Case: 15-30018      Document: 00513165157         Page: 1    Date Filed: 08/21/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                      No. 15-30018                       United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
MICHAEL L. BELANGER,                                                      August 21, 2015
                                                                           Lyle W. Cayce
              Plaintiff - Appellant                                             Clerk

v.

GEICO GENERAL INSURANCE COMPANY,

              Defendant - Appellee




                   Appeal from the United States District Court
                       for the Middle District of Louisiana


Before DAVIS, ELROD, and HAYNES, Circuit Judges.
PER CURIAM:*
       Plaintiff-Appellant Michael Belanger appeals from the district court’s
final judgment dismissing his suit against Defendant-Appellee GEICO
General Insurance Company (“GEICO”) with prejudice pursuant to Fed. R.
Civ. P. 12(b)(6), on the ground that it is time-barred under Louisiana law. For
the reasons set out below, we AFFIRM.




       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                   No. 15-30018
                                        I.
      The relevant facts are undisputed. On December 27, 2007, Belanger was
in an automobile accident with Natalie N. Stephen, GEICO’s insured. Belanger
sued Stephen and GEICO in state court. He alleges that, before trial, he offered
to settle his claim against both parties for the policy limits of $25,000, but
GEICO rejected his offers. Following a trial, the court entered a judgment
against Stephen in the amount of $450,000 and against GEICO for the policy
limits of $25,000, plus interest and court costs.
      The trial court denied the defendants’ motions for post-judgment relief
on September 8, 2011, and entered a signed order to that effect on November
17, 2011. GEICO appealed the $25,000 judgment against it suspensively, but
Stephen appealed the $450,000 judgment against her only devolutively, as
discussed below. The Louisiana First Circuit Court of Appeal affirmed the trial
court’s judgment on November 13, 2012, and the Louisiana Supreme Court
denied the defendants’ application for a writ of certiorari on April 1, 2013.
      GEICO then paid Belanger the $25,000 policy limits. On September 25,
2013, Belanger entered into a written compromise agreement with Stephen, in
which Stephen assigned Belanger any rights she had against GEICO
concerning GEICO’s alleged bad faith handling of her claim which resulted in
the excess judgment against her. Belanger filed this action against GEICO in
state court on October 4, 2013, asserting the claim he acquired from Stephen.
GEICO removed to federal court on November 20, 2013, more than one year
after the entry of the judgment against Stephen in the state trial court but less
than one year after the Louisiana Supreme Court denied the defendants’
application for a writ of certiorari.
      GEICO filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) or, in the
alternative, for summary judgment under Fed. R. Civ. P. 56, arguing that
Belanger’s bad faith claim against GEICO is time-barred because the
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                                       No. 15-30018
applicable prescriptive period for such claims is one year, and the cause of
action arose when the state trial court entered the excess judgment against
Stephen. Belanger, conceding in the district court that the one-year
prescriptive period applies to his assigned claim, argued that his claim is
nevertheless timely because (a) it did not arise until the Louisiana Supreme
Court denied a writ, and (b) the Louisiana doctrine of contra non valentem
should exempt the claim from the operation of prescription.
       The district court held that Belanger’s claim is time-barred. The district
court concluded that Belanger’s claim arose when the excess judgment was
entered against Stephen, more than one year before he filed this action. The
court also determined that contra non valentem does not apply to exempt the
claim from prescription. Accordingly, the district court granted GEICO’s
motion to dismiss. This appeal followed. On appeal, Belanger continues to
argue that the claim did not arise until the Supreme Court denied a writ and
now argues for the first time on appeal that the applicable prescriptive period
is 10 years rather than one year. He has waived his contra non valentem
argument by failing to pursue it on appeal.
                                             II.
       GEICO’s motion was styled as a motion to dismiss under Rule 12(b)(6)
or, in the alternative, for summary judgment under Rule 56, but neither party
relied on summary judgment evidence, and the relevant facts are undisputed. 1
Thus, we may apply the Rule 12(b)(6) standard: “[A] motion to dismiss under
12(b)(6) is viewed with disfavor and is rarely granted.” 2 In deciding a Rule
12(b)(6) motion, all well-pleaded facts must be taken as true and all inferences



