Articles Posted in Summary Judgment

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In an appeal filed in the United States Court of Appeals for the Fifth Circuit, from the Western District of Louisiana, the Court affirmed a district court verdict ruling in favor for the IRS. The Plaintiff, S.P. Lewis was ordered to pay monthly installments to the government to pay for taxes withheld from employee’s wages while S.P Davis and three other people were equal owners of the Winward Institute, Winward Heath Care Center, and Mynex. These three entities provide medical services to Louisiana patients. In 1997, these owners became aware that the companies were not paying enough federal payroll taxes. The owners asked the vice president of finance, Samuel Stevens, to negotiate with the IRS but the debt was never corrected.

In 2002, The IRS caught up with the companies and issued assessments against the owners for unpaid payroll taxes. Davis paid what he felt was his portion of the debt and then filed for a refund with the IRS. His claim was denied. In District Court, the government won the argument that the owners and Stevens were responsible people who had the opportunity to cure the dabt long ago. Because the owners and Stevens all had knowledge of the debt, and the opportunity to address the situation prior to suit, the owners and Stevers were considered equally responsible.

The government typically garnishes debtor’s wages in this situation. However, if the person in debt recieves income not exempt from taxes, the district court may order the person in debt to make payments instead of garnishing wages. When the Court established monthly payments against all counter-defendants, only Davis refused to pay. Davis did not want to pay the amount per month ordered by the government. Davis argued that the government was making him pay far too much each month. He argued the government was determining the monthly amount on a period in time when Davis had a much higher income. Davis also argued that the court had not properly considered his personal circumstances including the costs associated with earning his self-employment income.

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Louisiana has a Direct Action Statute that allows injured third parties to sue an insurance company directly when the insurance company’s insured causes an injury. For example, if you are involved an automobile accident where you are not at fault, you can sue the at-fault driver’s insurance company directly instead of suing the at-fault driver themselves. The Direct Action Statute is beneficial because it gives injured third parties access to the entity that will actually pay compensation for the injuries. It can be especially helpful where the insured fails to file a claim with their insurance company themselves. However, the injured third-party’s ability to sue the insurance company directly is limited by the insurance contract between the insurance company and the insured.

Despite the fact that the insurance contract is between the insurance company and the insured, an injured third party must still comply with most of the terms of the contract. This overarching rule applies specifically to whether the policy covers the insured and whether the policy covers a particular event. The insurance company will ask: Did this person have coverage when this accident happened? and Does this policy cover this type of event? For example, in insurance contracts limited to specific times, the insurance company will not cover a claim that occurred outside the time frame of the contract, regardless of who brings the claim. In a related example, automobile coverage that is limited to only certain vehicles will cover only those vehicles, regardless of who brings the claim. That is, the injured third party can have no greater rights than the insured would have had if he or she brought the complain themselves.

In a United States Fifth Circuit Court of Appeals case, the court determined that specific requirements of the contract also extend to injured third parties. That case involved a “claims-made-and-reported” policy. That type of policy not only requires that a claim arise within the policy period, but also that the insured (or another party under the Direct Action Statute) had to have reported the claim within the policy period. This type of notice requirement helps insurance companies avoid claims that are reported years after they happen; instead, this policy requires notice within a certain amount of time.

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If you have ever been injured on the job or if you have ever known an employee who broke the law while on the job, you might know something about an employee-employer relationship and the legal obligations that come with such a relationship. Typically, if you are working for an employer and one of the two above-mentioned scenarios happens (in addition to several other possible scenarios), the employer can be held vicariously liable for the actions of the employee. Furthermore, the employer’s insurer might also be held liable if the accident or unlawful behavior happened while on the job.

A recent case that took place in the Parish of Lafayette helps illustrate some of the issues of the employee-employer relationship and when exactly an employer might be held liable for the actions of someone else. In this Lafayette case, a lady had been riding on the back of a motorcycle when the driver of her motorcycle suddenly collided with another motorcycle. At the time of the accident, the driver was pulling into the parking lot of a truck stop. As a result of the collision, the female rider suffered severe brain injuries and was permanently disabled.

