Doucet-Speer, APLC v. State Farm Fire and Casualty Company

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF LOUISIANA

DOUCET-SPEER, APLC, ET AL. CIVIL ACTION

VERSUS 20-513-SDD-RLB

STATE FARM FIRE AND CASUALTY COMPANY

AMENDED RULING

This matter is before the Court on the Motion for Partial Summary Judgment1 filed

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by Plaintiff Doucet-Speer, APLC (“Doucet-Speer”) regarding coverage. State Farm Fire

and Casualty Company (“State Farm”) filed an Opposition,2 to which Doucet-Speer

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replied.3 Also before the Court is State Farm’s Motion for Summary Judgment4 as to all

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claims. Doucet-Speer opposes,5 and State Farm replied.6 For the reasons which follow,

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the Doucet-Speer’s Partial Motion for Summary Judgment7 shall be denied, and State

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Farm’s Motion for Summary Judgment8 shall be granted in part and denied in part.

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1 Rec. Doc. 95.

2 Rec. Doc. 104

3 Rec. Doc. 108.

4 Rec. Doc. 97.

5 Rec. Doc. 103. Jeffrey Speer (“Speer”) did not file an Opposition. Local Rule 7(f) of the Middle District of

Louisiana requires that memoranda in opposition to a motion be filed within twenty-one (21) days after

service of the motion. Moreover, State Farm’s undisputed facts are uncontroverted, and the Court finds

State Farm’s motion as to Speer has merit and is supported. Thus, State Farm’s Motion for Summary

Judgment is GRANTED to the extent it seeks dismissal of Speer’s claims with prejudice.

6 Rec. Doc. 107.

7 Rec. Doc. 95.

8 Rec. Doc. 97.

I. FACTUAL BACKGROUND

On or about July 6, 2020, the law firm Doucet-Speer filed suit in the Nineteenth

Judicial District Court for the Parish of East Baton Rouge, State of Louisiana, against

State Farm to obtain coverage and bad faith penalties after State Farm denied a claim for

losses resulting from employee theft and fraud.9 Doucet-Speer alleges that the State

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Farm policy provides coverage for: “(1) each occurrence of Employee Dishonesty causing

[Doucet-Speer] to sustain loss; (2) each occurrence of loss resulting from Forgery or

Alteration of any check, draft, or promissory note, etc.; and (3) each occurrence of loss of

Business Personal Property of others.”10

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On August 11, 2020, State Farm removed, asserting diversity jurisdiction under 28

U.S.C. §1332,11 and State Farm answered.12 On November 3, 2021, the Court granted

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Doucet-Speer’s motion to amend to add Jeffrey Speer (“Speer”) as a plaintiff, a breach of

contract claim, and additional factual allegations to support their claims against State

Farm.13

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Doucet-Speer and Speer (collectively, “Plaintiffs”) allege that State Farm provided

a policy of insurance which covered the business against perils, including (1) $10,000.00

for employee dishonesty, (2) $1,000,000.00 for business liability, and (3) $2,000,000.00

9 Rec. Doc. 1-2 at ¶¶2-9.

10 Id. at ¶5.

11 Rec. Doc. 1.

12 Rec. Doc. 3.

13 Rec. Docs. 34-1, 40, 41. The Amended Complaint was filed by Speer in proper person on his own behalf

and as counsel for Doucet-Speer. Rec. Docs. 33, 41. Speer was later transferred to Disability Inactive

Status and could no longer practice law. Rec. Doc. 97-2 at p. 2. After several withdrawals and enrollments

of counsel and dismissal of the case without prejudice, Plaintiffs’ current counsel of record enrolled for

Doucet-Speer and the case was reinstated. Rec. Docs. 73, 76. Speer, who was proceeding pro se passed

away on December 30, 2024. Rec. Doc. 109. This Court, after the filing of the instant motions, allowed

substitution of John Anthony Speer, the Testamentary Executor for the Estate of Jeffrey F. Speer, as the

proper party to substitute for Speer, and allowed attorney Mark Owens to enroll on behalf of the substitute

Plaintiff. Rec. Doc. 130 at p. 4. Doucet-Speer remains a named party Plaintiff. Rec. Doc. 130 at p. 9.

general aggregate for liabilities.14 Plaintiffs allege that prior to insurance agent John

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Montesano’s (“Montesano’s”) passing in October of 2015, Speer requested additional

Uninsured/Underinsured coverage in the amount of $2,000,000.00 and was sold

additional coverage in the form of endorsements, including but not limited to

Underinsured/Uninsured Motorist, Liability coverage, Employee Dishonesty, as well as

Corporation General Liability (“CGL”), in the amount of $2,000,000.00.15

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By the end of summer 2019, Plaintiffs allege Speer was unable to get satisfactory

statements from his bookkeeper and office manager about the financial state of affairs of

the law practice.16 Upon investigation, Speer discovered substantial sums of money

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missing and terminated all involved employees.17 After discovering the total amount of

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damage, Speer allegedly asked his insurance agent Trey Hargrove (“Hargrove”) if the

policy that he had been paying covered the situation.18

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Plaintiffs claim that Hargrove affirmed that the CGL and endorsements covered

the loss, damages, and liabilities incurred by the law firm.19 Plaintiffs allege Hargrove

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informed Speer that, “in situations where your employees act in a manner that creates

liability to third parties, then your policy will cover that debt up to your two-million-dollar

aggregate limit.”20 After submitting a proof of loss on December 2 and 12, 2019, State

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Farm tendered a check in the amount of $10,000.00 to Speer under the Employee

Dishonesty coverage and denied the remaining claims.21

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14 Rec. Doc. 41 at ¶5.

15 Id. at ¶¶7-8.

16 Id. at ¶10.

17 Id. at ¶¶11-13.

18 Id. at ¶15.

19 Id.

20 Id. at ¶16.

21 Id. at ¶¶18-20.

State Farm answered the Supplemental and Amended Petition.22 Now Plaintiffs

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seek partial summary judgment23 as to coverage, and State Farm seeks summary

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judgment24 as to all claims by Plaintiffs. The motions are opposed, respectively.25

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II. LAW AND ANALYSIS

A. Summary Judgment Standard

A court should grant a motion for summary judgment when the movant shows “that

there is no genuine dispute as to any material fact and the movant is entitled to judgment

as a matter of law.”26 The party moving for summary judgment is initially responsible for

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identifying portions of pleadings and discovery that show the lack of a genuine issue of

material fact.27 A court must deny the motion for summary judgment if the movant fails to

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meet this burden.28

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If the movant makes this showing, however, the burden then shifts to the non-

moving party to “set forth specific facts showing that there is a genuine issue for trial.”29

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This requires more than mere allegations or denials of the adverse party's pleadings.

Instead, the nonmovant must submit “significant probative evidence” in support of his

claim.30 “If the evidence is merely colorable, or is not significantly probative, summary

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judgment may be granted.”31

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22 Rec. Doc. 46.

23 Rec. Doc. 95.

24 Rec. Doc. 97.

25 Rec. Docs. 103, 104.

26 Fed. R. Civ. P. 56.

27 Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995).

28 Id.

29 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (quotations omitted).

30 State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990) (citing In re Mun. Bond Rep.

Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1982)).

31 Anderson, 477 U.S. at 249 (citations omitted).

A court may not make credibility determinations or weigh the evidence in ruling on

a motion for summary judgment.32 The court is also required to view all evidence in the

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light most favorable to the non-moving party and draw all reasonable inferences in that

party's favor.33 Under this standard, a genuine issue of material fact exists if a reasonable

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trier of fact could render a verdict for the nonmoving party.34

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B. Plaintiffs’ Partial Summary Judgment

Doucet-Speer seeks partial summary judgment as to coverage. It is undisputed

that Doucet-Speer, at all pertinent times, was a first-party insured of State Farm through

the CGL Policy, #98-BM-G174-4 (the “Policy”).35 However, the following facts are

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disputed. Doucet-Speer asserts that State Farm, through its agent Hargrove, undertook

actions and made representations to Doucet-Speer through Speer, that Doucet-Speer

had coverage for the alleged theft detailed in this suit.36 Doucet-Speer further contends

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that Speer, relying on Hargrove’s representations, had a reasonable expectation that

Doucet-Speer was indeed covered for the losses sustained.37

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Based on Hargrove’s deposition testimony, Doucet-Speer contends Hargrove

unquestionably represented to Plaintiffs that there was coverage afforded under the

Policy in the amount of a one million or two-million-dollar aggregate.38 Plaintiffs also cite

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Speer’s deposition testimony that Hargrove told him he believed Speer was “covered up

to the 2 million-dollar limits of that rider.”39 Speer further testified that he asked Hargrove

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32 Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

33 Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000).

