SAVOIE, Judge.
This matter involves New York Life Insurance Company's (New York Life's) appeal of a default judgment rendered against it awarding Plaintiff Michael Burley life insurance proceeds from a policy insuring the life of his brother, as well as damages and penalties for New York Life's breach of duty under La.R.S. 22:1973. New York Life also appeals the denial of its Motion for New Trial.
For the reasons that follow, we affirm the trial court's award in favor of the Plaintiff for $200,000 in policy proceeds and decrease the amount awarded to Plaintiff under La.R.S. 22:1973 to $5,000 in penalties.
Brothers William and Michael Burley each obtained reciprocal life insurance policies, with the other named as the owner and beneficiary of the policy. They purchased the policies from their personal friend, Mitch Ashmore, who was an agent for New York Life. Mr. Ashmore filled out the application for the policy insuring William's life, and both Michael and William signed the application on October 16, 2012. The policy insuring William's life became effective in December 2012.
William died on April 24, 2013, from a heart attack. Mr. Ashmore assisted Michael with filing a claim for payment of the policy proceeds. On October 14, 2013, New York Life sent a certified letter to Michael noting an inaccurate response to question 3(l) on William's insurance application. The application reflected a response of "no" to the following question:
According to New York Life, however, William's medical records indicated that the answer to question 3(l) should have been "yes." The October 14, 2013 letter further referred to New York Life's normal
On February 21, 2014, Michael filed suit against New York Life seeking the $200,000 life insurance policy proceeds, as well as penalties and attorney fees pursuant to La.R.S. 22:1892 and/or La.R.S. 22:1973 for New York Life's alleged bad faith handling of the claim. New York Life was served through the Louisiana Secretary of State on April 30, 2014. On June 3, 2014, Michael filed a Motion for Preliminary Default Judgment, noting New York Life's failure to file an Answer, and a preliminary default was entered on June 5, 2014.
A hearing to confirm the default judgment was held on June 10, 2014, wherein Michael testified and documentary evidence was admitted into evidence. The complete record of the confirmation hearing is before us on appeal.
The trial court rendered a default judgment in favor of Michael for the $200,000 policy proceeds. The trial court also awarded $20,000 in penalties under La. R.S. 22:1973, as well as $100,000 in penalties and "33 1/3% for attorney fees" under La.R.S. 22:1892. The judgment was signed on June 10, 2014, and served on New York Life through the Louisiana Secretary of State on June 16, 2014.
On June 23, 2014, New York Life filed a Motion for New Trial. Following a hearing, the trial court took the matter under advisement. On December 19, 2014, the trial court signed a judgment denying New York Life's Motion for New Trial as to the policy proceeds awarded to Michael. The judgment further provided:
New York Life filed a Motion for Suspensive Appeal.
On March 23, 2015, this court issued an order to New York Life requiring it to show cause why its appeal should not be dismissed for prematurity and/or because it was taken from a partial non-final judgment. We noted that the trial court had granted a new trial on the issue of penalties and attorney fees under La.R.S. 22:1892, and that a new trial had not yet been held. In response thereto, the parties jointly submitted a signed order from the district court dismissing Michael's claims for penalties and attorney fees under La.R.S. 22:1892. The March 23, 2015
On Appeal, New York Life submits the following assignments of error:
In its first two assignments of error, New York Life argues that Michael did not establish prima facie entitlement to either the policy proceeds or to the penalties awarded under La.R.S. 22:1973.
Louisiana Code of Civil Procedure Article 1701(A) allows a judgment of default to be entered against a defendant who fails to answer within the time prescribed by law. Confirmation of a default judgment under La.Code Civ.P. art. 1702(A) requires "proof of the demand that is sufficient to establish a prima facie case."
Thibodeaux v. Burton, 538 So.2d 1001, 1004 (La.1989) (citations omitted).
As we recognized in Bordelon v. Sayer, 01-717, p. 3 (La.App. 3 Cir. 3/13/02), 811 So.2d 1232, 1235, writ denied, 02-1009 (La. 6/21/02), 819 So.2d 340:
"A party seeking recovery under an insurance policy has the burden of establishing every fact in issue which is essential to his cause of action or right of recovery, including existence of the policy sued on, its terms and provisions, and coverage of the claim sued on." Gulf Wide Towing, Inc. v. F.E. Wright (U.K.) Ltd., 554 So.2d 1347, 1352 (La.App. 1 Cir.1989). The insurance contract itself is prima facie evidence of its existence and coverage under the contract. Id.