       1 Belanger v. GEICO Gen. Ins. Co., No. CIV.A. 13-752-SCR, 

, at *4
(M.D. La. Dec. 22, 2014).
       2 Turner v. Pleasant, 

, 775 (5th Cir. 2011) (citation and internal quotation

marks omitted).
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                                     No. 15-30018
must be drawn in favor of the plaintiff. 3 This court reviews de novo a district
court’s dismissal for failure to state a claim. 4
      In this diversity action arising under Louisiana substantive law, we
“should first look to final decisions of the Louisiana Supreme Court.” 5 Absent
such a decision, we must make an “Erie guess” and determine what the
Louisiana Supreme Court would decide under the circumstances, looking for
guidance to intermediate state appellate courts. 6 We may not disregard these
intermediate appellate decisions “unless [we are] convinced by other
persuasive data that the highest court of the state would decide otherwise.” 7
                                           III.
      This appeal concerns when the claim asserted by Belanger arose, and
what prescriptive period is applicable to that claim. If, as Belanger argues, the
claim did not arise until the Louisiana Supreme Court denied a writ, less than
one year before Belanger filed this suit, then it is timely even under the one-
year prescriptive period applied by both parties and the district court below.
If, however, it arose when the excess judgment was entered against Stephen,
more than one year before Belanger filed suit, then the length of the
prescriptive period alone will determine whether the claim is timely.
                                           IV.
       The bad faith claim at issue that Belanger obtained by assignment from
Stephen arises under La. Rev. Stat. § 22:1973 (formerly found at La. Rev. Stat.
§ 22:1220, with no substantive revision accompanying the redesignation),
which provides, in relevant part:



      3 

      5 Howe ex rel. Howe v. Scottsdale Ins. Co., 

, 627 (5th Cir. 2000) (citing

Labiche v. Legal Sec. Life Ins. Co., 

, 351 (5th Cir. 1994)).
      6 

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                                     No. 15-30018
              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. 8
     The district court concluded that the claim arose on April 26, 2011, the
day the state trial court entered the excess judgment against Stephen:
              While neither party cited any Louisiana Supreme
              Court or appellate court cases that addresses this
              specific issue, the case cited by the defendant, Mathies
              v. Blanchard [

(La. Ct. App. 2007)], is
              persuasive. In Mathies, the Louisiana First Circuit
              Court of Appeal found that entry of the judgment on
              the principal demand in excess of the policy limits
              harms the insured and gives rise to the right to enforce
              the cause of action for a[n] insurer’s bad faith failure
              to settle a claim against its insured within the policy
              limits. Although the appellate court was addressing
              the issue of prematurity rather than prescription of
              the claim, the court established that the
              injury/damage arising from an insurer’s bad faith
              refusal to settle was sustained at the time an excess
              judgment was entered. Because the allegations in the
              Petition show that the Petition was filed more than
              one year after the state court entered an excess
              judgment, the burden shifted to the plaintiff to show
              that prescription was interrupted by the state court
              appeal process or did not commence on the date of the
              judgment. 9
     The district court’s reliance on Mathies appears to be well founded.
Although Mathies did not concern precisely when a cause of action under




     8   La. Rev. Stat. § 22:1973(A).
     9   

at *4 (footnotes omitted).
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                                      No. 15-30018
section 1973 arises, 10 both its language and the reasoning of the cases it relied
on from other jurisdictions are highly persuasive:
              While Louisiana courts have recognized a cause of
              action against an insurer for bad faith failure to settle
              a claim against its insured within the policy limits, no
              Louisiana court has been called upon to determine
              when the right to enforce the cause of action arises.
              However, numerous courts in other jurisdictions have
              squarely addressed the issue, and have repeatedly
              held that an excess judgment is a prerequisite to an
              action for bad faith failure to settle a claim against an
              insured within the policy limits. See Romstadt v.
              Allstate Insurance Company, 

, 611 (6 Cir.
              1995); Kelly v. Williams, 

, 904 (Fla. App.
              5 Dist. 1982); Crabb v. National Indemnity Company,
              

, 231, 

, 638 (S.D. 1973);
              Amoco Oil Company v. Reliance Insurance Company,
              

