Joseph Gautreaux v. Louisiana Farm Bureau Casualty Insurance Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CA 22-294

JOSEPH H. GAUTREAUX

VERSUS

LOUISIANA FARM BUREAU
CASUALTY INSURANCE CO.,ET AL.

**********

APPEAL FROM THE
SIXTEENTH JUDICIAL DISTRICT COURT
PARISH OF ST. MARTIN, NO. 81835
HONORABLE ANTHONY THIBODEAUX, DISTRICT JUDGE

**********

GARY J. ORTEGO
JUDGE

**********

Court composed of Sylvia R. Cooks, Chief Judge, Charles G. Fitzgerald, and Gary
J. Ortego, Judges.

AFFIRMED, AND REMANDED FOR FURTHER PROCEEDINGS.

Fitzgerald, J., dissents in part with assigned reasons and concurs in part.

Wayne J. Lee
Heather S. Lonian
Stone Pigman Walther Wittmann, L.L.C.
909 Poydras Street, Suite 3150
New Orleans, Louisiana 70112
(504) 581-3200
Counsel for Defendant/Appellant:
Louisiana Farm Bureau Casualty Insurance Company

James K. Ordeneaux
Matthew T. Habig
Plauche Maselli Parkerson, L.L.P.
701 Poydras Street, Suite 3800
New Orleans, Louisiana 70139
(504) 582-1142
Counsel for Defendant/Appellant:
Louisiana Farm Bureau Casualty Insurance Company

Charles C. Garrison
Caffery, Oubre, Campbell & Garrison, L.L.P.
Post Office Drawer 12410
New Iberia, Louisiana 70562
(337) 364-1816
Counsel for Defendant/Appellant:
Louisiana Farm Bureau Casualty Insurance Company

Stephen B. Murray, Jr.
Stephen B. Murray, Sr.
Arthur M. Murray
701 Poydras Street, Suite 4250
New Orleans, Louisiana 70139
(504) 525-8100
Counsel for Plaintiffs/Appellees:
Joseph Harvey Gautreaux
Individually and On Behalf of Others Similarly Situated

Kenneth W. Dejean
Law Offices of Kenneth W. Dejean
Post Office Box 4325
Lafayette, Louisiana 70502-4325
(337) 235-5294
Counsel for Plaintiffs/Appellees:
Joseph Harvey Gautreaux
Individually and On Behalf of Others Similarly Situated

Kenneth D. St. Pe
Kenneth D. St. Pe, APLC
311 West University Avenue, Suite A
Lafayette, Louisiana 70506
(337) 534-4043
Counsel for Plaintiffs/Appellees:
Joseph Harvey Gautreaux
Individually and On Behalf of Others Similarly Situated

John Randall Whaley
Benjamin H. Dampf
Whaley Law Firm
6700 Jefferson Highway
Building 12, Suite A
Baton Rouge, Louisiana 70806
(225) 302-8810
Counsel for Plaintiffs/Appellees:
Joseph Harvey Gautreaux
Individually and On Behalf of Others Similarly Situated

ORTEGO, Judge.

The issue on appeal is whether the trial court erred in its rulings on five

separate motions for summary judgment.

FACTS AND PROCEDURAL HISTORY

In 2014, Plaintiff, Joseph H. Gautreaux (Gautreaux), filed a petition for

damages, penalties, attorney fees, and class certification against Defendant,

Louisiana Farm Bureau Casualty Insurance Company (Farm Bureau). Gautreaux

alleged in his petition that he and potential class members had automobile

insurance policies with Farm Bureau, and that Farm Bureau breached its

contractual obligations under those policies.

One year before filing suit, Gautreaux’s 2008 Ford F-250 was involved in an

automobile accident. Gautreaux made a claim against the collision coverage of his

automobile policy with Farm Bureau. The vehicle was ultimately deemed a total

loss. Thus, to assist in determining the vehicle’s actual cash value, Gautreaux

provided Farm Bureau with a valuation report from the National Automobile

Dealers Association (NADA). Gautreaux’s petition alleged that Farm Bureau

refused to honor the NADA report, relying instead on its own system, known as

the Mitchell Work Center Total Loss (WCTL) computer program.

Plaintiffs contend that the Mitchell WCTL system is a business-to-business

product offered by Mitchell to subscribing insurance companies, such as Farm

Bureau. Plaintiffs argue that the WCTL system generates values that are unfairly

low, that Farm Bureau is aware of this fact, and that Farm Bureau uses the system

to intentionally undervalue total loss vehicles. According to Gautreaux, the WCTL

does not meet the statutory requirements of La.R.S. 22:1892(B)(5) for determining

the actual cash value of their insured’s total loss vehicle. By refusing to pay actual

cash value, Farm Bureau breached the terms and conditions of its policy with

Gautreaux and other similarly situated policy holders. The petition therefore seeks

damages representing the difference between the amount tendered by Farm Bureau

and the actual cash value of the total loss vehicles. The petition also asserts that

Farm Bureau breached its duty to adjust claims fairly under La.R.S. 22:1892 and

La.R.S. 22:1973, thereby warranting penalties and attorney fees. Finally, the

petition asserts general tort claims of “fraud, misrepresentation, and duress.”

Many years after the petition was filed, the trial court granted class

certification. Thereafter, a jury trial was set for October 11, 2021. However, two

months prior to trial, Plaintiffs filed a motion for partial summary judgment on the

issue of statutory compliance, specifically seeking judgment that Farm Bureau’s

WCTL system violates the requirements of La.R.S. 22:1892(B)(5). Farm Bureau,

in turn, filed a cross-motion for summary judgment as to compliance with that

statute.

