Articles Posted in Accidents

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U.S. Court of Appeals affirms that maritime insurance policy covering collision on the Mississippi River included defense costs in coverage limits. In a case of insurance contract interpretation, the U.S. Court of Appeals for the Fifth Circuit determined that defense costs were included in the policy limits set by a maritime insurance policy. The court admitted that this interpretation erodes policy limits.

Gabarick v. Laurin Maritime (America) Inc., Nos. 09-30549, 09-30809 (5th Cir. 8/10/11) arose out of a collision on the Mississippi River. Laurin Maritime and related parties owned the ocean-going tanker M/V Tintomara. In the early hours of July 23, 2008, the ship collided with a barge carrying heavy fuel oil. The impact split the barge in half, and heavy oil spilled into the river. American Commercial Lines, LLC (barge owner) owned the tug, barge, and cargo, but D.R.D. Towing Co., LLC (towing company) provided the crew that ran the tug pushing the barge. It’s the towing company’s insurance policy that raised issues of policy interpretation.

A protection and indemnity (or P&I) policy issued by Indemnity Insurance Company of North America (insurer) covered the towing company. The policy is a standard maritime policy, except for modifications the parties made to the SP-23 Form. The policy provided a single occurrence limit of liability of $1 million, with a $15,000 deductible. The towing company and the barge owner demanded that the insurer indemnify and defend them. Not knowing which of the numerous parties rightfully should receive the insurance proceeds, the insurer deposited $985,000 into the registry of the U.S. District Court for the Eastern District of Louisiana for the court to make the decision. That court held that the insurer’s deposit for the interpleader action was proper and that the funds would reimburse defense costs. The barge owner and Laurin Maritime appealed.

The appellate court explained that Louisiana law forms the basis for the court’s independent review of the District Court’s interpretation of the insurance policy. Even before it entered into this analysis, the court cautioned that marine insurance commentators agree that defense costs are typically included within such insurance policy limits. The P&I insurer usually has no duty to defend: indemnification is the basis for coverage. Louisiana law agrees. Legal expenses incurred in defending a liability covered by an insurance policy are treated as part of the overall claim. Payment of legal expenses falls within the policy limits. Because the barge owner is a sophisticated commercial entity, it bore the burden that this policy should be interpreted differently.

The collision triggered coverage under the policy’s collision and towers liability and protection and indemnity coverage. Although the policy was mostly standard, a “manuscript provision” (modification) added a collision and towers liability clause. The standard language for the relevant coverage stated, “Liability hereunder in respect to any one accident or occurrence is limited to the amount hereby insured.” The court found no ambiguity.

The barge owner argued that the policy was ambiguous. It pointed to the modification language that the insurer “will also pay the costs which the Insured shall thereby incur or be compelled to pay.” The barge owner argued that Exxon Corporation v. St. Paul Fire & Marine Insurance Co., 129 F.3d 781 (5th Cir. 1997) had interpreted the clause to exclude defense costs from the policy cap. This argument did not work for three reasons. The cited case involved personal injury, not collision, placing the “also pay” language in the P&I policy, unlike the towing company’s policy. Second, the claims mentioned by the barge owner are excluded from the collision coverage. “[A]ny recovery must come under the standard P&I section of the policy,” the court explained. Finally, any ambiguity from the clause, were it applicable, would not extend to the relevant coverage sections of the standard policy language because the modification was a separate contract entered into by sophisticated parties.

The court summarized that “the policy is clear that defense costs were intended to be included within the policy limits. This P&I policy is unambiguously written against the backdrop of traditional principles of maritime law that defense costs erode P&I limits of liability.”

The barge owner also appealed the District Court’s denial of insurance proceeds. The appellate court explained, “The district court did not permanently deny funds to the barge owner but rather stated, ‘payment to [the barge owner] at this time would not be equitable.'” (Alterations in original.) Therefore, the District Court’s decision was not a final judgment and could not be appealed.

