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Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #016

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 15th day of March, 2011, are as follows:

BY JOHNSON, J.:

2010-C -0105

SHERRY COLEMAN TARANTO, DEAN COLEMAN AND WILLIAM S. COLEMAN, JR. v. LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION D/B/A LOUISIANA CITIZENS COASTAL PLAN (Parish of Orleans) Retired Judge Philip C. Ciaccio, assigned as sitting for Chief Justice Catherine D. Kimball. Justice ad hoc,

For the foregoing reasons, we conclude that filing of a lawsuit designated as a class action pursuant to LSA-C.C.P.art. 591, suspends prescription for all members of the putative class until the district court has ruled on the motion to certify the class. When notice is given, pursuant to LSA-C.C.P.art. 596, the suspended prescription period begins to run again. Thus, we affirm the ruling of the court of appeal. AFFIRMED VICTORY, J., dissents and assigns reasons. KNOLL, J., additionally concurs and assigns reasons. WEIMER, J., concurs and assigns reasons. GUIDRY, J., dissents and assigns reasons. CLARK, J., concurs for reasons assigned by Weimer, J.

3/15/11

SUPREME COURT OF LOUISIANA NO. 2010-C-0105 SHERRY COLEMAN TARANTO, DEAN COLEMAN AND WILLIAM S. COLEMAN, JR. VERSUS LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION D/B/A LOUISIANA CITIZENS COASTAL PLAN ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FOURTH CIRCUIT, PARISH OF ORLEANS

JOHNSON, Justice 1
We granted this writ application to determine whether the Plaintiffs' lawsuit, seeking damages from the Louisiana Citizens Property Insurance Corporation, that was filed nearly three years after Hurricane Katrina, is prescribed. The Fourth Circuit Court of Appeal held that the prescriptive period was interrupted by a timely filed class action petition against the insurer, which included the Plaintiffs as putative class members. Taranto v. Louisiana Citizens Property Ins. Corp., 09-0413 (La. App. 4 Cir. 12/16/09), 28 So.3d 543. For the reasons that follow, we hold that despite the language of the LCPIC insurance policy, which mandated a one year suit limitation, the Plaintiffs' lawsuit was

Retired Judge Philip C. Ciaccio, assigned as Justice ad hoc, sitting for Chief Justice Catherine D. Kimball.

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timely filed because prescription was suspended upon the timely filing of the pending class action suits, which included the Plaintiffs as putative class members. FACTS AND PROCEDURAL HISTORY On August 29, 2005, Hurricane Katrina completely devastated parts of New Orleans, Louisiana and the surrounding areas, and for the purpose of this case, the home of Sherry Coleman Taranto, Dean Coleman, and William S. Coleman, Sr. (hereinafter referred to as "Plaintiffs"), located at 25259 Chef Menteur Highway. In response to the extraordinary circumstances associated with Hurricanes Katrina and Rita, the Louisiana Legislature enacted House Bill 1289 and House Bill 1302, known as Acts 2006, Nos. 7392 and 802, which extended the prescriptive period within which insureds were allowed an additional year to file certain claims under their insurance policies for losses incurred by the storms.3 In May of 2006, the Louisiana

