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holding that release of all contractual rights against insurer did not include statutory bad faith claim
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No. 2015–CA–0737.
03-09-2016
Dana JOHNO v. John DOE et al.
Paul C. Miniclier, The Law Office of Paul C. Miniclier, New Orleans, LA, for Plaintiff/Appellant. G. Bruce Parkerson, Attie B. Carville, Scott H. Mason, Plauche' Maselli Parkerson L.L.P., New Orleans, LA, for Defendant/Appellee.
Paul C. Miniclier, The Law Office of Paul C. Miniclier, New Orleans, LA, for Plaintiff/Appellant.
G. Bruce Parkerson, Attie B. Carville, Scott H. Mason, Plauche' Maselli Parkerson L.L.P., New Orleans, LA, for Defendant/Appellee.
Opinion
PAUL A. BONIN, Judge.
In his seventh amending and supplemental petition, Dana Johno, the appellant, asserted three claims against Scottsdale Insurance Company, the appellee. Only one of those claims, however, is before us on this appeal. Mr. Johno, as the purported assignee of Leon Duplessis & Sons, Inc., (“Duplessis”) asserts a bad-faith failure-to-settle claim against Scottsdale. Scottsdale filed a partial peremptory exception of no right of action to this specific claim. The trial judge sustained the partial exception and dismissed this claim of Mr. Johno.
In support of the trial judge's ruling, Scottsdale argues that the Release executed between Mr. Johno and Duplessis, from which the purported assignment of the claim is derived, is unambiguous and does not assign any bad-faith failure-to-settle claim against Scottsdale. We have reviewed the Release, which of course is a contract between the parties, de novo and conclude as a matter of law that Duplessis did not therein assign Mr. Johno its bad-faith failure-to-settle claim against Scottsdale. Accordingly, we affirm the trial judge's sustaining the partial exception and dismissing the specific claim for bad-faith failure-to-settle claim against Scottsdale.
We explain our decision below.
I
A
Dana Johno owned a rental home, damaged during Hurricane Katrina in 2005, which according to him was demolished without his consent. Leon Duplessis & Sons, Inc. had a contract with Plaquemines Parish Government for demolition and debris removal. In addition to suing them, Mr. Johno also sued two subcontractors, Hard Rock Construction and Pro Tree Services as well as their insurer, Scottsdale Insurance Company.
During the course of the litigation, Mr. Johno settled with Duplessis and Plaquemines Parish. He learned around the time of the settlement that Scottsdale, who allegedly insured Duplessis, refused to participate in settlement negotiations.
As part of his settlement with Duplessis, Mr. Johno and Duplessis executed a Release. The full title of the Release is “Confidential Settlement Agreement and Release.” Additional parties and signatories to the Release are Plaquemines Parish and The Hanover Insurance Company. The Release generally provided for payment to Mr. Johno by Duplessis, Plaquemines Parish and Hanover and his release of “any and all claims” he may have against them. The term “claims” is comprehensively defined in the Release. The Release also provided an assignment to Mr. Johno of some but not all of Duplessis' “contractual rights” against Hard Rock and Scottsdale.
Mr. Johno also agreed to dismiss with prejudice his lawsuit against the released parties.
Upon the completion of the execution of the Release, Mr. Johno filed his seventh amending and supplemental petition. In that petition, he advanced three claims against Scottsdale. One of the claims he advanced was that Scottsdale was liable to him personally for its bad-faith failure to settle his own claim. The trial judge sustained a partial peremptory exception of no cause of action as to that claim and dismissed it. Mr. Johno has not assigned error to that ruling and the issue presented by the exception is not before us. Another of the claims advanced by Mr. Johno against Scottsdale is as the assignee of Duplessis (by virtue of the Release) for Duplessis' indemnity claim under the policy of insurance. Scottsdale has not challenged Mr. Johno's right to assert Duplessis' indemnity claim and thus this claim too is not before us.
See Theriot v. Midland Risk Ins. Co., 694 So.2d 184, 193 (La.1997).