The original insurance policy, along with the signed application made part of the policy, was admitted into evidence after Michael Burley, who was the owner of the policy, authenticated it. The policy lists William Burley as the insured, and Michael Burley as the owner and sole beneficiary. The application was signed by both William and Michael in the presence of New York Life agent Mitch Ashmore on October 16, 2012.
The policy reflects the "base policy face amount" as $200,000. Section One of the policy provides that New York Life will promptly pay proceeds to the beneficiary upon receipt of due proof that the insured died on or after the Effective Date of the policy. The policy date is listed as December 19, 2012. Michael testified that he began paying premiums on the policy in December 2012 or January 2013, and the payments were being drafted directly out of his bank account.
William Burley's certified death certificate, which was admitted into evidence, shows that he died on April 24, 2013. Michael testified that Mr. Ashmore came to his house the night that William died and assured him he would take care of filing the insurance claim. The October 13, 2014 certified letter from New York Life to Michael, admitted into evidence, confirms that a claim had been submitted.
Based on this evidence, Michael established prima facie proof that the policy insuring William's life existed, and that, as a beneficiary of the policy, he was entitled to the insurance proceeds under its terms.
On appeal, New York Life notes that Michael admitted to the trial court that Williams's response to question 3(l) on the insurance application was inaccurate. It then argues that, because Michael failed to prove that the inaccurate response was not made with intent to deceive, and/or was not a material misrepresentation, La.R.S. 22:860 precludes Michael's entitlement to the policy proceeds. Louisiana Revised Statutes 22:860 (formerly La.R.S. 22:619) provides:
However, reliance on La.R.S. 22:860 is an insurer's affirmative defense to avoid coverage, and the insurer bears the burden of proof. See Abshire v. Desmoreaux,
Michael's admission that William's insurance application contained an inaccurate response does not shift the burden onto him to prove that La.R.S. 22:860 is not applicable. However, the trial court was required to consider the admission of the inaccurate statement and determine whether, based on the evidence, La.R.S. 22:860 precluded Michael from recovering the policy proceeds.
Intent to deceive under La.R.S. 22:860 is determined from circumstances indicating the insured's knowledge of the falsity of the representations made in the application. State Farm Mut. Auto. Ins. Co. v. Bridges, 45,162 (La.App. 2 Cir. 5/19/10), 36 So.3d 1142. There is no evidence in the record suggesting that William knowingly provided an inaccurate response on his insurance application in order to deceive New York Life, and it was not incumbent upon Michael to prove that William's inaccurate statement was not intentional. Michael testified that he had no reason to believe that William's inaccurate response was made intentionally.
The evidence submitted indicated that: (1) Mr. Ashmore filled out the application on behalf of William; (2) William was forthcoming in the application concerning his smoking, his family history of cancer and heart disease, and his history of diverticulitis; (3) The application listed Dr. Moak as William's treating physician; (4) William signed a medical records release authorization allowing New York Life to obtain his medical records from Dr. Moak; (5) Dr. Moak's records obtained by New York Life after William's death revealed William's prior drug abuse treatment in October 2004; and (6) the only treatment for drug abuse within the ten years prior to the insurance application was in October 2004, which was only two years from being outside of the ten-year scope of the requested information. Therefore, the trial court's conclusion that the inaccurate response was not made with an intent to deceive New York Life is reasonably supported by the record.
To prove materiality of a false statement under La.R.S. 22:860, the insurer must show that the statement was "of such a nature that, had it been true, the insurer would either not have contracted or would have contracted only at a higher premium rate." Ned v. Magnolia Life Ins., 590 So.2d 733, 735 (La.App. 3 Cir. 1991). There was no evidence upon which the trial court could conclude that, had William indicated he had undergone drug abuse treatment eight years prior to the application, New York Life would not have issued the policy, or would have issued the policy at a higher rate. Michael was not required to prove that the inaccurate statement was not material. Therefore, the record reasonably supports a conclusion that Michael's claim was not barred under La.R.S. 22:860.
New York Life argues that, because William's death certificate lists marijuana use as contributing to his cause of death, the inaccurate response on the insurance application was necessarily material under La.R.S. 22:860. However, an insured's cause of death is irrelevant to an analysis under La.R.S. 22:860. See Jamshidi v. Shelter Mutual Insurance Company, 471 So.2d 1141 (La.App. 3 Cir. 1985), where the court noted that the test of materiality is not whether the false representation
New York Life also argues that Michael failed to sufficiently prove the allegations in his petition that (1) William's cause of death was unrelated to a preexisting condition or treatment, and (2) that the October 14, 2013 letter was a "denial" of the claim, noting that the letter gave Michael thirty days to provide additional information. However, neither of these facts are material to establishing a prima facie entitlement to the policy proceeds.
