Court: Louisiana Court of Appeal; September 19, 2014; Louisiana; State Appellate Court
The appeal addresses whether USAgencies, the defendant insurance company, is entitled to dismissal from a lawsuit after depositing its policy limits of $10,000, plus interest and court costs, into the court registry. The case stems from a 2008 motor vehicle accident involving Richard Reynolds and Robert Bordelon III, who was driving a vehicle owned by his father and insured by USAgencies. Reynolds alleged negligence and sought exemplary damages, claiming Bordelon III was intoxicated at the time of the accident.
In June 2013, USAgencies sought court approval to deposit its policy limits and requested dismissal from the case, acknowledging its ongoing duty to defend Bordelon III. The trial court ordered the deposit of $14,824.87 and dismissed USAgencies with prejudice, prompting Reynolds to appeal. On appeal, Reynolds contended that the dismissal was erroneous due to his claim for exemplary damages, which he argued could impose liability on USAgencies beyond its policy limits.
The appellate court clarified that an insurer cannot be liable for exemplary damages exceeding its policy limits, regardless of whether the policy covers such damages. The court referenced established case law affirming that insurers have the right to limit their liability as dictated by the insurance contract. It concluded that allowing insurers to be liable for exemplary damages beyond policy limits would not serve the public policy goals of punishment and deterrence. Furthermore, the court noted that Louisiana Civil Code Article 2315.4 does not indicate a legislative intent to override contractual liability limits set by insurers and their insureds. The appellate court thus amended the judgment and affirmed the dismissal of USAgencies from the action.
USAgencies has a policy limit of $10,000.00 per person, which inherently excludes liability for damages exceeding this amount. While the issue of coverage for exemplary damages is not currently under consideration, any judgment against USAgencies, whether exemplary or not, would be confined to the $10,000.00 limit, along with interest and court costs. Despite Reynolds' argument against USAgencies' dismissal based on his rejection of their tender, the policy’s terms restrict USAgencies' damage obligations to its limits. USAgencies made an unconditional tender of the policy limits, and judicial precedent supports the dismissal of an insurer after such a tender, provided they remain liable for ongoing court costs related to their defense of the insured. Although USAgencies' counsel confirmed that its duty to defend and pay accrued court costs was not affected by the dismissal, this was not adequately reflected in the judgment. Consequently, the judgment must be amended to clarify that USAgencies retains liability for court costs as they accrue. The September 10, 2013 judgment is therefore amended to include this provision and affirmed, with the plaintiff, Richard L. Reynolds, responsible for the appeal costs.
