Opinion
Civil Action Number 04-2630, Section "L" (4).
June 20, 2005
ORDER AND REASONS
Pending before the Court are the cross-motions for summary judgment file by the Plaintiff and Defendants. The motions were heard with oral argument on April 27, 2005 and subsequently taken under submission by the Court. For the following reasons, both motions are DENIED.
I. BACKGROUND
On April 16, 2002, Plaintiff, a Louisiana resident, obtained a final judgment from the 22nd Judicial District Court for the Parish of St. Tammany in a motor vehicle collision case against St. Tammany Parish for $784,697.42, plus legal interest in the amount of $718,989 through April 27, 2005 and accruing at a daily rate thereafter of $128.98, and for $6,172.09 in costs. However, Plaintiff has been unable to collect this judgment from St. Tammany Parish because Article 12, Section 10 of the Louisiana Constitution states that no public property or public funds shall be subject to seizure. Plaintiff believes that a policy of liability insurance was issued to St. Tammany Parish by GE Global Insurance Holding Corp. and/or its subsidiary, Coregis Insurance Co. and/or its subsidiary, International Insurance Co., all foreign corporations. According to the Plaintiff, the policy covers St. Tammany Parish for its liability to pay the judgment, including legal interests and court costs, less a self-insured retention of $100,000 for which the Defendants should be given a credit against the full amount of the judgment. The Plaintiff claims that a writ of fieri facias has been issued in this case to seize the insurance policy and the Plaintiff believes that the Defendants will deny coverage under the policy. Therefore, the Plaintiff seeks declaration that the liability insurance policy covers St. Tammany Parish for its liability to pay the Plaintiff's judgment, including legal interest and court costs. Plaintiff further prays for judgment against the Defendants for the amount owed under the judgment plus the costs of these proceedings.
Plaintiff originally filed this action on August 23, 2004 in the 22nd Judicial District Court for the Parish of St. Tammany. The Defendants filed a notice of removal on September 22, 2004, asserting diversity jurisdiction. In their answer, the Defendants deny that the Plaintiff is a beneficiary of the insurance policy by virtue of the judgment against St. Tammany Parish. According to the Defendants, they did not receive notice of the Plaintiff's claim until six days prior to the trial of the claim in state court. Therefore, the Defendants believe that they were prejudiced by the lack of notice, and that the lack of notice violated the terms and conditions of any policy issued to St. Tammany Parish. Accordingly, the Defendants claim that no coverage is provided for the Plaintiff's claims.
The Defendants also contend that St. Tammany Parish is an indispensable party to this litigation. The Plaintiff filed a motion for leave to amend her original complaint to add St. Tammany Parish as a defendant and for sanctions against the Defendants for opposing the Plaintiff's motion without setting forth reasons for their opposition. On January 14, 2005, Magistrate Judge Karen Wells Roby denied the Plaintiff's motion for leave to amend and for sanctions, finding that allowing the Plaintiff to amend her complaint would unduly prejudice the Defendants.
II. PLAINTIFF'S AND DEFENDANTS' SUMMARY JUDGMENT MOTIONS
Defendants GE Global Insurance Holding Corporation, Coregis Insurance Company, and International Insurance Company move for summary judgment pursuant to Federal Rule of Civil Procedure 56. The Defendants set forth several arguments in support of their motion. First, the Defendants claim that the doctrine of res judicata bars this suit because all of the Plaintiff's claims arising out of the automobile accident have been adjudicated. Second, the Defendants argue that the Plaintiff did not file the instant suit within the time limits imposed by the insurance policy at issue in this action. The Defendants also claim that the Plaintiff's action is prescribed under Louisiana law. Additionally, the Defendants argue that St. Tammany Parish is an indispensable party to this action. The Plaintiff responds by filing her own motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. The Plaintiff believes that summary judgment in her favor on the whole case is warranted. Alternatively, the Plaintiff requests summary judgement in her favor on the issue of the Defendants' liability. In the final alternative, the Plaintiff moves to strike certain defenses raised by the Defendants.