Farm Bureau also filed three other motions for partial summary judgment.

The first sought dismissal of Plaintiffs’ bad faith claims. The second sought

dismissal of Plaintiffs’ claims for fraud, misrepresentation, and duress. The third

sought judgment declaring that La.R.S. 22:1892(B)(5) does not require insurers to

use NADA.

The hearing on all five motions was held on September 22, 2021. The trial

court ruled from the bench. In summary, the trial court granted Plaintiffs’

noncompliance motion, and denied Farm Bureau’s cross-motion. As to Farm

Bureau’s three other motions, their bad faith motion was granted in part and denied

it in part; their fraud motion was also granted in part and denied in part; and their

NADA motion was granted.

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The trial court’s rulings were reduced to a single written judgment dated

November 15, 2021. The judgment was designated as a final judgment pursuant to

La.Code Civ.P. art. 1915(B)(1). Farm Bureau now appeals.

On appeal, Farm Bureau assigns that the trial court erred in granting

Plaintiffs’ noncompliance motion, in denying Farm Bureau’s cross-motion, in

denying in part its bad faith motion, in denying in part its fraud motion, and in

using confusing decretal language in granting its NADA motion.

ASSIGNMENTS OF ERROR

1. The Trial Court erred in granting Plaintiffs’ Statutory
Violation Motion because, at minimum, the uncontradicted fact and
expert evidence presented by [Farm Bureau] demonstrated that
genuine issues of material fact exist as to whether WCTL complies
with La. R.S. 22: 92B(5) and the Trial Court improperly ignored
uncontradicted fact and expert testimony and/or alternatively made
factual determinations regarding those facts.

2. The Trial Court erred in denying [Farm Bureau’s]
Compliance Motion because the uncontested evidence established that
WCTL valuations are derived from fair market surveys conducted
using qualified retail automobile dealers in the local market as
resources and/or determined from generally recognized used motor
vehicle industry sources. Alternatively, the motion should have been
granted because Plaintiffs have the burden of proving that WCTL
violates La. R.S. 22:1892B(5) and the uncontroverted evidence and
record established that Plaintiffs cannot meet their burden of proof.

3. The Trial Court erred in denying [Farm Bureau’s] Bad
Faith Motion in part, holding that Plaintiffs will be allowed to present
a claim for penalties and attorney fees under La. R.S. 22:1973 and
22:1892 without first proving that [Farm Bureau] paid insureds less
than the ACV of their respective vehicles at the time of the loss, as
required by the insurance policies and without proving that the failure
to pay the amount due was arbitrary, capricious or without probable
cause. The Trial Court’s ruling contravenes the plain language of
Sections 1892 and 1972. The Legislature did not establish a penalty
for noncompliance with Section 1892B(5) and neither penalties nor
attorney’s fees for non-compliance are authorized by Section 1973. In
the context of the allegations and evidence of this case, there is no
cause or right of action under La. R.S. 22:1973 for using a total loss
valuation that does not comply with La. R.S. 22:1892B(5) without
proof that [Farm Bureau] failed to timely pay the amount due under
the contract and that the failure to pay was arbitrary, capricious and

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without probable cause. [Farm Bureau’s] motion should have been
granted in full.

4. The Trial Court erred in not granting [Farm Bureau’s]
Fraud Motion in full by erroneously holding that Plaintiffs can assert
claims for misrepresentation under La. R.S. 22:1973, despite
Plaintiffs’ prior disavowal of such claims and the Courts’ reliance
upon that withdrawal. Plaintiffs did not plead a claim for
misrepresentation under La. R.S. 22:1973(B)(1) and presented no
evidence of any such misrepresentation by [Farm Bureau], no
evidence of materiality of any statement, and no evidence of reliance
by any class member. Thus, the theoretical 1973(B)(1) claim accepted
by the Trial Court’s ruling was not properly before the court.
Moreover, even if the claim was before the court, the Judgment is
erroneous because La. R.S. 22:1973(B)(1) does not provide a claim
where there is no specific misrepresentation by the insurer and no
reliance by the insured as a matter of law, evidence of which is totally
absent and precluded by the Trial Court’s own Judgment. [Farm
Bureau’s] motion should have been granted in full.

5. The Trial Court correctly granted [Farm Bureau’s]
motion for partial summary judgment on NADA, holding that La. R.S.
189213(5) does not require insurers to use NADA valuations, and that
it is improper for an insurer to rely upon NADA Valuations without
consideration of facts specific to individual vehicle. In order to
prevent confusion, [Farm Bureau] simply requests that this Court alter
the judgment in order to incorporate the decretal language requested
in its motion.

LAW AND DISCUSSION

I. Standard of Review

In reviewing the trial court’s decision on a motion for summary judgment,

this court applies the de novo standard of review using the same criteria applied by

the trial court to determine whether summary judgment is appropriate. Samaha v.

Rau, 07-1726 (La. 2/26/08), 977 So.2d 880.

“[A] motion for summary judgment shall be granted if the motion,

memorandum, and supporting documents show that there is no genuine issue as to

material fact and that the mover is entitled to judgment as a matter of law.”

La.Code Civ.P. art. 966(A)(3).