2006 Act No. 739 was enacted by the Legislature adding LSA-R.S. 22:658.3 (now LSA-R.S. 22:1894), which provides in pertinent part: A. Notwithstanding any other provision of this Title to the contrary, any person or entity having a claim for damages pursuant to a homeowners' insurance policy, . . . and resulting from Hurricane Katrina shall have through September 1, 2007, within which to file a claim with their insurer for damages, unless a greater time period to file such claim is otherwise provided by law or by contract. Act 739 was signed by the Governor on June 29, 2006, and became effective on that date. This Court refuted the insurance industry's argument that the prescriptive period provided in an insurance policy cannot be altered by finding that "the prescriptive periods provided for in Acts 739 and 802 are constitutional." State v. All Property and Casualty Ins. Carriers Authorized and License to do Business in the State of Louisiana, 06-2030 (La. 8/25/06), 937 So. 2d 313, 330. Specifically, this Court noted Section 2 of Act 802, which provides in pertinent part that Louisiana Legislature established: an additional, limited exception to the running of prescription and, as such, prevents the running of prescription for one year on any claim seeking to recover for loss or damage to property against an insurer on any homeowners' insurance policy . . . when such loss or damage was caused by or as a result of Hurricane Katrina or Hurricane Rita, or both. Accordingly, any such claim for damages caused by Hurricane Katrina shall be instituted on or before August 30, 2007, and any suit not instituted within that time and any claims relating thereto shall be forever barred unless a contract or the parties thereto provide for a later date. . . . Id. at 321. Act 802 was signed by the Governor on June 30, 2006, and became effective on that date. In other words, at the time of Hurricane Katrina, Louisiana law prohibited insurers from including 2
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Citizens Property Insurance Corporation ("LCPIC") unilaterally extended the period in which its insureds could file lawsuits concerning their Hurricane Katrina damage to September 4, 2007. On June 27, 2008, the Plaintiffs filed a petition against their insurer, LCPIC, seeking payment of their policy limits and damages, including damages for emotional distress and mental anguish. The Plaintiffs alleged, in pertinent part, that (1) the Plaintiffs' property and home were covered by a policy of insurance issued by LCPIC; (2) the property was completely destroyed on August 29, 2005, as a result of Hurricane Katrina; (3) the Plaintiffs presented proof of loss and made demand for payment of the policy limits; and (4) LCPIC refused to pay the policy limits. In the Petition for Damages, the Plaintiffs argued that the LCPIC's internal operating manual, called "Louisiana Citizens Claims Program and Procedure Guide," from April 2005, included a ten (10) year time limitation to commence actions for first party losses. In response, LCPIC filed an Exception of Prescription, arguing that the suit was not filed within one year of loss and that the extended period of prescription provided by legislation had also expired. The trial court granted the Defendant's Exception of Prescription and dismissed the Plaintiffs' claims with prejudice, finding that the Plaintiffs failed to timely file their suit despite the legislative enactment that extended the time to file. The trial court found that the Plaintiffs could not rely on LCPIC's operating manual because it contained a "typographical error indicating ten years to file litigation." The trial court held that the Plaintiffs could not have had a "meeting of the minds" regarding a ten-year suit limitation period when the Plaintiffs undisputably were not aware of the internal manual until they received it in discovery.
suit limitations periods shorter than 12 months, LSA-R.S. 22:629(A)(3)(2005), and prohibited parties from agreeing to a limitations period longer than the ten (10) year liberative prescriptive period. LSA-C.C. arts. 3471-3499. LSA-R.S. 22:658.3 (now renumbered LSA-R.S. 22:1894) extended the period to September 1, 2007 unless a greater time period was otherwise provided by law or by contract. 3

Specifically, the trial court ruled that the operating manual . . . was an in-house document that contained a typo . . . indicating ten years to file litigation. This Court finds that the Plaintiffs' insurance policy set forth a one-year prescriptive period for the filing of claims. In addition, the legislative enactment allowed additional time for parties to file suit related to Hurricane Katrina damage. As such, Plaintiff cannot rely on an internal document produced during discovery to expand the prescriptive period. The court of appeal reversed the trial court's ruling, holding that the prescriptive period was interrupted by the timely filing of a class action against LCPIC in which the Plaintiffs were putative class members. In Pitts v. Louisiana Citizens Property Ins. Corp., 08-1024 (La. App. 4 Cir. 1/7/09), 4 So.3d 107, writ denied, 09-286 (La. 4/3/09), the Fourth Circuit held that under LSA-C.C.P. art. 596, the filing of class action suits against LCPIC, i.e., Buxton v. LCPIC, 06-8341, Civil District Court, Orleans Parish and Chalona v. LCPIC, 08-0257 (La. App. 4 Cir. 6/11/08), 3 So. 3d 494, suspended or interrupted the running of prescription against Ms. Pitts' property damage claims since Ms. Pitts was found to be a putative class member when the original class action petitions were filed. In summary, that court determined that prescription was interrupted on August 25, 2006, as to all putative class members, including Ms. Pitts, who had not opted-out of the class. LCPIC filed a writ of certiorari, and this Court granted the writ application. Taranto v. Louisiana Citizens Property Ins. Corp., 10-105 (La. 4/16/10), 28 So.3d 543. DISCUSSION The issue before this Court is whether the Plaintiffs' lawsuit had prescribed when it was filed after the expiration of the suit limitation period provided in the policy of insurance and after the expiration of the extended deadline enacted by the Louisiana Legislature despite other pending class actions against LCPIC involving Hurricane Katrina claims, which purportedly included Plaintiffs as putative class
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members. In reviewing a peremptory exception of prescription, the standard of review requires an appellate court to determine whether the trial court's finding of fact was manifestly erroneous. Carter v. Haygood, 04-0646, p. 9 (La.1/19/05), 892 So.2d 1261, 1267. Jurisprudence provides that statutes involving prescription are strictly construed against prescription and in favor of the obligation sought to be extinguished. Bailey v. Khoury, 04-0620, (La. 1/20/05), 891 So.2d 1268, 1275. On the issue of prescription, the mover bears the burden of proving prescription. Pitts, supra. However, if the petition is prescribed on its face, then the burden of proof shifts to the Plaintiff to negate the presumption by establishing a suspension or interruption. Bailey, 891 So.2d at 1275. There are two procedural devices used in Louisiana to bar valid substantive claims which have not been timely filed, namely prescription and peremption. Dozier v. Ingram Barge Co., 96-1370 (La.App. 4 Cir. 1/28/98), 706 So.2d 1064, 1066. According to our civilian tradition, prescription is defined as a means of acquiring real rights or of losing certain rights as the result of the passage of time. Marjorie Nieset Neufeld, Prescription and Peremption - The 1982 Revision of the Louisiana Civil Code, 58 Tul. L. Rev. 593 (November 1983) (citing to BaudryLacantinerie & Tissier as well as Aubry & Rau).4 The article suggests, in pertinent part: Traditionally, prescription has been divided into two categories: acquisitive prescription . . . and liberative prescription, which is a mode of resisting a claim by virtue of the claimant's inaction over an established period of time. Accordingly, the Louisiana Civil Code of 1870 provided that "prescription is a manner of acquiring the ownership of property, or discharging debts, by the effect of time, and under the
The creation of prescriptive periods is exclusively a legislative task, and the state is afforded broad discretion in determining the time within which a claim must be brought. Marc S. Firestone, Prescription-What You Don't Know Can Hurt You-Louisiana Adheres To A Three Year Limit On The Discovery Rule, 58 Tul. L. Rev. 1547, 1549 (June 1984). 5
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conditions regulated by law." Id. at 594-595. In Cichirillo v. Avondale Industries, Inc., 04-C-2894, 04-C-2918 (La. 11/29/05), 917 So.2d 424, this Court determined that the fundamental purpose of the prescription statutes is "to afford a defendant economic and psychological security if no claim is made timely and to protect the defendant from stale claims and from the loss or non-preservation of relevant proof." According to the Louisiana Civil Code, there are only three forms of prescription: acquisitive, liberative, and prescription of nonuse. See LSA-C.C. art. 3445. This Court defines the term "liberative