(W.D. Mo. 4/14/98); Ragas v. MGA
              Insurance Company, 

(E.D. La.
              2/21/97). 11
       The key question in all of these cases was whether the insured had been
exposed to liability as a result of an excess judgment. In Romstadt and Kelly,
the courts held that the insureds could not assert a bad faith claim because
they had never, in effect, been exposed to liability for an excess judgment. The
Kelly court noted that “a cause of action for bad faith arises when the insured
is legally obligated to pay a judgment that is in excess of his policy limits.” 12
In Crabb, the South Dakota Supreme Court held that even a judgment-proof
insured was exposed to liability when an excess judgment was entered against
him because, for instance, “such a judgment will potentially impair his credit,


       10 In Mathies, the court addressed an exception of prematurity concerning a bad faith
claim brought before an excess judgment had even been entered against the insured. Thus,
the court had no occasion to determine whether the cause of action arose when an excess
judgment was entered or when the appeal of that judgment was concluded.
       

.
       12 

(emphasis added).

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                                       No. 15-30018
place a cloud on the title to his exempt estate, impair his ability to successfully
apply for loans, and may eventually require him to go through bankruptcy.” 13
The court concluded: “It is the entry of a final judgment in excess of the policy
limits, rather than its satisfaction, which harms the insured and gives rise to
a cause of action against the insurer for a wrongful or unreasonable refusal to
settle within the policy limits.” 14
       In this case, the state court entered the excess judgment on April 26,
2011, and the district court signed an order denying a motion for JNOV and
new trial on November 17, 2011. The appeals process finally concluded on April
1, 2013, with the Supreme Court’s writ denial, and Belanger filed this action
on October 4, 2013. Because the question under Mathies is when the insured
became legally obligated to pay the excess judgment, the outcome turns on how
the underlying action was appealed.
       The excess judgment against Stephen, the insured, was appealed
devolutively, not suspensively, and that distinction determines the outcome
here. Under Louisiana law, a suspensive appeal is one which “suspends the
effect or the execution of an appealable order or judgment”; requires the
appellant to furnish security, typically in the amount of the judgment; and
must be filed within 30 days of either a ruling on a motion for new trial or
JNOV (or expiration of the delay for applying for that relief, in the absence of
such a motion). 15 A devolutive appeal, on the other hand, is one “which does
not suspend the effect or the execution of an appealable order or judgment”;




       13 

       14 

analogous to Louisiana law regarding indemnity claims, i.e., “it is well
settled that prescription does not commence on a claim for indemnity or contribution until
the party seeking it has sustained a loss, either through payment, settlement or an
enforceable judgment.” Reggio v. E.T.I., 

, 952 (La. 2008).
       15 La. Code Civ. P. art. 2123, 2124.

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                                      No. 15-30018
does not require the appellant to post security; and must be filed within 60
days of one of the terminal events. 16
       Because the excess judgment was appealed only devolutively, not
suspensively, it was fully enforceable during the appeals process. Because
Stephen was legally obligated to pay the excess judgment in 2011 (regardless
of whether she actually paid it), her bad faith claim against GEICO arose at
that time, more than one year before she filed this action in October of 2013.
Thus, if Stephen’s bad faith claim is subject to the one-year prescriptive period,
Belanger’s action is untimely.
                                            V.
       The only thing that might save Belanger’s bad faith claim is a longer
prescriptive period. It is important to note that although Belanger was not
GEICO’s insured, the claim he asserts was assigned to him by Stephen, who
was GEICO’s insured. Thus, he essentially stands in the shoes of the insured.
Belanger argued for the first time on appeal that the prescriptive period for a
bad faith claim by an insured against an insurer under La. R.S. § 22:1973 is
subject to the 10-year prescriptive period for contract actions rather than the
one-year prescriptive period for torts. Although there is some authority
supporting his argument, he unequivocally waived it.
       “Under Louisiana law, ‘[t]he correct prescriptive period to be applied in
any action depends on the nature of the action; it is the duty breached that
should determine whether an action is in tort or contract.’” 17 “Unless otherwise
provided by legislation, a personal action is subject to a liberative prescription
of ten years.” 18 A contract action is subject to the default 10-year period,


       16 La. Code Civ. P. art. 2087, 2124(A).
       17 Richard v. Wal-Mart Stores, Inc., 

, 345 (5th Cir. 2009) (quoting
Terrebonne Parish Sch. Bd. v. Mobil Oil Corp., 

, 886 (5th Cir. 2002); and citing
Trinity Universal Ins. Co. v. Horton, 

, 638 (La. Ct. App. 2000).
       

