Opinion ID: 1808850
Heading Depth: 1
Heading Rank: 5

Heading: Penalties and Attorney's Fees under R.S. 22:658

Text: Plaintiff contends that the court of appeal erred in holding that Lafayette was liable under the version of R.S. 22:658 in effect at the time that plaintiff's property was damaged and when the claim was filed, which called for a twenty-five percent penalty in cases involving an insurer's failure to make payment within thirty days of receiving satisfactory written proof of loss, rather than under the amended version of the statute, which mandated a fifty percent penalty in such cases, as well as attorney's fees and costs. At the time of the loss and during the initiation of loss adjustment, the statute at issue read in pertinent part: § 658. Payment and adjustment of claims, policies other than life and health and accident; personal vehicle damage claims; penalties; arson related claims suspension A. (1) All insurers issuing any type of contract, other than those specified in R.S. 22:656, R.S. 22:657, and Chapter 10 of Title 23 of the Louisiana Revised Statutes of 1950, shall pay the amount of any claim due any insured within thirty days after receipt of satisfactory proofs of loss from the insured or any party in interest.    (3) Except in the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim and of a claim for reasonable medical expenses within fourteen days after notification of loss by the claimant. In the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim within thirty days after notification of loss by the claimant. Failure to comply with the provisions of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1220. (4) All insurers shall make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim. B. (1) Failure to make such payment within thirty days after receipt of such satisfactory written proofs and demand therefor or failure to make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim, as provided in Paragraphs (A)(1) and (4), respectively, or failure to make such payment within thirty days after written agreement or settlement as provided in Paragraph (A)(2), when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the amount of the loss, of twenty-five percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial payment or tender has been made, twenty-five percent of the difference between the amount paid or tendered and the amount found to be due as well as reasonable attorney fees and costs.    R.S. 22:658. In the aftermath of Hurricane Katrina, the legislature, by means of Acts 2006, No. 813, § 1, amended the statute by twice substituting the words fifty percent for twenty-five percent and added as well as reasonable attorney fees and costs in the first sentence of paragraph (B)(1). [4] This amendment became effective on August 15, 2006. Plaintiff argues that Lafayette did not preserve its objection to the submitting of the amended version of the statute to the jury. The Code of Civil Procedure article pertaining to objections to jury instructions states in pertinent part: C. A party may not assign as error the giving or the failure to give an instruction unless he objects thereto either before the jury retires to consider its verdict or immediately after the jury retires, stating specifically the matter to which he objects and the grounds of his objection. If he objects prior to the time the jury retires, he shall be given an opportunity to make the objection out of the hearing of the jury. C.C.P. art. 1793 C. Here, the trial judge held the charging conference in chambers and the parties made their objections to the resulting jury charge and instructions during the conference. Following the charging conference, the parties made their closing statements, the trial judge charged and instructed the jury, and the jury began its deliberation. Immediately afterward, the trial judge gave the parties the opportunity to put their objections on the record and to proffer evidence. At that time, the judge stated: We're going to put the objections on in here, so we can leave the door closed. Let the verdict show that counsel for all parties have complied with the provisions of Article 1793 of the Code of Civil Procedure with reference to special charges, and that prior to argument by counsel before the jury, the Court has informed counsel of those charges which the Court will give. Counsel, at a charge conference in chambers before the jury was charged and retired to deliberate, raised their objections to the general and special charges, given and refused, and to the form of the verdict stating specifically the matters to which they objected and the grounds therefore. For the sake of convenience of all concerned, and in the interest of conserving time, counsel have agreed to dictate their objections into the record, after the jury has retired