B
The third claim advanced is, however, before us on our review of the sustained partial exception of no right of action. When, as here, we are presented with an exception of no right of action under La. C.C.P. art. 927 A(6), we assume for the purposes of deciding the exception that the petition states a valid cause of action. See J–W Power Co. v. State ex rel. Dept. of Revenue, 10–1598, p. 7 (La.3/15/11), 59 So.3d 1234, 1239; Louisiana Paddlewheels v. Louisiana Riverboat Gaming Com'n, 646 So.2d 885, 888 (La.1984). This claim, a bad-faith failure-to-settle claim, arises under La. R.S. 22:1973. A cause of action for a bad-faith failure-to-settle under Section 1973 is only available to Mr. Johno if he is advancing Duplessis' claim as assigned to him. See Kelly v. State Farm Fire & Cas. Co., 14–1921, p. 6 (La.5/5/15), 169 So.3d 328, 333.
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.
In the trial court, Scottsdale excepted to Mr. Johno's right to assert Duplessis' bad-faith failure-to-settle claim against it on two distinct grounds. First, Scottsdale contended that because such bad-faith failure-to-settle claim, which it characterizes as a strictly personal right, was not first asserted by Duplessis in a lawsuit before any assignment, the claim was not assignable and thus Mr. Johno could not be the assignee. And, second, Scottsdale contended that the Release itself unambiguously did not grant any assignment of Duplessis' bad-faith failure-to-settle claim even if it could be assigned. The trial judge accepted Scottsdale's first contention and did not reach its second. He sustained the partial exception and dismissed the bad-faith failure-to-settle claim advanced by Mr. Johno. Mr. Johno appealed the ruling. We review the ruling de novo. See Caceras v. Work, 12–1097, pp. 3–4 (La.App. 4 Cir. 2/27/13), 110 So.3d 275, 278.
The trial judge designated his judgment sustaining a partial exception as final for the purpose of an appeal. See La. C.C.P. art. 1915 B(1). But because the trial judge did not give any reasons supporting his determination that “there is no just reason for delay” in taking an appeal on this limited issue, we have considered the matter de novo under applicable factors. See R.J. Messinger, Inc. v. Rosenblum, 04–1664, pp. 13–14 (La.3/2/05), 894 So.2d 1113, 1122. We prefer, however, that trial judges, who are more familiar with the relative importance of a particular partial judgment to the overall proceedings, give an explanation of why multiple appeals and piecemeal litigation is appropriate at the time of designating the partial judgment appealable.
We pause to emphasize that it is the ruling itself, and not the trial judge's stated reasons for his ruling, that we are reviewing for correctness. See Wooley v. Lucksinger, 09–0571, 09–0584, 09–0585, 09–0586, pp. 77–78 (La.4/1/11), 61 So.3d 507, 572 (Because reasons for judgment form no part of a judgment and we review judgments, “[j]udgments are often upheld on appeal for reasons different from those assigned by the district judges.”). And, because Scottsdale was the prevailing party in the trial court, it is not limited to the reasons given by the trial judge in support of its position but may rely on any argument supported by the record. See La. C.C.P. art. 2133 B (“A party who does not seek modification, revision, or reversal of a judgment in an appellate court ... may assert, in support of the judgment, any argument supported by the record, although he has not appealed, answered the appeal, or applied for supervisory writs.”); Cusimano v. Port Esplanade Condominium Ass'n, Inc., 10–0477, p. 3 (La.App. 4 Cir. 1/12/11), 55 So.3d 931, 935.
Because we agree with Scottsdale that the Release is unambiguous, as we discuss in Part II, post, and that Duplessis does not assign its bad-faith failure-to-settle claim against Scottsdale to Mr. Johno, we conclude that the ruling is correct and thus need not further consider the basis on which the trial judge based his ruling.
