Southern Marble Specialities, Inc. v. Mitchell Wayne Cholley, Individually, the Firm of Louisiana Property & Casualty, LLC and Abc Insurance Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

22-602

SOUTHERN MARBLE SPECIALTIES, INC.

VERSUS

MITCHELL WAYNE CHOLLEY, INDIVIDUALLY, THE FIRM OF
LOUISIANA PROPERTY & CASUALTY, LLC AND ABC INSURANCE
COMPANY

**********

APPEAL FROM THE
LAKE CHARLES CITY COURT
PARISH OF CALCASIEU, NO. 21-1493
HONORABLE JAMIE BLAIR BICE, CITY COURT JUDGE

**********

CANDYCE G. PERRET
JUDGE

**********

Court composed of D. Kent Savoie, Candyce G. Perret, and Ledricka J. Thierry,
Judges.

Savoie, J., concurs and assigns written reasons.

REVERSED.

Joseph L. McReynolds
Mark P. Allain, Jr.
Deutsch, Kerrigan, LLP
755 Magazine Street
New Orleans, LA 70130-3672
(504) 581-5141
COUNSEL FOR DEFENDANTS/APPELLANTS:
Mitchell Wayne Cholley
The Firm of Louisiana Property & Casualty, LLC

Thomas A. Filo
Cox, Cox, Filo, Camel & Wilson, LLC
723 Broad Street
Lake Charles, LA 70601
(337) 436-6611
COUNSEL FOR PLAINTIFF/APPELLEE:
Southern Marble Specialties, Inc.

PERRET, Judge.

Plaintiff, Southern Marble Specialties, Inc. (“Southern Marble”), sued

defendants, Mitchell Cholley and The Firm of Louisiana Property & Casualty,

L.L.C. (collectively “Defendants”), for professional negligence of an insurance

agent for allegedly reducing its business income and extra expense coverage under

a commercial property policy without its knowledge or consent.

After a one-day bench trial, the trial judge rendered a judgment on May 24,

2022, in favor of Southern Marble “in the amount of $27,393.60, as well as costs

of court, including the expert fee of Robert A. Ehlers in the amount of $8,500.00,

plus legal interest from date of judicial demand.” Defendants now appeal alleging

the trial judge erred in: (1) ruling that the Lloyd’s of London insurance policies

issued in 2018 and 2019 were not renewals of the original policy issued in

November 2017; (2) denying their exception of peremption; (3) finding them liable

for eighty percent of the stipulated damages totaling $34,242.00; (4) assessing

them with the expert fees of Mr. Ehlers; and (5) refusing to rule on, or consider,

their application to reduce the estimated costs of the appeal by $1,998.00.1 For the

following reasons, we reverse upon finding that Southern Marble’s claims against

Defendants were not filed within three years of the alleged negligent act and, thus,

are perempted under La.R.S. 9:5606.

PROCEDURAL HISTORY AND FACTS:

On August 18, 2021, following Hurricane Laura on August 27, 2020,

Southern Marble filed a petition against its insurance agent, Mitchell Cholley, and

his agency, The Firm of Louisiana Property & Casualty, L.L.C., for damages

1
At the March 7, 2023 oral arguments, Defendants acknowledged that the Lake Charles
City Court reimbursed them for the excessive court costs. Accordingly, this issue is now moot.

allegedly sustained after Defendants reduced its business income and extra expense

(“BI/EE”) insurance coverage without its knowledge or consent. Specifically,

Southern Marble’s petition states, in pertinent part (emphasis in original):

4.

In November of 2016, Plaintiff initially secured a policy of
insurance from Defendants, . . . through Anchor Specialty Insurance
Company. When said policy was expiring, Defendants placed
Plaintiff’s renewal policy through a different insurance company.

5.

For reasons unknown to Plaintiff, Defendants secured coverage
for the 2017-2018 policy period which was NOT identical to the
coverage which had been initially purchased by Plaintiff. Although
the property damage and contents (personal property) policy limits
remained the same, Defendants reduced the business interruption
coverage limits substantially without the knowledge or consent of
Plaintiff.

