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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE # 60 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 17th day of October, 2006 , are as follows:

BY KIMBALL, J. :

2005-CC-2289 C/W 2005-CC-2322

JASON MALLETT v. PAOLA MCNEAL AND ASSOCIATION (Parish of E. Baton Rouge)

UNITED

SERVICES

AUTOMOBILE

CHARLES RICHEY AND BARBARA RICHEY v. INFINITY INSURANCE KAMERON E. DIXON AND KEITH DIXON (Parish of Vernon)

COMPANY,

Therefore, we affirm the district court's denial of the exception of prescription in 05-CC-2289, and we vacate the ruling in 05-CC-2322 and remand the case to the district court for further proceedings consistent with this opinion. 05-CC-2289 AFFIRMED. 05-CC-2322 VACATED AND REMANDED. VICTORY, J., dissents and assigns reasons.

10/17/2006 SUPREME COURT OF LOUISIANA No. 05-CC-2289 JASON MALLETT v. PAOLA MCNEAL AND UNITED SERVICES AUTOMOBILE ASSOCIATION

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL FIRST CIRCUIT, PARISH OF EAST BATON ROUGE

c/w

No. 05-CC-2322 CHARLES RICHEY AND BARBARA RICHEY v. INFINITY INSURANCE COMPANY, KAMERON E. DIXON AND KEITH DIXON

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL THIRD CIRCUIT, PARISH OF VERNON

KIMBALL, J. We granted certiorari and consolidated these two cases to determine whether the insurance companies' actions with regard to the property damage claims of third party claimants qualified as acknowledgments sufficient to interrupt prescription or qualified as settlements, as the term is used in La. R.S. 22:661. For the reasons that

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follow, we hold that an unconditional payment of a property damage claim constitutes an acknowledgment sufficient to interrupt prescription and that the term "settlement," as used in La. R.S. 22:661, is limited to a settlement or compromise as contemplated by La. C.C. art. 3071. Specifically, in 05-CC-2289, we find that the insurer made an unconditional payment to the third-party claimant, thereby interrupting prescription; in 05-CC-2322, we refer the issue of prescription to trial on the merits and remand the case for further proceedings consistent with this opinion. FACTS OF 05-CC-2289 In 05-CC-2289, Jason Mallett v. Paola McNeal & United States Auto. Ass'n, plaintiff, Jason Mallett, was operating a vehicle that was struck from behind by a vehicle operated by defendant, Paola McNeal, as a result of which plaintiff suffered damages. The accident occurred on January 8, 2004, and at that time defendant Paola McNeal was insured by an automobile liability policy issued by defendant United States Automobile Association ("USAA"). In November 2004, pursuant to a demand for payment of property damage suffered by plaintiff, USAA made a payment to plaintiff. USAA issued a check in conjunction with the appraisal, and plaintiff cashed the check. Plaintiff subsequently forwarded a supplemental estimate of aftermarket parts, and USAA issued another check for the additional repairs, which plaintiff also cashed. On February 17, 2005, more than one year after the accident, plaintiff filed the instant action against defendants for injuries and damages sustained as a result of the accident. In the petition, plaintiff states that, although the action was filed more than one year after the date of the accident, the action was not prescribed because USAA's payment of the property damage served as an acknowledgment, thereby interrupting prescription. USAA filed an exception of prescription.

