Misty Finchum Agency, LLC v. Jamie Thibodeaux and Associates,inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

16-760

MISTY FINCHUM AGENCY, LLC, ET AL.

VERSUS

JAMIE THIBODEAUX AND ASSOCIATES, INC., ET AL.

**********

APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2012-2792
HONORABLE DAVID A. RITCHIE, DISTRICT JUDGE

**********

MARC T. AMY
JUDGE

**********

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

REVERSED AND REMANDED WITH INSTRUCTIONS.

David Dwight
Dwight Law Firm
1400 Ryan Street
Lake Charles, LA 70601
(337) 439-3138
COUNSEL FOR PLAINTIFFS/APPELLEES:
Misty Finchum Agency, LLC
Misty Finchum

Somer G. Brown
Cox, Cox, Filo, Camel & Wilson, LLC
723 Broad Street
Lake Charles, LA 70601
(337) 436-6611
COUNSEL FOR PLAINTIFFS/APPELLEES:
Misty Finchum Agency, LLC
Misty Finchum

Robert E. Landry
Scofield, Gerard, Pohorelsky, Gallauger & Landry, LLC
901 Lakeshore Drive, Suite 900
Lake Charles, LA 70601
(337) 433-9436
COUNSEL FOR DEFENDANT/APPELLANT:
Allstate Insurance Company

Kristin L. Beckman
Barrasso Usdin Kupperman Freeman & Sarver, L.L.C.
909 Poydras Street, 24th Floor
New Orleans, LA 70112
(504) 589-9700
COUNSEL FOR DEFENDANT/APPELLANT:
Allstate Insurance Company

Peter J. Valeta
123 N. Wacker Drive, Suite 1800
Chicago, IL 60606
(312) 474-7900
COUNSEL FOR DEFENDANT/APPELLANT:
Allstate Insurance Company

Timothy O’Dowd
921 Ryan Street, Suite D
Lake Charles, LA 70601
(337) 310-2304
COUNSEL FOR DEFENDANTS/APPELLEES:
Jamie Thibodeaux and Associates, Inc.
Jamie Thibodeaux

AMY, Judge.

Following the purchase of an insurance agency, the plaintiffs filed suit

against both the insurer and the agency, including its owner, alleging the discovery

of undisclosed problems with the agency’s book of business. The plaintiffs sought

damages stemming from her discovery of those alleged problems. The insurer

filed a cross claim against the agency owner, seeking indemnification. After a jury

found in favor of the defendants, the trial court granted the plaintiffs’ motion for

new trial against the insurer. However, the trial court denied the plaintiffs’ motion

for new trial against the agency and ultimately dismissed the agency and its owner

from the proceeding. The insurer appeals, asserting that the trial court erred in

dismissing its cross claim from the proceedings. For the following reasons, we

reverse and remand with instructions.

Factual and Procedural Background

Misty Finchum filed this matter, individually, and as Misty Finchum

Agency, LLC, following the purchase of an Allstate Insurance agency in Calcasieu

Parish for $500,000.00. The purchase was commemorated by a July 2011 Act of

Sale confected between “Misty Finchum Agency, LLC” as “Buyer” and Jamie

Thibodeaux, Marla Thibodeaux, and “Jamie Thibodeaux & Associates, Inc. [1] d/b/a

Jamie Thibodeaux Allstate Agency” as the “Seller.” Therein, Seller conveyed,

among other things, “[a]ll insurance policies and brokerage income[.]”2 The Act of

Sale further represented that “Seller approve[d] of the transfer of his current

1
The Thibodeaux agency appears variously throughout the record as “Jamie Thibodeaux
and Associates, Inc.[,]” “Jamie Thibodeaux & Associates, Inc.[,]” and “Jamie Thibodeaux
Associates[.]” Outside of quotations, this review references the entity as “Thibodeaux and
Associates” for brevity and consistency.
2
Mr. Thibodeaux asserted at trial that he believed that he was transferring only policies
from his independent book of business as he did not “own” the agency’s Allstate policies.

Allstate insurance agency to Buyer and does hereby transfer any and all rights in

said agency to Buyer.”

