The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAMES KORNDORFFER, JR. CIVIL ACTION
VERSUS NO. 22-2035
USAA CASUALTY INSURANCE CO. SECTION: “G”(2)
ORDER AND REASONS
In this litigation, Plaintiff James Korndorffer, Jr. (“Plaintiff”) brings breach of insurance
contract and bad faith claims against Defendant USAA Casualty Insurance Co. (“Defendant”).1
Before the Court is Defendant’s “Motion for Partial Summary Judgment.”2 In the motion
Defendant asks the Court to: (1) dismiss Plaintiff’s claim for bad faith penalties and attorney’s
fees; (2) dismiss Plaintiff’s claim for any damage to his roof “associated with mismatched
materials;” (3) limit Plaintiff’s recovery “[f]or costs associated with code upgrades and/or building
ordinances” to the policy limit; and (4) dismiss Plaintiff’s claim for penalties and attorney’s fees
on top of any amounts due to Plaintiff for code upgrades under Louisiana Revised Statute § 1892.3
Considering the motion, the memoranda in support and opposition, the record, and the applicable
law, this Court denies the motion.
1 Rec. Doc. 1-1 at 7–9.
2 Rec. Doc. 23.
3 Id. at 1.
I. Background
On May 12, 2022, Plaintiff filed a petition against Defendant in the Civil District Court for
the Parish of Orleans.4 On July 1, 2022, Defendant removed the case to this Court.5 According to
the Petition, Defendant issued an insurance policy (the “Policy”) covering Plaintiff’s home and
surrounding structures at 1820 South Carrollton Avenue, New Orleans, Louisiana 70118 (the
“Property”).6 The Policy contained coverage limits of $1,119,000 for damage to the dwelling,
$119,300 for damage to other structures on the Property, and a deductible of $11,930.7
Plaintiff alleges that Hurricane Ida damaged the Property on or about August 29, 2021.8
Plaintiff purportedly notified Defendant promptly of the loss, and Defendant assigned Plaintiff
claim number 002863434-026 (the “Ida Claim”).9 Plaintiff alleges Defendant dispatched Zayne
Dishion (“Dishion”) of AllCat Adjusting (“Allcat”), who inspected the Property on September 1,
2021, and documented $17,068.90 in damages to the dwelling, $1,377.11 in damages to other
structures, and $98.51 in damages to contents (the “Dishion Report”).10 However, Plaintiff alleges
that, “after over-depreciating the loss and applying the Policy’s $11,930 deductible,” Dishion
calculated that Plaintiff was only entitled to $5,137.90 to cover his losses.11 Plaintiff further
4 Rec. Doc. 1-1.
5 Rec. Doc. 1.
6 Rec. Doc. 1-1 at 4; see also Rec. Docs. 23-2 at 1, 31-1 at 1.
7 Rec. Docs. 23-2 at 1, 31-1 at 1.
8 Rec. Doc. 1-1 at 5.
9 Id.
10 Id.; Defendant alleges that it issued a payment of $6,613.52 based on the Dishion Report. Rec. Doc. 23-2
at 2 (citing Rec. Doc. 23-9); Rec. Doc. 23-9 (the Dishion Report).
11 Id.
alleges that Defendant “had a note in its claim file that a roof inspection was still needed for the
Property” because Dishion only conducted a ground inspection.12
In early February 2022, Plaintiff “submitted an estimate for a roof replacement prepared
by Precision Construction totaling $233,567 (the “Precision Estimate”).13 The parties agree that,
in late February or early March 2022, Travis Hughes (“Hughes”), an engineer requested by
Defendant to evaluate the extent of the damage to the Property’s roof, issued a report (the “Hughes
Report”) stating:
1. The three missing and detached ridge tiles were the result of exposure to
elevated winds that occurred during Hurricane Ida.
2. Broken tile ends and corners at the head lap were a pre-existing condition that
occurred a few months or more prior to the date of loss and were not due to
winds from Hurricane Ida.
3. Broken tile edges at the side lap were a pre-existing condition that occurred a
few months or more prior to the date of loss and were not due to winds from
Hurricane Ida.
4. The cracked tile on the roof of the residence and cabana were a pre-existing
condition as a result of footfall that occurred at the time of one of the roof repairs
prior to the date of loss and were not due to winds from Hurricane Ida.
5. The clay particle residue and wear on the clay tile surface were the result of a
long-term natural degradation of the clay in the tiles due to long-term
reoccurring freeze and thaw cycles and rubbing at the point of contact; there
were not due to winds during Hurricane Ida. This damage is cosmetic in nature
and not functional damage.
6. Tile roofing system of the building and cabana had not been damaged by hail.
7. The metal panel roof at the low roof had not been physically damaged by hail.14
12 Rec. Doc. 31-1 at 7 (first citing Rec. Doc. 21-6; and then Rec. Doc. 31-5 at 2).
13 Rec. Docs. 23-2 at 2, 31-1 at 3. The parties disagree over the precise date the roof replacement estimate
was submitted. See id.