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The burden of proof in summary judgment proceedings is set forth in

La.Code Civ.P. art. 966(D)(1), which states:

The burden of proof rests with the mover. Nevertheless, if
the mover will not bear the burden of proof at trial on the issue
that is before the court on the motion for summary judgment,
the mover’s burden on the motion does not require him to
negate all essential elements of the adverse party’s claim, action,
or defense, but rather to point out to the court the absence of
factual support for one or more elements essential to the
adverse party’s claim, action, or defense. The burden is on the
adverse party to produce factual support sufficient to establish
the existence of a genuine issue of material fact or that the
mover is not entitled to judgment as a matter of law.

“The only documents that may be filed in support of or in opposition to the

motion [for summary judgment] are pleadings, memoranda, affidavits, depositions,

answers to interrogatories, certified medical records, written stipulations, and

admissions.” La.Code Civ.P. art. 966(A)(4). “The court may consider only those

documents filed in support of or in opposition to the motion for summary judgment

and shall consider any documents to which no objection is made. Any objection to

a document shall be raised in a timely filed opposition or reply memorandum.”

La.Code Civ.P. art. 966(D)(2).

II. First and Second Assignments of Error - WCTL Compliance with

La.R.S. 22:1892(B)(5)

In its first assignment of error, Farm Bureau asserts that the trial court erred

in granting Plaintiffs’ noncompliance motion because genuine issues of material

fact exist as to whether the WCTL system complies with La.R.S. 22:1892(B)(5).

We find no merit to this assertation.

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Louisiana Revised Statutes 22:1892(B)(5) provides three exclusive methods

for determining the actual cash value of a total loss vehicle, stating as follows

(emphasis added):

(B)(5) When an insurance policy provides for the adjustment
and settlement of first-party motor vehicle total losses on the basis of
actual cash value or replacement with another of like kind and quality,
and the insurer elects a cash settlement based on the actual cost to
purchase a comparable motor vehicle, such costs shall be derived by
using one of the following:

(a) A fair market value survey conducted using
qualified retail automobile dealers in the local market
area as resources. If there are no dealers in the local
market area, the nearest reasonable market can be used.

(b) The retail cost as determined from a generally
recognized used motor vehicle industry source; such as,
an electronic database, if the valuation documents
generated by the database are provided to the first-party
claimant, or a guidebook that is available to the general
public. If the insured demonstrates, by presenting two
independent appraisals, based on measurable and
discernable factors, including the vehicle’s preloss
condition, that the vehicle would have a higher cash
value in the local market area than
the value reflected in the source’s database or the
guidebook, the local market value shall be used in
determining the actual cash value.

(c) A qualified expert appraiser selected and
agreed upon by the insured and insurer. The appraiser
shall produce a written nonbinding appraisal establishing
the actual cash value of the vehicle’s preloss condition.

(d) For the purposes of this Paragraph, local
market area shall mean a reasonable distance surrounding
the area where a motor vehicle is principally garaged, or
the usual location of the vehicle covered by the policy.

Farm Bureau concedes that the Mitchell WCTL system is not a qualified

appraiser under La.R.S. 22:1892(B)(5)(c). Thus, we turn to subsections (B)(5)(a)

and (B)(5)(b) and analyze whether the Mitchell WCTL system used by Farm

Bureau complies with either of those subsections.

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Interpretation and construction of statutes created by legislative acts are

tasked to the judicial branch of government wherein the first step is to look to the

language of the statute. Touchard v. Williams, 617 So.2d 885 (La.1993). “When a

law is clear and unambiguous, and its application does not lead to absurd

consequences, it shall be applied as written, with no further interpretation made in

search of the legislative intent.” La.Civ.Code art. 9.

The first issue before us is whether Farm Bureau’s use of the Mitchell

WCTL system, to determine the actual cash value of a total loss vehicle of its

insureds, as a matter of law, complies or violated La.R.S. 22:1892(B)(5). Plaintiffs

have the burden to prove this issue as both movant of this summary judgment, and

as the party that has the burden of proof on this issue at trial on the merits.

Therefore, in proper summary judgment analysis, we must determine whether

Plaintiffs have proven the lack of genuine issues of material fact and entitlement to

a judgment as a matter of law that Farm Bureau failed to comply with La.R.S.

22:1892(B)(5) by using the Mitchell WCTL system.

The first of the two compliant methods to determine the actual cash value of

a total loss vehicle is delineated by subsection (B)(5)(a) providing for the use of “a

fair market value survey using qualified retail automobile dealers in the local

market area as resources.” The language of La.R.S. 22:1892(B)(5)(a) is clear. To

comply with subsection (B)(5)(a), the Mitchell WCTL system must survey, or use

information gathered from participants, as to the fair market value of a vehicle.

The participants in that survey must be qualified, local area retail automobile

dealers.

To show that the Mitchell system fails to comply with subsection (B)(5)(a),

Plaintiffs provided the trial court with Mitchell’s own internal documents detailing

how the Mitchell WCTL system determines the actual cash value of a total loss
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vehicle. The produced documents indicate that, initially, the Mitchell WCTL

system finds twenty or less “comparable vehicles” within a given geographic area.

The documents state that the “comparable vehicles” are derived from “consumer-

based vehicle sources along with inventory directly from Dealerships. When

available WCTL also provides sale vehicle records from sources such as J.D.

Power and the CA DMV.” The documents specifically list J.D. Power and

Associates, AutoTrader.com, cars.com, Vast.com, and the California Department

of Motor Vehicles as sources to find “comparable vehicles.”