The plaintiffs alleged in the initial petition that, in the course of renewing

previously issued policies, “it was determined that the premium as quoted by

[Thibodeaux and] Associates and [Mr.] Thibodeaux would not be applicable upon

renewal and the renewal premium would increase.” They further alleged that

“[b]ased upon a review of the customer’s application when the initial policy was

issued and through the renewal process, it was determined certain information had

been falsified on the applications as submitted by [Thibodeaux and] Associates and

[Mr.] Thibodeaux.” The plaintiffs suggested that numerous customers did not

renew policies with the agency due to the resulting increase in premiums and that

the business, therefore, sustained damages.

The plaintiffs named Mr. Thibodeaux, Thibodeaux and Associates, and

Allstate Insurance Company as defendants. As for Allstate, the plaintiffs asserted

that “defendant Allstate knew or should have known the applications submitted by

defendant, [Thibodeaux and] Associates and [Mr.] Thibodeaux, were falsified and

failed to disclose this information to petitioners.”3 The plaintiffs alleged in their

petition that the Misty Finchum Agency “would never have purchased the business

had it known about the falsified applications prior to the sale.”

The petition included a prayer for damages, including those for economic

damages and for mental anguish. Additionally, and as to Mr. Thibodeaux and

Thibodeaux and Associates, Ms. Finchum noted that the Act of Sale provided: “In

3
On this point, uncontroverted evidence developed at trial indicated that the impetus for
the sale of the agency was Allstate’s termination of Mr. Thibodeaux’s affiliation with the
company following an internal review and his admission that he supplied improper policy
discounts to five policies. Ms. Finchum alleged at trial that she had subsequently discovered
problems associated with hundreds of applications, an allegation disputed by the defendants.

2

the event that any insurance policy is cancelled or not renewed because of non-

compliance by Seller with any of Allstate Insurance Company’s rules and

regulations, Buyer shall be entitled to liquidated damages in the amount of

$2,500.00 per policy which is cancelled or not renewed.” By supplemental and

amending petitions, Ms. Finchum not only increased the number of allegedly

problematic policies, but she further asserted that Allstate was liable to her for

damages for unfair trade practices pursuant to La.R.S. 51:1409.

In response, and included within its answer to the petition, Allstate asserted

a cross claim against Mr. Thibodeaux seeking indemnification. It referenced the

following portion of its “Exclusive Agency Agreement” executed by Mr.

Thibodeaux:4

X. INDEMNIFICATION:

....

B. You will indemnify the Company against liability, including the
cost of defense and settlements, imposed on the Company by law for
damages sustained by any person and caused by your acts or
omission, or those of any employees or other person working in
connection with this Agreement, provided that the Company has not
caused or contributed to cause such liability by its acts or omission.

Allstate further noted that it was not a party to the Act of Sale and that it “therefore

owed no duties to Finchum with regard to that contract or any other transaction

between Finchum and Thibodeaux.” It specifically denied the plaintiffs’

“allegations that that [sic] it made any misrepresentations in connection with her

purchase of Thibodeaux’s book of business.” Allstate suggested that “[t]o the

extent Finchum is awarded damages against Defendants, Allstate has not caused or

contributed to cause any liability by its acts or omissions.”

4
Thibodeaux and Associates was not a party to the Agency Agreement. Neither did
Allstate include Thibodeaux and Associates as a defendant to the cross claim.

3

Thereafter, the plaintiffs dismissed their “claims for damages against Jamie

Thibodeaux, Individually” by an “Ex Parte Consent Judgment of Partial

Dismissal[.]” The plaintiffs further represented that they would “not pursue Jamie

Thibodeaux, Individually, for any damage awards plaintiffs may obtain against

Jamie Thibodeaux and Associates, Inc. d/b/a Jamie Thibodeaux Allstate Agency.”

The judgment included a “reservation of rights as to all other defendants[.]”

Further, and during the subsequent jury trial, the plaintiffs and Mr.

Thibodeaux, as well as Thibodeaux and Associates, entered into an additional “Ex

Parte Consent Judgment of Partial Dismissal.” The judgment dismissed

“Plaintiffs’ claims for liquidated damages under the Act of Sale entered into

between Plaintiffs and the Thibodeaux Defendants on or about July 29, 2011.”

However, the plaintiffs reserved their rights “to pursue other claims under the Act

of Sale and Plaintiff expressly reserve[d] the right to assert such claims, including

the breach of warranty claim[.]”

Following the multi-day trial, the jury returned a verdict in favor of the

defendants. The jury responded “No” to questions as to whether Allstate violated

the Unfair Trade Practices Act, whether Allstate committed fraud, or whether Ms.