14 Rec. Docs. 23-2 at 3 (citing Rec. Doc. 23-11), 31-1 at 4.
Thereafter, Defendant informed Plaintiff that “a roof replacement was unwarranted.”15 Defendant
asserts that its refusal to cover a roof replacement was based on the Hughes Report,16 whereas
Plaintiff asserts that Defendant made the refusal prior to retaining Hughes.17
Plaintiff alleges that Hughes “failed to get on the roof, failed to inspect the tile for wind
up-lift damages and fastener pullout and failed to inspect the underlayment, decking or hip and
ridge nailer boards.”18 After receiving the Hughes Report, Plaintiff called Defendant on March 11,
2022, disputing the report and clarifying that he was looking to have the roof repaired, not
replaced.19 On March 14, 2022, Plaintiff asked Defendant to contact his general contractor to
obtain an estimate for the repairs.20 Defendant avers that the general contractor advised that he
could not repair the roof.21 Plaintiff avers that “[t]he general contractor [only] advised [Defendant]
that the roofing [was] not able to be repaired with 10 tiles and 3 ridge tiles.”22
15 Rec. Docs. 23-2 at 3 (citing Rec. Doc. 23-4), 31-1 at 4.
16 Rec. Doc. 23-2 at 3.
17 Rec. Doc. 31-1 at 4–5.
18 Rec. Doc. 1-1 at 6.
19 See Rec. Doc. 31-6 at 24. Defendant asserts that, “[o]n March 11, 2022, [Plaintiff] asked [Defendant] to
contact his general contractor and request an estimate to repair the roof as opposed to a roof replacement. Rec. Doc.
23-2 at 4. Plaintiff, citing Defendant’s communication log with Plaintiff, denies this assertion by stating that “[n]o
communication was present between Plaintiff and [Defendant] on March 11, 2022.” Rec. Doc. 31-1 at 5 (citing Rec.
Doc. 31-6 at 23–27). However, the communication log cited by Plaintiff clearly indicates that Plaintiff communicated
to Defendant on March 11, 2022, that he was seeking a roof repair rather than replacement.
20 Rec. Doc. 31-6 at 27. Defendant incorrectly asserts that this communication occurred on March 11, 2022.
See Rec. Docs. 23-2 at 4, 31-1 at 5.
21 Rec. Doc. 23-2 at 4.
22 Rec. Doc. 31-1 at 5.
On April 7, 2022, Plaintiff’s counsel sent Defendant a $451,262.47 demand to settle
Plaintiff’s claims, which included penalties of $123,350.69 and attorney’s fees of $75,210.41.23 In
the demand, Plaintiff’s counsel stated that the Property’s “roof consists of a Historic Ludowici
French Field Clay tile, which is no longer in production” but can be remade by Ludowici “with a
10SQ minimum order and 25-piece accessory minimum order.”24 Plaintiff avers that the demand
letter explains that these order requirements make it “impossible” to “price out” 10 tiles and 3
ridge tiles.25 The demand letter further states that such a repair would be against New Orleans
building codes because the tiles currently on the roof have “some form of old and new damage.”26
Defendant rejected Plaintiff’s demand27 even though Plaintiff avers that “[t]he Structural Alliance
Group (‘TSA’) concluded, [after an additional inspection], that replacement of the damaged tile
roof system was recommended.”28
On December 21, 2022, engineer Samuel Amoroso (“Amoroso”) inspected the property
and thereafter issued a report (the “Amoroso Report”) stating:
a. Clay tile roof ridge caps on the house were displaced by wind.
b. Impact from windborne debris could have caused some cracking of the clay
roofing tiles on the house’s south roof slope, on the roof above the front porch,
and on the roof of the detached storage building.
c. Cracked or missing clay tile roofing can be locally repaired/replaced, or the
existing clay tiles can be removed and reset to facilitate replacement of cracked
tiles, as evidenced by the prior repairs at the subject property.
d. The wind pressures that occurred at the [Property] during Hurricane Ida were
not sufficient to overcome the resistance provided by the weight of the field
23 Rec. Docs. 23-2 at 4, 31-1 at 5–6.
24 Rec. Doc. 23-7 at 3.
25 Rec. Doc. 31-1 at 7.
26 Rec. Doc. 23-7 at 3.
27 Rec. Docs. 23-2 at 4, 31-1 at 5–6.
28 Rec. Doc. 31-1 at 8.
tiles and their attachment. The tiles were not likely uplifted, and “chatter” would
therefore not have occurred.29
On January 25, 2023, Defendant filed the instant “Motion for Partial Summary
Judgment.”30 On February 7, 2023, Plaintiff filed an opposition to the motion.31 On February 15,
2023, with leave of Court, Defendant filed a reply brief in further support of the motion.32
II. Parties’ Arguments
A. Defendant’s Arguments in Support of the Motion
Defendant makes four arguments in support of the instant motion. First Defendant argues
that Plaintiff’s bad faith claims should be dismissed because Plaintiff has failed to show that
Defendant’s conduct was arbitrary and capricious.33 Defendant avers that, as the Louisiana Third
Circuit found in Mason v. Bankers Insurance Group, an insurance company’s conduct cannot be
arbitrary and capricious to constitute bad faith as a matter of law where “the evidence showed that
substantial, reasonable, and legitimate questions existed as to causation of loss.”34 Defendant
contends that it had a “reasonable” and “good faith basis when it determined that [Plaintiff’s]
demand for a full roof replacement was unwarranted given the scope of sudden and accidental
wind damage,” the Hughes Report, the Amoroso Report, its prompt investigation after Plaintiff
made the Ida Claim, and its issuance of payment for covered damages.35 Thus, Defendant asserts