According to these produced documents, after selecting and gathering the

list or sell price of the “comparable vehicles,” the Mitchell WCTL system

determines an adjusted value of the “comparable vehicles.” One such adjustment

is the “projected sold adjustment” wherein, when only the advertised price was

available for a “comparable vehicle,” the Mitchell WCTL system applies “a factor

to the advertised price based on historical price negotiating behavior of sellers of

vehicles similar to yours.” Once that and other adjustments are made, the average

adjusted value of the “comparable vehicles” is calculated and determined to be the

vehicle of the insured’s Loss Vehicle Base Value.

Next, the produced documents show that other adjustments are made prior to

the Mitchell WCTL system reaching its conclusion of the actual cash value of a

total loss vehicle. One is the mileage adjustment which is determine by

estimations “based on millions of retail transactions.” Other adjustments that are

applied by the Mitchell WCTL system include adjustments for vehicle type,

vehicle options, the condition of the vehicle or preexisting damage to the vehicle.

To further show that the Mitchell WCTL system fails to comply with

subsection (B)(5)(a), Plaintiffs provided sample claim and valuation

documentation, such as the Mitchell WCTL system’s valuation report for a class
8

member, Yvette Beauchamp. Beauchamp’s address listed on the report, when she

incurred the total loss of her vehicle, is St. Martinville, Louisiana. The

“comparable vehicles” selected by the Mitchell WCTL system were from the

following locations and distances from Beauchamp in St. Martinville, Louisiana:

Nederland, Texas, approximately 150 miles away; Bunkie, Louisiana,

approximately 50 miles away; Houma, Louisiana, approximately 70 miles away;

and Gulfport, Mississippi, approximately 150 miles away.

According to Plaintiffs, this report further indicates that the Mitchell WCTL

system fails to comply with subsection (B)(5)(a)’s mandated use of a survey of

local dealers because, first, choosing a limited number of comparable vehicles

from a database cannot be considered a survey. Additionally, Plaintiffs point out

that there are several dealers within 25 miles of Beauchamp’s address which are

purposely not utilized in that WCTL report. These several available dealers are

clearly part of the local market area to be used as resources, as contemplated by

plain language of the statute versus those in different states and approximately 150

miles away.

To counter this evidence produced by Plaintiffs that the Mitchell WCTL

system fails to comply with subsection (B)(5)(a), Farm Bureau submitted the

report of Rene Befurt, Ph.D. Berfurt opined that the Mitchell WCTL system

contains the essential characteristics of fair market value surveys. (emphasis

added.)

Additionally, Farm Bureau submitted the expert report of Arnold Barnett,

Ph.D. Barnett opined that the methodology of the Mitchell WCTL system is

statistically sound with no systemic bias in its price estimates, i.e., no systemic

tendency to under- or over-estimate the market price.

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Farm Bureau argues that the reports of these two experts shows that the

Mitchell WCTL system, used by Farm Bureau, complies with subsections (B)(5)(a)

and (B)(5)(b), or at the least creates an issue of material fact. We disagree.

To comply with subsection (B)(5)(a), the Mitchell WCTL system must

survey, or use information gathered from participants, as to the fair market value of

a vehicle. These participants in that survey must be qualified, local area retail

automobile dealers (emphasis added).

While it is true that both Berfurt and Barnett’s conclusions find that the

Mitchell WCTL system complies, we find that their opinions are mostly just

statements of law and not based in fact. Additionally, expert opinions would be

secondary to the plain language of the statute, and thus their opinions do not

constitute any issue of fact that is material. Regardless of whether both expert’s

views are taken as true, Louisiana Law, La.R.S. 22:1892(B)(5)(a), mandates that

Farm Bureau shall use an actual “fair market value survey” when choosing to pay

its insured a cash settlement derived from the actual cost to buy comparable

vehicle. Farm Bureau’s use of a system with the “essential characteristics” of a

fair market value survey that has no systemic biases is clearly not sufficient for

compliance as to the clear and unambiguous language of Subsection (B)(5)(a).

Additionally, and we find that this is why the legislature, in its wisdom,

provided these specific methods of compliance, and the legal requisites therein, in

order to prevent and prohibit exactly what Farm Bureau is attempting with their

use of the Mitchell WCTL system, namely, to avoid strict compliance with La.R.S.

22:1892(B)(5).

The “fair market value survey” provided for in La.R.S. 22:1892(B)(5)(a)

requires that the survey be conducted by the insurer using qualified retail dealers in

the local market area as resources. The “survey” conducted by the Mitchell
10

WCTL system does not comply with this requirement. Farm Bureau has failed to

show that it used local dealer to find comparable vehicles when calculating total

loss value. Farm Bureau has also failed to show that is used dealers in the nearest

reasonable market if none for available in the local market. Accordingly, we find

that the evidence presented and submitted by Plaintiffs, including the documents

from Mitchell, proves, by law, that the Mitchell WCTL system is not a “fair market

value survey using qualified retail automobile dealers in the local market area as

resources.”

For these reasons, we find the Plaintiffs have carried their burden to prove,

by law, that the Mitchell WCTL system is not for the use as “a fair market value

survey using qualified retail automobile dealers in the local market area as

resources,” and, as such, does not comply with La.R.S. 22:1892(B)(5)(a).

Next, we turn our attention to subsection (B)(5)(b). This subsection allows

total loss valuation based on “the retail cost as determined from a generally

recognized used motor vehicle industry source.”

Plaintiffs argue that the Mitchell WCTL system is an insurance industry

source rather than used vehicle industry source. In support, Plaintiffs produced the

deposition transcript of Mitchell representative, Donn Keatley (Keatley).

