Opinion ID: 146176
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Heading: Louisiana Revised Statutes 22:658 and 22:1220

Text: The Bradleys asserted claims for bad faith and mental and physical distress under Louisiana Revised Statutes §§ 22:658 and 22:1220 related to uncompensated loss for damage to their home. A cause of action for penalties under § 22:658 requires a showing that: (1) the 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. L A. R EV. S TAT. A NN. § 22:658. With respect to mental anguish damages, “[t]he conduct prohibited in R.S. 22:658(A)(1) is virtually identical to the conduct prohibited in R.S. 22:1220(B)(5): the failure to timely pay a claim after receiving satisfactory proof of loss when that failure to pay is arbitrary, capricious, or without probable cause.” Sher v. Lafayette Ins. Co., 988 So. 2d 186, 206 (La. 2008) (quoting Reed v. State Farm Mut. Auto Ins. Co., 857 So. 2d 1012, 1020 (La. 2003)). Thus, “a plaintiff attempting to base her theory of recovery against an insurer on [§§ 22:658 and 23 Case: 09-30035 Document: 00511105306 Page: 24 Date Filed: 05/10/2010 No. 09-30035 22:1220] must first have a valid, underlying, substantive claim upon which insurance coverage is based.” Clausen v. Fid. & Deposit Co. of Md., 660 So. 2d 83, 85-86 (La. Ct. App. 1st Cir. 1995). The district court did not speak to the arbitrariness of the insurer’s failure to pay; it instead granted summary judgment in favor of Allstate on the §§ 22:658 and 22:1220 claims based on its conclusion that the Bradleys had not carried their burden of establishing a valid, underlying breach of contract. Because the §§ 22:658 and 22:1220 claims are inextricably intertwined with the underlying breach of contract claims, we do not reach the question of entitlement to recovery under §§ 22:658 and 22:1220. We have held that the district court improperly granted summary judgment on the issue of the uncompensated structural damages and we therefore vacate the grant of summary judgment on the §§ 22:658 and 22:1220 claims as well, and remand for reconsideration consistent with this opinion.