In response to the serious injuries suffered by their daughter, the woman’s parents each sued several parties and insurers seeking recovery for the damages suffered by both their daughter and themselves individually. One of the parties was a business owner of the truck stop who the parents argued was the employer of one or both of the motorcycle operators involved in the collision. According to the parents’ lawsuits, under the employee-employer relationship, the truck stop owner was vicariously liable because the motorcycle operators were working for the owner of the truck stop at the time of the accident. Despite these allegations, the parents’ suits against the employer were dismissed when the employer filed a motion for summary judgment, which was granted.

On appeal, the parents argued that the motion for summary judgment should not have been granted for several different reasons, one of them being that there was an issue of fact as to whether or not the two motorcycle operators were employees of the truck stop owner. In response to their appeal, the court shed light on some of the important considerations that must be made when analyzing an employee-employer relationship.

First, the court looked to another Louisiana case, Savoie v. Fireman’s Fund Ins. Co., 347 So.2d 188 (La. 1977), in order to determine if an employee-employer relationship exists. In determining the existence of such a relationship, one of the main issues that has to be analyzed is whether or not the employer exercises sufficient right of control and supervision over the employee.

Some of the factors that might result in a court determining that right of control does exist are selection and engagement of a a worker, whether or not the individual receives wages, the power of control the employer exercises over the worker, and whether or not the employer has the power to dismiss the individual.

Ultimately, the court found that neither motorcycle operator was an employee of the truck stop owner and that the motion for summary judgment was proper. Neither driver received wages from the truck stop owner, and even if one of the motorcycle operators had been delivering a part to the owner, as was alleged, that alone was not enough to make him an employee, especially in light of the fact that the owner and the operator had been friends for years.

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One area where lawyers must continue to improve is drafting contracts. It is imperative that lawyers learn the intricacies of legal writing and the different meanings words have in the legal community and their ordinary meaning. If a word or phrase in a company’s contract is ambiguous, it is susceptible to multiple interpretations and might result in litigation at some point. A common example of litigation like this involves insurance policies. Therefore, it’s important to draft clear and concise contracts in order to save the time, money, and effort associated with litigation.

Ambiguous contractual provisions are to be strictly construed against the insurer and in favor of coverage for the insured. Insurance coverage is meant to protect the insured, so the public policy reflects this favoring. However, this strict construction rule applies only if the ambiguous policy provision is susceptible to two or more reasonable interpretations. The key is that it must be reasonable, not just another interpretation. If the word or phrase is clear, then no further interpretation is necessary. The words and phrases used in insurance policies are to be construed using their plain, ordinary, and generally prevailing meaning unless the words have acquired a technical meaning.

This seems to be a clear explanation of how contract terms are to be interpreted, but even so, many cases arise with an insured claiming that a certain phrase is ambiguous and they should not be denied relief under their policy. For example, Herbert Farms, who conducts a rice farming operation in St. Landry Parish, Louisiana, claimed the phrase “rice drying house” in their policy was ambiguous and other reasonable interpretations of the phrase was possible. Herbert Farms filed a claim for losses under its policy when its rice was damaged while in storage, seeking coverage under a section that listed “grain tanks” as covered property. However, there is a clear and unambiguous exclusionary clause that states that property covered in certain sections, including the section listing grain tanks, is not covered. The two pertinent pieces of property not covered in Herbert Farms’ policy were the contents of a rice warehouse and rice drying houses.

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In the aftermath of Hurricanes Katrina and Rita, the Louisiana legislature set deadlines for the filing of claims for damages resulting from the hurricanes. These dates were September 1, 2007 for claims of damage resulting from Hurricane Katrina and October 1, 2007 for claims of damage resulting from Hurricane Rita. Any claims filed beyond these dates would be subject to the exception of prescription, meaning that any legal remedies stemming from such damages would be extinguished. Under certain circumstances, however, Louisiana law allows for the suspension of prescription. For members of an ongoing class action in Louisiana state court, the deadline to file individual claims based on the same damages is suspended.

The countdown for the valid filing of individual claims begins to run again when a class member elects to be excluded from the class action or is notified that he or she has been excluded from the action, or is notified that the action has been dismissed. Once the countdown starts to run again, it resumes with how much time was left before the commencement of the class action. For instance, if there were two months remaining to file an individual claim of damages at the time a class action was started, the countdown for a class member’s individual claim would resume with two months remaining upon the member’s exclusion or the dismissal of the class action. This would hold true no matter how much time had elapsed since the class action’s commencement. However, it is crucial to note that such suspension of prescription is only allowed for class actions in Louisiana state court.