Plaintiffs point out that Keatley acknowledged that the Mitchell WCTL

system is only marketed to insurance companies and a few rental car companies.

As such, according to Plaintiffs, the Mitchell WCTL system is not “a generally

recognized used motor vehicle industry source” as required by the clear and

unambiguous language of subsection (B)(5)(b).

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Having reviewed Keatly’s testimony to surmise whether Plaintiffs have

carried their burden of proof, we highlight the following (emphasis added):

Q. The WorkCenter Total Loss product is part of a broader suite
that Mitchell has and - - and markets to insurance companies; is
that correct?

A. Yes.

Q. The - - product, and specifically WorkCenter Total Loss, is
what you would call a business-to-business product; is that
correct?

A. What is the definition of business to business, I guess?

Q. In order words, in - - in difference to NADA, which might
market their product to both businesses and consumers,
Mitchell is interested only in marketing it to other businesses,
and specifically insurance companies and a few rental car
companies; is that fair?

A. Then that’s correct.

....

Q. The Mitchell WorkCenter Total Loss product is not something
that’s used by used car dealers, is it?

A. No.

Q. Mitchell, as a company, apart from providing the service where
they attempt to valuate Total Loss vehicles, they do not provide
any of the products for evaluating the price of vehicles on the
resale market; would you agree with that?
A. I am not aware of any -- that maybe -- let me think about that. I
am trying to think. I think that’s an accurate statement, yes.

Q. Are you familiar with NADA or Kelley Blue Book?

A. Yes.

Q. So, for example, if somebody wants to buy a car or another
person wants to sell a car, they might reference those products
to see -- to give them an idea of what their vehicle might be
worth or is that that your understanding?

A. Those were those were guidebooks or sources of information to
reference vehicle values, yes.

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Q. Mitchell doesn’t provide any service like that does it?

A. No.

....

Q. Someone other than an insurance company, average person out
on the street who is looking to buy or sell the -- a used vehicle.

A. We do not sell it to those individuals.

Q. They don’t -- they do not have access to it?

A. They would not.

Q. Do used car dealers have access to the Mitchell WorkCenter
Total Loss valuations?

A. No.

Q. Do new car dealers have access to the Mitchell –

A. No.

Q. -- WorkCenter Total Loss valuations?

A. No.

This testimony makes it clear that the Mitchell WCTL system has limited

availability and was created specifically to be used by insurance companies, such

as Farm Bureau, exclusively for their purpose of valuing total loss vehicles.

Further, it is clear from this testimony that no one in the used motor vehicle

industry uses or even has access to the Mitchell WCTL system when evaluating

vehicles or retail costs.

Farm Bureau, in its effort to controvert this evidence, again relies on the

expert opinion of Rene Befurt, Ph.D. Berfurt opines that the electronic databases

from which the Mitchell WCTL system derives local market values are considered

to be generally recognized used motor vehicle industry sources.

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Once again, Farm Bureau’s reliance on Berfurt’s opinion is misguided.

Even if Berfurt’s opinion is taken as fact, subsection (B)(5)(b) does not allow for

the use of a conglomeration of adjusted values provided by generally recognized

used motor vehicle industry sources. It specifically mandates that the retail value

is derived “from a generally recognized used motor vehicle industry source.” The

Mitchell WCTL system’s sources are not relevant. The Mitchell WCTL system,

itself, must be “a generally recognized used motor vehicle industry source.”

Plaintiffs have produced a plethora of evidence that the Mitchell WCTL system is

not such, while Farm Bureau has failed to produce any credible evidence that the

Mitchell WCTL system is such a source.

For these reasons, we find the Plaintiffs have carried their burden to prove,

by law, that the Mitchell WCTL system is not “a generally recognized used motor

vehicle industry source,” and, as such, does not comply with La.R.S.

22:1892(B)(5)(b).

In summation, we find that Plaintiffs have carried their burden of producing

prima facie evidence that Farm Bureau’s use of the Mitchell WCTL system, by

law, does not comply with subsection (a) or (b) of La.R.S. 22:1892(B)(5).

Thereafter, the burden shifted to Farm Bureau to produce evidence of the existence

of a material factual dispute or demonstrate that Plaintiffs are not entitled to

judgment as a matter of law on this issue. We find that Farm Bureau has failed to

do so.

The first method at issue, under La.R.S.22:1892(B)(5)(a), provides for the

use of a fair market value survey using qualified retail automobile dealers in the

local market area. Based on the undisputed facts and evidence provided in the

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record, we find that the Mitchell WCTL system fails to comply with the clear and

unambiguous language of La.R.S. 22:1892(B)(5)(a) because it fails to conduct a

fair market value survey using qualified retail auto dealers in the local area as

resources.

The second method under La.R.S. 22:189(B)(5)(b) provides for the

determination of retail cost from a generally recognized used motor vehicle

industry source. Based on the facts and evidence in the record, we find that the

Mitchell WCTL system fails to comply with La.R.S. 22:189(B)(5)(b) because

retail costs was not determined from a generally recognized used motor vehicle

industry source. The Mitchell WCTL system’s database was created specifically

to be used by insurance companies as evidenced above in the testimony of Mitchell

representative, Donn Keatley. Keatley testified that no one in the used motor

vehicle industry uses or even has access to the Mitchell WCTL system when

evaluating vehicles or retail costs.