29 Rec. Docs. 23-2 at 4 (citing Rec. Doc. 23-13), 31-1 at 6.
30 Rec. Doc. 23.
31 Rec. Doc. 31.
32 Rec. Doc. 35.
33 See Rec. Doc. 23-1 at 10–13.
34 Id. at 11 (citing Mason v. Bankers Ins. Grp., 13-704 (La. App. 3 Cir. 1/31/14), 134 So. 3d 29, 35–36).
35 Id. at 12.
that the Court should dismiss Plaintiff’s bad faith claims given that “Plaintiff has presented no
evidence that [Defendant] acted in an ‘arbitrary,’ ‘capricious’ or ‘vexatious’ manner.”36
Second, Defendant argues that the Court should dismiss Plaintiff’s roof replacement claim
because the Policy does not cover roof replacements “due to mismatch of roof tiles.”37 Defendant
avers that the Policy, “clearly excludes coverage to repair or replace property, in this case clay roof
tiles, due to outdated, obsolete, or discontinued products.”38 Defendant asserts that, by Plaintiff’s
own admission, the roof tiles are no longer in production.39 Therefore, Defendant concludes that
the Policy does not cover replacement of the roof.40
Third, Defendant argues that Plaintiff is limited to $59,650 in coverage for additional costs
associated with complying with building codes.41 Defendant avers that, per Plaintiff’s demand
letter, “a full roof replacement is required to comply with [New Orleans building codes].”42 Thus,
Defendant concludes that the Court should limit Plaintiff’s claim “to $59,650 for additional costs
required and incurred by [Plaintiff] to comply with building codes or ordinances.”43
Fourth, Defendant argues that the Court “should rule on summary judgment that [Plaintiff]
is not entitled to bad faith penalties and fees on any code upgrades.”44 Defendant avers that
36 Id. at 12–13.
37 Id. at 13 (citing Rec. Doc. 23-5).
38 Id. at 14.
39 Id.
40 Id.
41 Id. at 15.
42 Id. (citing Rec. Doc. 23-7).
43 Id.
44 Id.
Plaintiff’s claim pursuant to Louisiana Revised Statute § 22:1892 requires a showing that
Defendant failed to pay the amount due in a timely fashion.45 Plaintiff further avers that, per the
Policy, “no amounts are ‘due’ to [Plaintiff] for any expense associated with code upgrades unless
and until those upgrades are complete.”46 Defendant contends that it owes Plaintiff nothing
because it is undisputed that Plaintiff “has not made any code upgrades to the roof since Hurricane
Ida.” Thus, Defendant concludes that “[t]he Court should dismiss [Plaintiff’s] claim for any bad
faith penalties and fees on any amounts found due to [Plaintiff] for building code upgrades.”47
B. Plaintiff’s Arguments in Opposition to the Motion
In opposition to the “Motion for Partial Summary Judgment,” Plaintiff makes six
arguments. First, Plaintiff argues that “Louisiana’s bad faith statutes require a fact intensive
determination that is rarely appropriate for summary judgment.”48 Plaintiff asserts that
“Defendant’s refusal to timely pay Plaintiff’s damages could be based on innocuous error or
omission, on illegal and violative behavior and policies, or even the intentional disregard of
Defendant’s own internal policies.”49 Plaintiff avers that Dishion “determined a mere ten . . . tiles
in need of replacement” but “only performed a ground inspection,” which led to Defendant making
“a note in its file that a roof inspection was needed” that was then ignored for five months.50
Plaintiff further avers that he obtained the Precision Estimate and brought it to Defendant’s
45 Id.
46 Id. at 16 (citing Rec. Doc. 23-5).
47 Id.
48 Rec. Doc. 31 at 4 (citing Radosta v. Lexington Ins. Co., No. 13-4441, 2014 U.S. Dist. LEXIS 52644, *15–
16 (E.D. La. Apr. 16, 2014)).