Finchum incurred damages as a result of Allstate’s actions. The jury also

responded “No” when asked whether “Jamie Thibodeaux Associates, Inc. d/b/a/

Jamie Thibodeaux Allstate Agency” breached any warranty from the Act of Sale or

whether Mr. Thibodeaux had a duty to indemnify Allstate for damages associated

with the sale of the Allstate agency. Thereafter, the plaintiffs filed a motion for

judgment notwithstanding the verdict or, alternatively, motion for new trial against

both Thibodeaux and Associates and Allstate.

4

By final, amended judgment, the trial court granted the plaintiffs’ motion for

new trial as to Allstate for “good grounds and to prevent a miscarriage of justice”

pursuant to La.Code Civ.P. art. 1973. It alternatively granted the motion for new

trial “pursuant to Louisiana Code of Civil Procedure Article 1972(1), as the jury’s

verdict is contrary to the law and the evidence.”5 However, the trial court denied

5
In granting the motion for new trial as to Allstate, the trial court explained:

So my struggle here is . . . . that no rational trier of fact could have found that
Allstate didn’t commit some kind of fraud or misrepresentation to induce Misty
Finchum into buying this agency. I mean I think the evidence is very clear on that
and I think the jurors - - I mean the jurors believed that, but on the damages side of it
there was a lot of discussion about the - - I don’t remember the extent of all of it. I
have some things I recall about what they said, but I remember they pointed out what
Mr. O’Dowd said in his closing argument about the backup for that. Where were the
witnesses? Where were the documents or policies to back up that spreadsheet? But,
you know, - - so what I’m struggling with is even though I do find that no rational
trier of fact could’ve found that there was no fraud or misrepresentation on the part of
Allstate - - and the thing is even though they checked his box on there, even though,
you know, they actually - - they shouldn’t have touched that box because once they
answered no to those two questions they shouldn’t have gotten to the next question,
which was do you find that there were damages or whatever the case may be, do you
find that Misty Finchum - - do you find that Misty Finchum incurred damages or
losses as a result of Allstate’s actions and they put no, but they weren’t supposed to
answer that question. If they put no they were supposed to go to five. If they put no
to question two they were supposed to go to question five.

So, you know, if they answered that question - - I mean had they answered the
first question, question two, as yes and then they would’ve put no on question number
three then I wouldn’t be spending any time on this, but the fact that they said no to an
obvious yes - - you know, to a question that the obvious answer was yes and that they
even believed it was yes, but whatever reason they just didn’t put that on there
because they focusing on the damages side of it, I don’t know, that’s the struggle here,
but I will say - - well - - but had they put yes and then they had put no and if we’re
here talking about - - you know, then we’d have to look at whether - - you know, then
I would be actually looking at whether there should - - you know, then your motion
would’ve been focused on whether there should be a JNOV on the damages with
regard to, you know, her buying this - - would she have bought this place, this agency,
but for this misrepresentation made to her because, you know, we’re all different.
Some people are more loose, like Dean Day. Hey, I’ll buy it, I don’t care what
problems they’ve got, I’ll buy it, it’s no big deal to me, where some people are more,
you know, by the book and they don’t want to even - - they don’t want to step across
the line or spit on the sidewalk because they’re afraid they’re going to get a ticket or
going to get arrested or whatever. I mean, you know, and Misty Finchum sounds like
she may be one of those people that’s more - - you know, that’s worried about doing
anything wrong and if she knew there was a book, you know, a business had
problems then she may not have bought the business. I don’t know. I mean that’s
just what she said. She wouldn’t have bought it.

....

5

the motion as to “defendant Jamie Thibodeaux and Associates, Inc. d/b/a Jamie

Thibodeaux Allstate Agency, Jamie P. Thibodeaux, Individually.”6

Central to the present matter, the amended judgment further indicated that

“defendant Jamie Thibodeaux and Associates, Inc. d/b/a Jamie Thibodeaux

Allstate Agency, Jamie P. Thibodeaux, Individually is hereby released from further

proceedings as it relates it this matter.”

Allstate appeals, assigning the following as error in its brief to this court:

The Trial Court improperly dismissed Allstate’s third-party
indemnity claim against Thibodeaux when it granted a new trial as to
Allstate but not Thibodeaux.

So, anyway, I don’t know why they did what they did because they all clearly - - it’s
not like I’m even saying that they were irrational in what they thought because they
thought the same thing that I did, which is that there was dishonesty and fraud
involved, but they checked off the box because it was clear to me they were focusing
more on damages than they were on answering the question correctly.