II
The Release is the law between Mr. Johno and Duplessis. See La. Civil Code art.1983. “When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent.” La. Civil Code art. 2046. And “[w]hen a contract can be construed from the four corners of the instrument without looking to extrinsic evidence, the question of contractual interpretation is answered as a matter of law.” Sims v. Mulhearn Funeral Home, Inc., 07–0054 p. 10 (La.5/22/07), 956 So.2d 583, 590; Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 93–0911 p. 7 (La.1/14/94), 630 So.2d 759, 764 (“The determination of whether a contract is clear or ambiguous is a question of law.”). The interpretation of this contract, then, is a question of law. Wooley, p. 56, 61 So.3d at 558.
Here, Mr. Johno argues that there is a broad assignment of rights, which although it admittedly does not expressly specify the assignment of the bad-faith failure-to-settle claim is sufficiently broad to include it. And, it is true, that the assignment of rights portion of the Release, if read in isolation from the remainder of the Release, would appear to be broad and nearly all-encompassing. But, of course, we do not read any single contractual provision in isolation. See La. Civil Code art. 2050 (“Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.”).
The assignment of rights portion of the Release is set forth below (capitalized terms are those which the Release specifically defines in its definitions portion):
Except as specifically stated herein, DUPLESSIS agrees to assign to RELEASOR [Mr. Johno] all contractual rights DUPLESSIS has or may have against HARDROCK, its subcontractors and their insurers, including but not limited to, the indemnity claims asserted by DUPLESSIS in the DEMAND and any additional rights DUPLESSIS has or may have under the HARDROCK CONTRACT, to the fullest extent allowed under Louisiana law, except DUPLESSIS and HANOVER specifically reserve their rights to recover past, present, and future defense costs, with DUPLESSIS and HANOVER remaining in the LITIGATION only to the extent necessary for RELEASOR [Mr. Johno] to pursue the herein assigned indemnity claim and for DUPLESSIS and HANOVER to recover its past, present and future defense costs. (emphasis added)
We have emphasized at the outset the provisions “all contractual rights,” which include “indemnity claims” as well as “any additional rights” under “the HARDROCK CONTRACT” so as to contrast them with Mr. Johno's argument that these contractual rights encompass a bad-faith failure-to-settle claim. It is settled that a bad-faith failure-to-settle claim arises not from the contract of insurance itself but rather from an insurer's violation of its statutory duties under La. R.S. 22:1973. See Wegener v. Lafayette Ins. Co., 10–0810, p. 12 (La.3/15/11), 60 So.3d 1220, 1229; Durio v. Horace Mann Ins. Co., 11–0084, p. 18 (La.10/25/11), 74 So.3d 1159, 1170 (The duties of an insurer under the statute “are separate and distinct from its duties under the insurance contract.”). And we detect no provision in the plain words of the assignment of rights which purports to assign the statutory (as opposed to contractual) claim.
The indemnity claim, clearly assigned to Mr. Johno, and the obligation-to-defend claim (defense costs), clearly reserved by Duplessis, are, on the other hand, quintessential claims arising from the contract of insurance, especially when contractual liability is assumed. See, e.g., Suire v. Lafayette City–Parish Consol. Government, 04–1459, pp. 18–19 (La.4/12/05), 907 So.2d 37, 51–52. Barton Protective Services, Inc. v. Coverx Corp., 615 So.2d 438, 441–442 (La.App. 4th Cir.1993).
We do not, and cannot, assume that the absence of an explicit assignment of its bad-faith failure-to-settle claim by Duplessis should be construed as an ambiguity in the Release. Elsewhere (in the definitions section) in the Release, the terms “CLAIM” or “CLAIMS” are defined. And, importantly, these terms as defined in the contract itself are only used in the assignment of rights provision with the modifier “indemnity.” As defined in the Release, a “CLAIM” or “CLAIMS” includes demands or causes of action whether arising out of tort, contract, statute, regulation, or otherwise, including contractual claims, extracontractual claims, claims for indemnity, claims for insurance coverage, and claims for violation of any code, statute, including but not limited to claims under La. R.S. 22:1973 (formerly 22:1220), statutory or contractual penalties, and bad faith damages.
