Alarcon v. Aetna Cas. and Sur. Co.

Citations: 538 So. 2d 696; 1989 WL 4657Docket: 88-CA-487

Court: Louisiana Court of Appeal; January 17, 1989; Louisiana; State Appellate Court

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In the case of Frederick J. Alarcon, Jr. and Ann Q. Alarcon v. The Aetna Casualty and Surety Company and Kim A. Goodwill, the Court of Appeal of Louisiana addressed an appeal from a summary judgment in a lawsuit initiated by the Alarcons, homeowners seeking damages related to a house fire that occurred on February 19, 1986. Following the incident, the Alarcons were dissatisfied with the damage assessment conducted by Aetna's adjuster, Kim A. Goodwill, leading to claims of inadequate and untimely payment under their insurance policy. The Alarcons alleged breaches of contract, mental anguish, and violations of the Louisiana Unfair Trade Practices and Consumer Protection Law due to the defendants' actions. Aetna and Goodwill responded with exceptions of no cause of action against specific claims and subsequently filed for partial summary judgment, which the court mistakenly granted as a full summary judgment, dismissing all claims against Goodwill and other allegations. On appeal, the court examined whether the Alarcons could pursue tort claims against Goodwill and Aetna for negligence and whether the Unfair Trade Practices and Consumer Protection Law applied in this context. The court noted that while Louisiana law typically limits recovery for nonpecuniary loss in breach of contract cases, tort liability might arise under certain conditions in contract disputes. The appellate court found error in the original judgment and set it aside for further consideration of the exceptions.

In *Lafleur v. John Deere*, the court dismissed a farmer's claim for mental anguish and crop loss due to a defective grain drill, stating that his distress did not fall within the manufacturer's duty of care. The ruling suggested that a manufacturer could have tort duties if at fault under a contract. The court referenced *Borden, Inc. v. Howard Trucking Co.*, affirming that parties can incur tort liability for consequential damages even with a contractual relationship if the damage results from both a breach of contract and legal fault. This principle was reiterated in *New Orleans v. United Gas Pipe Line Co.*, emphasizing that a contract does not grant tort immunity. The appellants claimed that Goodwill's negligence caused Alarcon's mental distress and conceded Goodwill's dismissal from the contract damages claim, asserting a tort claim against both Goodwill and Aetna. The appellees contended that the Alarcons could only seek damages under the insurance contract governed by LSA-R.S. 22:658, which outlines penalties for delayed payment. They distinguished their case from others involving misrepresentation and delays in payment, as those cases were based on LSA-C.C. art. 1934(3), which does not apply to the Alarcons’ claims. The plaintiffs alleged that Aetna and Goodwill failed to act in good faith regarding the property damage claim, leading to severe emotional and medical distress for Alarcon.

Damages claimed are attributed to the negligent acts of Aetna and Kim A. Goodwill, specifically: 1) failure to timely evaluate the homeowner's claim; 2) lack of meaningful effort in evaluating the claim; 3) failure to seek a reasonable settlement; 4) breach of the insurance contract; and 5) other unspecified negligent acts. These allegations center on general failures to perform contractual obligations. The document references legal precedents regarding the relationship between insurance adjusters and claimants, indicating that while typically no duty exists for adjusters to inform claimants of prescription deadlines, there could be exceptions based on circumstances such as the parties' relative knowledge, the adjuster's authority, or specific promises made. Previous cases, including Pellerin v. Cashway Pharmacy, highlight instances where an adjuster may have assumed a duty to inform, yet the current petition does not sufficiently allege a breach of such a duty related to the plaintiff's medical issues. Consequently, the trial court appropriately upheld the exception of no cause of action regarding the tort claim against Goodwill and Aetna. However, the court acknowledged that, under certain circumstances, a tort duty could arise in insurance settlement contexts and permitted the plaintiffs the opportunity to amend their petition. Additionally, the excerpt discusses claims under the Unfair Trade Practices and Consumer Protection Law, which prohibits unfair competition and deceptive practices as outlined in LSA-R.S. 51:1401-1418.

The definition of unfair or deceptive acts is determined by courts, referencing Moore v. Goodyear Tire and Rubber Co., which states that practices are unfair if they violate public policy or are immoral, unethical, oppressive, unscrupulous, or harm consumers. Louisiana Revised Statutes (R.S.) 51:1409 allows individuals who suffer financial loss due to these practices to take private action. However, R.S. 51:1406(1) excludes matters under the jurisdiction of specific state regulatory bodies, including the insurance commissioner, from this statute.

The appellant cites Lamarque v. Massachusetts Indem. Life Ins. Co., which indicated that the insurance commissioner does not have exclusive jurisdiction over unfair trade practices. Recent case law, particularly West v. Fireman's Fund Insurance Company, preferred the ruling in Comeaux v. Pa. General Ins. Co., which determined that similar claims fell under the jurisdiction of the insurance commissioner and were exempt from the Unfair Trade Practices and Consumer Protection Law.

The court agrees with the trial judge that the plaintiffs cannot pursue claims under the Unfair Trade Practices and Consumer Protection Law due to statutory exclusions, affirming the dismissal of these claims. However, the court reverses the summary judgment and remands the case for the plaintiffs to amend their petition in compliance with La. C.C.P. art. 934. The court also concurs with the majority that a breach of contract claim against Aetna could be valid, including potential damages for mental anguish, but such a claim could not proceed against Aetna's employee, Goodwill, due to lack of contractual privity. The decision is reversed in part, affirmed in part, and remanded with instructions.