*Pursuant to 5TH CIR. R. 47.5, the Court has determined that this

opinion should not be published and is not precedent except under

the limited circumstances set forth in 5TH CIR. R. 47.5.4.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 97-30381

Summary Calendar

MIDWEST EMPLOYERS CASUALTY CO.,

Plaintiff-Counter Defendant-Appellee,

VERSUS

HARRIS MANAGEMENT INC.,

Defendant-Counter Claimant-Appellant.

Appeal from the United States District Court

For the Western District of Louisiana

(96-CV-1349)

November 4, 1997

Before JOLLY, BENAVIDES and PARKER, Circuit Judges.

PER CURIAM:*

Harris Management Inc. (“Harris”) appeals a declaratory

judgment in favor of Midwest Employers Casualty Company

(“Midwest”). Harris is self-insured for Louisiana workers’

compensation purposes. Midwest issued an “Excess Insurance Policy

for Self-Insurer of Workers’ Compensation and Employer’s Liability”
to Harris. The policy provides for reimbursement and

indemnification of the insured for benefits paid to one claimant

that exceed $150,000. The policy includes a clause which obligates

Harris to employ good faith in the settlement of all claims.

Midwest brought this action seeking a declaration that it owes no

further indemnity on two claims -- brought by Mary Brouillette and

Truedy Autin -- because Harris refused to employ good faith in the

settlement of those claims. There is no dispute that Brouillette

and Autin were injured in the course and scope of their employment

with Harris and that they had valid workers’ compensation claims

under Louisiana law.

After trial on the merits before a magistrate judge, pursuant

to consent of the parties, declaratory judgment was entered for

Midwest, holding that Harris breached its obligation “to not

unreasonably refuse to settle any claim which, in the exercise of

sound judgment, should be settled.”

The case is before us based on our diversity jurisdiction and

requires the interpretation of a Louisiana insurance policy. An

insurance policy is a contract and must be interpreted by using

ordinary contract principals and rules of interpretation found in

Louisiana law. Lewis v. Hamilton, 652 So.2d 1327, 1329 (La. 1995).

The first issue raised on appeal is essentially whether Harris’s

conduct amounted to a bad faith handling of the claims. The

question is one of fact, a finding as to which we cannot overturn

absent clear error. Rogers v. Government Employees Ins. Co., 598

So.2d 670 (La.App. 3rd Cir. 1992). Having reviewed the record and

the Memorandum Ruling on the Merits, we cannot say that the

findings of the magistrate judge were clear error.

Next, Harris argues that a lump sum payment would have been

required to settle the cases and that lump sum payments are

precluded by public policy as announced by the Louisiana
2LSA R.S. 23:1271 provides in pertinent part:

A lump sum payment or compromise settlement in exchange

for full and final discharge and release of the employer,

his insurer, or both from liability under this chapter

shall be allowed only:

(1) upon agreement between the parties, including the

insurer’s duty to obtain the employer’s consent;

(2) when it can be demonstrated that a lump sum payment

is clearly in the best interests of the parties; and

(3) upon the expiration of six months after termination

of temporary total disability.

legislature, citing LSA R.S. 23:1271. In fact, 23:1271

specifically allows compromise and lump sum payments under certain

circumstances. The statute does not preclude such payments in

these cases.2 

Finally, Harris argues that it should not be held to a duty of

good faith because another clause in the insurance contract

provides for a specific procedure by which Midwest could limit its

exposure. We agree with the district court that the good faith

clause is not ambiguous and that it obligates Harris to do exactly

what it says, that is, to use good faith to settle any claim and to

“not unreasonably refuse to settle any claim which, in the exercise

of sound judgment, should be settled.” 

For the foregoing reasons, we affirm the declaratory judgment.

AFFIRMED.