34 Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).

35 Rec. Docs. 95-2, 104-1.

36 Rec. Docs. 95-2 at p. 1, 104-1 at p. 2.

37 Id.

38 Rec. Doc. 95-3 at p. 8 (citing Rec. Doc. 95-8 at p. 16)

39 Id. at p. 9 (citing Rec. Doc. 95-8 at p. 16).

to go back and confirm with underwriting what he was telling him to be sure.40 Speer

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testified that Hargrove returned the next day and said “You’re covered.”41 Specifically,

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Speer testified he recalled Hargrove did air quotation marks and said, “You’re covered for

debts that are caused by the misconduct, fraud, criminal activity that would lead to your

being liable to a third party.”42 Thus, Doucet-Speer argues that Hargrove, acting as an

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agent for State Farm, substantiated and confirmed coverage was afforded to Doucet-

Speer, upon which Speer relied.43 Based on this evidence, Doucet-Speer contends there

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is no genuine issue of material fact, and it is entitled to summary judgment as to coverage.

Doucet-Speer argues that Hargrove’s representations illustrate that “Speer was

advised that coverage was afforded under his Policy by the individual that was obligated

with the duty ‘to procure insurance coverage.’”44 Doucet-Speer further argues Hargrove’s

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testimony supports Plaintiffs’ “subjective” position.45 Doucet-Speer contends that when

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Speer met with Hargrove and discussed coverage, the Sworn Proof of Loss was provided

to State Farm detailing the losses that were discovered.46 Doucet-Speer contends

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Hargrove never advised Speer that there was no coverage or that the Policy was not

applicable.47

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Hargrove testified that he remembered getting a call from Jeff and that he

remembered “the call being like a hypothetical.”48 Hargrove also testified that Speer

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40 Id.

41 Id.

42 Id.

43 Id. at p. 10.

44 Id. at p. 8 (citing J & M Pile Driving, LLC v. Chabert Ins. Agency, LLC, 2017-0126, p. 4 (La. App. 1 Cir.

10/25/17); 233 So.3d 43).

45 Id. at pp. 8-9.

46 Id. at p. 9.

47 Id.

48 Id. at p. 7 (citing Rec. Doc. 95-6 at p. 30).

asked “if I had an employee, you know, stealing money from me or this or that,” “would I

have coverage for that?”49 Hargrove testified that he remembered “seeing the employee

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dishonesty kind of coverage and I remember telling him something, like, ‘Yeah, you know,

you would – you would have coverage for that.’”50 He further testified that at some point

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he and Speer discussed the amount of coverage and Speer said “hey, do I have the one

million, two-million-aggregate, you know, yes.”51

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State Farm argues the testimony fails to establish that there are no genuine issues

of material fact regarding coverage and/or the amount based on Hargrove’s purported

representations to Speer.52 State Farm denies that Hargrove’s testimony establishes that

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he told Speer he was covered for up to $2 million under the Employee Dishonesty

Coverage Endorsement, which is limited to $10,0000 as set forth on the declarations page

of the Policy.53

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State Farm maintains that Doucet-Speer’s assertions are contrary to recent

caselaw holding that, “as Louisiana requires that insurance contracts must be in writing,

reliance on oral representations by the insurance agent was unreasonable as a matter of

law as the oral representations were inconsistent with the unambiguous terms of the

contract.”54 State Farm further contends Doucet-Speer fails to mention Louisiana

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Supreme Court caselaw holding that insurance agents owe no duty to advise their clients

as to the type and amount of coverage to obtain and that the insured is obligated to read

49 Id.

50 Id.

51 Id. at p. 8.

52 Rec. Doc. 104 at p. 1.

53 Id.

54 Id. at p. 2 (citing Brown v. Phoenix Life Ins. Co., 843 F. App’x. 533 (5th Cir. 2021); Allstate Life Ins. Co.

v. Marcelle, 2024 WL 1999548 (M.D. La. May 6, 2024)).

the policy when received.55 Hargrove is not a named party to this litigation.56 Regardless,

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State Farm contends that any action against Hargrove is time-barred under the one-year

peremptive period to sue an agent under La. R.S. 9:5606.57

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Doucet-Speer responds that it does not seek to establish claims against Hargrove,

extend coverage, or be granted additional rights under the Policy.58 Instead, Doucet-

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Speer contends it demonstrates that partial summary judgment is appropriate because

“the subjective position of Jeffery Speer . . . is not merely self-serving . . . [but] is supported

by [Hargrove] and is a material fact for trial.”59 Doucet-Speer claims State Farm offers no

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evidence to refute the subjective beliefs held by Speer.60

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Doucet-Speer appears to ask the Court to make a finding in fact of Speer’s

subjective belief as to coverage, perhaps as an end around a detrimental reliance claim.61

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However, on a motion for summary judgment, courts may not evaluate the credibility of

the witnesses, weigh the evidence, or resolve factual disputes.62 Because a party’s state

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55 Id. (citing Isadore Newman Sch. v. J. Everett Eaves, Inc., 42 So.3d 352 (La. 2010)).

56 Rec. Doc. 104 at p. 1. Here, State Farm dedicates argument to whether Doucet-Speer states a viable

claim against Hargrove. Rec. Doc. 104 at pp. 10-20. Presumably, this is addressing the essence of Doucet-

Speer’s assertions in its motion that Speer relied on Hargrove’s representations as to coverage for the

alleged losses. However, Hargrove is not a named party, and Plaintiffs do not assert claims against

Hargrove for detrimental reliance or for failure to procure insurance coverage. Rec. Docs. 41, 108. Thus,

the Court need not address any hypothetical claims as to Hargrove.

57 Rec. Doc. 104 at p. 2.

58 Rec. Doc. 108 at p. 2.

59 Id.

60 Id.

61 Although Doucet-Speer attempts to distinguish their motion as a motion seeking summary judgment as

to the subjective belief of Speer versus a finding of detrimental reliance as a matter of law, it offers no

caselaw supporting a basis for such finding. Summary judgment is “particularly inappropriate” when

questions of subjective belief, motive, and intent are at stake. Friedman v. Meyers, 482 F. 2d 435, 439 (2d

Cir. 1973); see also Deneau v. Amtel, Inc., No. 77 CIV. 5718, 1980 WL 1440, at *9 (S.D.N.Y. Sept. 22,

1980) (finding where issues were raised as to the state of mind, intent and knowledge of the parties,

summary judgment is inappropriate where it is sought on the basis of the inferences which the parties seek

to have drawn questions of motive, intent, and subjective feelings and reactions).

62 Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008).

of mind is inherently a question of fact which turns on credibility, it is generally

inappropriate to grant summary judgment.63

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As the Louisiana Supreme Court has explained, “the only duty imposed on the

[insurance] agent is to obtain the coverage requested by the customer.”64 “To establish a

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detrimental reliance claim under Louisiana Civil Code art. 1967, a plaintiff must prove (1)

a representation by word or conduct, (2) justifiable reliance, and (3) a change in position

to one's detriment resulting from the reliance.”65 “Typically, whether a plaintiff justifiably

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relied on a promise is a fact question, but a plaintiff's reliance on a promise may be

unreasonable as a matter of law.”66 “A party cannot reasonably rely on an employee's

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representations when it ‘conflict[s] with the clear meaning of the contract terms.’”67

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Doucet-Speer has not presented the Court with summary judgment evidence

establishing that there are no genuine disputes of material fact as to coverage. The Court

finds that Speer cannot reasonably rely on Hargrove’s alleged conflicting statements as

a matter of law.68 Reliance on oral representations is unreasonable because “insurance

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contracts must be in writing.”69 “Louisiana law holds an insured responsible for reading

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and knowing the provisions of their own insurance policy.”70

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63 Waste Mgmt. of Louisiana, L.L.C. v. River Birch, Inc., 920 F.3d 958, 964 (5th Cir. 2019).