According to the Plaintiff, subsection A of the Direct Action Statute, La.Rev.Stat. § 22:655(A), gives her a right of action against the Defendant, because the statute allows for a suit against the insurer to be brought by the injured person to enforce the policy after a judgment is rendered and becomes final, therefore, the doctrine of res judicata does not bar her petition. Noting the difference between a cause of action and a right of action, the Plaintiff argues that Louisiana's Direct Action Statute provided the Plaintiff with a right of direct action against the insurer at the moment the judgment against St. Tammany Parish became final. The Plaintiff concedes that she would not have a right of action against the insurer had she unsuccessfully litigated the merits of her claim against St. Tammany Parish, the insured. Likewise, the Plaintiff acknowledges that her suit would be barred under res judicata if she would have actually recovered damages from St. Tammany Parish and was attempting to recover again for the same occurrence from the insurer. However, the Plaintiff points out that she is not trying to have the merits of her claim re-adjudicated, nor is she seeking a successive damage award. Instead, the Plaintiff argues that her claims are not barred by res judicata because she has obtained a judgment against an insured party but has not had that judgment satisfied. For the same reasons, the Plaintiff also argues that her claims are not barred by the doctrines of waiver, collateral estoppel, issue preclusion, or claim preclusion.
The Plaintiff further contends that her claims are not barred for any other reasons. Specifically, the Plaintiff argues that her claims against the Defendants are not barred by prescription or laches because the present action was brought within the ten years prescriptive period to enforce a money judgment provided by La.C.C. art. 3501. The Plaintiff also argues that St. Tammany Parish is not an indispensable party because the Plaintiff's suit is being brought pursuant to the Direct Action Statute, which allows for suits solely against the insurer. Further, the Plaintiff claims that it is well established that an insurer cannot deny coverage on the ground that the insured was delinquent in notifying the insurer of a third party's lawsuit against the insured. Therefore, according to the Plaintiff, she is not barred from recovering against St. Tammany's insurer even though St. Tammany may not have timely notified the insurer of the Plaintiff's suit against St. Tammany under the terms of the insurance policy.
Lastly, the Plaintiff argues that the Defendants are obligated to pay the money judgment in spite of St. Tammany Parish's immunity from seizure of its property. The Plaintiff points to Louisiana case law stating that an insurer may not raise a defense that is personal to the insured, such as governmental immunity. Furthermore, the Plaintiff points out that St. Tammany's immunity is from seizure of it's property and not from judgments rendered against it.
III. LAW AND ANALYSIS
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. When considering a motion for summary judgment, the Court must "review the facts drawing all inferences most favorable to the party opposing the motion." General Universal Systems, Inc. v. Lee, 379 F,3d 131, 137 (5th Cir. 2004). If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995).
A. Res Judicata
The Louisiana res judicata statute, La.R.S. 13:4231 provides in pertinent part:
Except as otherwise provided by law, a valid and final judgment is conclusive between the same parties, except on appeal or other direct review, to the following extent:
(1) If the judgment is in favor of the plaintiff, all causes of action existing at the time of final judgment arising out of the transaction or occurrence that is the subject matter of the litigation are extinguished and merged in the judgment.
The Defendants argue that the Plaintiff's claims in the instant case arise out of the same transaction and occurrence as the Plaintiff's claims against St. Tammany Parish in the prior suit. The Defendants reason that, because the Plaintiff sued St. Tammany Parish regarding a motor vehicle collision and the instant suit is to recover the money awarded to the Plaintiff in the collision suit, the Plaintiff is barred by res judicata. The Defendants claim that, because the Plaintiff did not assert her claim against them in the previous lawsuit, she cannot do so now. In support of their argument, the Defendants cite Westerman v. State Farm Mut. Auto. Ins. Co., 834 So.2d 445 (La.App. 1st Cir. 2002), and Hall v. Sinn, Inc., 102 Fed.Appx. 846 (5th Cir. 2004). However, both of these cases can be distinguished from the instant case.
In Westerman, a plaintiff brought a tort claim against an underinsured motorist and the motorist's insurer. At trial, the state court found for the plaintiff and assessed damages in the amount of $20,000. Thereafter, the plaintiff entered into a settlement agreement with the defendants, whereby the defendants paid to the plaintiff $10,000 and the plaintiff dismissed her claim with prejudice. The plaintiff then filed an underinsured motorist's claim against her own insurer. The state court held that the plaintiff's underinsured motorist's claim arose from the same occurrence, namely a car accident, as her prior tort claim against the uninsured motorist and the motorist's insurer. Thus, the Westerman Court held that the insured's underinsured motorist's claim against her own insurer was barred. Unlike the Westerman plaintiff, however, the Plaintiff in the instant case is not attempting to re-litigate liability for the car accident or to recover damages for injuries for which she has already been compensated. Instead, the instant Plaintiff has been awarded damages which she has not yet collected. Therefore, the Plaintiff has filed this suit to satisfy a judgment, rather than to obtain successive damages for the same occurrence.