49 Id.
50 Id. at 5 (citing Rec. Doc. 31-5 at 2).
attention, but Defendant only sent Hughes to the Property for further inspection, who again failed
to conduct a roof inspection and found only three cracked tiles even though Dishion noted ten.51
Therefore, Plaintiff contends that Defendant’s non-payment was not in good faith, but “on
the misplaced belief, with no evidence to support its position, that there were no storm-related
damages to the roof.”52 Plaintiff further contends that Defendant knew Plaintiff’s tiles required a
10 square minimum order and “are more expensive than what Xactimate allocates” but only
included three tiles in its estimate and refused to appropriately compensate them.53 Thus, Plaintiff
concludes the question of bad faith should be left to the finder of fact.54
Second, Plaintiff argues that Defendant had a duty of good faith and fair dealing.55 Plaintiff
asserts that whether Defendant’s behavior was sufficiently arbitrary, capricious, or without
probable cause to constitute a breach of this duty “is essentially a factual issue.”56 Plaintiff avers
that a Louisiana court held that an insurer’s nonpayment was arbitrary and capricious where it first
denied payment, was then “notified of the findings of claims adjusters for the [p]laintiffs’ policy,
but simply denied the claim a second time without reinspection.57 Thus, Plaintiff concludes that
Defendant’s “motion for summary judgment on bad faith issues should be denied.”58
51 Id.
52 Id.
53 Id. at 6.
54 Id.
55 See id.
56 Id. at 7.
57 Id. (citing Best v. State Farm Fire and Cas. Co., 2007-1573 (La. App. 4 Cir. 10/10/07); 969 So. 2d 671,
680).
58 Id.
Third, Plaintiff argues that coverage for replacement of the roof is not precluded under the
Policy.59 Plaintiff avers that the Policy clearly states that Defendant “will not pay to repair or
replace undamaged property due solely to a mismatch of color or due solely to materials being
outdated, obsolete, or discontinued product.”60 Plaintiff avers that, although he “is unable to
purchase the [same Historic Ludowici French Field Clay tile] ‘off the shelf’ at Ludowici, . . .
Ludowici keeps the molds . . . that it replicates on the production line.”61 Therefore, Plaintiff avers
that the roof replacement “is not a matter of being a mismatch of color nor is it an issue of being
‘outdated, obsolete, or discontinued.’”62 Rather, Plaintiff states that it is a matter of the tile’s
“profile” such that the roof can maintain its integrity.63
Plaintiff further argues that “the Policy does not define ‘discontinued,’ ‘obsolete’ or
outdated,’” and so the provision must be liberally construed in favor of coverage.64 Plaintiff also
contends that the word “discontinued” means “no longer produced or provided” and here the tiles
at issue “are being produced and provided by Ludowici.”65 Plaintiff avers that, per the Policy, he
is entitled to a roof replacement “with property of like kind, quality, age and condition” or actual
cash value equal to “the amount it would cost to repair or replace covered property, at the time of
loss or damage, with material of like kind and quality, subject to a deduction for obsolesce and a
59 See id.
60 Id. at 8.
61 Id.
62 Id.
63 Id. at 9.
64 Id.
65 Id. at 10 (citations omitted).
‘deduction for depreciation.’”66 Thus, Plaintiff asserts that the terms “outdated,” “obsolete” and
“discontinued” are “clearly ambiguous and subject to interpretation.”67 Finally, Plaintiff opines
that his experts found “that the damages were sufficient from Hurricane Ida to require a full roof
replacement.”68
Fourth, Plaintiff argues that it is not the case that “a full roof replacement is required to
comply with [New Orleans building codes].”69 Plaintiff avers that “[n]owhere in TSA’s report is
code established, or even mentioned as the sole reason for a full replacement of Plaintiff’s roof.”70
Plaintiff further avers that, “[i]n fact, TSA made clear that the tiles on Plaintiff’s roof will not
withstand repair” and so a “spot repair would not be feasible to conduct.”71 Plaintiff avers that
TSA also found that detaching and resetting the roof would be ineffective because the tiles are
“too brittle and would fall apart” 50% of the time, making them “functionally inadequate.”72 Thus,
Plaintiff concludes that whether the tiles would also fail any New Orleans building codes is
irrelevant because TSA recommended a full replacement of the roof based on the tiles’ lack of
functionality.73
Fifth, Plaintiff reasserts that bad faith is a fact-intensive inquiry not ripe for resolution as a
matter of law in opposing Defendant’s motion to dismiss bad faith penalties and fees based on any
66 Id. (quoting Rec. Doc. 21-4 at 32, 54).
67 Id. at 11.
68 Id.
69 Id.
70 Id. at 12 (citing Rec. Doc. 31-4).
71 Id. at 12–13 (citing Rec. Doc. 31-4).
72 Id. at 13 (citing Rec. Doc. 31-4).
73 Id.
code upgrades.74 Plaintiff argues that Defendant “inspected [the Property] first finding 10 tiles,
then only 3, needing replacement” and subsequently “did nothing” after Plaintiff retained his own
contractor and engineer.75 Thus, Plaintiff asserts that, “[e]ven if this [C]ourt were to find that
‘code’ was the reason for a full roof replacement, [Defendant] has been on notice of Plaintiff’s tile
roof not meeting building codes since April of 2022.”76
Sixth, Plaintiff argues that “it would be improper for the Court to grant Defendant’s Partial
Motion for Summary Judgment” because Defendant “has not presented any information that the
facts cannot be genuinely disputed.”77 Plaintiff asserts that “the physical damage assessed by both
Precision and TSA is the same” and “there is an issue of material fact as to which damages may
or may not be excluded under the terms of the Policy.”78 Plaintiff asserts that Defendant is asking
the Court to determine that certain damages are not covered under the Policy based on their own
expert’s report, which would require the Court to improperly weigh the validity of each party’s
assessment.79 Thus, Plaintiff concludes that the motion should be denied.80
C. Defendant’s Arguments in Further Support of the Motion
In the reply brief, Defendant reasserts the arguments raised in the memorandum in