6.

At all relevant times, Plaintiff believed it was insured through a
policy of insurance identical to the Anchor Specialty policy which
would have provided it additional coverage for the business
interruption loss caused by Hurricane Laura.

7.

While Plaintiff was performing its obligations under the
insurance policy by reporting hurricane related damages, it[] was
informed that [Defendants] had significantly reduced its business
interruption coverage when the policy was renewed. For some reason,
Defendants failed to secure the same coverage for business
interruption that was secured with the initial policy.

On October 21, 2021, Defendants filed an answer with affirmative defenses

wherein they argued, in pertinent part (reference to exhibits omitted):

17.

Plaintiff, through its agent Chuck Kuehn, agreed to bind
coverage through Central Louisiana Insurance Company (“CLIC”), a
surplus lines broker, with a policy underwritten by Lloyd’s of London,
for the 2017-2018 policy year. The Lloyd’s policy provided reduced

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BI/EE coverage in the amounts of $3,123 for Plaintiff’s office and
showroom and $7,800 for Plaintiff’s storage building, for a total
BI/EE coverage of $10,923.

18.

Defendant Cholley fully informed and advised Plaintiff,
through Chuck Kuehn, of the reduced BI/EE coverage. Mr. Kuehn
accepted all of the terms, conditions and proposed coverages of the
Lloyd’s policy and signed the application for the Lloyd’s policy on
November 7, 2017.

19.

Plaintiff agreed to the next three consecutive renewals of the
Lloyd’s policy, through CLIC, for the 2018-2019 policy year, the
2019-2020 policy year, and again for the 2020-2021 policy year, all
with the same BI/EE coverage limits.

On November 29, 2021, Defendants filed a peremptory exception alleging

that Southern Marble’s claims are “perempted on their face” because Southern

Marble “had knowledge of the change in BI/EE coverage on November 7, 2017

and waited three years before filing this suit on August 18 of 2021.” On January 4,

2022, Southern Marble filed an opposition to the exception alleging that

“Defendants’ Exception of Prescription is completely without merit and should be

overruled and dismissed.”

A hearing on the peremptory exception was held on January 12, 2022. After

hearing the testimony of Mr. Cholley and Mr. Kuehn, the trial judge denied the

peremptory exception upon finding that Mr. Cholley issued “a new policy each and

every year” and that the policies were not renewals. On March 23, 2022,

Defendants filed a motion for reconsideration (to be heard and ruled on at trial)

wherein they argued “that the policies were in fact renewal policies based on the

definition of ‘renewal’ in La.R.S. 22:1267” because “[t]he same policy forms in

the first Lloyd policy were re-issued in the two subsequent Lloyd policies —

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repeated in substance and in fact — and with the same coverage amounts,

including the coverages for Business Income and Extra Expenses, issued by the

same group of insurers.”

After a bench trial, held on March 31, 2022, the trial judge denied

Defendants’ motion for reconsideration and rendered judgment in favor of

Southern Marble, finding Defendants liable for eighty percent of the difference in

coverage limits and assessing twenty percent fault to Southern Marble for failing to

discover the Defendants’ negligent and/or intentional act. In his May 11, 2022

written opinion, the trial judge provided the following facts (emphasis in original):

Mr. Chuck Kuehn (“Kuehn”) is the owner of Southern Marble.
He has been in business in Lake Charles, Louisiana for 37 years, with
revenues of approximately 1.7 million dollars per year in sales.
Kuehn utilized the services of Billy Gage with Arthur Gallagher
Insurance as his agent for his insurance needs. Mr. Gage covered
Southern Marble with a Liberty Mutual policy for many years.
Because Mr. Gage generally only wrote high dollar policies,
ultimately in 2016, Kuehn moved all of his insurance needs, business,
homeowner’s, auto, commercial rental property, etc. to an agent, both
new in the insurance business and also his neighbor and personal
friend, Mitch Cholley at The Firm of Louisiana, LLC [“The Firm”].

