost of
any such future care and is contrary to the testimony of the
physicians that she is not expected to have surgery in the
future and is only expected to need periodic office exams
and some medication.

Soileau assigns as error:

1. The trial court was erroneous in failing to instruct the jury
concerning the burden of proving and apportioning fault
under the Louisiana Product Liability Act; and/or the jury
was erroneous in apportioning fault amongst the parties.

DISCUSSION

Hartford‟s assignments of error one through three address the same issue:

whether La.R.S. 22:1269 barred Soileau from pursuing Hartford alone once its

insureds were dismissed from the litigation. Whether Soileau had capacity to

proceed against Hartford alone (i.e., a valid right of action) is a legal question

subject to de novo review. See Shorter v. Akins, 11-1553 (La.App. 3 Cir. 4/4/12),

__ So.3d __. We find that the trial court legally erred in denying Hartford‟s

exception of no right of action.

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Louisiana Revised Statute 22:1269(B), formerly La.R.S. 22:665(B) states:

(1) The injured person or his survivors or heirs mentioned in
Subsection A of this Section, at their option, shall have a right of
direct action against the insurer within the terms and limits of the
policy; and, such action may be brought against the insurer alone,
or against both the insured and insurer jointly and in solido, in the
parish in which the accident or injury occurred or in the parish in
which an action could be brought against either the insured or the
insurer under the general rules of venue prescribed by Code of
Civil Procedure Art. 42 only; however, such action may be brought
against the insurer alone only when at least one of the following
applies:

(a) The insured has been adjudged bankrupt by a court of
competent jurisdiction or when proceedings to adjudge an insured
bankrupt have been commenced before a court of competent
jurisdiction.

(b) The insured is insolvent.

(c) Service of citation or other process cannot be made on
the insured.

(d) When the cause of action is for damages as a result of an
offense or quasi-offense between children and their parents or
between married persons.

(e) When the insurer is an uninsured motorist carrier.

(f) The insured is deceased.

In Foltmer v. James, 01-1510, pp. 4-5 (La.App. 4 Cir. 9/12/01), 799 So.2d

545, 548, writ denied, 01-2777 (La. 1/4/02), 805 So.2d 213 (citations omitted), the

appellate court stated:

[T]he question regularly asked by courts considering whether a
plaintiff has a right of action under the Louisiana Direct Action
Statute is . . . “whether plaintiff has the right to invoke a remedy
which the law extends only conditionally.” The fact is that the
Direct Action Statute extends a conditional right to file suit, to
some parties under some circumstances. The reason the right is
conditional is that no privity of contract exists between a plaintiff
injured by a torfeasor and that torfeasor‟s insurance
company. . . .[A]n injured party obtains a right of action against
another person‟s insurance company only if all the requirements of
LSA-R.S. 22:655(B) have been fulfilled. Accordingly, an
insurance company that proves that the requirements of LSA-R.S.

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22:655(B) have not been fulfilled is entitled to dismissal of the
claim against it on an exception of no right of action.

Hartford argues that Soileau‟s dismissal of Smith‟s in open court relieved it

of any obligation pursuant to the direct action statute.

Soileau argues that the direct action statute is inapplicable when the insured

has been a party to the litigation from the outset and is dismissed from the

litigation at the conclusion of trial pursuant to a valid compromise agreement and

that the high/low agreement allowed her to proceed against Hartford alone.

Soileau relies on Rollins v. Richardson, 02-556 (La. 12/4/02), 833 So.2d 921, and

Finnie v. Leblanc, 03-1013 (La.App. 3 Cir. 3/10/04), 875 So.2d 71, in support of

her argument.

The High/Low Agreement

Soileau argues that pursuant to the terms of the high/low agreement, she

“reserved her rights to proceed against Harford . . . given that Smith‟s had been

released of personal liability and was therefore „judgment proof.‟” This reliance is

misplaced. Nowhere in the high/low agreement does Hartford agree to waive its

rights under the direct action statute. There is no mention of the direct action

statute in the agreement, a provision that could have easily been inserted. The

agreement specifically provides for the reservation of the parties‟ rights as follows

(emphasis added):

4. Neither the existence of this Agreement nor any action
taken in accordance with its terms shall be construed in any way to
prejudice the interests or rights of any Party to this Agreement. All
of the terms, provisions, conditions, exclusions, endorsements, and
other limitations of the Policies, and all rights, causes of action,
claims or benefits of the Parties that are not expressly released,
waived or limited by this Agreement are preserved.

In Rollins, 833 So.2d 921, the plaintiff sued the defendant-homeowners, who

filed a third-party demand against their insurer, Allstate. Two weeks before trial,

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the plaintiff entered into a settlement agreement with the homeowners. In

consideration for being dismissed from the lawsuit, the homeowners “assign[ed],

transfer[red], and subrogate[d] unto plaintiffs . . . any claims or rights against

Allstate Insurance Company pursuant to any policy issued to us or for our benefit.”

Id. at 923 (alterations in original). Allstate also did not object to being named as a

direct defendant in the lawsuit. Plaintiff‟s third-amended petition claimed Allstate

had handled the claim in bad faith and that the homeowners had assigned their

claims against Allstate to the plaintiff. Allstate, thereafter, denied liability based

on certain policy provisions and asserted that the plaintiff had no right of action.

The trial and appellate courts found that Allstate was entitled to summary judgment

on the coverage issue because once the homeowner was dismissed, Allstate could

not be liable for any damages since it is only responsible for “damages which the

insured becomes legally obligated to pay.” Id. at 924.