Coverage limits and defense from an insurer are crucial issues in evaluating a claim when you have been harmed. Insurance policies differ between consumer and business and by industry. This case demonstrates the specificity of insurance coverage. A lawyer independent of your insurance company can help you understand your policy, its coverage limits, and the extent of an insurer’s duty to defend.

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Insurance companies do not always make recovery of benefits easy when a worker is injured on the job. The insurance recovery process can be overwhelming, and may be complicated by the often necessary instigation of litigation. Many different provisions governing recovery are involved in insurance contracts. Insurance negotiations can be complicated by differing interpretations of these policy provisions, often standing as the core principles upon which the sides dispute in a case. The interpretation of the language of the contract by the court plays a pivotal role in deciding who is liable for the costs associated with on the job injury. In fact, benefits can be delayed in disputes over the meaning of a single term contained in an insurance contract.

In Bayou Steel Co. v. National Union Fire Ins. Co., two insurance companies, New York Marine and General Insurance Company (NYMAGIC) and National Union Fire Insurance Company of Pittsburgh, Pennsylvania (NUFIC-PA), disagreed over which company was liable for an on the job injury. Both companies provided insurance coverage to the Bayou Steel Corporation when Ryan Campbell, an employee of Bayou Steel’s stevedoring contractor, was injured unloading cargo. A dispute arose as to whether Campbell’s employer was a contractor or a subcontractor of Bayou Steel under NYMAGIC’s “policy that excludes coverage of Bayou’s liability for bodily injury incurred by ‘[e]mployees of … [Bayou’s] sub-contractors’ but does not exclude coverage of such injuries incurred by employees of Bayou’s contractors.” If the court found that Campbell was a subcontractor, NUFIC-PA would be held liable for his injuries, but if they found he was a contractor, NYMAGIC would be liable. The lower court held that Campbell’s employer was a subcontractor of Bayou Steel, and NYMAGIC was not liable for his injury under their insurance agreement. An appeal by NUFIC-PA followed.

On appeal, the U.S. District Court for the Eastern District of Louisiana in New Orleans reversed the lower court’s decision. Based on principles of contract interpretation, the court held that Campbell’s employer was a contractor and not a subcontractor, thus NYMAGIC was liable for the payment of benefits to the injured. When a term in a contract is not specifically defined it is to be given its “generally prevailing meaning.” A terms generally prevailing meaning is determined by the court in examining a myriad of different sources including statues and prior court opinions, as well as various dictionaries. The lower court determined that a subcontractor was “simply some person hired to do part of another person’s work.” The appellate court held that Campbell’s employer could not be defined as a subcontractor because it was the party paying for the work and not the party actually performing the work. The decision of the lower court was reversed, and liability was ultimately determined, based entirely on this judicial interpretation of a single word.

Knowledge of the interpretation of insurance contract provisions can be pivotally important when negotiating an insurance settlement or in litigation for recovery of damages. If you or a loved one has a claim that could involve negotiating with an insurance company, then you need an experienced law firm to help you navigate those negotiations and to represent you in court should it be necessary. The Berniard Law Firm has experience negotiating with insurance providers.

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In a prior post, we examined the case of Berk-Cohen Associates, L.L.C. v. Landmark American Insurance Company, which concerned a dispute over an insurer’s coverage of lost revenue suffered by the Forest Isle Apartments complex in New Orleans in the aftermath of Hurricane Katrina. The district court found that the lost revenue experienced by the apartment’s owner, Berk-Cohen, was covered under the policy issued by Landmark. Based on this finding, it assessed Landmark penalties and attorney’s fees for its misinterpretation of its policy and refusal to pay Berk-Cohen for the lost revenue that it deemed covered under the policy. Landmark appealed the assessment (along with the district court’s finding on the coverage issue); although the Court of Appeals for the Fifth Circuit affirmed the district court’s holding as to insurance coverage, it reversed on the issue of the penalty.

