As hurricane claims attorneys on each side of the “v.” in litigation know, a basic tenet of Louisiana Legislation is that “[A]n insurer has a unbroken obligation of excellent religion and truthful dealing which extends all through the litigation interval.” 1 Psychological anguish, emotional misery, humiliation, aggravation, inconvenience, lack of property, lack of use, and protection prices incurred in underlying actions ensuing from an insurer’s breach are compensable basic damages for breach of the obligation of excellent religion and truthful dealing. In different phrases, this breach ends in unhealthy religion, and the insurer’s unhealthy religion results in damages. Damages brought on by the insurer’s unhealthy religion are compensable beneath Louisiana Revised Statutes 22:1973, whatever the insurer’s intent. Arguably, this is applicable to all interactions that the insurer and their counsel have with their insured. This might not be extra evident than within the case of Thibodaux v. State Farm Hearth and Casualty Firm, 2 which is mentioned beneath.
In Thibodeaux v. State Farm, 87-year-old widow Elrine Thibodeaux’s dwelling was devastated by Hurricane Laura on August 27, 2020. Elrine’s son, Stephen, lived along with her and took care of her. On October 1, 2020, State Farm’s adjuster accomplished the preliminary inspection of Elrine’s dwelling, estimating the loss at $26,719.10, and he or she was paid $8,960.25 after subtracting her deductible of $11,155.00 and depreciation of $6,603.85 from the estimate. Residential property harm legal professionals shouldn’t be stunned that this quantity was inadequate to even pay for the roof, and the 87-year-old widow started receiving assortment letters from a legislation agency retained by the roofing firm. State Farm solely made one well timed fee within the quantity of $8,960.25 beneath all the coverages beneath the coverage – inside thirty (30) days of receiving passable proof of loss. State Farm made no additional funds on the declare.
Determined to have her dwelling repaired, the 87-year-old widow sought financing from a non-public lender to restore her storm-ravaged dwelling – a mortgage to pay for contractors to restore storm harm that State Farm was contractually obligated to pay for. The whole quantity Elrine was compelled to finance in repairs to her dwelling and different buildings was a staggering $191,599.66. To make issues worse, she then needed to pay an extra $1,000.00 in emergency repairs to tarp the roof and protect the property from additional harm. Shockingly, the precise value of Elrine’s storm harm was 620.831% greater than State Farm’s preliminary lowball estimate. This incongruence within the precise value of damages and State Farm’s dubiously low estimate, mixed with the pittance they paid, comes as no shock to residential property harm attorneys. Insurers like State Farm are ruthlessly systematic of their consistency with underestimating claims like Elrine’s.
Through the inside repairs of her dwelling, the 87-year-old widow was compelled to reside within the Tremendous 8 on Martin Luther King Blvd in Lake Charles. Her son, Stephen, who’s her caregiver, used his life financial savings to lease two rooms (one for him and one for his mother) on the Tremendous 8 for 5 months, totaling $37,069.73. State Farm paid NOTHING towards the extra dwelling bills. The truth is, State Farm doubled down on its denial of reimbursement and argued that regardless of her son Stephen being a full-time live-in caregiver, he was not entitled to reimbursement for his mom’s resort room since he was not a named insured beneath the coverage. Hurricane claims attorneys who litigate claims recurrently perceive how tenuous such an antagonistic posture was for State Farm on this litigation.
Not solely was State Farm’s adjustment of the declare in unhealthy religion, however throughout the litigation interval, even a cursory evaluation of the case filings helps the jury’s verdict of $240,000 for psychological anguish brought on by State Farm. As a substitute of State Farm utilizing Elrine’s deposition to result in fairly calculated discoverable info, they used this chance to personally assault Elrine and make the continuing as excruciatingly tortuous and as miserably agonizing as attainable. 3 Through the deposition, Elrine repeatedly advised State Farm’s lawyer that she had well being points affecting her deposition, together with that she is: laborious of listening to; her physique doesn’t work anymore; has scoliosis; will get very upset; has points along with her blood stress; will get drained; her backbone is crooked which causes ache; she began to not really feel effectively; was hurting; doesn’t stroll effectively; can’t work anymore; can’t stand lengthy or stroll distance, and through her depo she began “shedding power.” She felt just like the lawyer for State Farm was making an attempt to make her have a stroke and break her down, and at that time, she was simply making an attempt to outlive due to the stress of the deposition.
