Who’s Left Holding the Bag? Indemnity in Construction Contracts

On July 27, 2023, the Louisiana First Circuit entered judgment in favor of Louisiana State Trooper Andre Bezou in the shooting death of Coltin LeBlanc. The case was defended by Keogh Cox attorneys Drew Blanchfield, Brian Butler, and Collin LeBlanc. In support of its ruling, the First Circuit cited La. R.S. 9:2798.1 which provides qualified immunity for an officer’s actions, unless their action constituted “criminal, fraudulent, malicious, intentional, willful, outrageous, reckless, or flagrant misconduct.” The court found Trooper Bezou was entitled to qualified immunity under the facts of this case.

After midnight in an area of Hammond, La. dotted with bars and restaurants, Trooper Bezou spotted LeBlanc driving a large Ford truck. Trooper Bezou testified that he witnessed two traffic violations and initiated a stop. “Bodycam” footage captured the interaction. LeBlanc exited the vehicle, and when the trooper asked for identification, LeBlanc indicated it was in his truck. LeBlanc moved to the cab of the truck, and Trooper Bezou followed, stopping within the open driver’s side door. Based upon his observations during this interaction, Trooper Bezou suspected LeBlanc was intoxicated. Later testing confirmed that LeBlanc had a blood alcohol level more than two times the legal limit.

But LeBlanc was not attempting to retrieve his license. Instead, he revved the engine and attempted to flee with Trooper Bezou immediately next to the vehicle. Trooper Bezou later testified he feared that LeBlanc would steer the vehicle to run him over with the back left wheel. In reaction, Trooper Bezou latched onto the truck and LeBlanc sped around a corner and down the roadway. Trooper Bezou was able to draw his weapon and gave multiple orders to stop. Trooper Bezou testified that he feared he would be thrown from the vehicle or scraped against parked cars in the area. When the trooper received no indication LeBlanc would relent, he opened fire. Thereafter, the truck came to a rest.

In the subsequent litigation, plaintiffs argued that Trooper Bezou used “excessive force” and should have attempted to move away and allow LeBlanc to flee the scene. In response, Keogh Cox cited Harmon v. City of Arlington, 16 F.4^th 1159 (5^th Cir. 2021), where the federal Fifth Circuit held that no “clearly established precedent” would prohibit an officer from firing while perched on the running board of a fleeing vehicle. Finding no excessive force under the facts of the case, Harmon acknowledged the simple truth that “there is an obvious threat of harm to an officer” who is “on the side of a fleeing vehicle.” The facts presented to the First Circuit showed that Trooper Bezou gave more warning to relent than was given in Harmon.

The New York Times covered this incident in an article titled, “Before the Final Frame: When Police Missteps Create Danger.” 11/17/21. In its coverage, the New York Times reported that Trooper Bezou “appeared to be in grave danger.” It then suggested that the trooper could have just backed away. However, courts are instructed not a gauge questions of immunity from an out-of-context application of “20/20 hindsight.” Because the facts in this case showed Trooper Bezou was in grave danger “at the moment” force was used and was faced with a split-second decision, he was protected from liability.

The use of biomechanical expert testimony in Louisiana courts has evolved over the last few years. A recent decision from the Louisiana Fifth Circuit Court of Appeal provides an example of the changing standards for the admissibility of biomechanical expert testimony and its relation to medical causation.

In Pollard v. 21st Century Centennial Ins. Co., 21-65 (La. App. 5 Cir. 12/23/21), 334 So. 3d 1013, writ denied, 2022-00163 (La. 4/20/22), the defendants argued that the underlying accident involved a minor rear-end impact not likely to cause injury. The defendants hired a biomechanical expert who was also a medical doctor. The expert performed an “impact severity analysis” to determine the force of impact in the collision.

The expert concluded that the accident involved a minimum damage collision; he relied upon the “force reflection method” and test data at his crash test facility to determine how fast the rear-ending vehicle would have traveled to cause the damage present on the plaintiff’s vehicle. Based upon his findings, the expert opined that the plaintiff was not seriously injured in the collision. He went further to testify that specific injuries could not have been caused by the forces involved.