Under Louisiana law, an insurance company generally has 30 days after receiving a demand letter and written proof of loss to pay a claim. A court can assess a penalty against an insurer that fails to pay within 30 days “when such failure is found to be arbitrary, capricious, or without probable cause.” La. Rev. Stat. Ann. § 22:1892(B)(1). The penalty is calculated as 50 percent of difference between the amount actually paid and the amount due. Attorney’s fees and costs can also be part of the assessment. No penalty is available “when there is a reasonable and legitimate question as to the extent and causation of a claim.” In the case of Louisiana Bag Co. v. Audubon Indemnity Co., the Louisiana Supreme Court assessed penalties against an insurer that failed to pay the uncontested portion of a claim and refused coverage for a loss that was clearly included in the policy. The court found that “no reasonable uncertainty existed as to the insurer’s obligation to pay,” and so its position was “arbitrary and without probable cause.”

The Fifth Circuit concluded, however, that the Forest Isle Apartments case was unlike the situation in Louisiana Bag. “The scope of the flood exclusion,” reasoned the court, “with its reference to all damage ’caused directly or indirectly’ by flooding, is susceptible to different interpretations.” Landmark, therefore, was “neither arbitrary nor capricious” in refusing to pay Berk-Cohen for lost revenue based on the favorable business conditions brought on by hurricane flooding. The court also found it important that Landmark had already paid out more than $20 million on undisputed portions of Berk-Cohen’s claims. In light of this, Landmark’s dispute over the lost revenue claim could reasonably be considered a “good-faith error” in interpreting the policy. In addition, the court noted that under Louisiana jurisprudence, an unfavorable judgment does not necessarily call for the statutory penalty. Thus, the court reversed the district court’s assessment of penalties against Landmark.

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It is widely accepted in Louisiana that insurance companies may limit coverage in any manner they desire, so long as the limitations do not conflict with the law or with public policy. Coverage limitations must be written into the policy and the burden to prove that a claim is excluded generally falls on the insurer. One common limitation for auto insurance policies is a driver exclusion. Louisiana law specifically authorizes insurance carriers and their customers to agree to exclude a resident of an insured’s household from coverage under a policy. LSA-R.S. 32:900(L). This arrangement allows the insured to pay a lower premium since excluding one or more drivers in the household from the policy would reduce the insurance company’s potential liability. A dispute over the effectiveness of an excluded driver provision was at the center of the recent case of Young v. McGraw.

In December of 2007, Vernon Washington took out an insurance policy for his two cars with the USAgencies Casualty Insurance Company. During the application process, Washington signed an excluded driver endorsement. The provision expressly excluded as insured drivers Aretha McGraw and her two children, Christopher McGraw and Tiffany McGraw. During the policy’s period of coverage, Aretha McGraw was involved in a car accident while driving one of Washington’s cars. The owner of the other vehicle, Jacqueline Young, filed a suit which named McGraw, Washington, and USAgencies as defendants. USAgencies filed a motion for summary judgment, arguing that McGraw was an excluded driver under its policy and therefore was not covered. The trial court denied the motion and, after a trial, the court concluded that the evidence presented failed to establish that Washington and McGraw lived in the same household when the policy was issued. Therefore, McGraw could not be considered an excluded driver under the policy because the requirements of LSA-R.S. 32:900(L) were not met. The trial court awarded Young personal injury and property damages totaling $5,800. USAgencies appealed.

The Second Circuit Court of Appeal reviewed the evidence presented at the trial concerning whether McGraw was actually a member of Washington’s household at the time he took out the auto policy. McGraw testified that she and her children had lived with Washington continuously since 1998 and at the address of 1996 Joe G. Drive in Monroe since 2003. She admitted to giving the address of her parents’ house to the police officer at the accident scene, but said she “didn’t think it was a big deal” since she visits there every day and receives her mail there. Washington testified that he and McGraw had lived together at 1996 Joe G. Drive for seven years. He also explained that at the time he bought the auto policy, he informed USAgencies that McGraw was a member of his household but wanted to exclude her from coverage due to “financial constraints.” The court noted: “Our review of the record convinces us that the lower court’s finding that McGraw and Washington were not residents of the same household at the time the automobile liability policy was issued is clearly wrong.” “Consequently,” the court reasoned, “the trial court was manifestly erroneous in concluding that the policy endorsement excluding Aretha McGraw … under the policy was inapplicable and that … [she] was a covered operator of the vehicle at the time of the automobile accident.” The trial court’s judgment was, accordingly, reversed.