Mr. Kuehn met with Mr. Cholley at the beginning of 2016 and
purchased policies of insurance that covered Southern Marble for
liability and business property losses. Cholley did not write (or
continue) the policy with Liberty Mutual, Kuehn’s insurer for many
years previously, but instead Cholley wrote a new policy with Anchor
Insurance. The Anchor policy included, among other things, business
income coverage with policy limits for both of Southern Marble’s
buildings at $43,700.00. After this initial transition from Gallagher to
The Firm, Kuehn never met with Cholley again face-to-face regarding
any of his insurance needs, until after Hurricane Laura in 2020.

At the end of the first policy period with Anchor, Kuehn
received an email directly from Anchor Insurance informing that his
premium was going to increase by $7,000.00 per year. Kuehn
emailed Cholley asking for an explanation for the premium increase.
Cholley informed Kuehn that he would begin to shop for other
coverage. Ultimately, Kuehn learned that the premium increase was
because Cholley had initially misclassified Southern Marble’s
business in the application submitted to Anchor Insurance.

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Apparently, after a site inspection of Southern Marble buildings by
Anchor, the business was then properly classified, causing the
premium increase from $14,000 annually to $21,000 annually
(basically the same premium amount as with Liberty Mutual).
Anchor recommended to Cholley that the business interruption
coverage limits should be $200,000, almost five (5) times more than
the limit of $43,700 in the policy written by Cholley, which was
Anchor’s explanation to Cholley for the increase in premium.
Cholley never shared those communications with Kuehn or anyone at
Southern Marble.

Hurricane Laura made landfall in Lake Charles, Louisiana on
August 27, 2020. Southern Marble sustained damages and Kuehn
attempted to collect on his policy for his business income losses. At
that time, only weeks after the hurricane, Kuehn learned that the B.I.
coverages were lowered by Cholley from $43,700 to $3,000 per
month, with a three (3) month maximum. Kuehn did not know his
coverage had been lowered. Cholley never personally informed him
of the reduction, nor did he ever sign anything agreeing to the
reduction in coverage. Southern Marble collected a total of $9,458 for
its business interruption claim stemming from Hurricane Laura.

[Southern Marble] filed suit against [Defendants] for
negligence in the handling of its insurance account and for the
damages and losses sustained as a result of Hurricane Laura which
would have been covered by the policy of insurance had it been
properly secured. The parties stipulated to the amount of damage
suffered by Southern Marble due the reduction by Cholley in business
interruption coverage was $34,242. The [D]efendants believe no
negligence was committed on their part whatsoever. It is their
contention the Kuehn either knew or should have known what the
business interruption limits were under the Lloyd’s policies that
Kuehn purchased. Liability was at issue.

On appeal, Defendants allege the following assignments of error:

A. The trial court erred as a matter of law in ruling that the Lloyd’s
policies issued in 2018 and 2019 were not renewals of the original
Lloyd’s policy issue[d] in 2017.

B. The trial court erred as a matter of law and fact in denying
Appellants’ exception of peremption.

C. The trial court committed a manifest error of fact and a reversible
error of law in holding Appellants comparatively liable for 80%
fault in the assessment of Southern Marble’s damages.

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D. The trial court erred as a matter of law, or otherwise abused its
discretion, in assessing Appellants with the expert fee of Mr.
Ehlers.

STANDARD OF REVIEW:

Questions of law, such as the proper interpretation of a statute, are reviewed

by the appellate court under the de novo standard of review. Land v. Vidrine, 10-

1342 (La. 3/15/11), 62 So.3d 36. “Legislation is a solemn expression of legislative

will, and therefore, interpretation of a law involves primarily the search for the

legislature’s intent.” Detillier v. Kenner Reg’l Med. Ctr., 03-3259, p. 3 (La.

7/6/04), 877 So.2d 100, 103. As further stated in Denham Springs Econ. Dev. Dist.

v. All Taxpayers, Prop. Owners, 04-1674, pp. 6-7 (La. 2/4/05), 894 So.2d 325,

330-331 (internal citations omitted):

The interpretation of a statute starts with the language of the statute
itself. When a law is clear and unambiguous and its application does
not lead to absurd consequences, the law shall be applied as written,
and no further interpretation may be made in search of the intent of
the legislature.

