What to do if your Home or Business is Damaged by Flood or Storm

Effective August 1, 2021, La. R.S. 23:291.2 will impact the hiring practices used by many employers. Under the new statute, unless otherwise allowed by law, “when making a hiring decision, an employer shall not request or consider an arrest record or charge that did not result in a conviction, if such information is received in the course of a background check.” This is a dramatic change for employers who consider arrest histories in the hiring process. But the statute does not stop with arrest records.

When considering “other” types of criminal history records, i.e., convictions or pleas, an employer “shall make an individual assessment of whether an applicant’s criminal history record has a direct and adverse relationship with the specific duties of the job that may justify denying the applicant the position.” In this assessment, the employer is to consider:

(1) The nature and gravity of the offense or conduct;

(2) The time that has elapsed since the offense, conduct, or conviction; and,

(3) The nature of the job sought.

Upon written request, an employer shall also make available to the applicant any background check information used during the hiring process. While an arrest is not proof an applicant engaged in criminal conduct, a conviction record is usually sufficient to show criminal conduct. See EEOC guidance at https://www.eeoc.gov/pre-employment-inquiries-and-arrest-conviction.

With convictions, the new Louisiana statute places a burden on the employer to make an assessment as to whether the criminal offense has a direct relationship to the specific job duties of the applicant. The statute gives little guidance as to how employers are to reach a conclusion.

At its core, the statute prohibits requests for arrests records and requires an employer to conduct an analysis as to whether a conviction is relevant to the job function before refusing to hire an employee on the basis of a conviction. The statute minimizes administrative burdens when it bars a consideration of arrests. Yet, it sets forth three factors employers must now weigh and measure for other criminal records. One reasonably asks how this statute- which appears designed to limit discretion in rejecting applicants with documented criminal records- will impact “negligent hiring” claims and other areas of the law.

Fortunately, the 2024 hurricane season has been relatively calm. We previously blogged about steps that can be taken after your property is damaged by a hurricane or other natural disaster. (Click here to access our prior blog). With a Tropical Storm, and potential Hurricane, threatening our coast, here are some steps to consider taking to prepare before a storm arrives in the event you must make a property insurance claim for damages after the storm:

• DOCUMENT, DOCUMENT, DOCUMENT – The best way to prove the condition of your property before damage is caused is to document it. Take pictures and videos of the interior and exterior of your home or business. Create an inventory of your contents. Narrate the video to provide better descriptions. If your property is damaged, this documentation will be used to verify its condition and make it easier for your insurer to adjust and pay your claim.
• INSPECT YOUR PROPERTY – As you are making your preparations, you may consider taking a walk around your property to notice any prior damage to your property. Identify any issues that could affect a potential insurance claim.
• KNOW YOUR INSURANCE COVERAGES – Make sure you are aware of the coverages that your insurance policy provides. The Declarations Page to your policy should provide much of this information – the coverage limits, types of coverage provided, deductible, etc. While your insurance agent likely maintains this for you, it is good practice to maintain and know this information, which lets you know what will or will not be covered.
• MITIGATE YOUR DAMAGES – You can take steps to prevent damage to your property during the storm. You can pick up items around the property that could become airborne and take whatever precautions you can to prevent damage to your property, particularly the exterior. If your property is damaged, you can make temporary repairs to prevent further damage until your insurance company can get to you (like placing a tarp on the roof).

In the wake of recent hurricanes, Louisiana courts were flooded with cases property owners filed against their insurers alleging improper denial or underpayment of hurricane claims. Many of those cases were stayed and the parties were compelled to arbitration, despite Louisiana law prohibiting arbitration provisions in insurance contracts, La. R.S. 22:868(A)(2).

In a typical case involving commercial property, a property owner filed suit against its insurers, often including both domestic and foreign companies. One or more insurance policies contained an arbitration agreement requiring all disputes to be resolved by arbitration in a specified U.S. city. Undeterred, the insured filed suit in Louisiana state court. The insurers removed the case to federal court and filed a motion to compel arbitration.

The foreign insurers sought to enforce the arbitration agreement under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (aka the New York Convention). The New York Convention is an international treaty that requires signatory countries to enforce an arbitration agreement where four requirements are met: (1) a written arbitration agreement exists, (2) that provides for arbitration in a signatory country, (3) which arises from a commercial legal relationship, and (4) at least one party is not a U.S. citizen. These conditions are met where a foreign insurer issues a commercial policy that contains an arbitration provision to a U.S. property owner. Under such circumstances, the courts were bound to compel the parties to arbitration.

The cases presented some interesting questions. For example, could domestic insurers also compel arbitration? Yes. Under the doctrine of equitable estoppel, where the claims against the insurers are interdependent, the domestic insurers, even if they were not signatories to the arbitration agreement, could compel arbitration.

Does the McCarran-Ferguson Act, a federal law that maintains the states’ power to regulate the insurance industry, cause Louisiana’s law prohibiting arbitration in insurance contracts to reverse-preempt the Convention? No, the Act does not apply to treaties.

What about the arguments that the contract was not freely negotiated, or that under conflict of laws principles Louisiana law should apply, or that the federal courts should abstain because the state has a vital interest in regulating insurance? The courts rejected these arguments as well.^

Recently, the U.S. Fifth Circuit Court of Appeals, in Bufkin Enterprises, LLC v. Indian Harbor Ins. Co., affirmed that equitable estoppel applied to allow domestic insurers to compel arbitration under the New York Convention even where the insured dismissed the foreign insurers with prejudice.* However, the U.S. Second Circuit has held the opposite in two recent cases involving insurance contracts between foreign insurers and Louisiana property owners – that Louisiana law applied to prohibit the enforcement of the arbitration provision in the insurance policy.^^

With the exception of the Second Circuit split, the numerous cases arising from recent hurricanes confirm a strong policy favoring arbitration under the New York Convention, which overrides potential state law obstacles to enforcing arbitration provisions in insurance policies.

Mary Anne Wolf is an arbitrator on the commercial, construction and large, complex cases panels of the American Arbitration Association and is a neutral at Perry Dampf Dispute Solutions.

References:

^ See for example, General Mill Supplies, Inc. v. Underwriters at Lloyd’s, London, et al, 23-6464, 2024 WL 216924 (E.D. La. 1/19/2024), - F.Supp.3d – (2024); Dryades YMCA v. Certain Underwriters at Lloyds, London, et al, 23-3411, 2024 WL 398429 (E.D. La. Jan. 31, 2024); Parish of Lafourche v. Indian Harbor Ins. Co., et al, 23-3472, 2024 WL 397785 (E.D. La. Feb. 2, 2024).

* Bufkin Enterprises, LLC v. Indian Harbor Ins. Co., et al, 96 F.4th 726 (5th Cir. Mar. 26, 2024).

^^ See Certain Underwriters at Lloyds, London v. 3131 Veterans Blvd. LLC, 22-9849, 2023 WL 5237514 (S.D.N.Y. Aug. 15, 2023); and Certain Underwriters at Lloyd’s, London v. Mpire Properties, LLC, 22-9607, 2023 WL 6318034 (S.D.N.Y. Sept. 28, 2023) (appeal filed).