For these reasons, we find that the Mitchell WCTL system does not comply

with La.R.S. 22:1892(B)(5)(a) or (b) and, thus, Farm Bureau’s use of the Mitchell

WCTL computer program, including Farm Bureau’s practice of adjusting values

downward for condition using nationwide data, by law, violates La.R.S.

22:1892(B)(5).

In its second assignment of error, Farm Bureau contends that the trial court

erred in denying its cross-motion for summary judgment asserting that WCTL

system complies with La.R.S. 22:1892(B)(5). Our finding above renders this

assigned error without merit.

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For the above reasons, we find that the Mitchell WCTL system, by law, does

not comply with La.R.S. 22:1892(B)(5). Thus, Farm Bureau’s use of the Mitchell

WCTL computer program, including Farm Bureau’s practice of adjusting values

downward for condition using nationwide data, violates La.R.S. 22:1892(B)(5).

Therefore, the trial court’s grant of the plaintiffs’ motion for summary

judgment and denial of Farm Bureau’s cross-motion for summary judgment, as to

compliance with LA.R.S. 22:1892(B)(5), are hereby affirmed.

III. Third and Fourth Assignments of Error - Bad Faith and Fraud Claims

In its third assignment of error, Farm Bureau contends that the trial court

erred in denying in part its bad-faith motion, thereby allowing Plaintiffs to present

claims for penalties and attorney fees under La.R.S. 22:1973. And in its fourth

assignment, Farm Bureau contends that the trial court erred in denying in part its

fraud motion, thereby allowing Plaintiffs to assert claims for misrepresentation

under La.R.S. 22:1973.

While we were willing to extend our appellate jurisdiction to review the trial

court’s denial of Farm Bureau’s cross-motion, we are unwilling to extend our

jurisdiction to review the denial of these other two motions for partial summary

judgment. In our view, entertaining the appeal of these two partial summary

judgments currently does nothing more than promote piecemeal litigation.

Moreover, in Granger v. Guillory, 00-363 (La.App. 3 Cir. 4/26/00), 762

So.2d 640, 641, a different panel of this court explained that the “[t]he trial court’s

rendition of judgment certifying the denial of the motion for summary judgment as

an appealable order was ineffectual.” Id. at 641. “While certification is allowed

under Article 1915 of partial judgments which grant a motion for summary

16

judgment, this statute does not authorize the certification of a judgment denying a

motion for summary judgment.” Id.1

For the above reasons, Farm Bureau’s appeal of their partial motion for

summary judgment as to bad faith and fraud is dismissed and remanded to the trial

court for further proceedings.

IV. Decretal Language related to the NADA

In its fifth and final assignment of error, Farm Bureau specifically contends

as follows:

The Trial Court correctly granted [Farm Bureau’s] motion for partial
summary judgment on NADA, holding that La.R.S. [22:]1892(B)(5)
does not require insurers to use NADA valuations, and that it is
improper to rely upon NADA valuations without consideration of
facts specific to individual vehicle[s]. In order to prevent confusion,
[Farm Bureau] simply requests that this Court alter the judgment in
order to incorporate the decretal language requested in its motion.

The decretal language requested in Farm Bureau’s motion is “that it is

improper to rely upon NADA valuations without consideration of facts specific to

individual vehicles.”

However, the record reflects that the trial court’s judgment states that “La.

R.S. 22:1892(B)(5) does not require the use of NADA clean retail values without

ever conducting vehicle-by-vehicle analysis of the actual condition of the total loss

vehicle.” (emphasis in original).2 In its brief to this court, Farm Bureau argues that

1
In relevant part, La.Code Civ.P. art. 1915 states:

B. (1) When a court renders a partial judgment or partial summary
judgment or sustains an exception in part, as to one or more but less than all of the
claims, demands, issues, or theories against a party, whether in an original
demand, reconventional demand, cross-claim, third-party claim, or intervention,
the judgment shall not constitute a final judgment unless it is designated as a final
judgment by the court after an express determination that there is no just reason
for delay.
2
As noted in the summary-judgment evidence before us, the term “clean retail” describes
an automobile in ready for sale condition on a used car dealer lot. NADA specifically defines
“clean retail” as “a vehicle with no mechanical defects and passes all necessary inspections with
ease[.]”
17

“[t]he Judgment could be read to mean that NADA is required when a vehicle-by-

vehicle analysis is conducted.” (emphasis in original). We disagree. The decretal

language used by the trial court is neither confusing nor does it misstate the law.

This assignment is without merit.

DECREE

For the above reasons, the trial court’s grant of Plaintiffs’ motion for partial

summary judgment that Farm Bureau’s use of the Mitchell WCTL system does not

comply with La.R.S. 22:1892(B)(5) is affirmed. This finding necessitates that the

trial court’s denial of Farm Bureau’s cross-motion for summary judgment is also

affirmed.

Further, the trial court’s decretal language relative to the NADA motion, and

grant of Farm Bureau’s motion for partial summary judgment relative to NADA is

affirmed.

Finally, the appeal of the trial court’s denial of Farm Bureau’s bad faith and

fraud motions are dismissed and remanded to the trial court for further proceedings.

Costs of this appeal are assessed to Defendant, Louisiana Farm Bureau Casualty

Insurance Company.

AFFIRMED, AND REMANDED FOR FURTHER PROCEEDINGS.

18

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

22-294

JOSEPH HARVEY GAUTREAUX

VERSUS

LOUISIANA FARM BUREAU CASUALTY
INSURANCE COMPANY

FITZGERALD, J., dissents in part with assigned reasons and concurs in part.