64 Coleman E. Adler & Sons, L.L.C. v. Axis Surplus Ins. Co., 49 F.4th 894, 899 (5th Cir. 2022) (citation

omitted).

65 Allstate Life Ins. Co. v. Marcelle, No. 24-30349, 2025 WL 789551, at *3 (5th Cir. Mar. 12, 2025) (citing

Patriot Const. & Equipment, LLC v. Rage Logistics, LLC, 15-1136, p. 10 (La. App. 3 Cir. 4/6/16), 215 So.3d

844, 852; La. Civ. Code Ann. art. 1967)).

66 Id. (citing Drs. Bethea, Moustoukas & Weaver LLC v. St. Paul Guardian Ins. Co., 376 F.3d 399, 403 (5th

Cir. 2004)).

67 Id. (quoting Cenac v. Orkin, L.L.C., 941 F.3d 182, 198–99 (5th Cir. 2019) (citing Bethea, 376 at 404–05));

see also Brown v. Phoenix Life Ins. Co., 843 F. App'x 533, 545–46 (5th Cir. 2021) (finding reliance on oral

representations unreasonable because “insurance contracts must be in writing”).

68 Allstate Life Ins. Co., 2025 WL 789551, at *3.

69 Id. (citing Brown v. Phoenix Life Ins. Co., 843 F. App’x 533, 545-46 (5th Cir. 2021)).

70 Id. at n.4 (citing Motors Ins. Co. v. Bud’s Boat Rental, Inc., 917 F.2d 199, 205 (5th Cir. 1990)).

In the Court’s view, Doucet-Speer does not argue that it sought coverage that

Hargrove failed to procure; rather, Doucet-Speer contends the testimony shows that,

contemporaneous with submitting the Sworn Proof of Loss to State Farm, Speer

discussed with Hargrove whether the Policy provided coverage for these types of

losses.71 The record demonstrates that this alleged conversation occurred after coverage

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had already been procured and after the loss was sustained.72 The deposition testimony

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shows that, in a phone call to Hargrove, Speer posed a hypothetical to Hargrove regarding

employees stealing money and whether there was coverage.73 Hargrove testified that he

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remembered “seeing the employee dishonesty kind of coverage” and “telling [Speer]

something, like, “Yeah, you know, you would – you would have coverage for that.”74

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Hargrove also testified that at some point he remembered Speer asking if he had the two-

million dollar aggregate CGL, but he did not remember specifically saying that the

employee dishonesty endorsement “is going to go from ten thousand all the way up to,

you know, whatever.”75 Hargrove testified that, if he was asked by Speer the amount of

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coverage as it is listed in the declarations, then “yes. . . at some point we discussed, like,

71 Rec. Doc. 95-3 at pp. 7-9.

72 In a Southern District of Ohio case, the district court observed that on a negligent misrepresentation claim

on a post-loss coverage opinion from an agent, an insured “cannot prove reliance or damages” based on

representations “made after the fact of the purchases” of a personal liability protection policy. See Abboud

v. LM General Insurance Company, 2018 WL 4095952, at *4 (N.D. Ohio Aug. 29, 2018) (citing Mafcote,

Inc. v. Genatt Associates, Inc., 2017 WL 537870, at *10 (S.D. Ohio Feb. 14, 2007)); see also PSG-Mid

Cities Med. Ctr., LLC v. Jarrell, No. 3:20-CV-02477-E, 2020 WL 7398782, at *3 (N.D. Tex. Dec. 17, 2020)

(quoting W. Texas Agriplex v. Mid-Continent Cas. Co., No. 5:03-CV-199-C, 2004 WL 1515122, at *13 (N.D.

Tex. July 7, 2004) (“[A]n insured normally cannot bring a misrepresentation claim for any alleged

representations made after a loss.”).

73 Rec. Doc. 95-3 at p. 7. (citing 95-6 at pp. 30-31).

74 Id.

75 Rec. Doc. 95-6 at pp. 45-46.

hey, do I have the one million, two million aggregate, you know, yes.”76 Hargrove did not

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recall ever discussing coverage in Speer’s office.77

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This conflicting evidence demonstrates that genuine fact issues exist both as to

coverage and policy limits for the losses sustained. The Policy’s Declarations Page

contains a $10,000 limit for Employee Dishonesty.78 The parties’ written stipulation

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confirms this Policy “contains the same and identical provisions, Sections of Coverage,

limits, endorsements, exclusions, etc. for the years 2014-2019.”79 It is also evident that

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the Employee Dishonesty $10,000 limit is listed under “Section I – Property” coverage

and the $2 million aggregate limits is listed under “Section II – Liability” coverage on the

declarations page.80

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Even if the Court found that Hargrove made oral representations to Speer

regarding coverage and policy limits, it would still be unreasonable for Plaintiffs to have

reasonably relied on this post-loss oral representation under applicable law.81 The

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statements at issue – which occurred post-procurement and post-loss – do not establish

that no genuine issue of material fact exists as to coverage because Doucet-Speer,

through Speer, is generally responsible for reading its policies and is expected to know

the provisions.82

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76 Rec. Doc. 95-3 at p. 8 (citing Rec. Doc. 95-6 at pp.68-69).

77 Rec. Doc. 95-6 at p. 45.

78 Rec. Docs. 92, 97-4 at p. 7.

79 Rec. Doc. 92.

80 Rec. Doc. 97-4 at pp. 7-8.

81 Allstate Life Ins. Co. v. Marcelle, 2025 WL 789551, at *3 (5th Cir. Mar. 12, 2025).

82 Allstate Life Ins. Co. v. Marcelle, No. 21-CV-469-SDD-SDJ, 2024 WL 1999548, at *5 (M.D. La. May 6,

2024), aff'd, No. 24-30349, 2025 WL 789551 (5th Cir. Mar. 12, 2025).

Further, the generalized testimony of a party's subjective belief does not create an

issue for trial when, as here, the beliefs are not substantiated.83 “While a witness is indeed

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capable of attesting to their own personal experiences and feelings, such testimony

cannot create genuine issues of material fact based on subjective opinions and recitation

of legal conclusions. General conclusory allegations do not become adequate summary

judgment evidence simply because they are put in affidavit form.”84 Speer’s subjective

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belief is not supported by undisputed facts, and Speer’s subjective belief alone does not

support summary judgment in Plaintiffs’ favor. Thus, Doucet-Speer’s Motion for Partial

Summary Judgment85 is denied.

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C. State Farm’s Motion for Summary Judgment

State Farm paid the $10,000 policy limits under the Employee Dishonesty

endorsement issued to Doucet-Speer. It argues that no additional amounts are owed

under the policy.86 State Farm seeks summary judgment and dismissal with prejudice of

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all claims by Plaintiffs against State Farm for additional amounts owed under the Policy,

the claims for penalties and attorney’s fees under La. R.S. 22:1892 and La. R.S. 22:1973,

the claims for mental anguish damages by Doucet-Speer, and all claims individually

asserted by Speer.87 Doucet-Speer opposed this motion,88 but Speer did not.

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83 Lewis v. Eye Care Surgery Ctr., Inc., No. CV 21-475-SDD-RLB, 2023 WL 8880348, at *3 (M.D. La. Dec.

22, 2023) (citing Bickerstaff v. Whitney Natl. Bank, No. 96-30231, 1996 WL 595654, at *3 (5th Cir. Sept.

20, 1996); Roberson v. Alltel Info. Servs., 373 F.3d 647, 654 (5th Cir. 2004); Armendariz v. Pinkerton

Tobacco Co., 58 F.3d 144, 152-53 (5th Cir. 1995)).

84 Scott v. Brandon Co. of Tennessee, LLC, No. CA 23-697-SDD-SDJ, 2025 WL 852504, at *6 (M.D. La.

Mar. 18, 2025).