This case demonstrates the requirement that insurance companies carefully follow all statutory requirements, if they exist, when writing coverage limitations into policies. Post-contract reviews of the insurer’s processes may, like in this case, require a fact-intensive analysis and a clear understanding of the law’s requirements. Thus, a skilled attorney is essential for any party facing a dispute over a coverage limitation.

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As we have discussed previously on our blogs, Louisiana courts apply “ordinary contract principles” when interpreting insurance policies. “Words and phrases used in an insurance policy are to be construed using their plain, ordinary and generally prevailing meaning.” Cadwallader v. Allstate Ins. Co. The U.S. Court of Appeals for the Fifth Circuit, applying Louisiana law, recently utilized this approach when reviewing an appeal in a case involving a tragic medical injury.

Dr. Robert Lee Berry, an anesthesiologist, was employed by Louisiana Anesthesia Associates (“LAA”), a practice that provided anesthesia services to hospitals throughout the state. In March, 2001, Berry’s employment was terminated by Dr. William Preau, a shareholder of LAA, when it was discovered that Berry had been abusing narcotics while on duty. Yet, less than four months later, Preau wrote an unqualified letter of recommendation on Berry’s behalf when Berry applied for a job at the Kadlec Medical Center in Richland, Washington. Preau did not disclose Berry’s known drug use at work or his employment termination from LAA. On November 12, 2002, Berry improperly anesthetized a patient, Kimberly Jones, at Kadlec while under the influence of drugs. As a result of Berry’s mistake, Jones suffered an anoxic brain injury and emerged from the surgery in a permanent vegetative state. Jones’s family sued Kadlec Medical Center and Berry in Washington, ultimately arriving at a settlment with Kadlec for $7.5 million. Kadlec then brought suit against LAA and Preau in the district court for the Eastern District of Louisiana. At that trial, the jury found that Preau had committed “intentional and negligent misrepresentation” by failing to disclose Berry’s drug abuse and employment termination in his recommendation letter. The jury awarded Kadlec damages of over $8 million. This amount reflected Kadlec’s settlement with the Jones family plus approximately $750,000 in attorney’s fees Kadlec incurred defending the suit.

In 2001 when Preau wrote the recommendation letter on Berry’s behalf, LAA was insured under a commercial general liability policy issued by the St. Paul Fire & Marine Insurance Co. The policy covered covered LAA’s shareholders, including Preau. When St. Paul declined coverage of the judgment against Preau in the Kadlec suit, Preau filed an action against St. Paul. Following cross-motions for summary judgment, and the district court entered judgment for Preau. The main issue on appeal was whether the damages that Preau was obligated to pay Kadlec were covered under the policy’s “bodily injury” provision, which defined the term as “any physical harm, including sickness or disease, to the physical health of other persons.” The Fifth Circuit held that characterizing the judgment against Preau as requiring him to pay Kadlec damages for “bodily injury” was inaccurate. Instead, the judgment required Preau to pay economic damages to Kadlec for the losses it suffered due to Preau’s misrepresentation. “The economic damages Kadlec sought for Preau’s tortious misrepresentation are distinct from the damages Jones or any other party might seek for her bodily injuries.” In the court’s view, even though the amount of the damages that Kadlec sought from Preau was directly related to the amount it had paid to defend and settle the Jones family’s claim, the damages were still of the economic variety, and therefore not of the type covered by the St. Paul policy. The court further explained the distinction by noting that Preau’s liability to Kadlec arose from his breach of an independent duty he owed to Kadlec–Preau did not become legally responsible to Kadlec Suit for Jones’s bodily injuries, but rather the losses Kadlec faced due to Preau’s breach. Accordingly, the court reversed the district court’s judgment and remanded with instructions to enter judgment in favor of St. Paul.