I respectfully disagree with the majority’s decision to affirm the trial court’s

grant of Plaintiffs’ motion for partial summary judgment on the issue of statutory

compliance. The reasons below correspond to Farm Bureau’s first assignment of

error: Farm Bureau initially asserts that the trial court erred in granting Plaintiffs’

motion because genuine issues of material fact exist as to whether the WCTL system

complies with La.R.S. 22:1892(B)(5). In my view, Farm Bureau is correct.

The issue is whether the WCTL violates subsections (B)(5)(a) and (B)(5)(b).

And because Plaintiffs have the burden of proving this at trial, the first step of de

novo review is to determine whether Plaintiffs have supported their motion with

prima facie evidence of noncompliance.

Plaintiffs’ motion describes the WCTL system as a “proprietary, database

valuation tool” offered by Mitchell International Inc. (Mitchell) to subscribing

clients such as Farm Bureau. According to Plaintiffs, the WCTL database system

determines vehicle values by locating comparable vehicles within a given

geographic area, selecting a handful of those comparables, discarding the rest, and

then applying various algorithms based on national data to adjust those comparables.

Thus, Plaintiffs initially contend that the WCTL is not a “fair market value

survey” as required by La.R.S. 22:1892(B)(5)(a). Plaintiffs suggest that the term

“survey” contemplates a broad treatment of a subject whereas the WCTL only

considers a small, rather than broad, number of comparable vehicles. In support,

Plaintiffs attached to their motion WCTL proprietary documents which explain that

the number of comparable vehicles used by the system is capped at twenty. Plaintiffs

maintain that viewing only twenty comparable vehicles cannot be considered a fair

market value survey.

Plaintiffs next assert that even if the WCTL is a fair market value survey, the

survey is not conducted using “qualified retail automobile dealers in the local market

area as resources” as required by subsection (B)(5)(a). In support, Plaintiffs filed

with their motion the WCTL valuation report for class member Yvette Beauchamp.

The report shows that the base value was calculated by using four comparable

vehicles ranging from 52 to 149 miles away from Beauchamp. This distance,

according to Plaintiffs, far exceeds what would qualify as a “local market area”

under the statute. Plaintiffs claim that the WCTL failed to use the car dealers located

within 25 miles of Beauchamp. And according to Plaintiffs, these are the dealers

that are within the local market area as contemplated by the statute.

Finally, Plaintiffs turn their attention to subsection (B)(5)(b), arguing that the

WCTL is an insurance industry source rather than “a generally recognized used

motor vehicle industry source[.]” In support, Plaintiffs point to the deposition

transcript of Mitchell representative Donn Keatley, who states that the WCTL is only

marketed to insurance companies and a few rental car companies. Thus, according

to Plaintiffs, Mitchell does not license or sell the WCTL to new or used motor-

vehicle dealers or individuals shopping for these vehicles.

2

Plaintiffs also filed numerous other documents with their motion for summary

judgment, including WCTL proprietary documents regarding data compilation and

the deposition transcript of NADA representative Mike Stanton. Because Plaintiffs

carried their burden of producing prima facie evidence of Farm Bureau’s statutory

noncompliance, the burden shifted to Farm Bureau to produce evidence of the

existence of a material factual dispute or demonstrate that Plaintiffs are not entitled

to judgment as a matter of law.

Farm Bureau first addresses the WCTL’s compliance with La.R.S.

22:1892(B)(5)(a), which contemplates a “fair market value survey conducted using

qualified retail automobile dealers in the local market area as resources.” In support,

Farm Bureau attached to its memorandum in opposition of summary judgment the

affidavit and report of Rene Befurt, Ph.D., an expert in designing, conducting, and

analyzing market surveys. Dr. Befurt concluded that the WCTL conducts a fair

market value survey because it has all the essential elements of a fair market value

survey: “it (1) clearly defines the target population, (2) uses a clear sampling frame

to identify and screen for members of the target population, and (3) precisely queries

information regarding the characteristics of the relevant vehicles.” He also observed

that the WCTL looks for the most comparable vehicles in the local market. Contrary

to Plaintiffs’ suggestions, Dr. Befurt believed that the adjustments made to

comparable vehicles did not detract from the WCTL’s status as a fair market value

survey using local dealerships as resources.

Farm Bureau also filed with its opposition memorandum the deposition

transcript and report of Arnold Barnett, Ph.D., a professor at the Massachusetts

Institute of Technology. Dr. Barnett explained that the algorithms used by the

WCTL are “eminently reasonable and carefully constructed.” According to Dr.

3

Barnett, the WCTL is “utterly similar in structure and purpose to any other existing

methods for processing market survey results, all of which use algorithms.”

In addition, Farm Bureau submitted countervailing evidence to Plaintiffs’

assertion that the WCTL does not derive its values using “qualified retail automobile

dealers in the local market area as resources.” Id. For example, Mitchell

representative Donn Keatley explained in his deposition that the WCTL surveys

local market dealerships by searching for comparable vehicles within a geographic

radius. It does so by searching for the best comparable vehicles in the local market.

Only when it cannot find three comparable vehicles of dealerships within an initial

75-mile search does it expand the search beyond 75 miles. According to Farm

Bureau, this is consistent with subsection (B)(5)(a). And the process of selecting the

best comparables from the local market—or the nearest market when insufficient

comparables are available—is reflected on the face of the WCTL valuation report

for each class member. Each report identifies the comparable vehicles and the

distance from the insured’s vehicle.

