Louisiana bad faith general damages

Louisiana’s Supreme Court handed insureds another bad faith victory in Wegener v. Lafayette Ins. Co., 2010-810 (La. 3/15/2011). General damage awards under Revised Statute 22:1973 (formerly 22:1220) are not conditioned upon proof satisfying the Civil Code article 1998 intent to “aggrieve the plaintiff” standard. The Court held that general damages may be awarded to insureds where incurred as a result of an insurer’s breach of statutory duty. Civil Code article 1998 limits general damage awards for “breach of contract”, but the Supreme Court rejected Lafayette Insurance Company’s suggestion that the limitation be read into Revised Statute 22:1973.

The prior Supreme Court decision on a parallel question posed in Sher v. Lafayette Ins. Co.,2007-2441 (La. 4/8/08), 988 So.2d 186, is not affected. In that case, the plaintiff’s general damage claim was asserted pursuant to Civil Code article 1998. Wegener explicitly overruled an intermediate appellate court decision [Veade v. Louisiana Citizens Property Corp., 2008-0251 (La.App. 4 Cir. 6/4/08), 985 So.32d 1275] imposing Civil Code article 1998 limitations on Revised Statute 22:1973 general damage awards.

In an unrelated procedural point of order, the Supreme Court employed a “‘plain and fundamental’ error” exception to the usual “contemporaneous objection” requirement for issues raised on appeal to consider a defect not subject to assignment of error. [See footnotes 10 and 11 to the opinion]. At trial, the jury returned a verdict without bad faith penalties under 22:1220. On JNOV motion, the trial court awarded penalties. Lafayette argued that the trial court erred by granting plaintiff’s motion on the premise that penalties are discretionary. The Supreme Court agreed with Lafayette on the discretionary nature of penalties, but remanded for new trial because of jury interrogatory errors sufficient to vacate the original defense verdict. It did so even though plaintiffs never objected to the interrogatories. One can only speculate whether such indulgence would have been afforded a direct challenge at the Supreme Court to the previously unopposed interrogatories.

Wegner v. Lafayette Ins. Co.

See also, Sher v. Lafayette Ins. Co.

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