support.81
74 See id. at 13–14.
75 Id. at 14.
76 Id. at 14–15.
77 Id. at 15.
78 Id. at 15–16.
79 Id. at 16.
80 Id.
81 Rec. Doc. 35.
III. Legal Standard
A. Legal Standard for Summary Judgment
Summary judgment is appropriate when the pleadings, discovery, and affidavits
demonstrate “no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.”82 To decide whether a genuine dispute as to any material fact exists, the court
considers “all of the evidence in the record but refrains from making credibility determinations or
weighing the evidence.”83 All reasonable inferences are drawn in favor of the nonmoving party.
Yet “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and
conclusions of law’ are insufficient to either support or defeat a motion for summary judgment.”84
If the entire record “could not lead a rational trier of fact to find for the non-moving party,” then
no genuine issue of fact exists and, consequently, the moving party is entitled to judgment as a
matter of law.85 The nonmoving party may not rest upon the pleadings.86 Instead, the nonmoving
party must identify specific facts in the record and articulate the precise manner in which that
evidence establishes a genuine issue for trial.87
The party seeking summary judgment always bears the initial responsibility of showing the
basis for its motion and identifying record evidence that demonstrates the absence of a genuine
issue of material fact.88 “To satisfy this burden, the movant may either (1) submit evidentiary
82 Fed. R. Civ. P. 56(a); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
83 Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398–99 (5th Cir. 2008).
84 Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
85 Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
86 Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
87 See id.; Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
88 Celotex, 477 U.S. at 323.
documents that negate the existence of some material element of the opponent’s claim or defense,
or (2) if the crucial issue is one on which the opponent will bear the ultimate burden of proof at
trial, demonstrate that the evidence in the record insufficiently supports an essential element of the
opponent’s claim or defense.”89 If the moving party satisfies its initial burden, the burden shifts to
the nonmoving party to “identify specific evidence in the record, and to articulate” precisely how
that evidence supports the nonmoving party’s claims.90 The nonmoving party must set forth
“specific facts showing the existence of a ‘genuine’ issue concerning every essential component
of its case.”91
The nonmovant’s burden of demonstrating a genuine issue of material fact is not satisfied
merely by creating “some metaphysical doubt as to the material facts,” “by conclusory
allegations,” by “unsubstantiated assertions,” or “by only a scintilla of evidence.”92 Moreover, the
nonmoving party may not rest upon mere allegations or denials in its pleadings.93 Hearsay
evidence and unsworn documents that cannot be presented in a form that would be admissible in
evidence at trial do not qualify as competent opposing evidence.
B. Legal Standard for Interpreting Insurance Contracts under Louisiana Law
Under Louisiana law, “an insurance policy is a contract between the parties and should be
construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil
89 Duplantis v. Shell Offshore, Inc., 948 F.2d 187, 190 (5th Cir. 1991) (internal citation omitted).
90 Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994), cert. denied, 513 U.S. 871 (1994); see also Morris
v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).
91 Morris, 144 F.3d at 380; see also Bellard v. Gautreaux, 675 F.3d 454, 460 (5th Cir. 2012).
92 Little, 37 F.3d at 1075 (internal citations omitted).
93 Morris, 144 F.3d at 380.
Code.”94 “The Louisiana Civil Code provides that ‘[t]he judiciary’s role in interpreting insurance
contracts is to ascertain the common intent of the parties to the contract’ by construing words and
phrases ‘using their plain, ordinary and generally prevailing meaning.’”95 “Interpretation of an
insurance contract generally involves a question of law.”96
If the contract is clear and unambiguous and does not have absurd consequences, the court
applies the ordinary meaning of the contractual language.97 If the insurance policy contains
ambiguous provisions, the ambiguity “must be resolved by construing the policy as a whole.”98
Yet an insurance contract “should not be interpreted in an unreasonable or strained manner under
the guise of contractual interpretation to enlarge or restrict its provisions beyond what is reasonably
contemplated by unambiguous terms or achieve an absurd conclusion.”99 “Courts lack the
authority to alter the terms of insurance contracts under the guise of contractual interpretation when
the policy’s provisions are couched in unambiguous terms.”100
94 In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (quoting Cadwallader v. Allstate
Ins. Co., 2002-1637 (La. 6/27/03); 848 So. 2d 577, 580). Wisznia Co. v. Gen. Star Indem. Co., 759 F.3d 446, 448 (5th
Cir. 2014) (quoting Mayo v. State farm Mut. Auto. Ins. Co., 2003-1801, at 3 (La. 2/25/04); 869 So. 2d 96, 99) (quotation
marks omitted).