Although the courts claim reliance on “ordinary” contract principles when interpreting insurance policies, this case shows how a court’s analysis of a policy–which to most consumers is already a particularly dense and forbidding document–can be anything but straightforward and obvious. If you are in a dispute with an insurance company over coverage, seek counsel from an experienced attorney who can help you navigate the complexities of the policy language and Louisiana case law to determine the strength of your claim.

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Previously on our network of blogs, we have discussed uninsured/underinsured motorist (“UM”) coverage in auto policies. The statutory requirement for UM insurance “embodies a strong public policy to give full recovery for automobile accident victims.” Duncan v. U.S.A.A. Insurance Co. So strong is this public policy preference, in fact, that “the requirement of UM coverage is an implied amendment to any automobile liability policy, even when not expressly addressed, as UM coverage will be read into the policy unless validly rejected.” If a policyholder wishes to reject UM coverage, he must do so by filling out a form that is issued by the state commissioner of insurance. The Louisiana Supreme Court has explained that completing the form is no simple, routine matter; the insurance company must see that the insured: (1) initials the line in the form that sets out the rejection of UM coverage; (2) prints his name; (3) signs his name; (4) fills in the policy number; and (5) fills in the date. (The same requirements for declining UM coverage would apply to an official representative of a corporate entity that owns a vehicle.) Moreover,

“in order for the form to be valid, [the information] must be completed before the UM selection form is signed by the insured, such that the signature of the insured … signifies an acceptance of and agreement with all of the information contained on the form. An insurer who is unable to prove that the UM selection form was completed before it was signed by the insured simply cannot meet its burden of proving … that the UM selection form is valid.” Gray v. American National Property & Casualty Co.

Indeed, even when an insurance company uses the official form and confirms that it is properly completed, it will only “receive[] a presumption that the insured’s waiver of coverage was knowing” (emphasis supplied), which can be rebutted.

The effectiveness of a UM waiver was at the center of a recent decision by the Third Circuit Court of Appeal in Melder v. State Farm. On March 1, 2007, Naddia Melder was driving a 2006 Nissan pickup truck that belonged to her employer, Grimes Industrial Supply, LLC (“GIS”), in Alexandria. She was involved in a collision with another vehicle in which she sustained serious injuries. After the accident, Melder filed a suit against State Farm seeking to recover under the UM coverage provision of the policy which GIS maintained on the vehicle. State Farm filed a motion for summary judgment asserting that when Floyd Grimes, the owner of GIS, obtained the insurance policy on the Nissan, he rejected UM coverage. After a hearing, the trial court granted the motion and dismissed the action against State Farm. Melder appealed, alleging that genuine issues of material fact about the validity of the UM waiver existed. The Third Circuit agreed with Melder. It cited the inconsistent evidence in the record about Mr. Grimes’s authority to execute the UM waiver. The policy indicated that the Nissan was owned by Floyd Grimes and his brother, Frank Grimes. But other evidence pointed to the corporate entity, GIS, as the owner of the truck. The court concluded, “the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the … company or the apparently non-existent partnership between himself and Frank Grimes.” Thus, the court held that a genuine, material issue existed about whether the waiver, though properly completed, was valid. It reversed the trial court’s granting of summary judgment for State Farm and remanded the case for trial.

The Melder case shows Louisiana’s strong policy toward including UM coverage in all auto policies. The significant steps required to waive UM coverage are intended to prevent unintentional or mistaken waivers by policyholders. Even though State Farm followed the requirements diligently, it failed to verify something even more fundamental–whether the person signing the form possessed the legal authority to make a decision about waiving coverage.