for deliberation. R., Vol. XIX at 58-9. Following the judge's comments, Lafayette properly objected to the jury instruction which used the amended form of R.S. 22:658. R., Vol. XIX at 172-3. Thus plaintiff's argument has no merit as the record affirmatively shows that Lafayette provided a contemporaneous objection to the jury charge. Plaintiff further argues that, although Lafayette breached the duty of good faith and fair dealing required under the pre-amendment statute, the insurer's breach continued after the amendment became effective. Thus, Lafayette was subjected to the increased penalties and attorney's fees contained in the amendment, and plaintiff's petition for damages filed after the amendment's effective date constituted a separate proof of loss, triggering the application of the amended statute. In support of his argument, plaintiff brings to the Court's attention the cases of Theriot v. Midland Risk Ins. Co., 664 So.2d 547 (La. App. 3 Cir.1996) and Harris v. Fontenot, 606 So.2d 72 (La.App. 3 Cir.1992), which each held that the duties of good faith and fair dealing imposed on insurers by R.S. 22:658 are continuing duties that do not end during litigation. He further cites this Court's opinion in McDill v. Utica Mut. Ins. Co., 475 So.2d 1085 (La.1985), in which we held that an insurer was liable for statutory penalties even though the insurer's first notice of the claim was the filing of suit almost a year after the accident occurred. In Manuel v. La. Sheriff's Risk Mgmt. Fund, 95-406 (La.11/27/95), 664 So.2d 81, we found that an insurer was liable for statutory penalties under R.S. 22:1220 for failing to pay a settlement after the settlement had been reduced to writing, because, even though the policy was perfected and the accident had occurred prior to the statute's effective date, the claim for failure to pay the settlement first arose after the effective date. We distinguished the situation in Manuel from those described in the court of appeal opinions in Rusch v. Cook, 619 So.2d 122 (La.App. 1 Cir.1993), and Jeffries v. Estate of Pruitt, 93-1442 (La.App. 1 Cir. 6/24/94), 638 So.2d 723, in each of which both the accident and the conduct first exposing the insurer to liability occurred prior to the enactment of the statute. Here, although an insurer has a continuing duty of good faith and fair dealing which extends throughout the litigation period, the claim first arose prior to the amendment of R.S. 22:658. Because the duty is a continuing one, had plaintiff not first made satisfactory proof of loss prior to the amendment of R.S. 22:658, his petition for damages served after the amendment became effective could have served as satisfactory proof, thereby triggering the time period set forth in the statute and could have subjected Lafayette to the penalties contained in the amendment because the claim would have first arisen after the amendment. Further, again because the duty is a continuing one, had plaintiff made satisfactory proof of loss prior to the amendment and had Lafayette paid that claim, and had plaintiff discovered new damage and made satisfactory proof which Lafayette failed to pay within the time period contained in the statute, but after the amendment became effective, Lafayette could have been subject to the penalties contained in the amendment because the claim would have arisen after the effective date of the amendment. Neither of those situations is the case here  the claim for the penalties contained within the statute arose prior to the effective date of the amendment. Plaintiff's argument that Lafayette's continuing breach of the duty of good faith and fair dealing made it subject to the increased penalties contained in the amended version of R.S. 22:658 is without merit. Plaintiff next argues that the current version of R.S. 22:658 should apply retroactively because the statute is a remedial law which the legislature intended to have retroactive effect. This Court discussed the issue of retroactivity in Morial v. Smith & Wesson Corp, XXXX-XXXX (La.4/3/01), 785 So.2d 1, when we determined that a statute which precluded suits brought by political subdivisions against gun manufacturers could be applied retroactively. There we said: Civil Code art. 6, entitled Retroactivity of laws, provides: In the absence of contrary legislative expression, substantive laws apply prospectively only. Procedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary. A related statute, R.S. 1:2, provides: No Section of the Revised Statutes is retroactive unless it is expressly so stated. Although this statute may appear to conflict with La. C.C. art. 6, La. R.S. 1:2 has been limited to apply only to substantive and not procedural or interpretive legislation and the two provisions are therefore generally construed as being co-extensive. Article 6 requires