. Code art. 3499.

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                                     No. 15-30018
“run[ning] from the time of breach or the time the cause of action arises.” 19
However, Louisiana law provides, in relevant part, that “[d]elictual actions are
subject to a liberative prescription of one year. This prescription commences to
run from the day injury or damage is sustained.” 20 The Fifth Circuit has
explained:
              The classical distinction between contractual and
              delictual damages is that the former flow from an
              obligation contractually assumed by the obligor,
              whereas the latter flow from a violation of general duty
              owed by all persons. However, even when a tortfeasor
              and victim are bound by a contract, Louisiana courts
              usually apply delictual prescription to actions that are
              really grounded in tort. 21
       It is undisputed that bad faith claims asserted by third parties (i.e., non-
insureds) against insurance companies under La. Rev. Stat. § 22:1973 are
subject to the one-year prescriptive period for delictual actions under Zidan v.
USAA Property & Cas. Ins. Co., 

, 266 (La. Ct. App. 1993), which
specifically addressed such third party claims. With respect to bad faith claims
by an insured (or her assignee), however, it appears no Louisiana state court
has ever specifically addressed the applicable prescriptive period. The Eastern
District of Louisiana has applied the one-year prescriptive period from Zidan
to claims by an insured in multiple cases, 22 but the Western District of
Louisiana, in Aspen Specialty Ins. Co. v. Technical Indus., Inc., No. 6:12-CV-
02315, 

(W.D. La. Jan. 22, 2015) (Hanna, Magistrate Judge,




       19 

.
       

. Code art. 3492.
       21 Terrebonne Parish Sch. 

(internal citations omitted).
       22 See, e.g., Marketfare Annunciation, LLC v. United Fire & Cas. Co., No. CIV.A. 06-

7232, 

(E.D. La. Mar. 15, 2007); Brown v. Protective Life Ins. Co., 353 F.
Supp. 2d 739 (E.D. La. 2004); and Yates v. Sw. Life Ins. Co., No. CIV. A. 97-3204, 

(E.D. La. Feb. 12, 1998).
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                                       No. 15-30018
sitting by consent), recently concluded that the prescriptive period for first-
party claims is ten years.
      As the Aspen opinion noted, the Eastern District cases rely on Zidan,
which did not concern a claim by an insured and thus does not necessarily
determine the issue. 23 The Aspen opinion identified a fundamental distinction
between a claim by a third party and a claim by an insured:
               “The proper prescriptive period to be applied in any
               action depends upon the nature of the cause of action.”
               It is logical that the claim by a third-party to an
               insurance contract against an insurer would be
               classified as a tort and subject to the one-year
               prescriptive period for delictual actions, but it is not
               logical that a first-party claim, that is, a claim by an
               insured against its insurer, would be classified as a
               delictual claim. A first-party claim arises out of the
               relationship created by the insurance contract and,
               therefore, is either contractual or quasi-contractual in
               nature. Indeed, Section 1973 “recognizes the
               jurisprudentially established duty of good faith and
               fair dealing owed to the insured, which is an
               outgrowth of the contractual and fiduciary
               relationship between the insured and the insurer.”
               Both contractual and quasi-contractual claims are
               classified, under Louisiana law, as personal actions
               subject to a liberative prescription of ten years. 24
      The       Aspen     reasoning     has    some    support.    The    longstanding
“jurisprudentially established duty” was announced in Wooten v. Cent. Mut.
Ins. Co., 

(La. Ct. App. 1964), which concluded that a claim by
an insured may sound in either tort or contract, which would determine not
only the appropriate venue for suit (as in Wooten itself) but also the applicable
prescriptive period. The Louisiana Supreme Court has not only recognized this