We quote the full definition of “CLAIM” or “CLAIMS” set forth in the Release:
“CLAIM” or “CLAIMS” shall mean any and all past, present and future claims, demands, obligations, requests, actions, suits, proceedings, losses, damages, liens, administrative proceedings, governmental actions, and causes of action, whether arising out of tort, contract, statute, regulation or otherwise, including but not limited to those for negligence, intentional tort, property damage, lost rents, lost income, loss of property, loss of use, claims for violation of civil rights under the United States Constitution, Amendments and Statutes, Louisiana Constitution, Amendments and Statutes, deprivation of due process, taking without compensation, intentional, malicious and [reckless] behavior and gross negligence in failing and refusing [to investigate] the ownership of the home and failing to notify Johno of the intent to destroy his property, failing to follow procedures in the demolition process, violation of rights under LSA Constitution Article 12, See 3 and La R.S. 44:31, et seq., malicious, intentional, and reckless and grossly negligence production of incomplete and/or false and/or misleading and/or fraudulent information, failing to supervise, altering and/or expurgating files, delayed production of documents, failure to properly investigate and supervise demolitions, destroying/demolishing property belonging to others, claims for failure to properly train employees; claims for failure to supervise; claims for failure to properly inspect; claims for failure to provide appropriate warnings, claims based on respondeat superior or vicarious liability, claims based on res ipsa loquitur, claims for property damage, past, present, and future lost rental, claims for past, present, and future mental pain and suffering, claims for punitive or exemplary damages, strict liability claims, absolute liability claims, property damage claims, bodily injury claims, contractual claims, extracontractual claims, claims for indemnity, claims for insurance coverage, claims for violation of any code, statute, rule regulation, or law, including but not limited to claims under La. C.C. arts. 1996, 1997. 1998, 2315 et seq., 2316, 2317, 2317.1, 2318, 2320, U RS, 22:1892 (formerly 22:658), and La. R.S. 22:1973 (formerly 22:1220), claims for attorney fees, interest, expert witness fees, court costs, statutory or contractual penalties, fees, expenses, bad faith damages, claims to enforce rights under the POLICY, claims to enforce rights under the CONTRACT, and any other claims for damages or relief at law or in equity, under any theory of recovery whatsoever, in any way arising out of, connected with, or relating to the allegations and/or events forming the basis of the LÌTIG ATION and/or the wrongful demolition of the RED HOUSE, or any other damage, loss, cost or expense of any kind or nature whatsoever whether presently known or unknown, filed or unfiled, asserted or as yet unasserted, which exists or may in the future exist[.]
We should note that Mr. Johno released Duplessis from all his “claims” against it. But Duplessis in the Release simply did not assign its “claims” against Scottsdale to Mr. Johno. Duplessis only assigned some of its contractual rights, primarily its (contractual) right to seek indemnity from its insurer for the settlement it paid to Mr. Johno.
Thus, as defined by the contract itself, a “claim” includes “contractual rights” such as a “claim for indemnity” or a claim for costs of defense, but the terms “claim” and “contractual rights” are not thereby interchangeable. And, as the Release makes plain, the parties were amply able to clearly express that among the claims for which Mr. Johno was releasing Duplessis and Hanover was the bad-faith claim under Section 1973. Yet nowhere in the Release, and certainly not in its assignment of rights portion, is there any mention of assigning such comparable claims that Duplessis may have against Scottsdale.
Therefore, we find that the Release, which is the contract between Mr. Johno and Scottsdale, is unambiguous and must be enforced as written. Because Mr. Johno is not the assignee of Duplessis' bad-faith failure-to-settle claim under Section 1973 against Scottsdale, he may not advance or exercise Duplessis' right of action. See Kelly, 14–1921, p. 6, 169 So.3d at 333. And, on that account, the trial judge was correct in sustaining Scottsdale's partial exception of no right of action.
