Opinion ID: 213920
Heading Depth: 3
Heading Rank: 1

Heading: 2003 statute, 2006 amendment

Text: At the time of Katrina, the Louisiana legislature had last amended § 22:658 in 2003. That version subjected the insurer, when liable, to a penalty of 25 percent damages on the amount found to be due, or in the event the insurer had made a partial payment, 25 percent of the difference between the amount paid and the amount found to be due. Post-Katrina, the Louisiana legislature amended the statute to double the recoverable penalties from 25 to 50 percent of the amount found to be due, and to provide reasonable attorney fees and costs. Sher v. Lafayette Ins. Co., 988 So.2d 186, 197 (La. 2008). That amendment took effect on August 15, 2006, and is not retroactive. Id. at 201. In Sher, the Louisiana Supreme Court explained that whether the 2003 or 2006 version of the statute applies to an insured's claim depends on when the claim first arose. For instance, if a claim for § 22:658 penalties first arose prior to the effective date of the amendment, then the 2003 version applied. Id. at 199. A claim under § 22:658 exists when (1) an insurer has received satisfactory proof of loss, (2) the insurer fails to tender payment within thirty days of receipt thereof, and (3) the insurer's failure to pay is arbitrary, capricious or without probable cause. La. Bag Co., 999 So.2d at 1112-13. The Plaintiffs argued in the district court that the 2006 version of the statute applied because their claim for penalties arose after the amendment's effective date. The district court disagreed, concluding that the Plaintiffs' claim for penalties first arose prior to the amendment's effective date. We agree with the district court. The record here sufficiently supports the district court's finding that the Plaintiffs' claim for § 22:658 penalties first arose in late 2005. The district court determined that Allstate had received satisfactory written proof of the Plaintiffs' wind-damage claim by late October 2005, when Allstate's adjuster Favel completed his estimate. We do not find this determination clearly erroneous. A satisfactory proof of loss under § 22:658 is only that which is sufficient to fully apprise the insurer of the insured's claims. La. Bag Co., 999 So.2d at 1119 (internal quotation marks omitted). [P]roof of loss is a flexible requirement to advise an insurer of the facts of the claim, and it need not be in any formal style. Id. (internal quotation marks omitted). Favel's report was based on his inspection of the damage to the Plaintiffs' dwelling, and it sufficiently informed Allstate of the Plaintiffs' wind-damage claim. His report recommended that the Plaintiffs receive $83,461.82 on their wind-damage claim. Allstate agreed that the Plaintiffs were entitled to that amount, but did not tender full payment within thirty days of Favel's report. Allstate's failure to pay the full undisputed amount within the statutory time limit was, by definition, arbitrary, capricious or without probable cause. Id. at 1116. Accordingly, the Plaintiffs' claim for § 22:658 penalties on their wind-damage claim arose by late 2005. See id. at 1112-13. We reject the Plaintiffs' contentions to the contrary. They assert that their § 22:658 claim did not arise until August 28, 2006, when they filed their lawsuit; or, in the alternative, until mid-2007, when Allstate received the report of Plaintiffs' expert LaGrange. In support of the first assertion, the Plaintiffs contend that their complaint was the first satisfactory written proof Allstate received of their wind-damage claim. This contention is plainly incorrect: Favel's earlier report was the first such proof. In support of the second assertion, the Plaintiffs claim that LaGrange's report included estimates for new damage to the Plaintiffs' home, thus giving rise to a new claim for statutory penaltiesthis one under the amended version of the statute. The district court, concluding that LaGrange's report did not constitute a new satisfactory proof of loss, rejected this argument. Based on our review of the record, we agree with the district court and cannot say its determination was clearly erroneous. Because the Plaintiffs' cause of action for § 22:658 penalties arose prior to the amendment of the statute, we conclude that the district court was correct to apply the 2003 version of the statute to the Plaintiffs' claim.