Plaintiff desires to further amend and supplement the original petition by inserting the following Paragraphs after Paragraph IX of the original petition, said paragraphs to read as follows:

Additionally, a Uniform Motor Vehicle Traffic Crash Report was issued on the March 29, 2009—the date of the accident—indicating that Justin Dodge was a passenger in the vehicle operated by Tracy Sherman and that Justin Dodge was transported to Avoyelles Hospital subsequent to the collision.

Thereafter, on June 2, 2009, a certified letter was forwarded to Gemini Insurance Company's insured by Justin Dodge's counsel notifying the Insured of Justin Dodge's injuries. Justin Dodge filed suit against Gemini Insurance Company's insured driver on July 8, 2009 and amended his petition on August 31, 2009 naming Gemini Insurance Company as defendant.

Nevertheless, Gemini Insurance Company disbursed its policy limits to additional claimants despite clear notice to it and its insured that Justin Dodge possessed a claim for injuries under the Gemini Insurance Company policy and thereafter denied any further payment to Justin Dodge.

This course of conduct by Gemini Insurance Company constitutes a violation of its statutory [“]affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant[”] pursuant to Louisiana Revised Statute [S]ection 22:1973 entitling Justin Dodge to all damages and penalties appurtenant thereto.

Gemini moved for summary judgment, asking that Mr. Dodge's demands against it be dismissed.

Gemini argued that La.R.S. 22:1973 did not confer a cause of action on third parties against an insurer to settle claims. Gemini supported its motion with the affidavit of Michael J. Gilmartin, vice president of claims for Berkley Program Specialists, an authorized representative for Gemini. Mr. Gilmartin affirmed that the policy issued by Gemini to Moncla had a per-accident liability limit of $30,000. Also according to Mr. Gilmartin, Gemini had issued eight checks to claimants between May 4, 2009 and July 27, 2009, in varying amounts but totaling exactly $30,000, arising from the March 29, 2009 accident.

Mr. Dodge opposed the motion for summary judgment and argued that, prior to issuing the checks, Gemini had not contacted him to attempt to resolve his claim from the accident, despite April 15, 2009 correspondence from his counsel to Cottonport Insurance Agency advising it of Mr. Dodge's claim and attaching a copy of the accident report completed by a Louisiana state trooper. Counsel also forwarded similar letters to Performance Insurance Services in Ruston, Louisiana, on April 15, 2009 and June 2, 2009. A fourth letter, also dated June 2, 2009, was sent by counsel to Moncla. A June 5, 2009 letter was sent to Performance Insurance Services in Denham Springs, Louisiana.

Gemini's co-defendants, Glenn Ducote, Sr., and Moncla, also opposed the motion. They argued that reasonable minds could differ over whether Gemini had violated its duty to thoroughly investigate the claims or whether it had made every effort to avoid prejudicing Moncla in the resolution of the claims. They also argued that there was no dispute over the fact that Gemini had been aware that Mr. Dodge had been a passenger in the vehicle and that he had sustained injuries.

After argument, the trial court observed that it could not believe that, in the process of settling the other claims, “the insurance company did not have an accident report in dealing with the people that they settled with.” The trial court noted that case law indicated that questions of bad faith ordinarily were not to be decided on summary judgment, and that with notice having been sent to Gemini's “apparent agent of record,” as indicated by the accident report, there remained a genuine issue of material fact regarding Gemini's good faith handling of the claim.

Gemini appealed.

Louisiana Law

La.R.S. 22:1973 provides:

A. An insurer, including but not limited to a foreign line and surplus line insurer, owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.

B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer's duties imposed in Subsection A of this Section:

(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.

(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.

(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.

(4) Misleading a claimant as to the applicable prescriptive period.

(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.

(6) Failing to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary, capricious, or without probable cause.

C. In addition to any general or special damages to which a claimant is entitled for breach of the imposed duty, the claimant may be awarded penalties assessed against the insurer in an amount not to exceed two times the damages sustained or five thousand dollars, whichever is greater. Such penalties, if awarded, shall not be used by the insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings.

D. The provisions of this Section shall not be applicable to claims made under health and accident insurance policies.

E. Repealed by Acts 1997, No. 949, § 2.

F. The Insurance Guaranty Association Fund, as provided in R.S. 22:2051 et seq., shall not be liable for any special damages awarded under the provisions of this Section.

The Appellate Court's Decision

The appellate court reversed.

In its decision, it explained that the second sentence of La.R.S. 22:1973(A) conferred a private right of action on third-party claimants, but only for the specific acts listed in Subsection (B) – none of which applied to Mr. Dodge's claim. The appellate court observed that:

- Mr. Dodge had not alleged and had produced no evidence that Gemini had misrepresented any facts or policy provisions to him;

- There had been no showing that Gemini had failed to pay a settlement between it and Mr. Dodge and, in fact, his claim arose because Gemini had not settled with him;

- Gemini had not denied coverage, and no showing had been made that Gemini had attempted to settle with Mr. Dodge at all, much less that an attempt to settle had been based on an altered application;

- Mr. Dodge had not asserted that Gemini had misled him regarding the applicable prescriptive period;

- Mr. Dodge was not “a person insured by the contract”; and

- The claim by Mr. Dodge did not involve immovable property.

The appellate court added, with respect to the trial court's concerns about whether Gemini had been notified or had notice of Mr. Dodge's claim, that the fact that Mr. Dodge's name had been included on the accident report did “not lead to the inevitable conclusion” that he would pursue a personal injury claim. Moreover, it said, whether Gemini had been placed on notice was “completely irrelevant to Mr. Dodge's claim—or lack thereof—under La.R.S. 22:1973.”

Finally, the appellate court said that, assuming for purposes of argument that Gemini had violated La.R.S. 22:1973(B)(1) by not informing Mr. Ducote and Moncla of the possibility of an excess judgment, such a violation was “personal to them and not to Mr. Dodge.”

The case is Dodge v. Sherman, No. 17–70 (La. Ct.App. June 7, 2017). Attorneys involved include: Sidney W. Degan, III, Travis L. Bourgeois, Catherine N. Thigpen, Degan, Blanchard & Nash, 400 Poydras, Suite 2600, New Orleans, LA 70130, (504) 529–3333, COUNSEL FOR DEFENDANT/APPLICANT: Gemini Insurance Company; Michael Joey Bernard, Burglass & Tankersley, LLC, 5213 Airline Drive, Metairie, LA 70001–5602, (504) 836–2220, COUNSEL FOR DEFENDANTS/RESPONDENTS: Moncla Auto Sales, LLC, Glen Ducote; William Compton Helm, Kinchen, Walker, Bienvenu, 9456 Jefferson, Building 3, Suite F, Baton Rouge, LA 70809, (225) 923–7844, COUNSEL FOR DEFENDANT/RESPONDENT: Tracy B. Sherman; Cory P. Roy, Brandon J. Scott, Benjamin D. James, Roy & Scott, P.O. Box 544, Marksville, LA 71351, (318) 240–7800, COUNSEL FOR PLAINTIFF/RESPONDENT: Justin Dodge; Blake E. Ryland, Law Office of Darrel D. Ryland, APLC, P.O. Drawer 1469, Marksville, LA 71351, (318) 253–5961, COUNSEL FOR DEFENDANTS/RESPONDENTS: Moncla Auto Sales, LLC, Glen Ducote.