The Fifth Circuit noted the same expert was previously excluded in a case that went to the Louisiana Supreme Court in Blair v. Coney, 2019-00795 (La. 4/3/20), reh'g denied, 2019-00795 (La. 7/9/20), 298 So. 3d 168, where the Court found the expert’s testimony to be based upon insufficient facts or data. In Blair, the Supreme Court found the expert’s testimony should be excluded because he did not (1) inspect either vehicle involved in the collision; (2) speak with the damage appraisers; (3) know the plaintiff’s body position at the time of the accident; (4) inspect plaintiff’s vehicle for variance from the test-vehicle or (5) interview the plaintiff. Thus, his testimony failed to meet the requirements of C.E. art. 702(A)(2).

Citing the Blair decision, the Louisiana Fifth Circuit in Pollard concluded that the expert “relied on the same [improper] methodology in reaching his conclusions.” Therefore, the appellate court found the trial court erred in denying a motion in limine to exclude the expert’s testimony. Although the expert cited to peer-reviewed literature to support his conclusions, the evidence revealed that “most of the research and articles” he cited were either written by him or one of his employees.

Effective January 1, 2021, Louisiana amended La. R.S. 32.295.1, which now allows the admission of a plaintiff’s failure to wear a seat belt as a factor to be considered in comparative fault. Defendants will seek to use biomechanical experts to prove that the failure to use a seatbelt substantially caused or contributed to the damages.

Biomechanical testimony may be allowed. However, as shown in Pollard, biomechanical opinions which lack sufficient inquiry to match the analysis to the real-world impact will be treated with skepticism. Taking Blair and Pollard together, the courts appear to resist expert biomechanical opinions which seek to definitively resolve medical causation which often involves subjective elements and credibility determinations reserved for the trier of fact.

It is certain that defendants will continue to advance the “low impact” argument because force-of-impact testimony is a relevant factor in determining causation or extent of injuries. See, e.g., Merrells v. State Farm Mutual Auto, Ins. Co., 33-404 (La. App. 2 Cir. 6/21/00), 764 So. 2d 1182. What is less than certain is the role of the biomechanical expert. Following the Fifth Circuit’s decision in Pollard, the Louisiana Supreme court denied the defendant’s writ application 4 to 3, with all three dissenters advising they would have granted the writ. Issues surrounding the use and scope of testimony from biomechanical experts appear far from settled.

The Louisiana Legislature recently enacted Act 3, which reflects an effort to address the handling of insurance claims in Louisiana – particularly for catastrophic losses – and define ambiguities in the law. This blog addresses changes to Louisiana’s “bad faith” statutes. Broadly, Act 3 amends and enacts new sections of La. R.S. 22:1892, repeals La. R.S. 22:1973, and enacts La. R.S. 1892.2 to address situations involving catastrophic losses.

Prior Louisiana Bad Faith Statutes – La. R.S. 22:1892 and La. R.S. 22:1973

Previously, La. R.S. 22:1892(A) stated an insurer must:

• Issue payment to an insured within 30 days of receipt of satisfactory proof of loss;
• Pay the amount of a bona fide third-party’s property damage or reasonable medical expenses within 30 days of a written settlement agreement;
• Initiate loss adjustment within 14 days of notice of a non-catastrophic loss or within 30 days of receipt of notice of a catastrophic loss;
• Make a written offer to settle property damage within 30 days of receipt of satisfactory proof of loss.

If an insurer did not follow the requirements of La. R.S. 22:1892(A), the insurer could be required to pay the insured the amount owed under the policy plus a penalty if the insured established that the insurer’s conduct was “arbitrary, capricious and without probable cause.” Courts defined this standard as “vexatious” and without justification. The penalty is calculated as either 50% of the amount owed under the policy or 50% of the difference between the amount owed and a partial tender made by the insurer, if any. Additionally, if the insured established entitlement to the penalty, the insured could also recover attorneys’ fees and costs from the insurer.