Therefore, the conclusion of the trial court that Michael established prima facie entitlement to the insurance policy proceeds is reasonably supported by the record and will not be disturbed on appeal.
New York Life also appeals the trial court's award of penalties under La.R.S. 22:1973. In connection with confirming the default judgment against New York Life, the trial court awarded Michael $20,000 in penalties under La.R.S. 22:1973.
New York Life first contends that La. R.S. 22:1973 is not applicable to claims under life insurance policies. We disagree. Louisiana Revised Statute 22:1973 provides (emphasis added):
The statute then enumerates certain acts that, "if knowingly committed or performed by an insurer", constitute "a breach of the insurer's duties in Subsection A." La.R.S. 22:1973(B) (emphasis added).
We read this language to generally include any and all insurers. While La.R.S. 22:1973(D) specifically excludes "claims made under health and accident insurance policies," nowhere does the statute exclude claims under life insurance policies, and we are not inclined to read such an exclusion into the statute.
New York Life also argues that Michael failed to establish that it breached a duty under La.R.S. 22:1973. A Plaintiff's burden of proof under La.R.S. 22:1973 was discussed in detail in Lemoine v. Mike Munna, L.L.C., 13-2187 (La.App. 1 Cir. 6/6/14), p. 12-14, 148 So.3d 205, 215-216:
Satisfactory proof of loss under the policy at issue necessarily includes proof of the insured's death after the effective date of the policy, as well as proof of the claimant's interest in the proceeds. This is consistent with Section One of the policy at issue.
The evidence submitted at the confirmation of default hearing does not indicate the exact date on which Michael submitted proof of satisfactory loss under the policy, but rather only that Mr. Ashmore had assured Michael that he would handle filing the claim. However, the October 14, 2013 letter to Michael from New York Life references the claim, and notes that William died within two years of the effective date. While the letter indicates an inaccurate response on the insurance application, it does not suggest that Michael had failed to submit adequate proof of William's death or Michael's status as a beneficiary of the policy. Therefore, there is reasonable support in the record upon which the trial court could conclude that Michael had submitted satisfactory proof of loss to New York Life.
There is also a reasonable basis upon which the trial court could conclude that New York Life had failed to pay the claim within sixty days of receipt of satisfactory proof of loss. New York Life made no payment at all until at least January 30, 2014, and this is well over sixty days from even the October 14, 2013 letter.
Since there was no evidence indicating when, prior to the October 14, 2013 letter, Michael had submitted satisfactory proof of loss to New York Life, we must use October 14, 2013 as the date that satisfactory proof of loss was received when determining whether New York Life was arbitrary and capricious in failing to timely pay the claim under La.R.S. 22:1973(B)(5).
The October 14, 2013 letter notes the inaccurate response on William's application, and states:
The letter further provides that "it appears that this is the proper resolution of the matter[,]" but gives Michael thirty days to "present any objective information that [it] should consider[.]"
The Louisiana Supreme Court has made clear that
Louisiana Bag Co., Inc., 999 So.2d at 1114-1115 (citations omitted).
Pretermitting whether the letter's reference to the inaccurate application response, without any indication that the response was made with an intent to deceive or that New York Life would not have issued the policy if an accurate response had been made, was sufficient to reflect a legitimate dispute, New York Life admits in the letter that it at least owed the amount of the paid premiums. However, it failed to tender that amount until at least January 30, 2014, which is over one hundred days after the date of the letter, and there is no indication that the tender was made unconditionally. Therefore, the trial court was not manifestly erroneous in concluding that New York Life arbitrarily and capriciously breached its duty under La.R.S. 22:1973(B)(5).
New York Life also asserts on appeal that the penalties awarded under La.R.S. 22:1973 should have been limited to $5,000 because Michael failed to prove that he suffered damages. We agree.
Michael's petition does not allege that he suffered damages as a result of New York Life's breach of La.R.S. 22:1973, and there was no testimony or other evidence presented at the hearing suggesting that he suffered any actual damages. The trial court did not award Michael with any damages, but rather awarded $20,000 in penalties as prayed for by Michael's counsel.