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The district court denied USAA's exception of prescription. In his oral reasons, the judge stated: The legislature used the word settlement. Settlement contends a disputed claim and some negotiation and, perhaps, compromise of that. I don't think that's what the legislature intended, but it's what the legislature said. The Supreme Court has said there can be tacit acknowledgments of a debt so as to interrupt prescription, and unconditional payments amount to such an acknowledgment . . . Like I said, I think the Legislature perhaps didn't mean settlement when it said settlement. I think it meant payment and/or settlement, but it used the word settlement. So I must apply the law as it is written. And while I think that the case has prescribed, I'm going to overrule the exception. The court of appeal denied the writ, with one judge dissenting. In the dissent, the judge stated there was no showing that USAA admitted liability, lulled Mallett into believing liability would not be contested, or otherwise expressed a clear declaration of intent to interrupt prescription. We granted certiorari to determine whether USAA acknowledged the claim, thereby interrupting prescription. FACTS OF 05-CC-2322 In 05-CC-2322, Charles Richey & Barbara Richey v. Infinity Ins. Co., Kameron E. Dixon & Keith Dixon, plaintiff, Charles Richey ("Richey"), was involved in a collision with a vehicle driven by defendant Kameron Dixon and owned by defendant Keith Dixon on March 11, 2000. Defendant Keith Dixon was insured by defendant Infinity Insurance Company ("Infinity"). Infinity sent a letter, postmarked March 15, 2000, requesting that Richey fill out forms. Because the vehicle was totaled, Infinity sent a second letter, postmarked March 24, 2000, asking Richey to sign the bill of sale, power of attorney and related forms and send the car title to Infinity. A check was issued July 10, 2000, for $3150.00, which Richey cashed. Infinity enclosed a letter stating that the check represented payment for the total loss of the vehicle.
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Subsequently, plaintiffs Charles and Barbara Richey timely filed suit on March 12, 2001, in the Ninth Judicial District Court, Rapides Parish, plaintiffs' domicile. Defendants filed an exception of improper venue urging Vernon Parish was the proper venue because the accident occurred in Vernon Parish and defendants were domiciled there. After the hearing on the exception of improper venue, the district court granted defendants' motion and transferred the action to the Thirtieth Judicial District Court, Vernon Parish. Thereafter, defendants filed an exception of prescription urging that, because the action was filed in a court of improper venue and no defendants were served within the prescriptive period, the action had prescribed.1 Plaintiffs did not file a memo with the court on the exception. At a hearing on the exception of prescription plaintiffs argued that the payment of the property damage and the representations made by Infinity to Richey constituted an acknowledgment, thereby interrupting prescription. Richey testified about the letters he received from Infinity and the check that was issued for the value of the truck, and the exhibits were offered into evidence. Because the plaintiffs argued acknowledgment for the first time at the hearing, the defendants objected to the plaintiffs' argument specifically contesting the fact that plaintiffs did not first submit a brief on the issue of acknowledgment. The defendants cited a violation of local rules, but the district court allowed plaintiffs to continue, with the stipulation that the defendants could submit supplemental briefing on the issue. Defendants subsequently filed a supplemental memorandum alleging that the

Prescription is interrupted when the obligee commences action against the obligor in a court of competent jurisdiction and venue. If action is commenced in an incompetent court, or in an improper venue, prescription is interrupted only as to a defendant served by process within the prescriptive period. La. C.C. art. 3462. In this case, plaintiffs commenced an action in a court of improper venue, and defendants were served on March 16, 2001, approximately one year and five days after the accident and after the case had prescribed on its face.
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property damage claim had been settled, as contemplated by La. C.C. art. 3071. Moreover, defendants asserted that the settlement had been reduced to writing and signed by Richey. The district court denied defendants' exception of prescription stating that "[t]he law is clear that the payment of a property claim is an acknowledgment and interrupts prescription." The court of appeal denied the writ, stating there was no error in the district court's ruling. We granted certiorari to determine whether the district court was correct in finding that Infinity acknowledged the claim. DISCUSSION Statutes regulating prescription are strictly construed against prescription and in favor of the obligation sought to be extinguished; thus, of two possible constructions, that which favors maintaining, as opposed to barring, an action should be adopted. Carter v. Haygood, 04-0646, p. 10 (La. 1/19/05), 892 So.2d 1261, 1268. The burden of proof on the prescription issue lies with the party asserting it unless the plaintiff's claim is barred on its face, in which case the burden shifts to the plaintiff. Bailey v. Khoury, 04-0620, p. 9 (La. 1/20/05), 891 So.2d 1268, 1275. Prescription is interrupted when one acknowledges the right of the person against whom he had commenced to prescribe. La. C. C. art. 3464. Such an acknowledgment is not subject to any particular formality. Lake Providence Equip. Co. v. Tallulah Prod. Credit Ass'n, 241 So.2d 506, 509 (La. 1970). It may be written or verbal, express or tacit. Id. In Flowers v. U.S. Fid. & Guar. Co., 381 So.2d 378, 382 (La. 1979) (on rehearing), this court consulted Aubry and Rau in interpreting the codal article dealing with acknowledgment, quoting: The acknowledgment with the interruptive effect may be express or tacit. No specific form is prescribed for the express acknowledgment;
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it may be by regular mail or even orally. Tacit acknowledgment results from any action which amounts to an admission of the creditor's or owner's right, for instance the payment of a bill as debtor; payment of a portion of the debt, interests or arrears by the debtor or his agent; a request for a postponement of a payment; and, a fortiori, the payment of the amount due by the agent of the debtor. The same would be true of an offer to pay the damages caused by a tort, made by the defendant in the course of the trial, or of an actual act of reparation or indemnity. 2 Civil Law Translations, Aubry & Rau, Property,

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