In a recent Louisiana Supreme Court case, a couple in Harvey, LA filed an individual claim for property damages resulting from Hurricanes Katrina and Rita more than two years after the deadline set by the legislature. Because the couple were members of a recently dismissed class action in federal court seeking the same damages, they argued that the countdown for the filing of their individual claim had been suspended. The Louisiana Supreme Court ruled, however, that only class actions filed in Louisiana state court (rather than federal class actions, or class actions in another state’s court system) could suspend the deadline for filing claims under Louisiana law. This meant that the couple’s individual claim had long expired unless they could prove membership in a class action in Louisiana state court for the same damages during that period.

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Regardless of your level of legal training, we’re all guilty of ignoring the fine print but insurance coverage is often determined by the placement of an unnoticed word or punctuation mark in the language of the policy. Under Louisiana law, the insured bears the burden of proving that an incident falls within the terms of the policy. In contrast, an insurer seeking to avoid coverage through a motion for summary judgment bears the burden of proving that a provision or exclusion precludes coverage. Courts treat insurance policies like other contracts and therefore strive to interpret each term according to its true meaning. As straightforward as it sounds, a contract’s true meaning is always disputed even if on its face the language appears clear. This requires courts to hear creative arguments on the meaning of particular terms buried in the policy.

On June 8, 2010, in an unfortunate incident at the Library Lounge in Monroe, McKenzie A. Hudson (Mr. Hudson) was approached by an intoxicated patron and struck in the head. In December 2010, Mr. Hudson died from severe brain injuries allegedly suffered during the attack. Mr. Hudson’s mother filed a wrongful death/survival suit against several defendants including the entity that owned the bar as well as its principals. Several weeks later Ms. Hudson added First Financial Insurance Company (FFIC), insurer of the bar.

Recognizing the language of the bar’s insurance policy, Ms. Hudson admitted that her son’s assailant did not intend or expect her son’s death but instead it resulted when he lost consciousness, fell to the pavement, and fractured his skull. The particular provision at issue in the policy read that it did not provide coverage for assault, battery, or other physical altercation. The policy defined assault in part as “a willful attempt or threat to inflict injury upon another” and battery as “wrongful physical contact with a person without his or her consent that entails some injury or offensive touching.”

Ms. Hudson differentiated between the FFIC’s old policy language which was ambiguous as to “extraordinary” injuries and its current policy which included amendments intended to broaden and clarify exclusions. Ms. Hudson specifically pointed to the removal of an “or” between the assault and battery provisions which had the effect of causing the provisions to be read together. This eliminated coverage for all “intended” or “expected” injuries. Since her son was not intentionally killed or expected to die she argued coverage should be provided. In response, FFIC submitted numerous cases where similar assault and battery exclusions were upheld.

Like the trial court, the court of appeals granted summary judgment in favor of FFIC for several reasons. First, the court reviewed the cases submitted by the FFIC and concluded that the “overwhelming” majority of insurers were dismissed from suits arising from injury or death after an assault or battery. Furthermore, the court pointed to a similar case where it was determined that the presence of an “and” or “or” did not necessarily indicate that the provisions should or should not be read together. The court concluded that the provisions were clear in their language and that there was no question Mr. Hudson was the victim of battery. Therefore, the policy excluded insurance coverage for his death.

Although the courts demonstrate a reluctance to rule against the insurance companies in policy exclusion cases this does not mean a particular result is guaranteed. The terms of each insurance policy varies and requires careful review of its language before any legal action is taken.

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Defendant Robert Turnage was in an accident with Plaintiffs Heather and Nicholas Tate on Memorial Day 2011 on Louisiana Highway 28 East, in Pineville. Tate attempted to pull out of a McDonald’s parking lot when she was struck my Turnage’s vehicle. Tate filed a petition for damages and the trial court found Tate to be 10% liable and Turnage to be 90% liable, awarding general, special and property damages to Heather Tate, along with general and special damages to her son Nicholas. Turnage appealed this judgment.

