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FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #018 FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 3rd day of April, 2009, are as follows:

BY GUIDRY, J.:

2008-C -1491

KAREN KING v. ILLINOIS NATIONAL INSURANCE COMPANY, ET AL. (Parish of Webster) For the reasons stated herein, the judgment of the court of appeal is affirmed and the case is remanded for further proceedings in accordance with this ruling. AFFIRMED AND REMANDED. KIMBALL, C.J., dissents and assigns reasons. JOHNSON, J., dissents.

4/03/09

SUPREME COURT OF LOUISIANA No. 2008-C-1491 KAREN KING VERSUS ILLINOIS NATIONAL INSURANCE COMPANY, ET AL. ON WRIT OF CERTIORARI TO THE COURT OF APPEAL SECOND CIRCUIT, PARISH OF WEBSTER GUIDRY, Justice We granted certiorari in this matter to address the res nova issue of whether an individual's unexercised right to institute litigation through the filing of a lawsuit can be seized by a writ of fieri facias. For the reasons that follow, we find the court of appeal properly concluded a cause of action on which suit has not yet been filed is a strictly personal right and, as such, not subject to seizure. Accordingly, the court of appeal's ruling reversing the trial court and granting summary judgment in favor of and dismissing the defendants, Illinois National Insurance Company (hereafter, "Illinois National") and American International Group, Inc., a/k/a AIG Specialty Auto (hereafter, "AIG"), is affirmed. FACTS AND PROCEDURAL HISTORY Rendering of Excess Judgment On January 13, 1998, Annessa Monique Theus, while operating a vehicle insured by Illinois National, made a left turn in front of and collided with a vehicle

in which the plaintiff, Karen King, was a guest passenger. Less than four months after the accident, the plaintiff provided to AIG, Illinois National's independent adjuster, medical documentation evidencing soft tissue and extensive dental injuries sustained when she was thrown into the windshield of the vehicle she was occupying.1 The plaintiff was subsequently unsuccessful in her proactive efforts to settle her bodily injury claim with Illinois National for the $10,000.00 policy limits in exchange for a full release of the insurer and Ms. Theus from any further liability. Following a bench trial on the merits, Ms. Theus was assessed total liability for the accident. The plaintiff was awarded a judgment in the amount of $74,111.86.2 Since Illinois National was given a $10,000.00 credit representing the policy limits tendered shortly before the trial, an excess judgment was rendered against Ms. Theus in the amount of $64,111.86. On appeal, the general damages portion of the award was increased by an additional $15,000.00, thereby making the excess amount owed by Ms. Theus $79,111.86. King v. Illinois Nat'l Ins. Co., 34,473 (La. App. 2 Cir. 2/28/01), 782 So. 2d 1104. Issuance of Writ of Fieri Facias Subsequently, this Court denied supervisory writ applications filed by the plaintiff seeking an increase in the general damage award and Ms. Theus contesting

As a result of the collision, the plaintiff fractured eleven (11) teeth, which warranted twelve (12) crowns and eleven (11) root canals. She was also prescribed occlusal splint therapy to alleviate her temporomandibular joint ("TMJ") symptoms (i.e., chronic headaches, pain). Specifically, the trial court apportioned damages in the amounts of $14,111.86 for past medical expenses, $5,000.00 for dental expenses, and $55,000.00 for general damages. 2
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the issue of liability. See King v. Illinois Nat'l Ins. Co., 01-1244 (La. 6/22/01), 794 So. 2d 788 and 01-1245 (La. 6/22/01), 794 So. 2d 788, respectively. Thereafter, in accordance with Louisiana Civil Procedure article 2253, the plaintiff formally requested the Webster Parish Clerk of Court to issue a writ of fieri facias in an attempt to collect on the excess judgment rendered against Ms. Theus. The following day, the plaintiff obtained a writ of fieri facias directing the Sheriff of Webster Parish to seize, among other things: All rights, causes of action, or other claims that Annessa Monique Theus may have against Illinois National Insurance Company for its failure to protect her from personal liability by settling Karen K. King's claim within the policy limits and obtaining a full release for Annessa Monique Theus. This is an excess claim that Annessa Monique Theus has against her own insurance company, Illinois National Insurance Company, and all rights and incidental actions that Annessa Monique Theus may have to bring legal action against Illinois National Insurance Company related to the automobile accident that took place on January 13, 1998 in Minden, Webster Parish, Louisiana. The rights herein seized include, but are not limited to, the right to sue Illinois National Insurance Company in the name of and on behalf of Annessa Monique Theus. (Emphasis added.) Subsequently, on July 24, 2001, the Webster Parish Sheriff filed a notice indicating that the property described in the writ had been seized.3