In Hall, the plaintiff was successful in a state court suit against her physician and pharmacist under the Louisiana Medical Malpractice Act for injuries she sustained from a drug with serious potential side effects. Thereafter, the Plaintiff filed a product liability suit in federal court against the drug manufacturer. The Fifth Circuit held that the plaintiff's product liability claim was barred by issue preclusion, pursuant to Louisiana Code of Civil Procedure art. 425, because the "purpose of issue preclusion is to prevent re-litigation of issues already dealt with by the courts." Id. at 848. The Court reasoned that the state court had already apportioned one hundred percent (100%) of the fault amongst the parties involved in the state court suit; therefore, the federal suit would require reapportionment of the fault and re-litigation of issues already dealt with by the state court. The same problems are not present in the instant case. The Plaintiff's suit against the Defendants in this case would not involve a reapportionment of the fault for the automobile accident. Instead, this case merely requires the Court to determine whether the Defendants' insurance policy covers St. Tammany Parish for the sort of liability for which the Parish owes the Plaintiff and, if so, to enforce payment of the judgment by the Defendants.
Louisiana Code of Civil Procedure art. 425 provides in pertinent part that "a party shall assert all causes of action arising out of the transaction or occurrence that is the subject matter of the litigation."
In short, the Plaintiff's claim against the Defendants is not barred because, in this action, the Plaintiff is exercising her right of action under the Louisiana Direct Action Statute. The Direct Action Statute allows an injured person "at their option" to exercise a right of direct action "against the insurer alone, or against both the insured and insurer jointly and in solido." La.R.S. 22:655B. Under the Direct Action Statute, the Plaintiff could have sued the Defendants in the suit against St. Tammany Parish, but the statute does not require her to do so. Now that the Plaintiff has obtained a judgment against the insured, she may bring an action against the insurer, who is solidarily obligated with the insured, for satisfaction of that judgment.
B. St. Tammany Parish as an Indispensable Party
Section (B) of the Direct Actions Statute provides that an action can be brought against the insurer alone only when the insured has been adjudged a bankrupt, the insured is insolvent, service cannot be made on the insured, the action is between married persons or children and their parents, the insurer is an uninsured motorist carrier, or the insured is deceased. The Defendants argue that St. Tammany Parish is not insolvent; rather, Louisiana law renders the Parish's property immune from seizure to satisfy a judgment. However, whether or not St. Tammany Parish is insolvent is a question of fact that cannot be determined by the evidence currently before the Court.
Furthermore, Section (A) of the Direct Action Statute, provides that "any judgment which may be rendered against the insured for which the insurer is liable which shall have become executory, shall be deemed prima facie evidence of the insolvency of the insured, and an action may thereafter be maintained within the terms and limits of the policy by the injured person." The Plaintiff's judgment against St. Tammany Parish was obtained on April 16, 2002. The First Circuit Court of Appeal affirmed the judgment on July 2, 2003. A writ of certiorari to the Louisiana Supreme Court was not sought by either party within thirty (30) days of the mailing of the notice of judgment of the Court of Appeal. Therefore, the judgment became executory on August 4, 2003, the first legal day following the expiration of the filing period. Consequently, because the Plaintiff has an enforceable judgment against the insured, the statute provides that the Plaintiff has prima facie evidence that St. Tammany Parish can be considered insolvent. It is now the Defendants' burden to produce evidence disproving the insolvency of St. Tammany Parish.
This interpretation of Section (A) is consistent with Section (B)'s allowance of actions solely against the insurer in cases where the a third-party cannot collect from the insured. In the instant case, the Plaintiff cannot have St. Tammany Parish's property seized to satisfy the money judgment because Article 12, Section 10 of the Louisiana Constitution renders the Parish immune from such seizures. Therefore, filing suit against the Parish's insurer to collect on the judgment is the Plaintiff's only recourse. Even if it later becomes evident that St. Tammany Parish is not insolvent under the terms of the Direct Action Statute, the statute allows the Plaintiff to maintain a right of direct action solely against the Defendants at this time for recovery within the limits of the policy. Therefore, at this stage, St. Tammany Parish is not an indispensable party to the litigation and the Plaintiff's suit against the insurer alone can stand.
