The Campbells moved to New Orleans and rented a residence in June 2004. They retained Stone Insurance to procure renters' insurance. The Fireman's Fund policy began in July 2004. Stone sent the policy documents to the Campbells for review. A cover letter included a flood rejection form to sign. By signing the form, the Campbells were “acknowledging we discussed flood insurance and you do not want it at the present time.” The Campbells reviewed the documents and asked for clarification on certain provisions. They allege that Stone assured them that the policy covered any potential damage, including flood. They also allege that Stone told them they could not obtain flood insurance through the National Flood Insurance Program because they were renters. On August 15, 2004, they signed the flood rejection form which stated Stone offered flood insurance coverage in the “National Flood Program through Omaha Property & Casualty,” that the Campbells rejected such coverage, and that Stone Insurance “will be held harmless and not liable in the event” of a flood loss.
After Hurricane Katrina hit and all of their belongings were destroyed, the Campbells made a claim under the Fireman's Fund policy. They found that the policy did not cover flood damage. They also learned that they could have obtained coverage under the National Flood Insurance Program. In August 2006, they sued Fireman's Fund, alleging that the policy should cover their damage. They also brought action against Stone Insurance, alleging misrepresentation of the extent and the availability of flood coverage.
Louisiana law provides, that no action for damages against an insurance agent, broker, solicitor, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide insurance services shall be brought unless filed within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered. However, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect. The trial court ruled against the Campbells , and this appeal followed.
The Campbells focused their appeal on whether Stone misrepresented the availability of insurance through the National Flood Insurance Program.
The court found that a prescriptive period will begin to run even if the injured party does not have actual knowledge of facts that would entitle him to bring a suit as long as there is constructive knowledge of same. Constructive knowledge is whatever notice is enough to excite attention and put the injured party on guard and call for inquiry.
It was undisputed that the Campbells read their policy documents because they asked for clarification on certain issues. Further, the cover letter sent with the policy explicitly stated that “you are acknowledging we discussed flood insurance and you do not want it at this time.” Because the Campbells read the cover letter and policy and signed the flood rejection form, they had constructive knowledge of the contents of the policy at that time. Any misrepresentation from the agent would have contradicted the cover letter and the flood rejection form, which would have put the Campbells on constructive notice of the misrepresentation. The cover letter and the flood rejection form should have “excited attention” and put the Campbells “on guard” of any misrepresentation at least by August 15, 2004. Therefore, the one-year preemptive period ended on August 15, 2005.
The court found that the Campbells had no viable causes of action under Louisiana law against Stone Insurance because they had at least constructive knowledge of the alleged misrepresentations more than one year before they filed their suit.
This case is Campbell v. Stone Insurance, Inc., 2007 WL 4248211 (C.A. 5).