In addition to the seizure of any interest Ms. Theus may have had in instituting suit against Illinois National, the writ of fieri facias included the seizure of three tracts of immovable property owned by Ms. Theus, but allegedly adjudicated to the Webster Parish Police Jury for non-payment of taxes. The seizure encompassed Ms. Theus's redemption rights for the tracts of land, as well as any resulting ownership rights. Further, the writ of fieri facias seized Ms. Theus's interest in a succession proceeding pending in the 26th Judicial District Court for the Parish of Webster, State of Louisiana. 3

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On June 13, 2002, the plaintiff, in her alleged capacity as transferee of Ms. Theus's inchoate rights4, instituted suit against Illinois National and AIG for damages, penalties, and attorney's fees due Ms. Theus under Louisiana Revised Statutes 22:658 and 22:1220. Essentially, the plaintiff alleged the defendants subjected Ms. Theus to the excess judgment through the breach of their contractual obligations to adjust promptly and in good faith the plaintiff's bodily injury claim through the defendants' adamant refusal to settle within the policy limits in exchange for Ms. Theus's release from liability. Motion for Summary Judgment On August 24, 2007, the defendants filed a motion for summary judgment seeking dismissal of the plaintiff's action on the basis that no genuine issue of material fact exists. Specifically, the defendants urged the plaintiff did not have a cause of action against them to seek recovery of the excess judgment or recover penalties and attorney's fees. The defendants maintained any inchoate rights Ms. Theus possessed to bring an action against them were neither transferable, nor subject to involuntary seizure, pursuant to a writ of fieri facias. In opposition, the plaintiff advanced, because Ms. Theus's claims against the defendants may be transferred by assignment, they could be subject of seizure by writ of fieri facias. Following a hearing, the trial court denied the motion for summary judgment, citing in its oral reasons the existence of a genuine issue of material fact as to whether the plaintiff had
"Inchoate right" is defined in Black's Law Dictionary 777 (8th ed. 2004) as "[a] right that has not fully developed, matured or vested." 4
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actually acquired the rights of Ms. Theus to file the petition and whether the defendants inappropriately failed to settle the plaintiff's earlier claim. The court of appeal reversed the trial court's denial of summary judgment and dismissed the plaintiff's action. King v. Illinois Nat'l Ins. Co., 43,237 (La. App. 2 Cir. 6/4/08), 986 So. 2d 839. In doing so, the appellate court maintained, since Ms. Theus's potential cause of action against the defendants was not subject of a pending lawsuit, the parties erred in relying on, as the controlling law in the case, Louisiana Civil Code article 2652 relative to the assignment of litigious rights.5 In addressing the legality of the seizure of an inchoate right, the court of appeal referenced treatise commentary suggesting that a mere potential claim for damages can be seized even before the cause of action becomes subject of a pending lawsuit. The court specifically referred to the discussion of Professors William Shelby McKenzie and H. Alston Johnson, III pertaining to an insured's claim against his insurer for excess exposure, which provides an "insured's claim may be seized and asserted by the

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Louisiana Civil Code article 2652, entitled "Sale of litigious rights," provides: When a litigious right is assigned, the debtor may extinguish his obligation by paying to the assignee the price the assignee paid for the assignment, with interest from the time of the assignment. A right is litigious, for that purpose, when it is contested in a suit already filed. Nevertheless, the debtor may not thus extinguish his obligation when the assignment has been made to a co-owner of the assigned right, or to a possessor of the thing subject to the litigious right. (Emphasis added.) 5

judgment creditor." 15 W.S. McKenzie & H.A. Johnson, Louisiana Civil Law Treatise: Insurance Law and Practice, Excess Liability Procedures

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