prescription" as a "period of time fixed by law for the exercise of a right." State ex. rel. Div. of Admin. v. McInnis Bros. Constr., 97-0742 (La. 10/21/97), 701 So.2d 937, 939. The Civil Code states that "there is no prescription other than that established by legislation" and "prescription runs against all persons" unless an exception is established by legislation. LSA-C.C. arts. 3457, 3467. Louisiana jurisprudence recognizes three theories upon which a Plaintiff may rely to establish that prescription has not run: suspension, interruption, and renunciation.5 Marco Demma v. Automobile Club Inter-Insurance Exchange, 082810 (La. 6/26/09), 15 So.3d 95, 98. Although sometimes used interchangeably, the concepts of "interruption" and "suspension" are distinguishable. The Louisiana Civil Code article 3462 provides in pertinent part "[p]rescription is interrupted when the owner commences action against the possessor, or when the obligee commences action against the obligor, in a court of competent jurisdiction and venue."6 If
It is well settled that liberative prescription may be "expressly or tacitly renounced only after it has accrued." LSA-C.C. Arts. 3449, 3450; Huckabee v. Sunshine Homes, 26,294 (La.App. 2 Cir. 12/7/94), 647 So.2d 409, 413.
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Comment "b" to LSA-C.C. art. 3463 provides: According to Louisiana decisions, after being interrupted by the filing of suit in a competent court, prescription is suspended while the suit is pending. See Marshall v. Southern Farm Bureau Casualty Company, 204 So.2d 665 (La.App. 3 Cir. 1967); 6

prescription is interrupted, the time that has run is not counted, and prescription commences to run anew from the last day of interruption. LSA-C.C.art. 3466. Adams v. Stalder, 2006-0051 (La. App. 1 Cir. 3/17/06), 934 So.2d 722, 725. By contrast, if prescription is suspended, the period of suspension is not counted toward the accrual of prescription but the time that has previously run is counted. LSA-C.C. art. 3472. This Court has indicated: An interruption of prescription resulting from the filing of suit continues as long as the suit is pending. LSA-C.C. art. 3463. The effect of interruption of prescription, as contrasted with suspension of prescription, is that the time that has run prior to the interruption is not counted; prescription commences to run anew from the last day of the interruption. LSA-C.C. art. 3466. Cichirillo, 917 So.2d at 430. Generally, the statutes (or the policy of insurance) provide a time period within which a particular cause of action must be filed, or be forever barred. See Lee R. Russ and Thomas F. Segalla, 16 Couch on Insurance 3d,

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