Former La. R.S. 22:1973 codified an insurer’s duty of good faith and fair dealing. It set an affirmative duty to adjust claims fairly and promptly and make reasonable efforts to settle claims with the insured, a claimant or both. This general duty of good faith and fair dealing applies only to insureds.^ The statute also outlined six prohibits acts that, if knowingly performed, constituted a violation of the statute. Five of these six prohibited acts applied to both insureds and third-party claimants.^*

If an insured proved a knowing violation of La. R.S. 22:1973, the insurer could be required to pay the amount owed under the policy, damages caused by the insurer’s violation of the statute and a penalty of up to 200% of the damages that the insured or claimant incurred as a result of the breach. Such damages were separate and distinct from the amounts owed under the policy but could extend to anything for which the insured could establish a causal link.˚̃

Revisions to La. R.S. 22:1892

The new revisions enact several important changes. While the text of the new statute should be considered when evaluating any pending or potential claims, a summary is provided here.

1. Time Delays

Under amended and re-enacted La. R.S. 22:1892(A), insurers must generally adhere to the time delays and conduct outlined under the previous law. Under La. R.S. 22:1892.2, for catastrophic events at residential properties, an insurer’s payment is owed within 60 days of receipt of satisfactory proof of loss. For catastrophic losses at non-residential properties, the statute provides an insurer’s payment is owed within 90 days of receipt of satisfactory proof of loss.

Another exception exists when an insurer initiates loss adjustment before the 14-day or 30-day deadline. If this occurs, the insurer’s obligation to issue a written offer to settle is extended by the number of days the insurer initiates loss adjustment before the deadline.

2. Reciprocal Duty of Good Faith

Under the new law, La. R.S. 22:1973 is repealed and the general duty of “good faith and fair dealing” owed by an insurer to its insured and the prohibited insurer conduct previously outlined in La. R.S. 22:1973 is now encompassed within §1892.

The new statute also provides that the insured, the claimant or the representative of the insured/claimant owes the duty of good faith and fair dealing. If an insured fails to comply with affirmative duties under the policy, misrepresents pertinent facts and coverages, submits an estimate that lacks a basis in the evidence or the policy, then the insured’s conduct may be considered in determining whether the insurer’s conduct warrants an award of penalties.

3. Cure Period

For catastrophic losses, the new law states suits may only be brought if the insured first provides the insurer with “cure period notice.” This notice requires that the insured provide the insurer with written notice of the violation, a written formal demand and notice of the facts and circumstances of the dispute. After this notice, several options exist:

1. The insurer can pay the demand in full (along with the insured’s actual expenses and attorney fees no greater than 20%) within 60 days of the notice and extinguish any further cause of action.

• The insurer can issue partial payment on the claim within 60 days of the notice and reduce the penalty owed, if any, by half.

• The insurer can request additional information, but this does not extend the insurer’s other deadlines.

4. Revised Penalty Provisions

The amendments also modify the recoverable penalty. The statute specifies the calculation of the penalty based on the type of violation, the type of property and the type of loss event. Generally, the insured is no longer entitled to recover all damages sustained by a breach of the statute: now the claimant may only recover “proven economic damages.” Notably, the potential for a penalty of up to 200% of the damages sustained as a result of the breach no longer exists.

5. Timing

The law also formalizes and codifies the prescriptive period for claims brought under La. R.S. 22:1892 or La. R.S. 22:1892.2 to two years.

References:

^Theriot v. Midland Risk Ins. Co., 1995-2895 (La. 5/20/97) 694 So.2d 184.

* Team Contractors, L.L.C. v. Waypoint NOLA, L.L.C., 780 Fed.Appx. 132 (5th Cir. 2019).

˚Durio v. Horace Mann Ins. Co., 2011-0084 (La. 10/24/11) 74 So.3d 1159.

̃ Audubon Orthopedic and Sports Medicine, APMC v. Lafayette Ins. Co., 2009-0007 (La.App. 4 Cir. 4/21/10) 38 So.3d 963.