“Peremption is a period of time fixed by law for the existence of a right.

Unless timely exercised, the right is extinguished upon the expiration of the

peremptive period.” La.Civ.Code art. 3458. “[P]eremption may not be renounced,

interrupted or suspended.” La.Civ.Code art. 3461. The party who files the

exception of peremption bears the burden of proof, unless the matter is facially

barred. Rando v. Anco Insulations, Inc., 08-1163 (La. 5/22/09), 16 So.3d 1065. In

the event that peremption is evident from the face of the pleadings, the burden of

proof shifts to the plaintiff. Id. If evidence is introduced, the trial “court’s findings

of fact are reviewed under the manifest error-clearly wrong standard of review.” Id.

at 20.

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DISCUSSION:

Defendants allege in their first assignment of error that the trial court erred

as a matter of law in ruling that the Lloyd’s of London insurance policies issued in

2018 and 2019 were not renewals of the original Lloyd’s policy, signed on

November 7, 2017. Specifically, Defendants argue that “Mr. Kuehn renewed the

same coverages under identical policies, for the same premiums, issued by the

same Lloyd’s of London group of underwriters, in 2018 and again in 2019[,]” and

that “[b]oth renewal policies showed the same BI/EE limits in their respective

Declarations Pages, as did the identical application forms Mr. Kuehn signed when

he renewed the Lloyd’s of London coverages.”

In response, Southern Marble argues that “this lawsuit does not deal with

any actions of Mitch Cholley or The Firm in connection with any of the earlier

policies because none of the earlier policies were in effect when Hurricane Laura

struck.” Southern Marble argues that the 2017 and 2018 policies, “which did not

provide coverage, [are] obviously of no moment and completely irrelevant to this

suit.”

Louisiana Revised Statutes 9:5606, titled “Actions for professional insurance

agent liability,” states, in pertinent part (emphasis added):

A. No action for damages against any insurance agent, broker,
solicitor, or other similar licensee under this state, whether based upon
tort, or breach of contract, or otherwise, arising out of an engagement
to provide insurance services shall be brought unless filed in a court of
competent jurisdiction and proper venue within one year from the date
of the alleged act, omission, or neglect, or within one year from the
date that the alleged act, omission, or neglect is discovered or should
have been discovered. However, even as to actions filed within one
year from the date of such discovery, in all events such actions shall
be filed at the latest within three years from the date of the alleged
act, omission, or neglect.

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Thus, “La.R.S. 9:5606 provides two preemptive periods: one year from the

date of the alleged negligent act or omission; or, one year from the date the

negligence was discovered or should have been discovered, as long as that date is

within three years of the alleged negligent act or omission.” Halmekangas v.

ANPAC La. Ins. Co., 11-1293, p. 7 (La.App. 4 Cir. 6/8/12), 95 So.3d 1192, 1197,

writ denied, 12-1542 (La. 10/12/12), 98 So.3d 873.2 Therefore, from the clear and

unambiguous language of La.R.S. 9:5606, it was the intent of the Legislature to set

forth a precise peremptive period of three years to govern the filing of claims for

professional negligence of an insurance agent.

In this case, Southern Marble’s petition was filed on August 18, 2021.

Therefore, the date of negligence or discovery must have occurred within one year

prior to this date. If the negligence was only discovered within one year prior to

this date, the negligent act must have occurred within the last three years. In

Southern Marble’s petition, it identified the 2017-2018 policy period (signed on

November 7, 2017) as the date when the Defendants allegedly reduced the BI/EE

limits by procuring the first Lloyd’s of London policy with the lower limits without

Mr. Kuehn’s knowledge or consent, i.e. the “alleged act, omission, or neglect[.]”