85 Rec. Doc. 95.

86 Rec. Doc. 97-2 at p. 1.

87 Rec. Doc. 97 at p. 2.

88 Rec. Doc. 103.

Accordingly, State Farm’s Motion for Summary Judgment as to Speer is granted as

unopposed.

Doucet-Speer admits to each uncontested material fact submitted by State Farm.89

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Thus, the following facts are undisputed.

State Farm issued Commercial Policy, #980BM-G174-4 to Doucet-Speer for the

policy period February 14, 2018 to February 14, 2019.90 As stipulated by the parties, the

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Policy was in effect for years 2014 to 2019 and contained the same provisions, sections

of coverage, limits, endorsements, and exclusions for the years 2014 through 2019 as

contained in the policy issued for the policy period February 14, 2018 to February 14,

2019.91 The named insured on the policy is Doucet-Speer, A Professional Law

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Corporation Entity: Corporation.92 The policy contains endorsement CMP-4710 for

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Employee Dishonesty.93 In the declarations page of the policy under Section 1 –

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Extension of Coverage – Limit of Insurance – Per Policy for Employee Dishonesty

Coverage, the Limit of Insurance is listed as $10,000.94 State Farm paid Doucet-Speer

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the $10,000 limit for the claim filed under the policy that is the subject of this lawsuit.95

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1. Ambiguities in the interpretation of the Policy must be construed in favor

of the insured – here, Doucet-Speer.

Under Louisiana law, “an insurance policy is a contract that must be construed in

accordance with the general rules of interpretation of contracts set forth in the Louisiana

89 Rec. Doc. 103-1. Doucet-Speer contends that despite admitting to all uncontested facts, that “there are

too many other issues that have not been presented to the Court” and summary judgment should not be

granted. Rec. Doc. 103-1 at p. 1.

90 Rec. Docs. 97-3 at p. 1 (citing Rec. Docs. 97-4, 92), 103-1.

91 Rec. Docs. 97-3 at p. 1 (citing Rec. Doc. 97-4), 103-1.

92 Id.

93 Rec. Docs. 97-3 at p. 1 (citing Rec. Doc. 97-4 at pp. 45-46), 103-1.

94 Rec. Docs. 97-3 at p. 2 (citing Rec. Doc. 97-4 at p. 7), 103-1.

95 Rec. Docs. 97-3 at p. 2 (citing Rec. Doc. 97-5 at p. 14), 103-1.

Civil Code.”96 The court's role “in interpreting insurance contracts is to ascertain the

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common intent of the parties to the contract.”97 The Civil Code provides that “[t]he words

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of a contract must be given their generally prevailing meaning,” and “[w]hen the words of

a contract are clear and explicit and lead to no absurd consequences, no further

interpretation may be made in search of the parties' intent.”98 Each provision of the

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insurance contract “must be interpreted in light of the other provisions so that each is

given the meaning suggested by the contract as a whole.”99 Louisiana law also requires

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that an insurance policy “should not be interpreted in an unreasonable or strained manner

so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by

its terms or so as to achieve an absurd conclusion.”

“With respect to coverage, the insured bears the burden of proving that the incident

giving rise to a claim falls within the policy's terms.”100 However, “the insurer bears the

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burden of proving the applicability of an exclusionary clause within the policy.”101

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“Exclusionary provisions must be read together with the entire policy, and are construed

strictly against the insurer and in favor of coverage.”102 “Any ambiguities within an

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exclusionary provision or the policy as a whole must be construed against the insurer and

96 Am. Int'l Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 262 (5th Cir. 2003).

97 Mayo v. State Farm Mut. Auto. Ins. Co., 2003-1801 (La. 2/25/04), 869 So.2d 96, 99.

98 La. C.C. Arts. 2046, 2047, 2050.

99 La. Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 n.8 (La. 1994) (citing La. Civ. Code

art. 2050).

100 Coleman v. Sch. Bd. of Richland Par., 418 F.3d 511, 517 (5th Cir. 2005) (citing Doerr v. Mobil Oil Corp.,

2000-0947 (La. 12/19/00), 774 So.2d 119, 124).

101 Id.

102 Coleman, 418 F.3d at 517 (citing Garcia v. Saint Bernard Parish Sch. Bd., 576 So.2d 975, 976 (La.

1991) & Vallier v. Oilfield Constr. Co., 483 So.2d 212, 215 (La. Ct. App. 1986)).

in favor of coverage.”103 When the “language of an insurance policy is clear, courts lack

102F

the authority to change or alter its terms under the guise of interpretation.”104

103F

“An insurer, like other individuals, is entitled to limit its liability and to impose and

enforce reasonable conditions upon the policy obligations it contractually assumes; it may

change or amend the coverage provided by the policy by an endorsement attached to the

policy as long as the provisions and/or endorsements do not conflict with statutory law or

public policy.”105 When an endorsement is attached to the policy, the endorsement

104F

becomes part of the contract.106 The policy and the endorsement must be construed

105F

together.107 “If a conflict between the endorsement and the policy exists, the endorsement

106F

prevails.”108 Standard exclusions may be completely eliminated or modified in part by an

107F

endorsement.109

108F

a. Employee Dishonesty Endorsement

Here, the Policy had an extension of coverage under the CMP 4170 Employee

Dishonesty Endorsement, which was an Extension of the Section I Property Coverage,

that provided State Farm “will pay for direct physical loss to Business Personal Property

and “money” and securities . . . resulting from dishonest acts committed by any of your

‘employees’ acting alone or in collusion with other persons (except you or your partner)

with the manifest intent to:

a. Cause you to sustain loss; and

103 Coleman, 418 F.3d at 517 (citing La. C.C. Art. 2056; Mayo, 869 So.2d at 100; Reynolds v. Select

Properties, Ltd., 634 So.2d 1180, 1183 (La. 1994); La. Ins. Guar. Ass'n, 630 So.2d at 767; RPM Pizza, Inc.

v. Auto. Cas. Ins. Co., 601 So.2d 1366, 1369 (La. 1992)).

104 Coleman, 418 F.2d at 518 (citing La. Ins. Guar. Ass'n, 630 So.2d at 764).

105 King v. Old Republic Ins. Co., 2016-0170 (La. App. 4 Cir. 9/7/16), *4, 200 So.3d 989.

106 Id.

107 Id.

108 Id. at *7.

109 See 15 La. Civ. L. Treatise, Insurance Law & Practice § 6:11 (4th ed.).

b. Obtain financial benefit (other than salaries, commission, fees, bonuses,

promotions, awards, profit sharing, pension or other ‘employee’ benefits

earned in the normal course of employment for:

(1) Any ‘employee’ or

(2) Any other person or organization intended by that ‘employee’ to

receive that benefit.”110

109F

The Policy states that “[t]he most we will pay for loss under this Coverage in any

one occurrence . . . is the Limit of Insurance for Employee Dishonesty shown in the

Declarations, even if the occurrence includes more than one policy period.”111 The limit

110F

of coverage under the Employee Dishonesty Endorsement is clearly and unambiguously

identified at a limit of $10,000 on the Declarations Page, Section I Extensions of Coverage

Limit of Insurance – Per Policy.112

111F

The Employee Dishonesty Endorsement is provided under Section I – Property

Coverage, Extension of Coverage.113 The endorsement provides limits on types of

112F

coverages including Dependent Property – Loss of Income at $5,000 and Employee

Dishonesty at $10,000.114

113F

The Policy defines loss as follows:

4. All loss:

a. Caused by one or more persons; or

b. Involving a single act or series of acts;

is considered one occurrence.115

114F

110 Rec. Doc. 97-2 at pp. 4-5 (citing Rec. Doc. 97-4 at pp. 45-46).

111 Rec. Doc. 97-4 at p. 45 (emphasis added).

112 Id. at p. 7.

113 Id. at p. 45.

114 Id.

115 Id.

As to the Employee Dishonesty Endorsement, it is undisputed that the

endorsement applies, but the parties dispute the amount of coverage. Doucet-Speer

alleges State Farm denied the claim except for payment under the Employee Dishonesty

Endorsement in the amount of $10,000.116 Doucet-Speer disputes that is the limit of

115F

coverage.117 Doucet-Speer argues additional provisions under the Policy apply; thus, it

116F

seeks additional damages and penalties.