95 Wisznia Co., 759 F.3d at 448–49 (quoting Mayo, 869 So. 2d at 99).
96 In re Katrina Canal Breaches Litig., 495 F.3d at 206 (citing Bonin v. Westport Ins. Corp., 930 So. 2d 906,
910 (La. 2006)).
97 Prejean v. Guillory, 2010-0740, at 6 (La. 7/2/10); 38 So. 3d 274, 279; see also Sapp v. Wood Grp. PSN,
Inc., No. 15-3, 2016 WL 6995897, at *4 (E.D. La. Nov. 30, 2016) (Brown, J.).
98 Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La. 1994) (citing LA. CIV.
CODE art. 2050).
99 Cadwallader, 848 So. 2d at 580.
100 Id.
IV. Analysis
In the motion, Defendant asks the Court to dismiss Plaintiff’s claim for bad faith penalties
and attorney’s fees, to dismiss Plaintiff’s claim for any damage to his roof “associated with
mismatched materials, to limit Plaintiff’s recovery “[f]or costs associated with code upgrades
and/or building ordinances” to the policy limit, and to dismiss Plaintiff’s claim for penalties and
attorney’s fees on top of any amounts due to Plaintiff for code upgrades under Louisiana Revised
Statute § 22:1892.101 The Court first addresses the arguments regarding Plaintiff’s bad faith claims.
Then, the Court addresses Defendant’s remaining arguments in turn.
A. Whether Defendant is Entitled to Summary Judgment on Plaintiff’s Claim for Bad Faith
Penalties and Attorney’s Fees
Defendant argues that the Court should dismiss Plaintiff’s claim for bad faith penalties and
attorney’s fees because there is a genuine dispute as to whether the Policy covers the Ida Claim.102
Plaintiff argues that Defendant’s conduct was arbitrary and capricious to preclude summary
judgment.103
Plaintiff brings a claim against Defendant for bad faith processing of the insurance claim
in violation of Louisiana Revised Statute § 22:1892 and Louisiana Revised Statute § 22:1973.104
Louisiana Revised Statute § 22:1892(A)(1) provides that an insurer has a duty to “pay the amount
of any claim due any insured within thirty days after receipt of satisfactory proofs of loss from the
insured.” Pursuant to Section 22:1892(B)(1) a failure to pay that is “arbitrary, capricious, or
without probable cause” renders an insurer liable for the resulting damages and for a statutory
101 Rec. Doc. 23 at 1.
102 See Rec. Doc. 23-1 at 10–13.
103 See Rec. Doc. 31 at 4.
104 Rec. Doc. 1-1 at 8.
penalty, attorneys’ fees, and costs. Louisiana Revised Statute § 22:1973(B)(5) provides that an
insurer may be held liable for “[f]ailing to pay the amount of any claim due any person insured by
the contract within sixty days after receipt of satisfactory proof of loss from the claimant when
such failure is arbitrary, capricious, or without probable cause.”
The Louisiana Supreme Court has held that Section 22:1973 and Section 22:1892 prohibit
“virtually identical” conduct.105 Furthermore, both statutes are only applicable where the insurer’s
failure to pay is “arbitrary, capricious, or without probable cause,” and the Louisiana Supreme
Court has held that an insurer’s failure to pay is “arbitrary, capricious or without probable cause,”
only if its failure to pay “is not based on a good-faith defense.”106 It is the insured’s burden to
prove that the insurer acted in an arbitrary and capricious manner.107
Here, Defendant argues that its failure to pay for the Property’s roof replacement is based
on a good faith dispute as to the Policy’s coverage such that its conduct was not “arbitrary,
capricious, or without probable cause” as a matter of law.108 Plaintiff argues that there is an issue
of material fact as to whether Defendant’s conduct was “arbitrary, capricious, or without probable
cause” because Defendant neglected to conduct a roof inspection for five months and failed to
properly investigate the Ida Claim after Plaintiff provided the Precision Estimate.109 Plaintiff relies
on Best v. State Farm Fire and Casualty Company, where a Louisiana state appellate court found
that the trial court’s determination that an insurance company’s conduct was arbitrary and
105 Reed v. State Farm Nat’l Auto. Ins. Co., 03-107 (La. 10/21/03); 857 So.2d 1012, 1020.
106 Guillory v. Lee, 09-75 (La. 6/26/09); 16 So.3d 1104, 1127.
107 Dickerson v. Lexington Ins. Co., 556 F.3d 290, 297 (5th Cir. 2009).
108 See Rec. Doc. 23-1 at 10–13.
109 See Rec. Doc. 31 at 4–6.
capricious did not constitute manifest error.110 There, the court found that the insurance company’s
failure to pay the plaintiff was arbitrary and capricious because it initially denied the plaintiff’s
claim but simply denied the claim again rather than conducting additional investigation after it was
notified of the new findings made by the policy’s adjusters.111
Defendant’s conduct is easily distinguishable from the insurance company’s conduct in
Best. Unlike in Best, where the insurance company initially denied coverage, here the undisputed
facts establish that Defendant promptly sent Dishion to inspect the Property after Plaintiff
submitted the Ida Claim and issued payment to Plaintiff based on the inspection.112 Further,
whereas the insurance company in Best did not further investigate the claim after additional
information came to light, Defendant promptly sent Hughes to re-inspect the property after
receiving the Precision Estimate from Plaintiff.113 Therefore, Best does not support a denial of
summary judgment.