Regardless of State Farm’s acute consciousness of Elrine’s quite a few well being situations, they selected to interrogate her with rapid-fire machine-gun questions on a number of points that had been totally irrelevant to her Hurricane Laura Declare. This included asking about her marriage in 1960, when she has been widowed since 1977; asking about her employment as a janitor at McNeese when she has been retired for greater than twenty years; asking about her checking account; asking about her revenue from her pension; asking what number of instances her grownup kids carry her lunch; asking about birthday presents she receives from her household, and plenty of different points that had been wholly irrelevant to the Hurricane Laura declare. State Farm squandered greater than 4 hours questioning the widow about non-issues that had been inappropriate and unjustifiable in mild of her well being situation and the details of the declare.
Lastly, after enduring greater than 4 hours of arduous and abusive interrogation on the deposition, Erline couldn’t take anymore and walked out. The deposition transcript bears out the astronomical toll this four-hour ordeal had on this 87-year-old widow. Astoundingly, State Farm was relentless in its pursuit to proceed deposing Elrine. State Farm remained undeterred regardless of the submitting of a protecting order and her treating doctor opining that attributable to her well being situations, she shouldn’t be deposed any additional. Incredulously, regardless of the order and medical opinion on the contrary, State Farm continued to insist on deposing Elrine.
State Farm’s antics didn’t cease there. The truth is, State Farm took an antagonistic and unrealistically antagonistic place when it refused to launch the reserve quantities set for Elrine’s declare and went a step additional and redacted that info in her declare file. Nevertheless, the court docket disagreed with State Farm, and Elrine was victorious. Not solely did the court docket order State Farm to launch the reserve quantities, nevertheless it additionally ordered State Farm to pay all the lawyer charges incurred. 4
State Farm’s antagonistic and antagonistic posture on this matter was to their detriment. The jury discovered that State Farm was arbitrary, capricious, and with out possible trigger in failing to pay the quantities owed inside thirty or sixty days after receiving passable proof of loss. On the finish of the trial, the jury’s verdict towards State Farm was staggering – $240,000 in damages for psychological anguish. Moreover, the jury awarded the octogenarian contractual damages as follows:
Dwelling $136,280.22
Different Buildings $12,212.00
Extra Dwelling Bills: $35,677.34
The whole contractual quantities the jury awarded complete $184,169.56. Penalties of fifty% beneath Louisiana Revised Statute 22:1982 can be assessed on that quantity, totaling $92,084.78. The whole contractual quantities owed and penalties mixed beneath regular circumstances can be $276,254.34. That will be a powerful verdict.
Nevertheless, on this case, contemplating the abhorrent impermissible conduct of State Farm in dealing with this declare throughout the adjustment interval and the litigation interval, that quantity can be inadequate to penalize the mega-insurer. The penalty afforded beneath §22:1973 5 is far more punitive, supposed to forestall egregious conduct as demonstrated on this case by State Farm. Beneath §22:1973, the penalty is 2 instances the precise consequential damages sustained by the policyholder, plus attorneys’ charges and prices. 6
Strategically, throughout post-trial litigation to calculate the penalty, lawyer charges and prices, the widow will seemingly advocate that State Farm pay penalties beneath §22:1973 of $480,000.00, which might enhance the quantity of the decision for psychological anguish damages exponentially. Along with the lawyer charges and prices that the widow is entitled to beneath §22:1973, the decision communicated a transparent and distinct message – the citizenry and the juries within the State of Louisiana won’t tolerate insurers partaking in unhealthy religion conduct and conduct that shocks the conscience whether or not throughout the pre-litigation adjustment interval or throughout litigation.
Residential property harm attorneys who characterize policyholders ought to scrutinize the facets of this case which will assist them buttress their unhealthy religion claims towards insurers in their very own instances. Hurricane claims attorneys who’re representing the insurers ought to take into account this a cautionary story concerning the perils of partaking in unhealthy religion adjustment and litigation techniques with the policyholder, in addition to required studying for each senior adjuster who protects the insurers’ coffers by supporting or recommending such techniques.
1 Sher v. Lafayette Ins. Co., 988 So. second 186 (La. 4/8/08), on reh’g partially (July 7, 2008).
2 Thibodeaux v. State Farm, No. 2:22-cv-06252, (W.D. La. February 13, 2025). [Rec. Doc. 125].
3 Thibodeaux, [Rec. Doc. 18, Exh. B].
4 Thibodeaux, [Rec. Doc. 21, 53].
5 Louisiana Revised Statute 22:1973 was repealed in 2024 however can be relevant as this litigation was filed previous to the repeal, and it’s substantive in nature.
6 Durio v. Horace Mann Ins. Co., 74 So.3d 1159 (La. 2011).