Louisiana Supreme Court Finds Business Interruption Coverage Does Not Apply to Losses Attributable to COVID-19

Can a child have more than one father? Yes, according to Louisiana law which allows for "dual paternity."

Louisiana's "family law" has undergone many changes in an attempt to react to the challenges presented by new medical technology and a breakdown of the traditional family structure. The recent Supreme Court decision in Derek Alan Pociask v. Kera Mosely is the latest effort to address these "modern problems."

The Pociask Court explained that there is a public interest in "protect[ing] innocent children, born during marriage, against scandalous attacks upon their paternity by the husband of the mother, who may be seeking to avoid paternal obligations to the child ... Thus, the traditional and historical position of Louisiana jurisprudence was to zealously guard and enforce the presumption of paternity created by the Civil Code." This public policy was easier to promote in the past when a husband may have had no reason to question or ability to challenge his paternity. However, in a world of vasectomies and DNA testing, the husband now has an increased ability to factually prove that he is not the father.

With "dual paternity," the first "father" is the husband of the child's mother. The second "father" is the biological father of the child. This situation can occur because the husband is presumed to be the father of the child under Louisiana law. See, La. C.C. art. 185. This "presumption" becomes incontrovertible if the husband does not bring an action to disavow his paternity within one year from when he learns or should have learned of the child's birth unless the husband lived separate and apart continuously from the mother for three-hundred days immediately preceding the birth of the child. See, La. C.C. art. 189.　

If the husband lived separate and apart for three-hundred days immediately preceding the birth of the child, the husband can bring a disavowal action within one year from being notified in writing that a party in interest asserts that he is the father of the child. If he fails to bring the disavowal action, he will be considered the "father" for all legal purposes. The purpose behind the "separate and apart" exception is to bring legal and biological paternity into "closer association." See, Katherine Shaw Spaht, Who's Your Momma, Who are Your Daddies?: Louisiana's New Law of Filiation, 67 La. L. Rev. 307 at 314 (2007).

In Pociask, the Louisiana Supreme Court addressed what it means to "live separate and apart continuously" from the mother. The plaintiff in Pociask (the presumed father and ex-husband of the defendant mother) brought an action to disavowal his paternity. The disavowal action was brought well over a year after the child's birth.

Factually, the presumed father in Pociask underwent a vasectomy prior to the birth of the child, had not entered into sexual relations with the mother for over three-hundred days (over nine months) prior to the child's birth and had barely seen the mother in the three-hundred days prior to the birth of the child. Moreover, DNA testing proved that he was not the biological father. Nevertheless, the Louisiana Court of Appeals determined that the husband was the presumed father of the child because he did not bring his disavowal action within a year of the child's birth.

The Court of Appeals interpreted the phrase "lived separate and apart continuously" so strictly that the husband's one night stay at the marital domicile during the three-hundred day period preempted the disavowal action. The Appeals Court held that the phrase "lived separate and apart continuously" should not be interpreted in pari materia (in a like manner) with the divorce articles of the Civil Code. In the divorce setting, a spouse will be found to have lived "separate and apart" when the overall circumstances show that there was no mutual intention to resume the marital relationship.

The Pociask Court disagreed with the strict reading of the "separate and apart" language used by the appellate court. According to the Pociask Court, the phrase "lived separate and apart continuously" should be interpreted the same way in a disavowal action as it interpreted with a divorce. Therefore, the overnight visit in Pociask did not serve to interrupt the three-hundred day period and the disavowal action was timely.

In Barber Brothers Contracting Company, LLC v. Capitol City Produce Company, LLC, the Louisiana Supreme Court re-examined how Louisiana courts should review general damage awards. The Court noted its decision also was intended to clarify its prior ruling in in Pete v. Boland Marine & Mfg. Co., which addressed the same issue. To review our prior analysis of the Court’s holding in Pete, click here.

Traditionally, Louisiana has required a two-step analysis for appellate review of a lower court’s damage awards. First, the appellate court must determine whether the trier of fact “abused its discretion” in assessing damages. Courts generally found a damage award abused discretion if it “shocked the conscience,” a standard critics argued was too subjective. Second, and only if the award “shocked the conscience,” courts could consider prior awards to establish the highest or lowest reasonable award.

In Pete, the Court held that courts of appeal should compare verdicts to general damage awards in similar cases during the first step of analysis to determine whether a trial court abused its discretion. This approach suggested general damage awards should not be solely based on the subjective findings of the jury but should be grounded in objective comparisons to other cases. It was thought this also served the purpose of maintaining consistency and reasonableness of damage awards. The Pete decision was seen by many as an attempt to address Louisiana's trend of rising verdicts, which critics argued were contributing to higher insurance premiums in the state.