Anyway. But look, I think that in this case with regard to Allstate under the
circumstances because I do find that there’s no - - I mean I’m going to grant a new
trial on the - - with regard to Allstate.
6
With regard to Thibodeaux and Associates, the trial court explained:

Now I will say this. On the issue of Jamie Thibodeaux I do recall the evidence showed
that Allstate had actually kept Jamie Thibodeaux out of that business for several months
and I think for Jamie Thibodeaux to have assumed that - - I mean Jamie Thibodeaux had
no control over what happened in that business during those months he was locked out of
it and I think he was, as I recall, I mean I think he was - - I think the jury could’ve
assumed that because he had no control over the business that Allstate would’ve fixed the
problems during that time and that he felt like he was making a - - and they felt like
Allstate really treated him the same way that treated Misty Finchum potentially, you
know, with trying to force him to kind of hide their - - you know, what they were doing.

So anyway I’m going to deny the JNOV and the Motion for New Trial as it relates to
Jamie Thibodeaux because I do think the way the case was argued, the way the evidence
was presented, et cetera, that I think the jury could’ve - - I don’t think it was irrational for
them to have made the finding they did with regard to Jamie Thibodeaux and his agency.
So I’m going to deny it with regard to Jamie Thibodeaux and Jamie Thibodeaux Agency,
but I’m going to grant a new trial as it relates to Allstate because I just don’t see any
other way to handle that situation.

6

Discussion
We first observe that Allstate does not challenge the trial court’s granting of

the motion for new trial against it by this appeal.7 Rather, its focus on appeal is on

the dismissal of Mr. Thibodeaux in light of its cross claim for indemnification

against him, a ruling it contends was premature in light of the forthcoming new

trial.

In response, Mr. Thibodeaux suggests that the trial court’s dismissal of the

cross claim was appropriate in light of the denial of the motion for new trial as to

Thibodeaux and Associates. Specifically, he notes that the jury answered “No” to

the following jury question:

5. Do you find that Jamie Thibodeaux Associates, Inc. d/b/a
Jamie Thibodeaux Allstate Agency breached any warranty
in the act of sale?
He contends in his brief that the “same facts that would cause Thibodeaux to

violate the warranty would also cause Allstate’s rights to become executable.” He

additionally suggests that the trial court found a lack of evidence regarding the

breach of warranty8 in its denial of the motion for new trial against Thibodeaux and

7
Allstate instead challenged the ruling regarding the motion for new trial by applications for
supervisory writs. Following review, a panel of this court denied the applications finding “no
abuse of discretion in the trial court’s ruling.” See Misty Finchum Agency, L.L.C. v. Jamie
Thibodeaux and Associates, Inc. d/b/a Jamie Thibodeaux Allstate Agency, 16-378, 16-561
(La.App. 3 Cir. 7/20/16), writ denied, 16-1598 (La. 12/16/16), _ So.3d _.
8
The warranties at issue appear within the Act of Sale, which includes the following

provision:

“Property” shall mean all of Seller’s present and future rights, title and interest:

A) All insurance policies and brokerage income bound or transacted after 12:01
a.m. July 1, 2011.

....

G) Seller approves of the transfer of his current Allstate insurance agency to
Buyer and does hereby transfer any and all rights to said agency to Buyer.

7

Associates. Mr. Thibodeaux further notes that the clause relied upon by Allstate

requires indemnification “provided that the Company has not caused or contributed

to cause such liability by its acts or omission.” He contends that the trial court’s

granting of the new trial as to Allstate, but denial as to Thibodeaux and Associates,

reveals a determination that Allstate was the cause of injuries, if any.

After review, we conclude that the trial court did, in fact, err in its dismissal

of Allstate’s cross claim against Mr. Thibodeaux under the facts of this case.

Importantly, the dismissal of the indemnity claim, and the argument of Mr.

Thibodeaux above, presupposes that Allstate caused or contributed to any liability

by its own acts or omissions so as to render the indemnity clause ineffective.

However, and while the trial court remarked upon the evidence presented as

to Allstate’s alleged actions in finding that a new trial was appropriate, it did not

enter a finding in favor of the plaintiffs. Neither did it enter a finding against

Allstate. Rather, it rejected the plaintiffs’ motion for JNOV in that regard. Such a

finding would have at least arguably resolved the issue of whether Allstate “caused

Seller warrants that he has not made any material misrepresentations to
Allstate Insurance Company in the issuance of these policies he is currently
transferring to Buyer.

