Louisiana Supreme Court Revisits How General Damage Awards Are Reviewed on Appeal

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.

Louisiana is a "direct action" state that continues to present new challenges for insurers. Over the years, Louisiana courts have expanded the duty to defend. This expansion created pitfalls for the insurer and forced the provision of a complete defense, even when all or a majority of the claim was not covered by the insurance policy. However, some of this expansion has been drawn back by the Louisiana Supreme Court which recently ruled that, in latent, long-term exposure cases, the duty to defend is to be spread across a number of years­­­--as opposed to the arbitrary selection of a single insurer to defend the entirety of the case. This change presents opportunities for immediate risk transfer and reimbursement to recoup what can be significant dollars invested in the defense of legacy and environmental actions.

A General Overview: Like many other states, an insurer’s duty to defend suits against its insured is broader than its liability for damage claims. The duty to defend is determined by the factual allegations contained in the plaintiff's petition, which are to be broadly construed. American Home Assurance Co. v. Czarniecki, 230 So.2d 253 (La. 1969). The court examines the duty under the “eight corners” rule which means that the duty attaches if a review of the four corners of the policy and the petition raises the potential for coverage and coverage is not unambiguously excluded. Once a complaint states one claim within the policy's coverage, the insurer has the duty to defend the entire claim, even though other claims in the complaint fall outside the policy's coverage. Treadway v. Vaughn, 633 So.2d 626 (La. App. 1 Cir. 1993), writ denied, 635 So.2d 233 (La. 1994).

Execution of the defense duty can present big challenges given that Louisiana is a direct action state where the attorney is often called upon to represent both the insured and the insurer. If the insurer does not properly handle the assignment, coverage positions can be waived. See Steptore v. Masco Const. Co., 643 So. 2d 1213 (La. 8/18/94); Sosebee v. Steadfast Ins. Co., 701 F.3d 1012, 1020 (5th Cir. 2012). Additionally, insurers must recognize that Louisiana has recognized Cumis (insured selected) counsel in situations when coverage positions issue. Belanger v. Gabriel Chemicals, Inc., 00-0747 (La.App. 1 Cir. 5/23/01); 787 So.2d 559, writ denied, 01-2289 802 (La. 2001); So.2d 612 (citing 46 C.J.S.§ 1157 (1993). In such a situation, independent counsel must be separately retained to represent the diverging interests.

When is the duty to defend discharged: The court will determine whether exhaustion of policy limits will terminate an insurer’s obligation to defend the insured on a case-by-case basis, taking into consideration whether the settlement was made in good faith. Holtzclaw v. Falco, 355 So.2d 1279 (La. 1977). An insurer that “hastily enters a questionable settlement simply to avoid further defense obligations under the policy” does not act in good faith and may be held liable for damages caused to its insured. Pareti v. Sentry Indemnity Co., 536 So.2d 417, 423 (La. 1988). The timing of its withdrawal from the suit is critical to a determination of the insurer’s good faith. A tender of policy limits into the registry of the court may terminate the duty to defend; however, the tender must comply with all of the statutory requirements (to include the admission of liability). In this connection, an insurer who wishes to tender its limits and admit liability may well face a challenge from the insured that such action is a breach of its good faith obligations. Pareti, supra.

Long-Tail Exposure Cases: For some time now, Louisiana courts have recognized the concept of “horizontal spreading” over a number of years based on the “trigger” of coverage each year a policy was in place. See Cole v. Celotex Corp., 599 So. 2d 1058 (La. 1992) and Norfolk Southern Corp. v. Cal. Union Ins. Co., 859 So. 2d 167, 192 (La. App. 2003),writ denied, 861 So. 2d 578 (2003). The practical effect is to hold each insurer liable to indemnify only for its pro-rata time on the risk and, if the insured was not covered for a period of time, it bore its own pro-rata portion of the risk.

Until recently, the courts held that the duty to defend in such actions was a solidary (joint and several) obligation, meaning that the insured could select any carrier and require it to defend the entire claim. Simply, the courts held that the duty to defend was not subject to proration such that an insurer who was on the risk for a very short time could be compelled to pay all of the fees and costs and must then file a reimbursement action to collect from other insurers. But, the Louisiana Supreme Court recently ruled that defense costs are now subject to proration in the same manner as with indemnity. Arceneaux v. Amstar Corp., 15-0588 (La. 9/7/16); 200 So 3d 277.