However, Plaintiff's claim for bad faith penalties must be determined by a finder of fact
because there is a genuine dispute as to whether Defendant failed to properly investigate the Ida
Claim by neglecting to conduct a roof inspection.114 The Louisiana Supreme Court has found that
an insurer’s “obligation to act in good faith is triggered by knowledge of the particular situation,
which knowledge ‘[t]he insurer has an affirmative duty’ to gather during the claims process.”115
110 Best v. State Farm Fire and Cas. Co., 2007-0573 (La. App. 4 Cir. 10/10/07); 969 So. 2d 671, 680.
111 Id.
112 See Rec. Doc. 31-1 at 3.
113 See id.
114 See Rec. Doc. 31 at 4–6.
115 Kelly v. State Farm Fire & Cas. Co., 2014-1921 (La. 5/5/15), 169 So.3d 328.
Thus, an insurer’s duty of good faith includes a duty to conduct “a thorough investigation” and
determine whether to settle or litigate based on “the evidence developed in the investigation.”116
“Summary Judgment is not appropriate when a claim for bad faith penalties depends on factual
determinations concerning the reasonableness of the insurer’s actions.”117
Here, in disputing the reasonableness of Defendant’s failure to conduct a roof inspection,
Plaintiff cites Allcat’s “Activity Diary Notes,”118 which states that the Dishion Report was based
on “inspection from ground” and that a roof inspection was “still needed.”119 Additionally,
Defendant’s communication logs stated that Hughes did not get on the roof when conducting his
follow up inspection five months later, after Plaintiff submitted the Precision Estimate.120 Thus,
there is a genuine dispute of material fact as to whether Defendant acted reasonably or failed to
conduct a thorough investigation and so summary judgment on Plaintiff’s claim for bad faith
penalties is not appropriate. Further, Defendant’s alleged failure to conduct a thorough
investigation regarding the Ida Claim could constitute bad faith even if any part of the Ida Claim
partially falls under a code upgrade provision in the Policy.121 Accordingly, the instant motion is
denied to the extent it seeks dismissal of Plaintiff’s bad faith claims.
116 See Smith v. Audubon Ins. Co., 95-2057 (La. 9/5/96), 679 So.2d 362, 377.
117 Burrell v. Phillips, No. 19-14711, 2021 WL 720635, at *3 (E.D. La. Feb. 24, 2021) (quoting Johnson v.
State Farm Mut. Auto. Ins. Co., 111-1991, 2012 WL 1745497, at *4 (E.D. La. May 16, 2012)) (denying summary
judgment based on a dispute of material fact as to the reasonableness of the insurer’s actions).
118 Rec. Doc. 31 at 5.
119 Rec. Doc. 31-5 at 2.
120 Rec. Doc. 31-6 at 24.
121 The reasonableness of Defendant’s conduct is at issue regardless of the Policy’s ultimate coverage of the
Ida Claim, making summary judgment on Plaintiff’s bad faith claims inappropriate at this stage.
B. Whether Defendant is Entitled to Summary Judgment on Plaintiff’s Claims Based on
the Mismatch Provision
Defendant argues that the Court also should dismiss Plaintiff’s claim for a roof replacement
because the Policy contains a provision excluding from coverage replacements due to mismatched
or discontinued materials (the “Mismatch Provision”) and Plaintiff admits that the roof is
comprised of Historic Ludowici French Field Clay tiles that are no longer in production.122
Plaintiff argues that the Mismatch Provision does not preclude coverage for the replacement of the
Property’s roof.123 The Mismatch Provision states, in pertinent part: “[i]n case of damage to
property, we will not pay to repair or replace undamaged property due solely to . . . [m]ismatch
between undamaged material and new material used to repair or replace damaged material due to
outdated, obsolete or discontinued products.”124 The Policy does not define the terms “outdated,”
“obsolete,” or “discontinued.”125 Thus, pursuant to the Louisiana Civil Code, the Court must
determine whether the Mismatch Provision precludes coverage for the roof replacement based on
these terms’ “plain, ordinary and generally prevailing meaning[s].”126
Merriam-Webster Dictionary defines “discontinued” to mean “no longer produced or
provided.”127 Defendant’s own expert states that the French Field Clay tiles at issue are still made
available for sale by Ludowici.128 Accordingly, the tiles are still “provided” and have not been
122 Rec. Doc. 23-1 at 14.
123 See Rec. Doc. 31 at 7.
124 Rec. Doc. 23-5 at 32.
125 See id. at 13–15.
126 Wisznia Co., 759 F.3d at 448–49 (quoting Mayo, 869 So. 2d at 99).
127 Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/dicontinued (last visited
February 14, 2023).