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In a prior post, we reviewed the Johnson v. Louisiana Farm Bureau Casualty Insurance Co. case. The case concerned the undelivered notice from Farm Bureau to Janice Johnson that the company would not renew her homeowner’s insurance policy. The case centered around the state law that requires notice of the intent not to renew:

“An insurer that has issued a policy of homeowner’s insurance shall not fail to renew the policy unless it has mailed or delivered to the named insured, at the address shown in the policy, written notice of its intention not to renew. The notice of nonrenewal shall be mailed or delivered at least thirty days before the expiration date of the policy.” La. R.S. 22:1335, formerly La.R.S. 22:636.6.

In the Johnson case, the Third Circuit interpreted the “mailing or delivery” requirement to mean that the notice must actually be received by the homeowner. During the trial, the jury found that Farm Bureau had properly mailed the notice. But Johnson’s testimony that she always opened every piece of mail she received (except for bank statements) convinced the jury that she had not, in fact, received Farm Bureau’s letter. Since the Third Circuit regarded the conclusion about delivery to be a matter of “the credibility of the witnesses,” and could not find “manifest error in the jury’s credibility determination nor in their determination that the notice of non-renewal was not delivered,” it affirmed the trial court’s award of damages to Johnson.

Farm Bureau appealed this decision, which so happened to contrast directly with a recent decision from the Fourth Circuit. The Fourth Circuit case, which featured very similar facts, reached the following conclusion:

“[t]he mailing of a notice of nonrenewal to the insured’s address, as listed on the policy, at least thirty days before the expiration of the policy satisfies the burden placed upon the insurer.” Collins v. State Farm (La.App. 4 Cir. 1/26/11).

The Louisiana Supreme Court sided with the Fourth Circuit, finding that “the key is that the statute requires only mailing, not proof of receipt.” Because “the plain language of the statute requires only that such notice be mailed,” in the court’s view “any evidence of non-delivery is relevant only as far as it is evidence of non-mailing or improper mailing.” The court determined that the jury’s fact-finding duty extended no farther than determining that Farm Bureau had properly mailed the notice, which was “all that [Farm Bureau] was required to do under [the statute] in order to give notice of nonrenewal of [Johnson’s] insurance policy.” Accordingly, the Supreme Court reversed the Third Circuit and declared that “Farm Bureau did not provide homeowner’s coverage to [Johnson] at the time of the loss.” As a result, Johnson was denied the $296,500 payment she expected from Farm Bureau.

The purpose of the nonrenewal notice is to provide an insured homeowner sufficient time to obtain new insurance with another company before the existing policy expires. While the law placed a specific burden on insurance companies to send such a notice, customers in Louisiana are now clearly warned that the failed delivery of a properly mailed notice will not obligate an insurer to extend coverage, even if the consequences are catastrophic to the homeowner.

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Nearly six years after Hurricane Katrina struck, Louisiana residents are still dealing with the traumatic and costly effects of the storm. The American Red Cross estimates that approximately 275,000 Louisiana homes were destroyed by the storm and thousands more were damaged. Even those homeowners with insurance can find the recovery of damages to be a difficult and definitely expensive process. This financial burden, regardless of the supposed
Many homeowners filing claims for damages were in for a nasty surprise: the “Named Storm Deductible.” Under Louisiana law, insurance companies can implement deductibles of as much as 5% of the value of the insured property for damage caused by “named storms,” including tropical storms and hurricanes such as Hurricane Gustav or Hurricane Katrina. Frequently these provisions have not appeared on the original policies, but were added during a policy renewal, meaning homeowners are unaware of its existence or don’t understand its implications.

Under a Named Storm Deductible of 5%, for example, damage caused to a home with an insured value of $100,000 would cost the homeowners a deductible of $5,000, rather than the standard $500 or $1,000 deductible ordinarily applied to such losses. Litigation arguing against and interpreting these deductibles can be complicated and frustrating.