Plaintiffs’ Amended Complaint alleges that, in the summer of 2019, Speer was

unable to get satisfactory statements from his bookkeeper and office manager about the

financial state of affairs of his law practice.118 Once he discovered substantial amounts of

117F

missing money from both his Operating and Trust accounts, he terminated his

bookkeeper, office managers, and all employees involved.119 Speer determined that

118F

several workers were taking money in reimbursements for expenses that didn’t exist by

manipulating Quickbooks.120 Speer also confronted his office manager about some of the

119F

checks signed with her name, which she verified were forgeries.121 The Amended

120F

Complaint contains no other factual allegations identifying the employees or concerning

the acts of theft or embezzlement resulting in the alleged losses.

State Farm cites Speer’s testimony that the alleged thefts were committed by the

firm’s employees through multiple transactions run through the firm’s operating account,

law firm trust account, and credit line for loans on certain cases which totals over $2

116 Rec. Doc. 41 at p. 4.

117 Rec. Doc. 97-2 at pp. 7-8.

118 Rec. Doc. 41 at p. 3.

119 Id.

120 Id.

121 Id.

million.122 Speer testified that theft by employees began on a large scale in 2017 when

121F

he began having serious health issues.123

122F

Speer employed Michelle Mouton (“Mouton”) as his office manager, Gypsy

Delahoussaye (“Delahoussaye”) as a bookkeeper/paralegal, and Carla Toucheck

(“Toucheck”) as a bookkeeper.124 Speer testified that he found a firm check in the amount

123F

of $38,500.00 written by Mouton to herself, which she cashed and deposited into her

personal bank account.125 Speer also testified he had given Mouton signature rights on

124F

the firm’s operating bank account to cover things like payroll, the electric bill, or operating

expenses when he was not available.126 Speer stated he was in a jury trial at the time she

125F

cashed the check.127

126F

Speer also discovered that, in personal injury cases, his “office manager and

cohort” would take checks signed for payment of medical providers at the time of

settlement, never disburse the funds, and write separate checks on the side.128 Speer

127F

testified that Quickbooks would show that the expenses were paid.129 In the first instance

128F

of theft regarding a personal injury client’s case, Speer determined he still owed the

medical providers $115,000.130

129F

Speer asserts that further review of the law firm’s financial records in 2019

revealed that Toucheck, the bookkeeper, was collecting regular payroll checks and then

122 Rec. Doc. 97-2 at p. 13 (citing Rec. Doc. 97-5 at pp. 26-27).

123 Rec. Doc. 97-5 at pp. 19-20.

124 Id. at pp. 20-21.

125 Id. at pp. 24-25.

126 Id. at p. 26.

127 Id. at p. 27.

128 Id. at pp. 27-29.

129 Id. at p. 28.

130 Rec. Doc. 97-5 at pp. 28-29.

taking checks on the side as an independent contractor.131 He claimed multiple

130F

employees were doing the same.132 Speer retained a forensic accounting firm to perform

131F

a forensic analysis of his accounts some time in 2022 or 2023.133 He could not recall if he

132F

provided that report to State Farm.134

133F

Speer testified that Mouton, Toucheck, and Delahoussaye all participated in the

thefts, along with Toucheck’s fiancé Rowdy Whittington (“Whittington”).135 Speer testified

134F

that Whittington was employed as a runner for the firm and was receiving checks that

were cashed.136 Speer testified of another theft in which Delahoussaye’s daughter

135F

received a check which she used to buy a car.137 However, he testified Delahoussaye

136F

was dead by then, and he did not know of any involvement by her.138

137F

Speer also testified that he had a client line he used for personal injury cases.139

138F

After terminating Mouton, he found out she created another trust account and found

checks that she had signed or borrowed money, ran it through the trust account, and took

it out and put it into her personal account.140

139F

Speer stated that after he terminated Mouton, he found checks on which she had

signed and forged his signature and deposited the checks in his trust account.141 Speer

140F

discovered that she had been borrowing money against the firm’s credit line for herself.142

141F

131 Id. at pp. 29-30.

132 Id. at pp. 29-31.

133 Id. at pp. 35-36.

134 Id. at p. 37.

135 Id. at 39.

136 Id. at pp. 38-39.

137 Id. at p. 40.

138 Id. at p. 41.

139 Id. at pp. 42-43.

140 Rec. Doc. 97-5 at pp. 42-43.

141 Id. at pp. 46-47.

142 Id.

Speer testified that the president of the bank, Jeremy Callais, later altered the documents

and copy and pasted Speer’s signature over the forged signatures before sending a copy

of the loan to the police.143

142F

Speer also stated that Toucheck was writing her son checks, but he did not know

how much, and he wasn’t clear on the details because the firm also had a client case

open for him.144 Speer believed she was paying her son “in excess of what he had

143F

coming.”145 Speer also found a check signed by Toucheck that came out of the trust

144F

account.146

145F

Speer further admitted that he was investigated by the Louisiana Bar Association

for a check in the amount of $10,000 that Toucheck bounced.147 Speer claims that the

146F

father in a client’s case was in need of funds and he attempted to provide a loan to him

but, but Toucheck gave Speer the wrong check.148 Speer acknowledged that the check

147F

he signed was from the trust account, and he should not have signed it.149

148F

Speer testified that both Mouton and Toucheck endorsed the $38,500 check.150

149F

Contrary to his previous testimony, Speer testified that Toucheck took it to the bank, and

he found a bank statement showing she made a $36,000 cash deposit into her account.151

150F

However, the record evidence reflects that Mouton was the one who made the cash

deposit.152 Speer then testified he had no doubt they were all in cahoots.153 But, he later

151F 152F

143 Id. at p. 47.

144 Id. at p. 52.

145 Id.

146 Id.

147 Id. at p. 55.

148 Id.

149 Id.

150 Rec. Doc. 97-5 at p. 59.

151 Id. at p. 60.

152 Rec. Doc. 103-4 at p. 28.

153 Rec. Doc. 97-5 at p. 60.

recanted whether Delahoussaye or her daughter had any knowledge.154 Speer further

153F

testified there were about 31 loans on his account, with the largest one to Mouton’s

uncle.155

154F

State Farm contends that, although the theft and embezzlement consisted of a

series of acts, it still constitutes a single occurrence under the terms of the Policy;156 thus,

155F

coverage is limited to $10,000.157 It is undisputed that this $10,000 limit was paid by State

156F

Farm to Doucet-Speer.158 Speer testified that he submitted a proof of claim form to State

157F

Farm in February 2020.159 He also testified he recalled receiving the payment, but due to

158F

his memory issues he could not recall when.160

159F

Doucet-Speer argues that it sustained losses over the course of multiple policy

periods and that each act and event causing the losses sustained was separate and

distinct from the others.161 Doucet-Speer argues “Occurrence” is defined in the Policy as

160F

“an accident, including continuous or repeated exposure to substantially the same general

harmful conditions.”162 However, Doucet-Speer pulls this definition from the Definitions in

161F

“Section II” of the Policy which is the Business Liability Coverage section.163 It cannot be

162F

found in the Section I Property Coverages.164 Section II provides third-party insurance to

163F

protect the insured – here, Doucet-Speer – from losses resulting from actual or potential

154 Id. at p. 61.

155 Id. at p. 86.

156 Rec. Doc. 97-2 at p. 15.

157 Id. at p. 16.

158 Rec. Docs. 97-3 at p. 2 (citing Rec. Doc. 97-5 at p. 14), 103-1.

159 Rec. Doc. 97-2 at p. 9 (citing Rec. Doc. 97-5 at p. 94).

160 Id. (citing Rec. Doc. 97-5 at pp. 97-98).

161 Rec. Doc. 103 at p. 11.

162 Id. at p. 12 (citing Rec. Doc. 103-3 at p. 93).

163 Rec. Doc. 103-3 at p. 80.

164 Id. at p. 58.

liability to a third party, whereas Section I provides first-party insurance to protect Doucet-

