Preview:

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #069

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 25th day of October, 2011, are as follows:

BY JOHNSON, J.:

2011-C -0084

GINGER HINCH DURIO v. HORACE MANN INSURANCE COMPANY, ET AL. (Parish of Calcasieu) For the above reasons, we hold that the lower courts erred in calculating La. R.S. 22:1220 penalties based on contractual amounts due under the insurance contract. Such penalties are properly calculated by doubling the amount of damages sustained as a result of the insurer's breach of its duties under the statute. Applying the proper statutory interpretation to the facts of this case, we amend the trial court's judgment to reflect the correct award of penalties totaling $334,666.00. We also hold the lower courts erred in applying the amended version of La. R.S. 22:658, thereby allowing attorney fees to be awarded. Thus, we reverse the lower courts' rulings on this issue, and vacate the award of attorney fees. In all other respects, the rulings of the lower courts are affirmed. AFFIRMED IN PART; REVERSED IN PART; AMENDED IN PART. VICTORY, J., additionally concurs in part. KNOLL, J., concurs in part and dissents in part with assigned reasons.

Page 1 of 4

10/25/11 SUPREME COURT OF LOUISIANA No. 2011-C-0084 GINGER HINCH DURIO VERSUS HORACE MANN INSURANCE COMPANY, ET AL. ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD CIRCUIT, PARISH OF CALCASIEU

JOHNSON, Justice This writ application arises from Plaintiff's claims for property damage to her home following Hurricane Rita and for damages and penalties against her homeowner's insurer pursuant to La. R.S. 22:658 and La. R.S. 22:1220.1 We granted the writ application primarily to review the correctness of the rulings of the lower courts applying the penalty provision of La. R.S. 22:1220(C) to contractual damages, and awarding attorney fees pursuant to the amended version of La. R.S. 22:658. For the reasons that follow, we affirm in part, reverse in part and amend in part. FACTS AND PROCEDURAL HISTORY In September of 2005, Plaintiff, Ginger Hinch Durio ("Ms. Durio"), owned and lived with her three children in a home on East Banbury Drive in Lake Charles, Louisiana. Plaintiff's home was covered by a homeowner's insurance policy issued by defendant, Horace Mann Insurance Company ("Horace Mann"). The policy provided the following coverage limits: Coverage A

These statutes were renumbered pursuant to La. Acts 2008, No. 413 to La. R.S. 22:1892 and La. R.S. 22:1973, respectively. For clarity, we refer to the previous statute numbers in this opinion. 1

1

(Structure/Dwelling) - $173,300.00; Coverage B (Other Detached Structures) $17,330.00; Coverage C (Contents) - $103,980.00; and Coverage D (Additional Living Expenses) - $103,980.00. On September 24, 2005, Plaintiff's home was damaged by Hurricane Rita. The home had an attached garage, and the majority of the damage occurred when winds dislodged the garage door, causing the main support beam to collapse, resulting in a partial collapse of the garage structure. The extent of damage to the rest of the structure and to the interior of the home was disputed, other than water damage caused when a hot water heater in the attic overturned. Ms. Durio was in the process of a divorce at the time of the hurricane, and obtained ownership of the home through the community property settlement. Due to financial difficulties, she had recently signed a contract to sell the home. In anticipation of their move, the Durios had packed up many of their belongings and stored them in the garage. When the ceiling inside the garage collapsed, their stored belongings were destroyed. Ms. Durio filed suit against Horace Mann on June 13, 2006. In her Petition for Damages, she alleged the "dwelling, contents and appurtenant structures [shed] were completely destroyed by Hurricane Rita," but Horace Mann "consistently arbitrarily and capriciously refused to classify [the] home as a total loss." Ms. Durio asserted bad faith claims under La. R.S. 22:658 and La. R.S. 22:1220. At trial, conflicting evidence was presented regarding the extent of damage to the property. In addition, expert testimony was presented regarding Ms. Durio's claims for emotional distress damages and lost wages as a result of Horace Mann's bad faith adjustment of her claim. The relevant evidence in the record is generally summarized below. Plaintiff initiated a claim with Horace Mann on September 27, 2005. On
2

October 1, 2005, Horace Mann issued a $2,500.00 check to Ms. Durio as an advance on additional living expenses ("ALE"). Ricky Fine, an independent claims adjuster hired by Horace Mann, testified he did a full inspection of the property on October 12, 2005. He noted the garage was severely damaged, and noted some interior damage from the hot water heater. His estimate also allowed for an electrical inspection of the garage and home to assess the amount of damage caused by the garage collapsing. Mr. Fine testified there was no storm related damage to the slab, and he did not believe the house needed to be rebuilt. He opined the structural damage was limited to the garage. The Horace Mann adjuster's reports dated November 2, 2005, reflect estimated damages of $19,293.70 under Coverage A and $8,217.03 under coverage B. On November 4, 2005, Horace Mann issued a check for damage to the dwelling (Coverage A) in the amount of $18,293.70 (estimate less deductible), and a check for damage to other structures (Coverage B) in the amount of $8,217.03. These checks were never negotiated. The record reflects that Ms. Durio did not negotiate the checks because her ex-husband was also listed as a payee on the checks (the Horace Mann policy was issued in both names), and there was no indication on the checks that the payments were intended as an unconditional tender. Ms. Durio was dissatisfied with the estimate of damages, and insisted the home was a total loss. At the request of Ms. Durio, Horace Mann reinspected the property on November 18, 2005. On December 5, 2005, Horace Mann issued a supplemental payment for structural damage (Coverage A) in the amount of $1,572.27, and a check in the amount of $6.99 for contents (Coverage C). Horace Mann subsequently issued additional checks for ALE, each in the amount of $1,950.00, on October 1, 2005, November 1, 2005, December 1, 2005, and January 1, 2006, for a total of $7,800.00. No further payments were made by Horace Mann
3

under Coverages A, B or D. Because she still disagreed with Horace Mann's estimation of the extent of damages, Ms. Durio hired an engineer to inspect the property. Mr. Charles Norman, P.E., inspected the house on January 21, 2006, and issued a report dated January 26, 2006, in which he opined the house was not livable, and the structural and mechanical integrity of the home was compromised. Specifically, his report provides:

Download 2011-C-0084 GINGER HINCH DURIO v. HORACE MANN INSURANCE COMPANY, ET AL..pdf

Louisiana Law