128 Rec. Doc. 23-11 at 10.
discontinued. Further, the Louisiana Supreme Court has defined “obsolete” to mean “no longer in
use; disused; neglected.”129 Given that the tiles are still made available for purchase, there is a
genuine issue of fact regarding whether they have been “disused” or “neglected.” Finally,
Merriam-Webster Dictionary indicates that “outdated” and “obsolete” are synonymous.130
Accordingly, construing the Policy in favor of coverage, and given the plain meaning of the terms
above, there is at least a genuine issue of material fact as to whether the Mismatch Provision
precludes Plaintiff from receiving coverage for replacement of the Property’s roof.131
C. Whether Plaintiff is Limited to Recovering the Policy Limit for Building Ordinances
and Law Upgrades
Defendant also argues that Plaintiff is limited to recovering the $59,659 policy limit for
building ordinances and law upgrades because Plaintiff’s demand letter states that “a full roof
replacement is required to comply with [New Orleans building codes].”132 Plaintiff argues that he
is not limited to recovering this policy limit for the roof replacement because the building codes
cited in the demand letter are irrelevant to Plaintiff’s expert’s recommending a full roof
129 Union Tank Car Co. v. La. Oil Refining Corp., 165 So. 638, 641 (La. 1936); see also Merriam-Webster
Dictionary, https://www.merriam-webster.com/dictionary/obsolete (last visited February 14, 2023) (defining obsolete
to mean “no longer in use or no longer useful”).
130 Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/obsolete (last visited
February 14, 2023).
131 See Supreme Servs. and Specialty Co., Inc. v. Sonny Greer, Inc., 2006-1827 (La. 5/22/07), 958 So. 2d 634,
638 (“[I]f the insurance policy is susceptible to two or more reasonable interpretations, then it is considered ambiguous
and must be liberally interpreted in favor of coverage.”) The Court notes that the Mismatch Provision states that the
Policy does not cover replacements due solely to materials being outdated, obsolete, or discontinued. See Rec. Doc.
23-5 at 32. Given that Plaintiff is seeking a roof replacement due to damage sustained during Hurricane Ida, there also
appears to be an issue of material fact as to whether the roof replacement is sought solely due to the nature of the tiles.
However, because the Court finds that there is a genuine issue of material fact as to whether the tiles are “outdated,”
“obsolete” or “discontinued,” the Court does not reach this issue.
132 Rec. Doc. 23-1 (citing Rec. Doc. 23-7).
replacement.133 Defendant cites the “Building Ordinance or Law” Additional Coverage provision
(the “Building Code Provision”), which states:
[W]e will pay the increased costs which are required and you actually incur to
comply with any ordinance or law governing the rebuilding, repair or demolition
of the damaged property. The limit for this coverage will not be more than
[$59,659]. This coverage is additional insurance and does not reduce the Dwelling
Protection Amount of Insurance.134
Plaintiff argues that this provision does not apply because TSA determined that a full roof
replacement is necessary because the tiles on the roof will not withstand repair, not to comply with
any building codes.135
Plaintiff admits that the tiles do not comply with the requisite New Orleans building code
requirements for clay tiles.136 However, the TSA’s report cited by Plaintiff creates a genuine issue
of material fact as to whether Plaintiff is limited to coverage under the Building Code Provision
by stating that a full roof replacement is necessary because the “other repair options are
contraindicated,” not because it is necessary only to comply with any building codes.137
Specifically, TSA determined that spot repairs are not feasible “[g]iven the widespread and
scattered nature of the observed damaged tiles,” spot repairs with brackets are not feasible because
“there is no compatible bracket for the french tile profile,” and a full detach and reset of the existing
tile is not advisable “[g]iven the large amount of damage and extensive labor required,” and
133 See Rec. Doc. 31 at 11.
134 Rec. Doc. 23-5 at 24–25.
135 Rec. Doc. 31 at 12.
136 Id. at 13.
137 See Rec. Doc. 31-4 at 9.
because the tiles could break at a rate “as high as 50%.”!°* Although the TSA report does state that
a full detach and reset of the existing tile “is further contraindicated because the tile failed [the
requisite test to comply with certain New Orleans building codes],” this language appears to
provide alternative grounds rather than the sole grounds for recommending a roof replacement.!°?
Thus, the TSA report suggests that a roof replacement may be necessary even without the
need to comply with building codes. Accordingly, given that the Building Code Provision provides
“additional insurance and does not reduce the Dwelling Protection Amount of Insurance,” there is
a genuine issue of material fact as to whether the provision limits Plaintiff's coverage under the
Policy. !“°
V. Conclusion
For the reasons stated above, the Court denies Defendant’s motion because genuine issues
of material fact exist regarding Plaintiffs claims.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s “Motion for Partial Summary Judgment”"!
is DENIED.
NEW ORLEANS, LOUISIANA, this 2nd _ day of March, 2023.
NANNETTE JOLQYETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
ra
19 Td.
40 Rec. Doc. 23-5 at 25.
41 Rec. Doc. 23.
23