Happy Independence Day!
The owners and lawyers of Eaux Holdings celebrated in early July 4 on Friday when they received a court order confirming their judgment in bad faith against Scottsdale Insurance. I have previously blogged about this case in Hurricane Laura Bad Faith ruling against Scottsdale Insurance. Scottsdale is a non-licensed surplus insurance company affiliated with and wholly owned by Nationwide Mutual Insurance Company.
Memorial order1 maintained the results of the claim for delay from Scottdale Insurance and discussed the legal issue:
Eaux sued Scottsdale for violations of La. RS 22: 1892, which prescribes a penalty in bad faith when an insurer does not pay the amount due within 30 days of receipt of satisfactory proof of loss, and when this failure to pay is arbitrary, capricious, or without probable cause …
Scottsdale claims that Eaux failed to meet its burden at the trial to show that the final payment in May 2021was inappropriate, which is required to overcome its claims in bad faith related to this payment. Scottsdale claims that the policy and Louisiana law are clear that a payment for compensation cost value is not due until the repairs are complete and the insured submits the amounts actually spent on repairs. Scottsdale claims that the evidence submitted at the trial established that the payment in May 2021 was made within 30 days of receipt of the alleged repair costs, and that the payment is therefore not premature.
Eaux claims that in order to uphold the jury’s conclusions that all of Scottsdale’s payments were late (with the only exception stated), Eaux only needs to show that Scottsdale had sufficient information to know the extent of Eaux’s loss and did not pay as much within 30 days. Eaux claims that it provided ample evidence to support this claim, such as: Jeff Major’s testimony that he informed Scottsdale that the building was a total loss on September 15, 2020 and gave a detailed estimate of four volumes to Scottsdale; Scottsdale admitted that the first adjustment in September said it was a loss of at least $ 1.5 million and that it could be cheaper to demolish and rebuild; the testimony of Jeff Majors, Joey Odom and Evan Monheiser that they all tried to communicate with Scottsdale for months, informed Scottsdale about the repairs and costs, and Scottsdale did not respond.
Delay in insurance payment is failure to act in good faith. In Louisiana, the time frame is codified because insurance companies always come up with excuses to defer payment. The court agreed:
Eaux argues that the proper legal standard for a JMOL is if there is any “substantial evidence, in the light that is most favorable to the successful party”, that supports the jury’s conclusions that Scottsdale’s payments were more than 30 days after satisfactory evidence of loss. Eaux claims that there is ample support for those who have found and as such this motion should be rejected. The Court agrees and finds no legal basis to change its previous decision on this issue.
IN Understand Louisiana’s law of bad faith when claims for payments are delayed or lateI made the following observation:
The most important and fundamental principle of good faith that insurers owe to Louisiana’s first-time customers is to make unconditional claims within 30 days of receiving adequate proof of loss. If an insurer delays payment for more than thirty days after the investigation of the claim, my considered opinion is that Louisiana policyholders should seek and be referred to legal counsel for their legal rights.
Louisiana Revided Statute § 22: 1892 specifies a 30-day period for fast payment. Louisiana Revised Statute § 22: 1973 provides a 60-day period for the insurer to make an unconditional payment to the insured after the insured has made satisfactory proof of loss. These statutes have remedies and penalties when insurers do not comply with them.
This latest order from a federal judge in Louisiana indicates that I’m right. Insurance companies must pay what they owe as soon as they can if they want to avoid complaints about misconduct. Unfortunately, in an attempt to evade liability, Scottsdale Insurance argued for an excuse that would turn the insurance into a repayment agreement. Instead, Scottsdale Insurance should simply try harder to fulfill the promise “on your side” from its parent, Nationwide Insurance. Sometimes these cases are lessons learned on how to do better with property adjustments.
Where freedom lives, there is my country.
1 Eaux Holdings v. Scottsdale Ins. Co., no. 2: 20-cv-01582, 2022 US Dist. LEXIS 116996 (WD La. July 1, 2022).