Speer from its own actual losses and expenses.165

164F

Doucet-Speer makes a first-party claim for its property losses. The coverage

provisions referenced by Doucet-Speer throughout its briefing are contained in Section II

or the third-party liability coverage provisions of the Policy, not Section I’s first-party

property coverage. Speer testified that this is a first-party claim for lack of good faith and

fair dealing.166 Doucet-Speer improperly seeks to utilize third-party liability coverage

165F

provisions to support its first-party property damage claim.167

166F

Doucet-Speer contends the Policy is silent as to how many occurrences are

allowable per the Policy period or over the multiple years the Policy was in effect.168

167F

Doucet-Speer notes that its forensic accountant Kyle P. Saltzman (“Saltzman”), CPA,

CFE, detailed in his report that for over five years, there were multiple events involving at

least three employees of Doucet-Speer which caused and contributed to the losses.169

168F

Doucet-Speer posits that the events are multiple occurrences that happened during

different policy periods, not a single act.170 Doucet-Speer argues that, if the Court finds

169F

that the only applicable Endorsement is CMP-4710 pertaining to Employee Dishonesty,

the amount due is not capped at $10,000, and the tender is not dispositive of this case.171

170F

165 Property insurance is considered “first-party” insurance in the sense that it covers a loss sustained by

the insured, the first party to the insurance contract. Conversely, liability or “third-party” insurance covers

the insured's liability to a third party (a non-party to the insurance contract) for that party's loss. Mangerchine

v. Reaves, 2010-1052 (La. App. 1st Cir. 3/25/11), 63 So.3d 1049, 1055 n.4 (citing Black's Law Dictionary

(8th ed. 2004)).

166 Rec. Doc. 97-5 at pp. 76-77.

167 Louisiana courts have consistently held that CGL policies are intended to protect the insured from losses

caused to third parties, not to cover the insured’s own losses. See e.g. All Crane Rental of Georgia, Inc. v.

Vincent, 47 So. 3d 1024 (La. App. 1 Cir. Sep. 10, 2010).

168 Rec. Doc. 103 at p. 12.

169 Id. at. p. 12.

170 Id. at p. 13.

171 Id. at p. 14.

Saltzman reviewed a haphazard sampling of 15 checks made payable to Mouton,

Toucheck, or Cash in Quickbooks, and he noted in his Report that Mouton received

checks totaling $81,515.18 which were recorded in a similar way to that of clients of

Doucet-Speer.172 Mouton was never a client.173 Saltzman noted various amounts which

171F 172F

he considered in excess of what would be traditionally expected in a law practice.174 For

173F

example, he noted substantial cash distributions to Mouton for items such as: (1) Auto

Allowances; (2) client expenses; (3) office expenses; (4) gifts; (5) coded as “Michelle M;”

(6) “Due from Shareholder”; (7) medical reimbursement; (8) various “other;” (9)

maintenance; and (1) reimbursed expenses.175

174F

Saltzman also noted substantial cash distributions to Toucheck, including: (1) Auto

Allowance; (2) coded as “Michelle M;” (3) coded as “Cullen Hatten”; (4) coded as “Theft;”

(5) gifts; (6) maintenance and (7) reimbursed expenses.176 As for Whittington, a runner,

175F

Saltzman noted substantial cash distributions such as (1) split/mix; (2) lawn maintenance;

(3) maintenance; and (4) reimbursed expenses.177

176F

He observed $423,119 in checks to have been made payable to “Cash.”178 It is

177F

unclear how the cash distributions related to the employees, either as individuals or

together in a scheme. Distributions were listed as: (1) Due from Shareholder; (2)

reimbursed expenses; (3) maintenance; (4) contract labor; (5) utilities; (6) telephone; and

172 Rec. Doc. 103-4 at p. 4.

173 Id.

174 Id.

175 Id.

176 Rec. Doc. 103-4 at p. 5.

177 Id.

178 Id. Speer acknowledged that some checks made payable to Cash were for his incidental living expenses

or other minimal expenses, which he claimed was an infrequent practice or should have amounted to no

more than $500 per month. Rec. Doc. 103-4 at p. 17.

(7) various other.179 Saltzman, relying on representations by Speer, estimated potential

178F

fraudulent cash disbursements to be between $600,000 and $665,000.180 He opined that

179F

the large volume of checks made payable to Cash, and the larger than expected checks

to administrative staff for reimbursable expenses, do not by themselves prove fraud, but

bear similar traits to other engagements in fraud.181

180F

Saltzman supplemented his report after being provided additional financial

documentation for review. He determined that 743 of 843 checks were made payable to

either Mouton, Toucheck, Whittington, or Cash, representing approximately

$1,085,682.182 In an addendum to his supplemental report, Saltzman identified that the

181F

$38,500 check created from the firm’s operating account was made payable to Mouton,

signed by Mouton, and recorded as a loan receivable/client receivable.183 On this

182F

particular transaction, Toucheck was a second endorser on the check.184 Mouton then

183F

made a deposit of $36,000 of cash to her personal account.185 Saltzman also noted that

184F

various electronic credit card payments were made from Mouton’s personal bank account

the following day.186 Saltzman noted another instance in which a $9,000 check was

185F

created from the firm’s operating account and made payable to Mouton, recorded as a

loan receivable/client receivable, and endorsed by Mouton and Toucheck.187 Mouton

186F

179 Id. at p.6.

180 Id.

181 Id. at p. 7.

182 Id. at p. 14.

183 Rec. Doc. 103-4 at pp. 27-28.

184 Id.

185 Id.

186 Id.

187 Id. at p. 29.

deposited $8,000 of cash to her personal account the following day, and a day later issued

a personal check in the amount of $7,500 for a “Pool Deposit.”188

187F

Saltzman found that certain transactions and distributions created suspicion of

their legitimacy, but he stated that he was not engaged to, and did not, express an opinion

relative to the subject matter.189 Saltzman was retained for the purpose of identifying and

188F

estimating Doucet-Speer’s losses.190 He stated he was not in a position to opine as to

189F

fraud or intentional acts.191

190F

State Farm’s retained forensic accounting expert, Tuan Pham (“Pham”), opined

that Saltzman’s report was methodologically flawed and lacking support, speculative and

unreliable, and overstated his estimate of losses.192 Even so, it appears both experts were

191F

working with limited documentation.193

192F

Pham noted that Saltzman failed to address formal charges brought by the Office

of Disciplinary Counsel (“ODC”) against Speer and relevant data therein.194 Pham stated

193F

that the ODC’s 2017 investigation and audit noted the following findings: (1)

disbursements from the trust account had no identifying corresponding deposits and/or

balances available for specific client matters; (2) allocations to Speer for cost

reimbursement in excess of costs identified as advanced on behalf of the same matter;

(3) duplicate withholdings from settlement proceeds for the same obligations; (4) failure

to return cost reduction refunds to respective clients; (5) balances withheld from client

188 Id.

189 Id. at p. 30.

190 Id. at pp. 6-7.

191 Id. at p. 7.

192 Rec. Doc. 103-2 at p. 3.

193 Id. at pp. 3-4.

194 Id. at p. 8.

proceeds for medical providers were paid to Speer; and (6) excessive time periods

between receipt of client money and issued payments to the client/third parties due.195

194F

Pham stated the ODC Report concluded that Speer forged a client’s signature to

obtain a settlement check and mismanaged his trust account, including the issuance of

numerous checks personally signed by Mouton, a nonlawyer.196 Pham observed that the

195F

ODC concluded that Speer misused his client trust account, which held insufficient funds

to honor the sum of all client and third-party money received, outstanding checks, and

pending interest, to a shortfall of over $800,000.197

196F

Pham opined that Saltzman’s forensic accounting analysis was impacted by his

failure to account for the ODC accusations of fraud, financial mismanagement, and poor

record keeping against Speer.198 Pham also observed that Saltzman relied upon

197F

information and representations provided by Speer and did not account for, or reference,

any agreed upon salary for Toucheck or Whittington, and he disregarded documentation

of Speer’s regular practice of paying bonuses to Mouton and others.199 Pham referenced

198F

various text message exchanges wherein Speer directed Toucheck or other staff to issue

bonus checks “asap” on multiple occasions to staff.200 Pham also pointed to various text