Based on the above, Farm Bureau asserts that genuine issues of material fact

exist as to whether the WCTL complies with La.R.S. 22:1892(B)(5)(a). Specifically,

Farm Bureau contends that genuine issues of material fact exist as to whether the

WCTL is a fair market value survey; and genuine issues of material fact exist as to

whether the WCTL uses local dealers as resources for each class member.

Farm Bureau next turns its attention to La.R.S. 22:1892(B)(5)(b), contending

that the WCTL is “a generally recognized used motor vehicle industry source[.]” In

support, Farm Bureau points to Dr. Befurt’s affidavit and expert report. Dr. Befurt

concluded that the “WCTL derives actual cash values from generally recognized

used motor vehicle sources” such as cars.com, autotrader.com, vast.com,

4

truecar.com, and J.D. Power. He then explained that the WCTL is used by financial

institutions and insurers, both of which are essential participants in the used car

industry. And all of this, he opined, is evidence that the WCTL itself is a generally

recognized used motor vehicle industry source. Thus, Farm Bureau contends that

genuine issues of material fact exist as to whether the WCTL complies with

subsection (B)(5)(b).

Finally, Farm Bureau’s opposition homes in on Plaintiffs’ statement of

undisputed material facts. The statement was submitted with Plaintiffs’ original

motion. And therein, Plaintiffs identify forty-nine facts which they claim are both

undisputed and material. Yet Farm Bureau’s opposition contradicts forty-eight of

these facts with countervailing summary-judgment evidence. Take, for example, the

following excerpt from Plaintiffs’ statement of undisputed material facts:

STATEMENT NO. 4:

WCTL is available only to Mitchell’s subscribers. . . .

RESPONSE TO NO. 4:

[Farm Bureau] contests Plaintiffs’ Statement of Uncontradicted
Material Fact No. 4 and submits countervailing evidence as follows:
The testimony of Mike Stanton as the corporate representative of J.D.
Power established that anyone using the J.D. Power website is directed
to the Mitchell site when the user is looking for total loss valuations for
a particular vehicle.

Plaintiffs’ above statement and Farm Bureau’s response are relevant to

whether the WCTL is “a generally recognized used motor vehicle industry source”

under La.R.S. 22:1892(B)(5)(b).

Here are two more examples:

STATEMENT NO. 14:

The projected sold adjustment is based on historic national sales
data, not surveys of local dealers. . . .

5

RESPONSE TO NO. 14:

[Farm Bureau] contests Plaintiffs’ Statement of Uncontradicted
Material Fact No. 14 and submits countervailing evidence as follows:
WCTL has a database of national sales data which is continuously
updated. As Mitchell’s corporate representative Philip Kroell testified:

The projected sold, those you would need at least 30 records of
where you have a—to develop a sold ratio, right, an average.
They start at the—local market area, so the designated market
area. And they only expand as needed.

So it’s—it is possible that when they have a sold projected price
for a comparable in Louisiana, it will be based on sold
transactional data from Louisiana.

Kroell Dep. at 117.

....

STATEMENT NO. 16:

The mileage adjustment is based on regional/national data. . . .

RESPONSE TO NO. 16:

[Farm Bureau] contests Plaintiffs’ Statement of Uncontradicted
Material Fact No. 16 and submits countervailing evidence as follows:
The deposition testimony of Phillip Kroell, designated representative
of Mitchell on August 5, 2017 . . . . “WorkCenter Total Loss makes
appropriate adjustments for the difference in mileage between the loss
vehicle and each comparable vehicle. Adjustments are estimated based
on millions of retail transactions that are captured through J.D. Power
dealer relationships . . .” and Affidavit of Matthew Racho, JD Power,
Senior Director of the Power Information Network dated March 15,
2018 confirming that JD Power sales prices that may be shown on
Mitchell reports for sales prices in Louisiana are derived from 82
franchise dealerships representing 160 franchises, all in the State of
Louisiana[.]

Plaintiffs’ above statements and Farm Bureau’s responses are relevant to

whether the WCTL is “[a] fair market value survey conducted using qualified retail

automobile dealers in the local market area as resources” under La.R.S.

22:1892(B)(5)(a). And as noted previously, Dr. Befurt stated that these types of

6

adjustments do not detract from the WCTL’s status as a fair market value survey

using local dealerships as resources.

“In considering whether a genuine issue exists, courts cannot consider the

merits, make credibility determinations, evaluate testimony or weigh evidence.”

Pritchard v. American Freightways Corp., 37,962, pp. 3-4 (La.App. 2 Cir.

12/10/03), 862 So.2d 476, 478. And “when the party opposing the summary

judgment motion submits expert opinion evidence that would be admissible and that

is sufficient to allow a reasonable juror to conclude the expert's opinion on a material

fact more likely than not is true, the court should deny the summary judgment

motion.” Willis v. Medders, 00-2507, p. 3 (La. 12/8/00), 775 So.2d 1049, 1051.

In the end, I believe that the trial court erred in making factual findings and

weighing the evidence presented. Once Plaintiffs’ produced prima facie evidence

of Farm Bureau’s statutory noncompliance, the burden shifted to Farm Bureau to

produce evidence of the existence of a material factual dispute or demonstrate that

Plaintiffs are not entitled to judgment as a matter of law. In my view, the summary-

judgment evidence produced by Farm Bureau clearly demonstrates the existence of

genuine issues of material fact. Thus, I would reverse the trial court’s grant of

Plaintiffs’ motion for partial summary judgment.

I concur with the majority in all other respects.

7