Turnage brought up 4 issues in his appeal: 1. The Plaintiff was essentially free from fault and met the heightened burden of proof imposed upon left-turning motorists from private driveway; 2. The Plaintiff preempted the Defendant’s right-of-way, although the accident did not occur at an intersection; That Defendant was 90% at fault, although the Court found credible his testimony that he did not motion to the Plaintiff that the way was clear for her to cross the highway; 4. The Plaintiff was 10% at fault in causing the Accident.

The standard of review for the appellate court is based on precedent, or previous case law, that sets for the amount of deference that the appellate court has in ruling the trial court’s initial decision. The appellate court is bound by the precedent that states:

“a court of appeal may not set aside a trial court’s finding of fact in the absence of manifest error or unless it is clearly wrong…the court of appeal may not reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently.”

The appellate court in this case has a higher standard of review in that they cannot reverse the decision based on small differences they perceived in the facts that the trial court ruled on, but can only rule differently if the original fact finder ruled in error or the ruling is completely wrong.

Turnage testified that he left a “gap” while sitting at a red light outside of the McDonald’s that Tate was pulling out of. Tate claimed that Turnage waved her forward to make the left turn she was waiting to make out of the private parking lot, but Turnage denies this, which the trial court found to be irrelevant. Louisiana Revised Statute 32:104(A) requires that a turning vehicle must not enter the roadway “unless and until such movement can be made with reasonable safety” and that La.R.S. 32:124 requires that a motorist entering a highway from a private road or driveway “yield the right of way to all approaching vehicles so close as to constitute an immediate hazard.” Although Tate is held to this standard, as soon as Turnage left the gap for Tate to pull out he no longer was in favor and he needed to exercise with caution by looking both way, which he states he failed to do. The appellate court found no error in the trial court ruling and that the fact that Tate almost completed the left hand turn before being hit only makes it more evident that Turnage proceeded unlawfully.

The appellate court disagreed with Turnage’s arguments that Tate failed to meet the burden of extreme care, that the trial court relied on Tate’s testimony that Turnage signaled her to pull through, and that the trial court abused its discretion in saying that Turnage was 90% at fault. The appellate court affirmed the trial court’s ruling and all costs of appeal were assessed to Robert Turnage and Southern Casualty Insurance Co.

If you ever experience a similar situation or are involved in a car accident contact the Berniard Law Firm.

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In January, the Louisiana Supreme Court considered an appeal from the Vermilion Parish School Board. The appeal centered on environmental damage to land that was subject to a mineral lease. The mineral lease allowed those leasing the land to look for and remove any mineral, including oil, that they found on the land. However, once they did this, they left the land in a state that was environmentally hazardous.

Louisiana has special procedures for dealing with restoring land so that we do not harm the environment, specifically when removing oil. The remediation of the land, this restoring process, was one of the major issues in the Vermilion Parish case. The defendants included Union Oil Company of California, Union Exploration Partners, Carrollton Resources, LLC, Chevron USA, Inc., and Chevron Midcontinent, L.P.

The Court faced two major issues in this case. The first was whether the parties could receive damages in excess of the amount it would take to restore the property, thereby correcting the environmental damage. The Court determined that the language of the legislation (La. R.S. 30:29) was clear and that the parties could receive a larger amount.

Under Louisiana law, when a case arises where a party is required to correct an environmental wrong, the funds are deposited into the court’s registry. The court will then disperse the funds to repair the land. This is a relatively new development because this act was put into effect in 2006. The legislature was concerned that parties who received funds to help correct the damage done to their land would not use it for that purpose if they were not so required. Leaving property that is damaged could create serious issues for the health, safety, and welfare of the surrounding population.

The legislation focuses on the role of the fact finder in determining whether there was environmental damage, and how much that environmental damage will cost to fix. As such, the court determined that the case should continue so that the fact finder could make those determinations.

The second issue was whether Chevron should be dismissed from the case. According to the facts, Union Oil had the mineral lease first, but Chevron subsequently acquired Union Oil and all of their assets, including the lease. As such, Chevron became responsible for any environmental damage that Union Oil may have caused. Chevron admitted responsibility initially, but then denied that they should be legally responsible later.