The supreme court reversed, finding that summary judgment should not have

been granted as “the intent of the parties to the compromise is central to the

resolution of this case.”1 Id. The supreme court found that genuine issues of fact

existed regarding the parties‟ intent to release the homeowner‟s obligation to which

the insurance coverage applied. The supreme court stated:

In particular, the record demonstrates that Allstate did not object,
and in fact agreed, to the amendment of plaintiff‟s petition to name
it as a direct defendant in the face of its knowledge that its insureds,
the [defendant-homeowners] were being released. Because
genuine issues of material fact exist with respect to the confection
of the compromise and Allstate‟s role in that compromise,
summary judgment should not have been granted in this case.

Id. at 925.

1
Justices Victory and Traylor both dissented, finding there were no genuine issues of fact
that warranted reversal.

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The facts of Rollins are distinguishable from the ones present here. First, the

direct action statute was not at issue in Rollins. Second, it is clear that Hartford‟s

intent in executing the high/low compromise was not to allow Soileau to proceed

against it alone or otherwise waive it rights under the direct action statute.

Hartford‟s intent is easily ascertainable from the four corners of the document, to

wit, to cap its liability at $2,500,000.00, regardless of the jury verdict. The

high/low agreement in this case is factually dissimilar from Rollins, where there

was a genuine issue of fact as to whether the insurer agreed to have the plaintiff

proceed against it alone.

Direct Action Statute

Soileau argues that the direct action statute only governs the “bringing” of

actions, not the maintenance of an action against an insurer once the insured is

dismissed. Soileau argues that because she did not bring an action directly against

an insurer, the direct action statute is inapplicable. We disagree. It is true that in

Foltmer, 799 So.2d 545, and White v. State Farm Insurance Co., 03-754 (La.App.

4 Cir. 11/26/03), 862 So.2d 263, the insureds were not initially named, whereas in

this case, Soileau proceeded against the insureds until nearly the end of the trial

before dismissing them in open court.2 Nevertheless, we agree with Hartford that

the legislative intent behind the amendment of the statute would be defeated if a

plaintiff could circumvent the statute‟s requirements simply by filing the action

against the insured and the insurer and then, later, dismissing the insured.

2
In Foltmer, the plaintiff sued the City of Gretna and its insurer in Orleans Parish;
however, the plaintiff‟s claim was transferred to Jefferson Parish, thus rendering the plaintiff‟s
claim against the insurer alone in Orleans Parish prohibited by the direct action statute. In White,
the plaintiffs filed an amended petition naming the insured driver as a defendant four-and-a-half
months after the trial court rendered a judgment against the defendant insurer. Notably, the
insured owner, not the driver, had been named as a defendant throughout the trial and was only
dismissed at the conclusion of the trial pursuant to a motion for involuntary dismissal.
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Soileau cites Finnie, 875 So.2d 71, for the proposition that the dismissal of

an insured pursuant to a compromise does not bar the plaintiff from pursuing her

action solely against the insurer. We find the facts of Finnie distinguishable.

In Finnie, the plaintiff settled with the defendant and all of the other insurers

except Lafayette Insurance Company (LIC). The settlement agreement stated that

plaintiff “reserved the right to proceed against [defendant] „to the extent that he

was insured by Lafayette.‟” A panel of this court found:

Ms. Finnie reserved her claim against Mr. LeBlanc to the extent
that he was insured by LIC. This was a partial dismissal, not a
carte blanche release. The language in the partial dismissal, “to the
extent he was insured by Lafayette” gave Ms. Finnie the right to
proceed against LIC. LIC should not have been dismissed from the
suit for the sole reason that Mr. LeBlanc was dismissed from the
suit. The intent was to grant a partial release of Mr. LeBlanc and
to reserve rights to the extent that he was covered by LIC. We
cannot say that [the] trial court was legally incorrect in allowing
the suit against LIC.

Id. at 76-77.

Finnie did not discuss the application of the direct action statute and the

clear wording of the settlement agreement revealed the intent of LIC to remain as a

party.

We agree with Hartford that Soileau‟s right of action against Hartford was

extinguished when she dismissed Smith‟s from the suit. Pursuant to the plain

language of the statute, a party can pursue an insurer alone only when one of the

enumerated exceptions in the statute exist.

The direct action statute does not create an independent
cause of action against the insurer. It merely grants a procedural
right of action against the insurer where the plaintiff has a
substantive cause of action against the insured. Descant v. Adm’rs
of Tulane Educ. Fund, 93-3098 (La.7/5/94), 639 So.2d 246. When
the injured party‟s substantive cause of action against the original
tort feasor is extinguished, the procedural right of direct action
against the insurer, which is purely remedial and ancillary to the
cause, must fall by operation of law. Dumas v. U.S. Fid. & Guar.
Co., 241 La. 1096, 134 So.2d 45 (1961.)
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Marsh Engineering Inc. v. Parker, 04-509, p. 11 (La.App. 3 Cir. 9/29/04),

883 So.2d 1119, 1127, writ denied, 04-2669 (La. 1/28/05), 893 So.2d 73.

Soileau makes a feeble argument that La.R.S. 22:1269(B)(1)(b) should apply

as an exception because the high/low agreement effectively rendered the insureds

insolvent. A novel argument, but one that must fail. There are no valid exceptions

to the direct action statute here; thus, the trial court erred in denying Hartford‟s

exception of no right of action. Because we have found that Soileau no longer had

a cause of action against Hartford, all remaining issues assigned as error are

rendered moot.

CONCLUSION

The judgment of the trial court denying the defendant-appellant, Hartford

Insurance Company‟s, exception of no right of action is reversed. The exception is

granted, and Hartford Insurance Company is, hereby, dismissed. Costs of this

appeal are assessed equally between the parties.

REVERSED AND RENDERED.

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