Dooley v. Wright

Citation: 501 So. 2d 980Docket: 18313-CA

Court: Louisiana Court of Appeal; January 20, 1987; Louisiana; State Appellate Court

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The Court of Appeal of Louisiana, Second Circuit, addressed the case of Dooley v. Wright, where plaintiffs William Kenneth Dooley and Priscilla Krahl Dooley sued defendant William C. Wright and XYZ Insurance Company following an accident in which a kitchen wall cabinet fell on Mrs. Dooley, resulting in serious injuries. The plaintiffs purchased their home in 1977 from Wright’s corporation, which installed the cabinets. Over time, gaps formed between the cabinets and the ceiling, and despite contacting Wright, no inspection was conducted. In 1982, Mr. Dooley reinforced one cabinet but not the other, which ultimately fell in May 1983, causing Mrs. Dooley's injuries.

The court noted that prior to the accident, Wright's corporation was dissolved, and he received all corporate assets. Wright had canceled the corporation's liability insurance shortly before the dissolution but did obtain property insurance for assets in his name without ensuring personal liability coverage for past corporate negligence. The trial court awarded damages to the plaintiffs and dismissed Wright’s third-party demand against his insurance agent. Wright contested the comparative negligence allocation against the plaintiffs and sought judgment on the third-party demand, while the plaintiffs maintained they bore no negligence. The court declined to consider the plaintiffs' argument regarding negligence since they did not appeal or respond to Wright's appeal. The ruling also examined whether a shareholder can be liable for damages resulting from corporate conduct after dissolution.

Wright filed a third-party demand against Tucker and a corporate insurance agency, claiming Tucker failed to secure adequate liability coverage for Wright and the corporation's homebuilding activities. The trial court found negligence in the installation of cabinets but assigned five percent of the fault to the plaintiffs, who had noticed the sagging cabinets for months. The court awarded $4,150 in special damages, $20,000 for Mrs. Dooley's general damages, and $3,000 for Mr. Dooley's loss of consortium, all reduced by five percent due to comparative negligence. Wright's claims against Tucker and the agency were dismissed because he did not demonstrate a reasonable belief that he was covered by liability insurance for the incident. 

The document discusses stockholder liability for a dissolved corporation's negligent acts, stating that an injured party can recover from a stockholder who inherits the corporation's assets, limited to the value of those assets. The negligence occurred after the corporation's dissolution. The ruling cited previous cases, establishing that a stockholder's personal liability does not extend beyond the corporate assets received upon dissolution. Wright received significant assets from the dissolved corporation, including real estate and promissory notes, and did not argue for liability beyond the asset value. Therefore, his liability is capped at the value of the assets he received. The cabinet that fell was noted to be substantial in size, used for storage, and caused the injury.

Wright acknowledges the trial court's findings regarding the negligent installation of the cabinet, which was secured with only five nails and one screw. The court concluded that a proper installation with six or more screws would have prevented the cabinet from detaching, even under load. Wright seeks to increase the negligence percentage assigned to the plaintiffs, who the court found should have suspected the cabinet's unsafe installation upon noticing sagging in an adjacent cabinet. The trial court reduced the plaintiffs' negligence due to Wright's assurances of the cabinets' safety, his knowledge of prior complaints about cabinet conditions in other homes he built, and the plaintiffs' trust in his expertise.

Wright argues it was unreasonable for the plaintiffs to rely on his assurances given their observations of the cabinets' condition. However, the court emphasizes that assessing comparative fault involves considering each party's conduct and the causal connections to the damages. Factors include whether actions were inadvertent or aware of danger, the risk created, the significance of the actions, the actor's capacities, and any extenuating circumstances.

Wright's defense is that his installation method was common in the industry and he was not consciously aware of any danger. Testimony revealed significant discrepancies in the number of nails used in the cabinets, with prior complaints from neighbors about similar issues in houses built by Wright. Despite the plaintiffs' concerns about the cabinets' safety, they relied on Wright's expertise, which the court does not find unreasonable. The court stands by its finding that Wright's corporation was at least 95 percent negligent, attributing the cabinet's fall directly to the negligent installation and the plaintiffs' reasonable reliance on Wright's assurances.

Additionally, Wright's third-party demand for indemnity was dismissed because he failed to demonstrate that Tucker's actions justified any assumption of proper insurance coverage.

The trial court's decision is upheld, confirming that the proof required to establish a claim against an insurance agent for failing to obtain coverage includes: 1) an agreement by the agent to procure insurance; 2) the agent's lack of reasonable diligence in obtaining the insurance and failure to promptly notify the client of any failure; and 3) the client's assumption, based on the agent's actions, that they were insured. In the case at hand, Wright informed Tucker of his intention to dissolve his corporation and requested cancellation of business policies, acknowledging in a signed release that no claims could arise post-cancellation. There were no discussions about continuing liability coverage after the corporation's dissolution. Although Tucker mistakenly believed that Wright was shielded from personal liability for corporate negligence post-dissolution, he did not communicate this belief to Wright or seek legal advice regarding potential liabilities. Both parties assumed that corporate liability insurance was unnecessary after dissolution, failing to consider personal liability risks. Wright did not inquire about his liability until after the lawsuit commenced, and he did not pursue insurance to cover potential personal liabilities. The evidence did not support claims that Tucker had agreed to procure such coverage for Wright. Consequently, Wright's assumption that Tucker was responsible for obtaining personal liability insurance was unreasonable. The trial court's dismissal of Wright's claims against Tucker is affirmed.