Specifically, the petition states that the Defendants: “secured coverage for the

2017-2018 policy period which was NOT identical to the coverage which had been

initially purchased by Plaintiff. Although the property damage and contents

2
In Teague v. St. Paul Fire and Marine Ins. Co., 07-1384, p. 13 (La. 2/1/08), 974 So.2d

1266, 1275, the court defined the “date of discovery” as follows:

The “date of discovery” from which prescription or peremption begins to
run is the date on which a reasonable man in the position of the plaintiff has, or
should have, either actual or constructive knowledge of the damage, the delict,
and the relationship between them sufficient to indicate to a reasonable person he
is the victim of a tort and to state a cause of action against the defendant.

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(personal property) policy limits remained the same, Defendants reduced the

business interruption coverage limits substantially without the knowledge or

consent of Plaintiff.” Accordingly, under the three-year peremption period in

La.R.S. 9:5606, Southern Marble’s claims for professional negligence of an

insurance agent are perempted on the face of the petition. Thus, the burden shifts

to Southern Marble to show the action was not perempted.

Southern Marble argues that the policies signed by Mr. Kuehn in 2017 and

2018 are irrelevant to this case because the loss occurred during the 2019-2020

policy, and Southern Marble argues that the 2019-2020 policy was a new policy,

not a renewal. We disagree and find the 2019 policy is a renewal policy under

La.R.S. 22:1267. The Louisiana Legislature set forth the definition of a “renewal”

policy applicable to commercial liability insurance policies in La.R.S. 22:1267,

which states as follows:

B. For the purposes of this Section, the following terms shall mean:

(5) “Renewal” or “to renew” means the issuance of or the offer to
issue by the insurer a policy succeeding a policy previously issued and
delivered by the same insurer or an insurer within the same group of
insurers, or the issuance of a certificate or notice extending the term of
an existing policy for a specified period beyond its expiration date.

In this case, the record indicates that on November 8, 2016, Mr. Cholley

secured $43,700.00 in BI/EE coverage for Southern Marble with Anchor Specialty

Insurance. However, when the Anchor Specialty policy came up for renewal in

October 2017, Mr. Cholley secured a new commercial policy issued by Lloyd’s of

London that reduced Southern Marble’s combined BI/EE coverage from

$43,700.00 to $10,923.00. Mr. Kuehn, owner and agent acting on behalf of

Southern Marble, signed this new insurance application for the 2017-2018 policy

year on November 7, 2017. It is undisputed that Mr. Kuehn signed the same

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coverages under identical policies, for the same premiums, issued by Lloyd’s of

London, in 2018, and again in 2019. Accordingly, based on La.R.S. 22:1267, we

agree with Defendants that the trial court legally erred in finding that the 2019

policy was a new policy and not a renewal to the original Lloyd’s of London policy

signed in 2017.

Because Southern Marble did not file its petition against Defendants until

August 18, 2021, well beyond the three-year peremptive period as set forth in

La.R.S. 9:5606, its claims against them are perempted. Moreover, even if we were

to consider Southern Marble’s discovery of the negligence, the supreme court, in

McKernan v. ABC Ins. Co., 21-859 (La. 11/23/21), 328 So.3d 69, held that it is the

insured’s obligation to read the policy. In McKernan, the supreme court found that

the plaintiff had constructive knowledge of her claims against her insurance agent

at the time she received the initial insurance policy, which was in December 2008.

Id. The supreme court held, in pertinent part:

This court has held that it is the insured’s obligation to read the policy
when received, since the insured is deemed to know the policy
contents. Seruntine v. State Farm Fire & Cas. Co., 10-1108 (La.
9/3/10), 42 So.3d 968; Isidore Newman School v. J. Everett Eaves,
Inc., 09-2161, p. 12 (La. 7/6/10), 42 So.3d 352, 359. In this case,
there are no facts under which Ms. McKernan’s claims against Brad
Bourg and Bourg Insurance Agency, Inc. are not perempted. The
district court correctly noted that Ms. McKernan received a copy of
the initial insurance policy in December 2008. Additionally, Ms.
McKernan received copies of every yearly renewal policy covering
her property through 2016. A simple review of the initial policy in
2008, as well as the numerous following renewal policies, would have
revealed 250/100/250 flood coverage limits. Under these
circumstances, Ms. McKernan knew or should have known of the
flood policy limits in December 2008 when she received a copy of the
initial policy. Moreover, even if we were to consider the most recent
policy renewal date, which occurred in December 2015, plaintiff’s
claims would still be perempted because she did not file suit until May
2017–well beyond the one-year discovery date set forth in La.R.S.
9:5606. Accordingly, the writ is granted. The judgment of the court

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of appeal is reversed, and the judgment of the district court sustaining
the exception of peremption is reinstated.