a two-fold inquiry: First, we must ascertain whether in the enactment the legislature expressed its intent regarding retrospective or prospective application. If the legislature did so, our inquiry is at an end. If the legislature did not, we must classify the enactment as substantive, procedural or interpretive. (Emphasis added, citations omitted). Morial, 785 So.2d at 10, citing Cole v. Celotex Corp., 599 So.2d 1058, 1063 (La. 1992). As stated in Cole, the legislature's intent as to the retroactive application of a statute must be present in the wording of the Act. Morial, 785 So.2d at 10; St. Paul Fire & Marine Ins. Co. v. Smith, 609 So.2d 809, 816-17(La.1992); Cole, 599 So.2d at 1063. In Cole, this Court determined that the legislature clearly intended that the statute at issue be applied prospectively only, due to the inclusion of language in the enactment setting out a future effective date. Cole, 599 So.2d at 1064. In contrast, in Morial and in State v. All Property and Cas. Ins. Carriers, 2006-2030 (La.8/25/2006), 937 So.2d 313, we determined that the legislature intended the statutes at issue be applied retroactively due to the explicit wording of those enactments. Morial, 785 So.2d at 10; All Property and Cas. Ins. Carriers, 937 So.2d at 322. Here, however, there is no indication in the wording of the statute as to the legislature's intent as to retroactivity. Although plaintiff argues that a court should investigate the legislative history of a statute in order to determine the legislature's intent regarding retroactive application, neither Article 6 nor our prior jurisprudence indicate that the legislative history is a legitimate indicator of legislative intent when the retroactivity of a statute is in question. Even if it were, however, the legislative history of the amendment to R.S. 22:658 fails to clearly articulate the legislature's intent as to retroactivity. In brief, Plaintiff argues that House Concurrent Resolution No. 58, contained in the Historical and Statutory Notes to R.S. 22:658, blames the dilatory conduct of insurance companies for delays in the recovery process. The purpose of this Resolution, however, did not concern either penalties for insurers or retroactivity, but rather urged the Attorney General to file suit seeking declaratory judgment concerning homeowner's insurance coverage exclusions for wind, hail, and hurricanes. Likewise, House Concurrent Resolution No. 59, which requests the Attorney General to file a declaratory judgment suit concerning the cause of the flooding of New Orleans, fails to provide any indication of the legislature's intent regarding retroactivity. Plaintiff further argues that the sponsor of the bill creating the amendment implied retroactive application of the amendment when he stated that increasing the penalties available under R.S. 22:658 would encourage insurers to timely resolve the claims of insureds who were deal[ing] with the costs associated with a disaster. Although this language may indicate one legislator's possible intent as to the amendment, he did not state that the amendment was meant to apply retroactively, and his comments could just as well be said to apply to future as to past disasters. Because the legislature failed to specify whether the amendment was designed to operate retroactively, we must now classify the amendment as substantive, procedural, or interpretive. With regard to such classification, we have stated: Substantive laws establish new rules, rights, and duties or change existing ones. Procedural laws prescribe a method for enforcing a substantive right and relate to the form of the proceeding or the operation of the laws. Interpretive laws merely establish the meaning the interpreted statute had from the time of its enactment. Segura v. Frank, 93-1271, (La.1/14/94), 630 So.2d 714, 723. Here, the amendment in question neither clarifies nor explains pre-existing law as it would were it interpretive, nor does it prescribe a method for enforcing a substantive right or relate to the form of a proceeding, as it would if it were procedural. Rather, the amendment changes a right to receive penalties, from twenty-five per cent to fifty percent of damages, and establishes a new right to attorney's fees. The amendment is unquestionably substantive, and as such cannot be applied retroactively. Plaintiff's argument that the amendment should be applied retroactively because it is remedial is also without merit. Each type of statute, be it substantive, interpretive, or procedural, contains examples of laws which may be characterized as remedial, however, this characterization is not one which is helpful or determinative when deciding whether the statute in question may be applied retroactively. See Dombrowski v. New Orleans Saints, XXXX-XXXX (La.App. 1 Cir. 8/2/06), 943 So.2d 403, 408.