DECREE
The ruling sustaining the partial exception of no right of action filed by Scottsdale Insurance Company, dismissing Dana Johno's bad-faith failure-to-settle claim, is affirmed.
AFFIRMED
TOBIAS, J., dissents and assigns reasons.
BAGNERIS, J., dissents.
TOBIAS, J., dissents and assigns reasons.
The plaintiff/appellant, Dana Johno (“Mr. Johno”), appeals a judgment that granted a partial peremptory exception of no cause of action and a partial peremptory exception of no right of action filed by the defendant/appellee, Scottsdale Insurance Company (“Scottsdale”). Mr. Johno, however, does not assign as error that part of the judgment that granted the partial exception of no cause of action, and thus I pretermit a discussion of the correctness of that portion of the judgment. Finding that our procedural law does not recognize a partial exception of no right of action and for the reasons that follow, I would convert the appeal of Mr. Johno to a writ application for supervisory review, grant the writ application, vacate the judgment insofar as it granted the partial exception of no right of action, and remand the matter to the trial court for further proceedings.
The trial court set forth the facts in its reasons for judgment, which for the purposes hereof I adopt:
The underlying factual basis for this litigation is the post-Katrina demolition of a rental home belonging to plaintiff. He filed suit against numerous parties,
including the Parish of Plaquemines (PPG), Leon Duplessis & Sons (Duplessis), Hard Rock Construction (Hard Rock), and Pro Tree Services (Pro Tree). Duplessis had a contract with PPG for demolition and debris removal following Hurricane Katrina, and Duplessis had sub-contract with Hard Rock which in turn had a subcontract with Pro Tree.
In his seventh supplemental and amending petition, plaintiff alleged that he sent a settlement demand to all defendants and that he settled with PPG and Duplessis. As part of the settlement, Duplessis assigned to plaintiff all of its contractual rights against Hard Rock, Pro Tree and Scottsdale. He further alleged that Hard Rock and Pro Tree, under the direction of their insurer Scottsdale, refused to negotiate or make a settlement offer.
* * *
Plaintiff further alleged that Scottsdale was in bad faith for its refusal to settle with him after he provided Scottsdale with proof of his losses and damages. He quoted both La. R.S. 22:1973 and La. R.S. 22:1892 as legal support for the bad faith claims against Scottsdale based on both his own claims and the claims he alleges were assigned to him by Duplessis.
In response to the seventh supplemental and amending petition, Scottsdale filed partial peremptory exceptions of no cause of action and of no right of action.
First, Scottsdale argued that Mr. Johno does not have a [direct] cause of action against it for bad faith damages under La. R.S. 22:1973 (formerly La. R.S. 22:1220) for its alleged failure to settle his claims because he was not a party to the insurance contract between Scottsdale and its additional insured, Duplessis.
La. R.S. 22:1973 provides in pertinent part:
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:
(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.
* * *
(6) Failing to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary, capricious, or without probable cause.
Second, Scottsdale argued that an unexercised right to file a lawsuit is not assignable; thus that claim should be dismissed as well.
After briefing and oral argument, the trial court granted both of Scottsdale's partial exceptions and dismissed those two claims asserted by the plaintiff with prejudice. It did not, however, dismiss Scottsdale from the litigation, as the plaintiff has asserted other issues against Scottsdale in this lawsuit.
The precise language of the judgment at issue reads:
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Partial Exception of No Right of Action is GRANTED and plaintiff's claim based on the assignment of rights to it from Leon Duplessis & Sons, L.L.C. is DISMISSED with prejudice.
This judgment is designated as a final judgment under La. C.C.P. art.1915 because this Court determines that there is no just reason for delay. [Emphasis in original.]
In pertinent part, La. C.C.P. art.1915 reads as follows:
A. A final judgment may be rendered and signed by the court, even though it may not grant the successful party or parties all of the relief prayed for, or may not adjudicate all of the issues in the case, when the court:
(1) Dismisses the suit as to less than all of the parties, defendants, third party plaintiffs, third party defendants, or intervenors.