199F

message exchanges that Saltzman did not account for showing that there was money

from Mouton and Toucheck spent for Speer’s personal benefit that was reimbursable.201

200F

Pham opined that Saltzman failed to account for numerous examples of checks made to

195 Id.

196 Id.

197 Id. at pp. 8-9.

198 Id.at p. 9.

199 Id. at pp. 12-13.

200 Id.at p. 14.

201 Id. at p. 15.

“Cash” for Speer’s benefit or at his behest.202 Pham also pointed to instances of Speer

201F

instructing Mouton or Toucheck to “forge” his signature, which Saltzman failed to

address.203 Pham opined that there was no indicia of the alleged fraud or that economic

202F

loss was incurred, supported by the limited accounting records produced by Plaintiff to

date.204

203F

State Farm relies on case law and the policy language to support its assertion that

the $10,000 tender satisfies its obligations under the Policy. State Farm contends that the

multiple acts of theft and embezzlement constitute “one occurrence” under the Policy.205

204F

In Jefferson Parish Clerk of Court Health Ins. Trust Fund v. Fid. & Deposit Co. of Md.,206

205F

the trustee of a health insurance trust fund withheld multiple employee contributions but

failed to pay the premiums to the trust fund, using the withheld money to provide funds to

operate his office and pay non-insurance related expenses.207

206F

There, the language of the trust fund’s Commercial Crime Policy was nearly

identical to the one at issue, providing “Occurrence means all loss caused by, or involving,

one or more ‘employees,’ whether the result of a single act or series of acts.”208 The court

207F

found that the language was inclusive of any scheme to cause loss to the insured;

therefore, only one occurrence of employee dishonesty could be found under that

definition.209 The trustee’s multiple acts of embezzlement were found to be integral parts

208F

of a scheme to deprive the trust fund of its current premiums directed to the single aim of

202 Id.at pp. 16-19.

203 Id. at p. 21.

204 Id. at 23.

205 Rec. Doc. 97-2 at pp. 13-16.

206 673 So. 2d 1238 (La. App. 5 Cir. Apr. 30, 1996).

207 Jefferson Parish Clerk of Court Health Ins. Trust Fund v. Fid. & Deposit Co. of Md., 95-951 (La. App. 5

Cir. Apr. 30, 1996), 673 So. 2d 1238, 1245.

208 Id.

209 Id.

providing the trustee with additional funds to operate his office and pay non-insurance

expenditures.210 Utilizing the “cause” theory, the court observed that the trustee’s acts

209F

were one occurrence.211

210F

Doucet-Speer distinguishes Jefferson because it contends the Policy here defines

“occurrence” as “an accident, including continuous or repeated exposure to substantially

the same general harmful conditions.”212 However, Doucet-Speer cites to the definition of

211F

“occurrence” in the Section II Definitions under the Section II Liability Limits of Insurance,

arguing the Policy does not differentiate one act versus a series of acts.213 Yet, the Policy

212F

defines “occurrence” as described hereinabove under CMP-4170 Employee Dishonesty

Endorsement.214 Doucet-Speer concedes that the Jefferson court was correct in

213F

considering multiple acts of embezzlement as one occurrence under the policy limit where

the definition there expressly stated that “all loss [is a] single act or a series of acts.”215

214F

But Doucet-Speer claims that is not the case here. Doucet-Speer also claims that the

term “loss” is not mentioned in the Policy’s definition of occurrence.216 However, again,

215F

Doucet-Speer fails to address the terms of CMP 4710 Employee Dishonesty

Endorsement which define “loss” as “[c]aused my one or more persons; or involving a

single act or series of acts; is considered one occurrence” – a nearly identical definition

as the policy in Jefferson.217

216F

210 Id.

211 Id.

212 Rec. Doc. 103 at p. 5 (citing Rec. Doc. 103-3 at p. 93).

213 Id.

214 Rec. Doc. 103-3 at p. 45.

215 Rec. Doc. 103 at p. 5.

216 Id. at p. 5.

217 Rec. Doc. 103-3 at p. 45.

Doucet-Speer further argues that, in that case, there was only one bad actor,

whereas here there are at least three separate employees that engaged in multiple

independent schemes and tactics over five years.218 Doucet-Speer asserts that each of

217F

the bad actors contributed to a different aspect of the fraud, which was a pattern of

multiple dishonest actions over time.219 Doucet-Speer contends this case is

218F

distinguishable from Jefferson because the actions here were separate, intentional,

ongoing, and involved different individuals.220

219F

State Farm asserts that in Howard, Weil, Labouisse, Friedrichs, Inc. v. Insurance

Co. of North America,221 a diversity action under Louisiana law, the United States Court

220F

of Appeals for the Fifth Circuit found that several fraudulent commodities trades on the

employer’s account over a four-day period constituted one loss for the purpose of the

employee dishonesty coverage’s per-loss deductible, as one ongoing episode produced

the loss.222 Doucet-Speer responds that, in Howard, the term “occurrence” is not defined,

221F

and the court was considering only one bad actor and one action that produced continuing

consequences over four days.223 Doucet-Speer distinguishes Howard noting that the

222F

case focused on multiple acts versus a single act by one employee, whereas here there

are multiple acts involving multiple people producing multiple losses over multiple

years.224

223F

218 Rec. Doc. 103 at p. 5.

219 Id.

220 Id. at pp. 5-6.

221 557 F.2d 1055 (5th Cir. 1977).

222 Rec. Doc. 97-2 at p. 14.

223 Rec. Doc. 103 at p. 6.

224 Id.

State Farm cites APMC Hotel Mgmt., LLC v. Fidelity and Deposit Co. of

Maryland,225 where the court considered whether three thefts which totaled $804,000

224F

constituted multiple occurrences in determining whether to apply the policy limits of

$500,000 per “occurrence.”226 There, the policy defined occurrence as “all loss caused

225F

by, or involving, one or more ‘employees,’ whether the result of a single act or series of

acts.”227 In that case, the insured submitted three separate Proofs of Loss for three thefts

226F

by one employee over multiple policy periods. The court held the employee’s actions

constituted “one occurrence” and that the insured’s contention that each theft was a

separate occurrence was contrary to the language of the policy.228

227F

Doucet-Speer responds that the relevant policy in APMC defined occurrence as

“all loss caused by, or involving, one or more ‘employees,’ whether the result of a single

act or series of acts.”229 Doucet-Speer claims that the State Farm Policy does not define

228F

occurrence as “all loss” and that, unlike here, APMC involved only one person who

committed the same act over and over again.230

229F

Doucet-Speer emphasizes, for example, that if Doucet-Speer had sustained

losses categorized as: (1) Employee A stole twenty cases of toilet paper and utensils from

the kitchen annually; (2) Employee B stole $100,000 money from the trust account

annually; and (3) Employee C forged thirty separate $1,000.00 blank checks, which were

then deposited into her account, State Farm would treat these as once occurrence, which

it disputes.231 Doucet-Speer fails to cite or address the relevant policy definition of “loss”

230F

225 09-2100, 2011 WL 5525966, at *1-2 (D. Nev. Nov. 10, 2011).

226 Rec. Doc. 97-2 at pp. 14-15.

227 Id. at p. 15 (citing APMC Hotel Mgmt., LLC, 2011 WL 5525966, at *3).

228 Id. (citing APMC Hotel Mgmt., LLC, 2011 WL 5525966, at *6).

229 Rec. Doc. 103 at p. 7 (citing APMC Hotel Mgmt., LLC, 2011 WL 5525966, at *3).

230 Id. at p. 7.

231 Id. at p. 7.

under the State Farm Employee Dishonesty Endorsement, 232 which defines “loss” as

231F

“[a]ll loss . . [c]aused by one or more persons; or [i]nvolving a single act or series of acts;

is considered one occurrence.”233

232F

Doucet-Speer contends that each theft by different employees constitutes a

separate occurrence triggering a separate $10,000.00 endorsement limit.234 State Farm

contends the all the acts of theft and embezzlement were part of a scheme constituting a

single occurrence under the Policy. There are genuine issues of material fact as to

whether there was one scheme by multiple employees or whether the individual

employees acted independently, albeit repeatedly, to cause loss.