Homeowners Mary Williams, Michael Manint, and Susan Manint ran into this problem firsthand when recovering from damage caused to their homes by Hurricane Katrina. While their policy from Republic Fire and Casualty Insurance Company includes a Named Storm Deductible of five percent (5%), it does not specifically designate what the 5% is to be taken from: the damage amount or the dwelling coverage limit. One year, when renewing their homeowners insurance, Republic sent them an Important Policyholder Notice explaining the application of the Named Storm Deductible. The Notice included an example of the Named Storm Deductible which showed that the deductible would be 5% of the dwelling coverage limit. This distinction, however, did not actually appear within the provisions of their policies.

After Hurricane Katrina struck Louisiana, Republic determined that Ms. Williams and the Manints would have to pay deductibles of $7,320 and $4,445, respectively, which were 5% of their dwelling coverage limits. Both homeowners, however, had expected to have to pay only 5% of the covered loss, which would have amounted to costs under $1,000.

Both homeowners filed suit against Republic, asserting that the company had miscalculated the Named Storm Deductible. They argued this on the theory that the Important Policyholder Notice, which showed that the 5% was to be taken from the dwelling coverage limit, could not be considered when interpreting the Named Storm Deductible. The district court however, disagreed and ruled in favor of Republic, confirming that the deductible had been calculated correctly.

On appeal, the court affirmed the district court’s ruling. Under Louisiana law, because the Important Policyholder Notice was physically attached to the renewal policies, it was made a part of them as well. This meant that the Notice’s interpretation showing that the 5% was to be taken from the dwelling coverage limit was part of the policy and thus enforceable against the homeowners.

If you find yourself in a similar predicament, consulting with a legal expert may be your best chance in receiving the justice you deserve.

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Class actions are a common and popular legal tool for cases involving a large group of people who share the same grievance against a defendant. Specifically, the plaintiffs have to have a real and actual interest in order to join a class action. An issue may arise however, if a plaintiff’s interest is called into question. In particular, whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted against a defendant. Essentially, the plaintiff’s have to share the same type of complaint and injury in order to form a proper class action. Many times, defendants will allege that the class action was improperly certified (allowed) in order to invalidate any complaints against them.

In a recent Second Circuit Court of Appeal Case in Louisiana, the court explored the certification of a class action in order to determine whether or not it was proper. The facts of the case include the plaintiff, representing a class of individuals, who all share a grievance against a funeral home, owners of the funeral home, and numerous banks. The gist of their complaint is that the funeral home sold prepaid funeral expenses to the plaintiffs and other putative class members. The owner of the funeral home then deposited their payments into certificates of deposit (COD) with one or more of the banks named as defendants. The bulk of COD’s were under names which included the Funeral Home, followed by either “payable on death,” or “for the benefit of” followed by the name of the individual whose prepaid funeral funds were being held on deposit. The issue became that without presentation of a death certificate as required by Louisiana statute, the law governing prepaid funeral services, and in breach of the banks’ contracts, namely, the certificates of deposit, the funeral home was allowed by the banks to withdraw the funds which they converted and appropriated for their own use. The plaintiffs argue that by accepting the deposits, the defendant banks became commonly liable with the funeral home. Yet, the appellate court is charged with the responsibility to determine whether the class action should be certified, despite the fact the trial court denied the class’s certification.

A class action must have certain definite characteristics. First, the class must be so large as to make individual suits impractical. Second, there must be a legal or factual claim in common between all the plaintiffs involved. Third, the claims or defenses must be typical of the plaintiffs or defendants. Fourth, the representative parties must adequately protect the interest of the class. Further, in many cases, the party seeking certification of a class must also show that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand. Here, the class certification, the plaintiffs sought to certify a class defined as “all individuals from whom the funeral home appropriated and converted funds collected by them for prepayment of funeral expenses.” Additionally, the motion asserted common questions of law and fact including:

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With little details available, the residents of New Iberia sit and wait to find out more about an explosion that took place at the Multi-Chem plant. Conflicting reports exist regarding harm caused by the incident, though the most recent release states all plant employees are accounted for and there were no reported injuries.

A 1-5 mile evacuation has taken place with residents encouraged to leave or, at worst, remain inside.

More information will be available on our Personal Injury blog as it becomes available.

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