      23   

, at *2.
      24   

at *2 (footnotes omitted).
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                                        No. 15-30018
jurisprudential duty since the late 1960s, but also has recognized that the duty
was ultimately incorporated into La. R.S. § 22:1973. 25 On the other hand, since
the enactment of La. R.S. § 22:1973 or its predecessor, La. R.S. § 22:1220, no
Louisiana court has ever determined the prescriptive period applicable to a
first-party claim, so the answer to that question remains uncertain.
       Ordinarily, the failure to raise an argument before the district court
results in its waiver or forfeiture on appeal, 26 subject only to plain error review,
under which we cannot grant relief unless the error is plain. 27 In this case,
Belanger’s counsel stated at oral argument on appeal that he chose not to
assert the 10-year prescriptive period argument in the district court because
the state of Louisiana law is uncertain on this point. We agree. Even though
Louisiana law might ultimately apply the ten-year prescriptive period to his
claim, the legal uncertainty means Belanger cannot obtain relief under plain
error review. 28
       We might have discretion, under appropriate circumstances, to excuse
the waiver of an argument on a pure question of law where both parties have
had a chance to fully brief the issue. 29 Although this issue is a pure question of



       25  Richard v. S. Farm Bureau Cas. Ins. Co., 

, 437-438, 

, 861
(1969) (citing Wooten); Holtzclaw v. Falco, Inc., 

, 1280 (La. 1977) (citing
Richard); Theriot v. Midland Risk Ins. Co., 95-2895 (La. 5/20/97), 

, 187 (citing
Holtzclaw); Kelly v. State Farm Fire & Cas. Co., — So. 3d —, (La. 2015), No. 14-1921 (citing
Theriot).
        26 See, e.g., LeMaire v. La. Dep’t of Transp. & Dev., 

, 387 (5th Cir. 2007)

(citing Tex. Commercial Energy v. TXU Energy, Inc., 

, 510 (5th Cir. 2005), cert.
denied, 

(2006)).
        27 See, e.g., Tilmon v. Prator, 

, 524 (5th Cir. 2004).
        28 A question of law with an uncertain answer cannot support relief under plain error

review precisely because any error on that question cannot be “plain.” See, e.g., United States
v. Ellis, 

, 377 (5th Cir. 2009) (“Putting aside its obscurity at trial, even now after
full briefing and oral argument the error is not plain or obvious, indeed it is most uncertain
whether there was any error at all.”).
        29 See Forte v. Wal-Mart Stores, Inc., 

, 275-76 (5th Cir. 2015), certified

question accepted (Mar. 6, 2015).
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                                        No. 15-30018
law, and the parties, at the court’s request, had a chance to provide
supplemental briefing on it, we decline to excuse Belanger’s waiver. Based on
his representations at oral argument, it is clear that Belanger’s counsel did not
fail to raise this argument out of mere inadvertence, but rather made a
conscious decision. We therefore hold that he actively waived the argument
that Belanger’s claim is subject to a 10-year prescriptive period. 30 The question
of which prescriptive period applies to a bad faith claim by an insured against
an insurer under La. Rev. Stat. § 22:1973 may be ripe for consideration, but
not under these circumstances. Thus, we must conclude that Belanger’s case
is time-barred under the one-year prescriptive period.
                                              VI.
       Because Belanger’s assigned claim arose when the excess judgment was
entered against Stephen, more than one year before filing suit, it is time-barred
under the one-year prescriptive period applied by the district court and both
parties below. Belanger waived his argument that the claim is subject to a ten-
year prescriptive period. Accordingly, we AFFIRM.




       30 We usually apply the general rule that the failure to raise an issue in the trial court
waives the issue on appeal. See, e.g., Veasey v. Abbott, No. 14-41127, 

, at
*12 n.22 (5th Cir. Aug. 5, 2015). We have applied the exception very sparingly in
circumstances very different than those here. See New Orleans Depot Servs., Inc. v. Dir. Office
of Worker’s Comp. Programs, 

, 388 (5th Cir. 2013) (en banc); 

. In New Orleans Depot, we explained that the legal argument in question was
acknowledged by the party to be foreclosed under circuit precedent such that “this is not a
case in which a party has wholly ignored a major 

. Instead, the issue
“ha[d] been contested throughout the case’s history,” the issue had been presented to the
administrative law judge, and “every party was provided an adequate opportunity to brief
and argue the issue before the en banc court.” 

Forte we held that an issue
was not waived where the court was asked to consider a party’s proposed construction of a
statute, the Texas Optometry Act, which was nearly the same as the construction that the
party argued before the district 

–76. In neither case did the party
affirmatively argue the exact opposite of its district court argument.
                                              12