(2) Grants a motion for judgment on the pleadings, as provided by Articles 965, 968, and 969.
(3) Grants a motion for summary judgment, as provided by Articles 966 through 969, but not including a summary judgment granted pursuant to Article 966(E).
(4) Signs a judgment on either the principal or incidental demand, when the two have been tried separately, as provided by Article 1038.
(5) Signs a judgment on the issue of liability when that issue has been tried separately by the court, or when, in a jury trial, the issue of liability has been tried before a jury and the issue of damages is to be tried before a different jury.
(6) Imposes sanctions or disciplinary action pursuant to Article 191, 863, or 864 or Code of Evidence Article 510(G).
B. (1) When a court renders a partial judgment or partial summary judgment or sustains an exception in part, as to one or more but less than all of the claims, demands, issues, or theories against a party, whether in an original demand, reconventional demand, cross-claim, third-party claim, or intervention, the judgment shall not constitute a final judgment unless it is designated as a final judgment by the court after an express determination that there is no just reason for delay.
(2) In the absence of such a determination and designation, any such order or decision shall not constitute a final judgment for the purpose of an immediate appeal and may be revised at any time prior to rendition of the judgment adjudicating all the claims and the rights and liabilities of all the parties.
I find that the judgment rendered by the court was improperly designated as final and immediately appealable under La. C.C.P. art.1915.
Simply put, the portion of the judgment that granted the partial exception of no right of action should not have been designated as “final” and immediately appealable as it does not meet the criteria described in La. C.C.P. art. 1915. See R.J. Messinger, Inc. v. Rosenblum, 04–1664 (La.3/2/05), 894 So.2d 1113. This court does, however, have the authority to convert the appellant's appeal to an application for a supervisory writ of review, and thereby exercise our constitutional supervisory jurisdiction. This I would do in this case because I find no such procedural device exists in our law as a partial peremptory exception of no right of action. Shinew v. Luciano Refrigerated Transport, Inc., 96–2454, pp. 3–4 (La.App. 1 Cir. 11/19/97), 706 So.2d 140, 141; Cenac Towing Co. v. Cenac, 413 So.2d 1351, 1352 (La.App. 1st Cir.1982); Poy v. Twin Oaks Nursing Home, Inc., 95–889, pp. 6–8 (La.App. 5 Cir. 2/14/96), 671 So.2d 15, 18–19; see also In re Medical Review Panel Claim of Dunjee, 97–0451, 97–0452 (La.App. 4 Cir. 5/27/98), 715 So.2d 64. Either a person has a right of action or he does not. By Scottsdale's filing of a motion asserting a partial exception of no right of action, it confesses that Mr. Johno has a right of action on some other cause of action.
For a detailed discussion and analysis of why a partial exception of no right of action does not exist, see 2 La. Prac. Civ. Proc. Article 927, § 6 (2015 ed.)
I find Scottsdale's “partial” exception of no right of action was instead, and in fact, another exception of “no cause of action.” As explained by the Supreme Court in Babineaux v. Pernie–Bailey Drilling Co., 261 La. 1080, 1095–97, 262 So.2d 328, 333–34 (La.1972):
There has been much discussion about the purpose of the exception of no right of action, and many attempts to differentiate that exception from the exception of no cause of action. One of the best statements of the definition of no right of action and of the basis of the distinction between it and no cause of action was given by the late Henry George McMahon: “The former (no cause of action) is used to raise the issue as to whether the law affords a remedy to anyone for the particular grievance alleged by plaintiff; the latter (no right of action) is employed (in cases where the law affords a remedy) to raise the question as to whether plaintiff belongs to the particular class in whose exclusive favor the law extends the remedy, or to raise the issue as to whether plaintiff has the right to invoke a remedy which the law extends only conditionally.” McMahon, The Exception of No Cause of Action in Louisiana, 9 Tul.L.Rev. 17, 29–30. See also McMahon, Parties Litigant in Louisiana, 11 Tul.L.Rev. 529–30. The exception of no right of action, however, cannot be invoked to determine whether a particular defendant can stand in judgment in a particular case, i.e., whether the right or remedy can be exercised against that defendant.