However, in Barber Bros., the Supreme Court revisited these issues, when it examined a jury verdict that awarded the plaintiff $10.75 million in general damages, $2.5 million to his wife for loss of consortium, and $1.5 million to each of their two children. The jury found the plaintiff sustained extensive physical injuries and a traumatic brain injury, which significantly impacted his personality, lifestyle, and self-image.

Citing Pete, the Louisiana Supreme Court initially reduced the awards to $5 million for the plaintiff, $400,000 for his wife, and $100,000 for each child. However, upon rehearing, the Court reinstated the original general damages award. Citing Pete again, the court clarified how damage awards should be reviewed on appeal as follows: (1) courts should determine whether abuse of discretion occurred by examining the particular facts and circumstances of the case, to include a “consideration of prior awards in similar cases,” and (2) if abuse of discretion is found, “the court is to then also consider those prior awards to determine ‘the highest or lowest point which is reasonably within that discretion.’”

The Court clarified that the consideration of prior awards should be balanced with an examination of the unique facts and circumstances of each case. Considering the facts of Barber Bros., the Court held it did not adequately account for the effects of the plaintiff’s injuries upon initial hearing. While the jury award was “on the high end of the range of reasonable awards,” the court found it was not disproportionate to prior awards and “bore a reasonable relationship” to the evidence presented at trial. Thus, the award did not “shock the conscience” and should not have been adjusted following the initial hearing.

The Barber Bros. decision may be limited to the facts presented in that case. However, the ruling appears to suggest that prior verdicts are only a factor to be weighed against a case’s facts to assess whether a trial court abused its discretion with a general damage award that “shocks the conscience.” While the court did not overturn Pete, the Barber Bros. case appears to re-open the door for damage awards to be based upon more subjective assessments of the jury and not the more objective standards the Pete decision initially appeared to create. It remains to be seen how much weight prior decisions will carry when courts address these issues moving forward.

References:

Barber Brothers Contracting Company, LLC v. Capitol City Produce Company, LLC, 23-788 (La. 12/19/24), 397 So. 3d 404.

Pete v. Boland Marine & Mfg. Co., 23-170 (La. 10/20/23), 379 So. 3d 636, reh'g denied, 23-170 (La. 12/7/23), 374 So. 3d 135.

As part of its travel pitch, Louisiana tourism once used the slogan: “Louisiana. Come as you are. Leave different.” If an out-of-state insurer writes in Louisiana and does not understand the ramifications of “Gasquet,” then they may leave different, very different.

The term “Gasquet” comes from the case of Gasquet v. Commercial Union Ins. Co., 391 So. 2d 466 (La. App. 4th Cir. 1980). The case considered how a settlement of the plaintiff's claims against the primary carrier and a partial settlement of claims against the tortfeasor/insured impacted the excess carrier.

In Gasquet, the plaintiff alleged serious personal injury. Prior to trial, he settled with the primary insurer, Commercial Union, for $200,000, even though it had a $300,000 policy limit. In the deal, the plaintiff fully released Commercial Union. He also released the tortfeasor/insured from all liability not insured by the excess carrier, Stonewall Insurance. The insured therefore remained in the lawsuit as a “nominal defendant” to allow the plaintiff to pursue the excess carrier.

After settlement, the excess carrier denied the claim and asserted that payment by the primary carrier of less than policy limits did not trigger its policy, which required that the primary policy be "exhausted." Without exhaustion, the excess carrier argued that it could not be called upon to respond under its policy language. The court rejected this argument and held that the plaintiff was entitled to a direct action against the excess carrier who would, in turn, receive a credit for the full limits of the primary policy. The “Gasquet release” has since become a staple of Louisiana litigation.

In Louisiana, unlike many states, a primary insurer owes no general duty to the excess carrier under Great Southwest Fire Ins. Co. v. CNA Insurance Companies, 557 So. 2d 966 (La. 1990). This creates a dynamic not present in states where the primary carrier is duty bound to consider the interests of the excess carrier. This lack of duty magnifies the vulnerability of the excess carrier’s position in Gasquet-friendly Louisiana.

An excess carrier in Louisiana should measure its reliance upon a primary carrier who can independently settle out with the plaintiff, sometimes on the eve of trial. If the excess carrier relied upon the primary carrier to defend the case, the excess carrier could be placed in the unenviable position of scrambling to defend a case where the insured (protected by Gasquet) may be suddenly disinterested in the outcome. Excess carriers with real potential exposure need to stay involved in the litigation and be prepared.

Following Gasquet, permutations have developed such as a “reverse-Gasquet,” where the excess carrier settles with the plaintiff and then pursues the primary insurer to recoup its payment. So, come to Louisiana, but know that we are sometimes different.

Collin LeBlanc is a Keogh Cox partner and experienced litigator who concentrates in injury, commercial, and legal malpractice disputes. He lives in nearby Zachary, Louisiana with his wife Melissa and three all-too-active children. He is an outdoorsman, a tennis player, a cook, and a hobbyist writer.