McKernan, 328 So.3d at 69-70 (per curiam). Based on McKernan, Southern

Marble knew or should have known of its deficient BI/EE coverage no later than

February 2018, when the copy of the new Lloyd’s of London policy was mailed to

it.

It is also worth noting that we find the case, Theriot v. Dwight W. Andrus

Ins., Inc., 21-431 (La.App. 3 Cir. 12/15/21), 332 So.3d 224, writ denied, 22-97 (La.

3/15/22), 334 So.3d 395, distinguishable from the facts of this case. In Theriot, the

original insurance policy for plaintiff’s vessel was procured in February 2017.

When the existing policy was up for renewal in February 2018, plaintiff agreed to

renew the existing policy but discussed a plan with his agent to procure additional

coverage for the vessel. Plaintiff received a copy of the renewal policy on April

11, 2018. On November 27, 2018, the vessel sank, prior to the agent procuring the

larger insurance policy. On November 26, 2019, Plaintiff filed a petition against

his insurance agent for failure to procure the larger policy within a year of the

sinking, but more than a year from the receipt of the smaller renewal policy. The

insurance agent argued the claim was perempted under La.R.S. 9:5606. Although

the trial court agreed with the agent that plaintiff’s claim was perempted under

La.R.S. 9:5606, this court reversed upon finding that the “date of discovery” was

the day the ship sunk, November 27, 2018. However, in Theriot, unlike the instant

case, the three-year peremptive period did not come into play since the negligent

act occurred less than three years prior to the petition being filed. In fact, even the

original insurance that was procured was handled two years and nine months

11

before the petition was filed. Accordingly, we find the Theriot case has no bearing

on this case.

Because we have determined that the instant case is perempted pursuant to

La.R.S. 9:5606, we pretermit discussion of the remaining assignments of error.

“Further, when a trial court judgment is reversed on appeal, the party that loses on

appeal is generally obligated to pay all costs of the trial and the appeal, even

though that party won at the trial level.” Hebert v. Barry’s Air Conditioning, Inc.,

16-911, p. 9 (La.App. 3 Cir. 8/31/17), 226 So.3d 1222, 1228. In view of this

court’s reversal of the trial court’s judgment, all trial and appellate costs are

assessed against Southern Marble.

Despite this conclusion, however, we note that Defendants’ actions in

knowingly obtaining BI/EE coverage that was significantly insufficient to meet

Southern Marble’s needs or expectations, without specifically informing Southern

Marble or explaining to it the reduced coverage procured, are reprehensible and not

excused by the result of this litigation.

CONCLUSION:

Based on the foregoing, we find the trial court erred as a matter of law in

concluding that the 2018 and 2019 Lloyd’s of London policies were not renewals

of the original policy issued in 2017. As such, we find the trial court erred as a

matter of law in denying Defendants’ exception of peremption. Thus, the

judgment of the trial court is reversed, the exception of peremption is granted, and,

accordingly, Southern Marble’s claims are dismissed. All trial and appellate costs

are assessed against Southern Marble Specialties, Inc.

REVERSED.

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STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

22-602

SOUTHERN MARBLE SPECIALTIES, INC.

VERSUS

MITCHELL WAYNE COLLEY, INDIVIDUALLY, THE FIRM OF
LOUISIANA PROPERTY & CASUALTY, LLC AND ABC INSURANCE
COMPANY

**********

SAVOIE, J. concurs and assigns written reasons.

I respectfully disagree with the majority’s conclusion that the peremptive

period began to run on the date that Southern Marble signed or received the 2017-

2018 policy, after it found that the 2019-2020 policy was a “renewal” policy;

however, I concur in the conclusion that Southern Marble’s claims against

Defendants are perempted and should be dismissed.