In Bielkiewicz v. Rudisill, 201 So.2d 136 (La.App. 3rd Cir.1967), Mr. Justice Tate of our court, then writing for the Court of Appeal, correctly stated the purpose of the exception of no right of action:
The want of interest raised by the exception relates primarily to whether the particular plaintiff falls as a matter of Law [sic] within the general class in
whose favor the law grants the cause of action sought to be asserted by the suit, with the factual evidence admissible being restricted as to whether this particular plaintiff does
or does not fall within the general class having legal interest to sue upon the cause of action asserted.
* * *
In short, the objection of no right of action raises the question of whether the plaintiff has a legal interest in the subject matter of the litigation, assuming (for the purpose of deciding the exception) that a valid cause of action is pleaded by the petition. LeSage v. Union Producing Co., 249 La. 42, 184 So.2d 727. [Footnotes omitted.]
See also Harvey v. Cole, 02–1704, p. 5 (La.App. 4 Cir. 4/30/03), 845 So.2d 591, 595 (“The exception of no right of action assumes that the petition states a valid cause of action for some person and questions whether the plaintiff in the particular case has a legal interest in the subject matter of the litigation.”)
Babineaux sets forth a bright-line rule of law from which the Louisiana Supreme Court has never intentionally deviated. I acknowledge that the Court and courts of appeal have from time-to-time said or found that a party had “no right of action,” even utilizing the word “partial” in its discussion. However, a careful dissection of the issue before the courts in those cases is that they were using “right of action” to mean that the law afforded the party no claim, much like Scottsdale's proffered position in this case, that Mr. Johno has no direct claim for bad faith under La. R.S. 22:1973, a position with which I agree.
However, I do find that Mr. Johno has an interest in asserting that he was assigned Duplessis' La. R.S. 22:1973 claim by the Confidential Settlement Agreement and Release at issue. It is clear (undisputed) that Mr. Johno has an assignment of Duplessis' indemnity claims. In pertinent part, the Release states:
4. ASSIGNMENT OF RIGHTS
Except as specifically stated herein, DUPLESSIS agrees to assign to RELEASOR [Johno] all contractual rights DUPLESSIS has or may have against HARDROCK, its subcontractors and their insurers, including, but not limited to, the indemnity claims asserted by DUPLESSIS in the DEMAND and any additional rights DUPLESSIS may have under the HARDROCK CONTRACT, to the fullest extent allowed under Louisiana law, except DUPLESSIS and HANOVER specifically reserve their rights to recover past, present, and future defense costs, with DUPLESSIS and HANOVER remaining in the litigation to pursue the herein assigned indemnity claim and for DUPLESSIS and HANOVER to recover its past, present and future defense costs. [Emphasis supplied.]
The definition of “claim” or “claims” is contained earlier in the settlement agreement. In the section entitled “DEFINITIONS,” Paragraph 13 states in pertinent part:
13. “CLAIM” or “CLAIMS” shall mean any and all past, present and future claims, demands, obligations, requests, actions, suits, proceedings, losses, damages, liens, administrative proceedings, governmental actions, and causes of action, whether arising out of tort, contract, statute, regulations or otherwise, including but not limited to those for
* * *
contractual claims, extracontractual claims, claims for indemnity, claims for insurance coverage, claims for violations of any code, statute, rule [,] regulation, or law, including but not limited
to claims under La. C.C. arts.1996, 1997, 1998, 2315 et seq., 2316, 2317, 2317.1, 2318, 2320, La. R.S. 22:1892 (formerly 22:658), and La. R.S. 22:1973 (formerly 22:1220)[.] [Emphasis supplied.]