Louisiana Revised Statute 22:1973(C) states:
The Louisiana Supreme Court has recognized that proof of actual damages is not a prerequisite to the recovery of penalties. Sultana Corp. v. Jewelers Mut. Ins. Co., 03-360 (La. 12/3/03), 860 So.2d 1112. However,
Hall v. State Farm Mut. Auto. Ins. Co., 94-867, p. 7 (La.App. 3 Cir. 5/31/95), 658 So.2d 204, 208 (emphasis in original removed, our emphasis added). See also, Gilpin v. State Farm Mutual Automobile Insurance Company, 99-36 (La.App. 5 Cir. 5/19/99), 735 So.2d 921.
Because the trial court did not award Michael any damages from New York Life's breach of La.R.S. 22:1973, it was error for the trial court to award more than $5,000 in penalties.
New York Life submits that the trial court erred by not granting its Motion for New Trial as to Michael's claims for the insurance proceeds and penalties under La.R.S. 22:1973.
The only peremptory ground for new trial under La.Code. Civ.P. art. 1972 that has been asserted is that the default judgment was clearly contrary to the law and evidence. However, as noted above, the trial court's findings that Michael was entitled to the life insurance policy proceeds and that New York Life breached its duty under La.R.S. 22:1973 were reasonably supported by the record. While the amount of penalties awarded under La. R.S. 22:1973 should have been limited to $5,000, we can adequately resolve this issue on appeal without remanding the matter for a new trial.
As to the discretionary grounds for new trial under La.Code. Civ.P. art. 1973 in the context of a default judgment, the Louisiana Supreme Court stated in Thibodeaux v. Burton, 538 So.2d 1001, 1005 (La.1989):
In its brief to this Court, New York Life refers to documents attached to its memorandum in support of its motion for new trial in support of its argument that a new trial should have been granted. However, at the hearing on New York Life's motion, counsel presented argument only, and no documents were admitted into evidence. "Evidence not properly and officially offered and introduced cannot be considered, even if it is physically placed in the record. Documents attached to memoranda do not constitute evidence and cannot be considered as such on appeal." Denoux v. Vessel Mgmt. Services, Inc., 07-2143, p. 6 (La. 5/21/08), 983 So.2d 84, 88. Therefore, we cannot consider any of these documents in our review.
At the hearing on New York Life's motion, counsel argued that a new trial should be granted because Michael misrepresented William's cause of death, omitted details of the extent of William's drug abuse treatment in October 2004, misrepresented that New York Life had failed to respond until the October 14, 2013 letter, and misrepresented that New York Life had not responded to Michael's former counsel with requested medical records.
New York Life failed to prove any of its allegations in connection with its Motion for New Trial, and, even if it had, the trial court would not have abused its discretion in denying the motion. There was no indication of any evidence showing that William's inaccurate response was intentionally made to deceive New York Life or that New York Life would not have issued the policy if the response had been accurate. While New York Life focuses on the fact that Michael's counsel did not specifically indicate to the trial court that the death certificate indicated marijuana use as contributing cause of death, as noted above, William's cause of death is immaterial to the analysis. Moreover, the complete certified death certificate was admitted into evidence and considered by the trial court.
In addition, New York Life incorrectly suggests that its duty under La.R.S. 22:1973(B)(5) requires only that it communicate with the claimant. However, whether or not New York Life communicated to Michael or his former counsel before or after the October 14, 2013 letter does not affect whether it satisfied its duty under La.R.S. 22:1973(B)(5) under the instant facts. New York Life admitted in connection with that letter that it at least owed the amount of the premiums paid, yet did not attempt to tender that amount until January 30, 2014, which is in breach of its duty under La.R.S. 22:1973(B)(5).
In its final assignment of error, New York Life contends that the trial court erred in increasing its initial award under La.R.S. 22:1973 from $20,000 in penalties to $100,000 in damages and $200,000 in penalties, in connection with the denial of New York Life's motion for new trial. We agree.
Because the trial court denied New York Life's motion for new trial as to its award under La.R.S. 22:1973, and Michael did not timely seek, or was otherwise granted, a
For the reasons set forth above, we affirm the denial of New York Life's motion for new trial. We further affirm the trial court's judgment against New York Life awarding Michael Burley with life insurance policy proceeds in the amount of $200,000, and we decrease the amount awarded under La.R.S. 22:1973 to $5,000 in penalties. Costs of this appeal are assessed equally between the parties.