C. Timeliness of the Plaintiff's Action
The Direct Action statute allows the Plaintiff to file suit "within the terms and limits of the policy." The Defendants argue that the Plaintiff's case is barred because suit was not filed within the 27 month-requirement set forth by the insurance policy. The policy requires that a suit to recover a claim under the policy be filed within 27 months of: (1) "the date the loss occurred, if an insured knew of the loss; or" (2) "the date an insured notified [the insurer] of the loss or claim." (Defendants' Exhibit I, Policy of Insurance, p. 29). The Defendants claim that they were not notified of the claim against St. Tammany Parish until six days before the August 27, 2001 state court trial and that the loss occurred on April 16, 2002, when the Plaintiff obtained a judgment against St. Tammany Parish. Therefore, according to the Defendant, because the Plaintiff did not file this suit to recover until August 23, 2004, the Plaintiff's action was not filed timely.
It is first important to note that, though the judgment against the Parish was obtained on April 16, 2002, that judgment did not become final until August 4, 2003, the date on which the parties' right to appeal to the Louisiana Supreme Court expired. August 4, 2004, then, is the proper date of loss to the insured. Therefore, the Plaintiff's suit against the Defendants, which was filed on August 23, 2004, was brought within 27 months of the loss to the insured. Secondly, however, even if this Court had determined that April 16, 2002 was the date upon which the loss occurred, the Plaintiff's suit still would not be barred by the policy's 27-month requirement. The general rule in Louisiana is that "an insurer cannot raise the failure of its insured to give notice of the accident or suit as a valid defense to claims of an injured third party" unless "the insurer can demonstrate prejudice from the insured's failure to comply with the policy's notice provisions." Haynes v. New Orleans Archdiocesan Cemeteries, 805 So.2d 320, 323 (La.App. 4th Cir. 2001). In Haynes, there was prejudice to the insurer because the plaintiff had obtained a default judgment against the insured, meaning that the insurer never had an opportunity to appear and defend the suit. Id. at 324. However, in this case, the Defendants were not prejudiced by the late notice because they had an opportunity to appear in the initial suit but chose not to do so, and the insured, St. Tammany Parish, was represented by counsel in the initial suit. See Pomares v. Kansas City Southern Ry. Co., 474 So.2d 976 (La.App. 5 Cir. 1985) (finding no prejudice to the insurer when the insured was represented by counsel at trial).
Another issue is whether the Plaintiff's claim is prescribed. The Plaintiff claims that the ten-year prescriptive period set forth in La.C.C. 3501 for collecting money judgments applies in this case. This Court agrees. Though the insurer is being sued in this action pursuant to the Direct Action Statute which has a one-year prescriptive period, this underlying purpose of the Plaintiff's suit is to enforce a money judgment. Therefore, the Plaintiff had until August 4, 2013 to file this suit to recover the money judgment rendered against St. Tammany Parish. Consequently, the Plaintiff's action for declaration that the Defendants' liability insurance policy covers St. Tammany Parish for its liability to pay the Plaintiff's judgment also has not prescribed as well. See Fishbein v. State ex rel. Louisiana State University Health Sciences, ___ So.2d ___, 2005 WL 832400, *4 (La. 2005) (explaining that the right to seek declaratory judgment does not prescribe, but the nature of the basic underlying action determines the appropriate prescriptive period).
D. Plaintiff's Motion For Summary Judgment
Though the Court has determined that the Defendants are not entitled to summary judgment in their favor, the Court will decline rendering summary judgment is favor of the Plaintiff. In her motion for summary judgment, the Plaintiff does not demonstrate an absence of a genuine issue of material fact in this case. The Defendants deny several of the facts which the Plaintiff claims are uncontested Those contested facts deal with interpretation of the insurance policy and go to the heart of the issue before the Court — whether the insurance policy issued by the Defendant covers St. Tammany Parish's liability to the Plaintiff. Normally, contract interpretation would be a legal issue, rather than a factual issue. La.C.C. arts. 2045— 2047. However, the Plaintiff's motion for summary judgment is unusual in that it sets forth reasons why summary judgment should not be granted in favor of the Defendants, rather than presenting evidence that this case is ripe for summary judgment in favor of the Plaintiff. Therefore, summary judgement in favor of the Plaintiff is not proper at this time.
IV. CONCLUSION
For the aforementioned reasons, both the Defendants' motion for summary judgment and the Plaintiff's motion for summary judgment are DENIED.