In order to argue that an exception of no right of action applies in this case, Scottsdale would be conceding that an unexercised right to file a lawsuit may be assigned, but that Mr. Johno is not in the class of persons permitted to do so. Instead, Scottsdale's position is that an unexercised right to file a lawsuit may never be assigned. Like the inability of a third-party claimant to directly sue the defendant's insurer, this too questions whether the petition states a valid cause of action.
Thus, the issue in this case is whether an unexercised right to institute a lawsuit may be assigned. Although I pretermit a detailed discussion of that issue, reserving it for another day, I note that La. C.C. arts. 448, et seq. , 1765, 1766, 1984, and 2642; King v. Illinois National Ins. Co., 08–1491 (La.4/3/09), 9 So.3d 780; and Kelly v. State Farm Fire & Cas. Co., 14–1921(La.5/5/15), 169 So.3d 328, drive the issue, with King and Kelly taking inconsistent and irreconcilable positions on the issue and the Civil Code specifically answering the issue, agreeing with the dissent of Justice Kimball in King.
See also Falco Lime, Inc. v. Plaquemine Contracting Co., Inc., 95–1784 (La.App. 1 Cir. 4/4/96), 672 So.2d 356; Maryland Casualty Co. v. Dixie Ins. Co., 622 So.2d 698 (La.App. 1st Cir.1993); Keith v. Comco Ins. Co., 574 So.2d 1270 (La.App. 2d Cir.1991); Soma Enterprises, Inc. v. State, Dept. of Transp. and Development, 584 So.2d 1243, 1246 (La.App. 2d Cir.1991); Rollins v. Richardson, 02–0556 (La.12/4/02), 833 So.2d 921.
In the case at bar, Duplessis did not assert a bad faith claim against Scottsdale in a lawsuit; from my reading of the Release, it is unclear whether Duplessis' unexercised right to file a bad faith claim against Scottsdale was assigned to Mr. Johno. We as a panel are in disagreement as to exactly what, if anything, Duplessis transferred to Mr. Johno. This is best fleshed out in the trial court with evidence. Thus, I find it appropriate to convert Mr. Johno's appeal to an application for supervisory writ (because his appeal was filed within thirty days of the trial court's judgment on the exceptions), grant the writ application, vacate the trial court's judgment insofar as it granted the partial exception of no right of action and dismissed Scottsdale with prejudice.
See specifically the definition of the word “claims” in paragraph 13 of the release and the use of the words “indemnity claims” in paragraph 4 of the release quoted infra. A remand would permit Mr. Johno an opportunity to enter into a written agreement with Duplessis as to whether Duplessis did in fact transfer its bad-faith claim under L. R.S. 22:1973. If Mr. Johno cannot obtain the written agreement, then obviously his claims for bad-faith would be totally gone.
See Rule 4–3, Unif. Rules, La. Cts. of App.
Because (a) the trial court granted the partial exception of no right of action and dismissed some of Mr. Johno's claims with prejudice; (b) the trial court improperly determined an issue of law on a nonexistent asserted “partial” exception of no right of action; and (c) reasonable minds could conceive or perceive interpretations of the contract (the “Confidential Settlement Agreement and Release”) at issue which may or may not have transferred to Mr. Johno the assignor's bad faith claims under La. R.S. 22:1973, I find it appropriate to covert the appeal of the appellant to a writ application.
The proper procedural vehicle to address an issue that might sounds as if it would be a partial exception of no right of action is a motion for summary judgment. La. C.C.P. art. 966, et seq.; see, especially, La. C.C.P. art. 966 E that reads: “A summary judgment may be rendered dispositive of a particular issue, theory of recovery, cause of action, or defense, in favor of one or more parties, even though the granting of the summary judgment does not dispose of the entire case as to that party or parties.”
Ibid. The trial court's judgment is dated 19 May 2015, and the order of appeal was granted on 5 June 2019, within the thirty days to apply for a writ application to this court.
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BAGNERIS, J., dissents.
I dissent for the reasons assigned by Judge TOBIAS.