Southern Marble’s claims arise out of the following duty owed by an

insurance agent:

an insurance agent owes a duty of “reasonable diligence” to his
customer. This duty of “reasonable diligence” is fulfilled when the
agent procures the insurance requested. Jurisprudence has suggested
that an insured has a valid claim against the agent when the insured
demonstrates that: “1) the insurance agent agreed to procure the
insurance; 2) the agent failed to use ‘reasonable diligence’ in attempting
to procure the insurance and failed to notify the client promptly that the
agent did not obtain insurance and 3) the agent acted in such a way that
the client could assume he was insured.”

Isidore Newman School v. J. Everett Eaves, Inc., 09-2161, p. 7 (La. 7/6/10), 42 So.3d

352, 356-57.

Specifically, Southern Marble’s claims involve Defendants’ alleged

negligence in procuring deficient BI/EE coverage in connection with the 2019-2020

policy that was in effect when Southern Marble made an insurance claim for

damages sustained during Hurricane Laura.

In accordance with La.R.S. 9:5606, the peremptive period applicable to

Southern Marble’s claims begins to run “from the date of the alleged act, omission,

or neglect” or “from the date that the alleged act, omission, or neglect is discovered

or should have been discovered. Whether or not the 2019-2020 policy meets the

statutory definition of a “renewal” under La.R.S. 22:1267, is not necessarily

determinative of when the peremptive period began to run; rather, the focus should

be on when the alleged negligent action occurred or when it was, or should have

been, discovered.

Here, it was undisputed that Southern Marble’s insurance policies did not

automatically renew every year. Rather, both Southern Marble and Defendants had

to take action annually to obtain a policy. Southern Marble was required to submit

requested information to the Defendants and complete an application, and

Defendants facilitated submission of that information to the insurer. Southern

Marble’s claims arise out of deficient BI/EE coverage for damages sustained during

Hurricane Laura and, therefore, are based only on Defendants’ alleged negligence in

procuring the 2019-2020 policy. While the 2017-2018 policy provided the same

insurance coverage limits as the 2019-2020 policy, Defendants’ claims are not based

on Defendants’ actions in procuring the 2017-2018 policy.

However, it is undisputed that Southern Marble received via email a copy of

the 2019-2020 policy at issue on or around December 19, 2019. An insured has an

obligation to read the policy when it is received, and an insured is deemed to have

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knowledge of any deficient coverage upon the receipt of the policy. See McKernan

v. ABC Insurance Co., 21-859 (La. 11/23/21), 328 So.3d 69, and Seruntine v. State

Farm Fire & Casualty Co., 10-1108 (La. 9/3/10), 42 So.3d 968. An insured does

not need to suffer a loss before the peremptive period for actions against insurers for

negligence in procuring coverage begins to run. Theriot v. Dwight W. Andrus Ins.,

Inc., 21-431 (La.App. 3 Cir. 12/15/21), 332 So.3d 224. While the Theriot court

ultimately concluded that the peremptive period did not begin to run on the date the

insured received the policy, but rather, on the date of loss, the underlying facts are

distinguishable. Theriot involved the agent’s failure to take additional agreed-upon

steps to secure additional coverage after the interim step of renewing the existing

policy; however, the instant case does not involve a plan to take various steps over

time to obtain additional coverage.

In my opinion, the peremptive period in this case began to run no later than

December 19, 2019, as that is the date that Southern Marble should have known of

any deficient coverage procured by Defendants that forms the basis of its claims.

However, the action was not filed until August 18, 2021, which is more than one

year from the date that Southern Marble received the policy. Therefore, Southern

Marble’s claims are perempted in accordance with La.R.S. 9:5606 and should be

dismissed.

Despite this conclusion, however, it is also my opinion that Defendants’

actions in knowingly obtaining BI/EE coverage that was significantly insufficient to

meet Southern Marble’s needs or expectations, without specifically informing

Southern Marble or explaining to it the reduced coverage procured, are reprehensible

and not excused by the result of this litigation.

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