At the outset, almost every long-tail exposure claim is a complex action that can take years to resolve. It is nearly always a very expensive proposition in terms of defense costs. The Arceneaux decision has meaningful, real-world impact upon both the insurer and the insured.

From the insurer’s perspective, it can easily calculate its percentage of time on the risk and thereby readily ascertain what it owes in the defense of the action. Insurers can applaud the fact that they no longer pay for uninsured time on the risk or the portion of recalcitrant insurers who do not wish to “participate” in a joint defense.

From the insured’s perspective, new incentive exists to scour all avenues to find older policies that may have been on the risk to avoid having direct participation in defense costs. In this regard, the insured will now have strong monetary incentive to keep all policies on file (or to take depositions of agents and brokers to identify coverage that may have been in place). Of course, insurers who otherwise might have remained unknown might now have an active role in long-tail exposure cases.

John Wolff is a member of the management committee and a senior partner at Keogh Cox with more than thirty years of experience. John has made his mark in a practice that has included complex litigation, commercial disputes, serious injury, bad-faith and insurance coverage, legacy/long-term exposure, and other matters. He has litigated numerous significant cases in state and federal courts and regularly appears before the courts of appeals in and out of the state. John has devoted attention to non-profit boards dedicated to assisting at-risk children. In his spare time, he enjoys spending time with wife, his three children, and grandchildren, playing tennis, and hiking.

Almost no litigation grabs attention and headlines more than a high-profile class action. The Louisiana Supreme Court's recent class action ruling was no exception in a case involving salacious conduct and a violation of privacy.

The plaintiff in Jane Doe v. Southern Gyms, LLC, 2012-1566 (La. 3/19/13) was an unnamed victim of a "peeping tom." She contended that an employee of a popular gym placed a pen camera in the women's bathroom where he would tape unsuspecting women in various states of undress. The pen camera could hold only 1-2 hours of film. The perpetrator testified that, after viewing, he would immediately delete the footage. The images of only four women were seen on the footage when it was discovered. After the employee was arrested, one of the victims filed the class action lawsuit. At issue before the Louisiana Supreme Court was whether the class action was properly certified by the Trial Court.

Class action is a nontraditional litigation procedure that was introduced into Louisiana civil procedure in 1961. Louisiana class action procedure is modeled after the original federal rule and has been extensively revised since its inception. Louisiana Code of Civil Procedure Article 591 provides the elements that must be met before a class action can be certified. Failure to meet one of the threshold requirements of Article 591 precludes class action treatment. Once of these threshold requirements is numerosity, i.e. a class of potential plaintiffs "so numerous that joinder of all members is impractical." La. C.C.P. art. 591(a)(1). The requirement of numerosity was at issue in Jane Doe.

In its analysis, the Supreme Court stressed that courts must perform a rigorous analysis to determine whether the proposed class action meets the requirements of Article 591. Simply pleading a class action is insufficient. Instead, the plaintiff "must be prepared to prove in fact" that the Article 591 requirements are met. Id. at p. 9. To establish the "numerosity" requirement, the class representative cannot simply allege that several persons were affected by the defendant's bad acts. She must be able to offer some proof of a definable group of aggrieved persons so numerous that joinder is impractical.

In Jane Doe, the Supreme Court held that the plaintiff did not satisfy numerosity. The employee's testimony revealed that he may have recorded approximately 20 women. However, because the footage was deleted, most of the potential class members could not show that their privacy had been violated. Only nine women had positive knowledge that they were on video. According to the Jane Doe Court, nine class members did not meet the numerosity requirement and the class was decertified. While the Court did not reveal a "magic number" to meet numerosity, we now know it may be higher than nine.

There is an old adage that "bad facts make bad law." In Jane Doe, the Louisiana Supreme Court did not let the egregious nature of the conduct impact its view that the requirements of Article 591 must be met in every circumstance.