(Emphasis added.) Additionally, the portion of the Act of Sale entitled “Obligations of Seller”

includes:

Warranties of Seller

As a material inducement to the Buyer to execute this agreement and to perform or cause
same to be performed the obligations of the Buyer hereunder, the Seller represents and
warrants to the Buyer that:

The business and operations of Jamie Thibodeaux & Associates, Inc. d/b/a Jamie
Thibodeaux Allstate Agency has been and are being conducted in all material aspects in
accordance with all applicable laws, rules and regulations of the state of Louisiana and
Allstate Insurance Company.

(Emphasis added.)

8

or contributed” to any liability as a matter of law. See Martin v. Heritage Manor

South Nursing Home, 00-1023 (La. 4/3/01), 784 So.2d 627. The trial court instead

granted the new trial as to Allstate, and, thus, did “not deprive the parties of their

right to have all disputed issues resolved by a jury.” Id. at 631. The mechanism of

the new trial returned the plaintiffs and Allstate “in the positions they occupied

prior to trial.” Id., n.4 (quoting FRANK L. MARAIST AND HARRY T. LEMMON,

LOUISIANA CIVIL LAW TREATISE, CIVIL PROCEDURE, § 13.4 (1999)). In turn,

Allstate’s liability and/or cause or contribution of any liability to the plaintiffs, if

any, remains to be resolved and cannot at this point be construed as negating the

subject indemnity clause as urged by Mr. Thibodeaux.

Neither is the reinstitution of the cross claim undermined by the fact that the

trial court denied the motion for new trial against Thibodeaux and Associates. Mr.

Thibodeaux points out that the jury indicated “NO” in response to the following

question:

5. Do you find that Jamie Thibodeaux Associates, Inc. d/b/a
Jamie Thibodeaux Allstate Agency breached any warranty
in the act of sale?

He contends that the determination of this fact, which the trial court did not

disturb, precludes Allstate’s continued pursuit against him for indemnification.

Recall, however, that the warranties referenced above were contained within the

Act of Sale, confected exclusively between the plaintiffs and the Thibodeaux

parties. Allstate was not a party to that transaction.

Neither is indemnification dependent upon a breach of warranty claim.

Instead, Mr. Thibodeaux, individually, entered into the Agency Agreement, which

broadly provided for indemnification to Allstate “for damages sustained by any

person and caused by your acts or omission, or those of any employees or other

9

person working in connection with this Agreement[.]” That indemnification was

not dependent upon an underlying breach of warranty. Additionally, as seen by

reference to the question above, the jury indicated “NO” to a question asking

whether “Jamie Thibodeaux Associates, Inc. d/b/a Jamie Thibodeaux Allstate

Agency” breached any warranty.

By comparison, the subsequent question inquired as to the appropriateness

of indemnification by Mr. Thibodeaux, individually, as follows:

7. Do you find that Jamie Thibodeaux has a duty to indemnify
Allstate for the damages associated with the sale of the
Allstate agency?

The jury indicated “NO” in response to this inquiry as well.

In sum, while the plaintiffs’ underlying claims against Thibodeaux and

Associates may have been resolved both by the jury and by the corresponding

motion for new trial, Allstate’s claims were not similarly resolved by those factual

determinations. Rather, the plaintiffs’ motions for new trial did not include any

claim regarding Mr. Thibodeaux, individually, as he appeared in the case at that

juncture only by inclusion as a defendant in Allstate’s cross claim. Simply, as

explained above, the trial court returned the plaintiffs and Allstate to their pre-trial

posture due to the granting of the motion for new trial against that sole defendant.

That pre-trial posture included Allstate’s claim for indemnity against Mr.

Thibodeaux. Accordingly, we find that the trial court erred in its dismissal of Mr.

Thibodeaux, individually, insofar as he remained a defendant in the cross claim.

We remand for the reinstitution of that claim.

DECREE

For the foregoing reasons, the trial court’s dismissal of Allstate Insurance

Company’s cross claim against Jamie Thibodeaux, Individually, is reversed. This

10

matter is remanded for reinstatement of appellant/defendant’s cross claim in that

regard. Costs of this proceeding are assessed to the appellee, Jamie Thibodeaux.

REVERSED AND REMANDED WITH INSTRUCTIONS.

11