Chevron explained that while Chevron Corp. owns both Chevron USA and Union Oil Company of California, the two sections do not overlap. That is, Union Oil had $18 billion in assets, and should they be found liable for environmental damage, the amount that they will pay will come from their assets and not Chevron’s. Chevron explained that those assets were never transferred out of Union Oil, so Union Oil remained somewhat independent even after Chevron acquired them.

Therefore, Chevron argued that Chevron USA should be removed from the case so that those assets are not adversely affected. Nonetheless, Frank Soler, the senior liaison in the subsidiary governance unit of the corporate governance department for Chevron Corp. admitted that Union Oil does not have any employees and there may be service agreements between the two sections for day-to-day activities.

The Plaintiffs in the case were only allowed to discover a very limited amount of information from Chevron regarding this case. The court restricted the information until they determined whether or not Chevron should remain in the case a defendant. As such, many facts remained unknown regarding the relationship between Chevron and Union Oil. Therefore, the court determined that Plaintiffs should be allowed to gather more information and the case should continue.

Both of these issues failed the summary judgment test. The test is whether there is an absence of material facts in the case. If there is such an absence, then the court will only determine the questions of law and one side will receive a summary judgment. In this case, however, the court determined that there may be facts in dispute because they did not have enough information; therefore, the case continued.

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In Louisiana, a merchant’s duty to keep the premises safe for its customers is narrowly defined by the law. La. R.S. 9:2800.6 specifically deals with merchants and requires the injured party to prove:

(1) The condition presented an unreasonable risk of harm to the claimant and that risk of harm was reasonably foreseeable.

(2) The merchant either created or had actual or constructive notice of the condition which caused the damage, prior to the occurrence.

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The “New York Convention” (9 U.S.C. §§ 201 et seq.) gives a U.S. court the ability to enforce a foreign arbitration award if there is personal jurisdiction over the defendant. Personal jurisdiction is when the defendant can expect to appear in a foreign country’s court because the defendant has minimum contacts with the country. First Inv. Corp. v. Fujian Mawei Shipbuilding, Ltd. reaffirms that personal jurisdiction is necessary when a plaintiff is trying to confirm an arbitration award.

In First Inv. Corp., a Marshall Islands corporation and Chinese shipbuilding company entered into a contract that had an arbitration clause. The Marshall Islands is a presidential republic of the United States. The U.S. provides defense, funding, social services, and its currency for use to the republic. The arbitration clause required all disputes to be resolved in neutral territory under the London Maritime Arbitrators Association rules. The English arbitration panel found for the Marshall Islands corporation, but China refused to enforce the award against the defendant because not all the arbitrators on the panel had seen the final draft of the decision. Instead of resolving the matter in either the country of arbitration or the defendant’s country, First Inv. Corp. commenced action in the U.S. District Court for the Eastern District of Louisiana. The case eventually appeared before the Fifth Circuit Court of Appeals.

The Fifth Circuit affirmed the district court’s decision that the U.S. lacks personal jurisdiction over a Chinese shipbuilding company that has no contacts with the U.S. The Chinese company did not distribute products, conduct any transactions, or maintain property on American soil. However, the Marshall Islands plaintiff argued that since the defendant did not have any contacts with the U.S., the defendant should not be afforded the right of due process stemming from personal jurisdiction. The Fourteenth Amendment of the U.S. Constitution forbids states from depriving “any person of life, liberty, or property, without due process.” In the district court trial, the plaintiff argued that as a corporation controlled by the Chinese government, the defendant was not entitled to due process. Ultimately, the trial court rejected the plaintiff’s argument because it would undermine the “minimum contacts” test set by the U.S. Supreme Court because a confirmation of the award would suggest that a court can exercise personal jurisdiction over a defendant with no contacts in the U.S. The Fifth Circuit followed up by citing cases affirming due process protection for foreign corporations.

The plaintiff then argued that a confirmation of the arbitration would not affect the defendant’s “substantive rights” or fundamental protections afforded by the U.S. Constitution. The Fifth Circuit disagreed because a confirmation of the arbitration award would allow the plaintiff to enforce the judgment in Britain.

First Inv. Corp. shows how significant it is for parties to understand U.S. legal procedures when seeking to enforce foreign arbitration awards.

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