Two Fifth Circuit cases are persuasive, one applying Texas law and the other

applying Mississippi law.235 The Court finds that the analysis applied by the Fifth Circuit

in those cases would yield the same result under Louisiana law.236 In Ran-Nan Inc. v.

Gen. Acc. Ins. Co. of Am.,237 the Fifth Circuit held that two thefts by two employees

234F

working separately and independently constituted two “occurrences” of employee

dishonesty.238 In Ran-Nan, the term “occurrence” was defined as “all loss caused by, or

235F

232 Rec. Doc. 97-4 at pp. 45-46.

233 Id. at p. 45.

234 Rec. Doc. 103 at p. 11.

235 See Ran-Nan, Inc. v. Gen. Acc. Ins. Co. of Am., 252 F.3d 738 (5th Cir. 2001) (Texas); Madison Materials

Co. v. St. Paul Fire & Marine Ins. Co., 523 F.3d 541 (5th Cir. 2008) (Mississippi).

236 See Jefferson Parish Clerk of Court Health Ins.Trust Fund v. Fidelity and Deposit Co. of Maryland, 673

So.2d 1238, 1245, (La.App. 5 Cir.,1996), discussed at pages 27-28 supra, wherein the Court found that

where the policy defined “occurrence” as “all loss caused by, or involving, one or more “employees”,

whether the result of a single act or a series of acts” that “[t[his language is inclusive of any scheme to

cause loss to the insured”.

237 252 F.3d 738 (5th Cir. 2001).

238 Cf. Glaser v. Hartford Cas. Ins. Co., 364 F.Supp.2d 529 (D. Md. Apr. 4, 2005) (finding there are two

separate “occurrences” of employee dishonesty when two independent causes exist for an insured’s total

loss due to dishonest acts by two employees who did not conspire to steal from their employer but instead

acted independently). This supports the notion that when multiple employees engage in separate acts of

theft, each act should be evaluated on its own merits under the policy.

involving, one or more ‘employees,’ whether the result of a single act or series of acts.”239

236F

The term “loss” in Section I – Property Coverage, Extension of Coverage of the subject

policy is defined the same. In Ran-Nan, the court found that the Employee Dishonesty

coverage endorsement was ambiguous because, as defined, the term “occurrence” had

two possible interpretations.240 The Court reasoned that the clause “involving, one or

237F

more employees” signifies a group of employees conspiring together to steal.241 The

238F

Employee Dishonesty Endorsement in this case is ambiguous for the same reasons. The

ambiguity creates a material issue of fact for the jury.242

In Madison Materials Co., Inc. v. St. Paul Fire & Marine Ins. Co.,243 the Fifth Circuit

240F

held that a series of thefts by a single employee constituted a single occurrence.244 The

Court concluded that “[a]s there was but a single cause of [the insured’s] injury, and as

the policy states that multiple related acts are to be treated as a single occurrence, there

was only one occurrence of employee dishonesty over the ten year period.”245

244F

Applying the cause analysis used by the Fifth Circuit, recurring thefts by a single

employee is a single occurrence. Likewise, theft by multiple employees acting collusively

is also a single occurrence. Material questions of fact remain whether the loss in this case

was caused by more than one employee acting independently or whether multiple

employees acted in concert to cause loss. The question for the trier fact is whether the

239 252 F.3d at 739.

240 See id. at 739-740.

241 Id.

242 In OneBeacon America Ins. Co. v. Barnett, 761 Fed. Appx. 396, 403 (5th Cir. 2019), the Fifth Circuit

stated that "once a policy is determined to be ambiguous, or further fact-finding is necessary to determine

the effect of an ambiguity, a fact-finder must address those questions." Id. (citing Westerfield v. LaFleur,

493 So. 2d 600, 605 (La. 1986)).”

243 523 F.3d 541 (5th Cir. 2008).

244 Id. at 543.

245 Id. at 543-44.

allegedly dishonest employees acted independently, each employee thereby causing a

separate loss or occurrence, or whether, several employees collusively caused loss and

thereby a single occurrence.

There is no reasonable reading of the policy to support Doucet-Speer’s position

that each act of theft constitutes a separate occurrence. The policy plainly states that loss

“[i]Involving a single act or series of acts” is one occurrence. The endorsement extends

coverage for employee dishonesty, not individual acts of theft. The question of fact

remaining for the for the jury is whether any employees acted collectively or collusively to

cause loss, which would be a single occurrence; or whether the employees acted

independently, although repeatedly, to cause loss. In which case each employee’s

dishonesty, even if involving multiple acts, is a separate occurrence. Accordingly,

summary judgment on this issue is denied.

b. Forgery or Alteration Provisions

Doucet-Speer seeks additional coverage under other policy provisions for the

employee thefts.246 Doucet-Speer asserts that the “Forgery or Alteration” provision of the

246F

Policy also provides coverage for the distinct acts of its employees. It provides:

246 Rec. Doc. 41 at pp. 3-4. Doucet-Speer makes a general conclusory assertion that it should have been

covered up to the $2 million aggregate based on alleged representations by Hargrove and based on Speer’s

“reasonable expectation of coverage” and the “intention of the insured” to cover potential losses from theft.

Rec. Doc. 103 at pp. 16-17. However, Doucet-Speer asserts no claims against Hargrove. Id. As discussed

herein, Hargrove is not a named party, and Plaintiffs do not assert claims against Hargrove for detrimental

reliance or for failure to procure insurance coverage. Rec. Docs. 41, 108.

Further, in looking to the “intentions of the parties,” a Court looks to facts as to “the intentions of

the parties at the time they executed the contract.” Hinkle v. USAA Gen. Indem. Co., 326 F.Supp.3d 249

(M.D. La. Aug. 8, 2018) (quoting Ashy v. Migues, 760 So. 2d 440, 447 (La. App. 3 Cir. 2000)). When

interpreting a contract, courts should be careful not to do so in an unreasonable or absurd manner. Winn

v. Nation, 893 So. 2d 133, 135 (La. App. 2 Cir. 2005). Moreover, when a policy can be construed from the

four corners alone, looking to extrinsic evidence is improper. See Peterson v. Schimek, 729 So. 2d 1024,

1029 (La. 1999)). Regardless, no specific factual evidence is presented by Doucet-Speer regarding the

intentions of the parties at the time they executed the contract. Instead, it appears that the only alleged

conversation as to coverage took place after the insured procured coverage and after the loss was

We will pay for loss resulting from forgery or alteration of any check,

draft, promissory note, bill of exchange or similar written promise of

payment in ‘money’ that you or your agent has issued, or that was

issued by someone who impersonates you or your agent.”247

247F

Doucet-Speer cites Saltzman’s report identifying several instances of checks and

promissory notes being forged by its former employees.248 Doucet-Speer contends State

248F

Farm’s retained expert Pham “focuses an entire section on the issue of Forging of

Signatures as an attempt to posit that the forgery was condoned.249 Thus, Doucet-Speer

249F

contends State Farm’s Statement of Facts ignores these provisions of the Policy, and

even assuming the undisputed facts as true, the Court cannot grant summary judgment

in State Farm’s favor.250

250F

State Farm counters that the forgery provision of the Policy does not apply under

the facts of this case.251 State Farm contends that, as noted in Pham’s expert report,

251F

there is no mention in Saltzman’s report of forging Speer’s signature.252 Text messages

252F

between Speer and Mouton and Toucheck show numerous instances where Speer

instructed employees to sign his name on checks and, in one instance, Speer himself

admitted placing a client’s signature on a settlement check.253 Speer testified that his

253F

office manager Mouton had signature rights on the firm’s operating account.254

254F

sustained. Rec. Doc. 103 at pp. 16-18. Yet again, no claims are being made as to Hargrove. Nevertheless,

reliance on oral representations is unreasonable because “insurance contracts must be in writing.” Brown

v. Phoenix Life Ins. Co., 843 F. App'x 533, 545–46 (5th Cir. 2021).

247 Rec. Doc. 41 at pp. 3-4.

248 Id. at p. 4.

249 Id. (citing Rec. Doc. 102-3 at p. 19).

250 Rec. Doc. 103 at p. 4.

251 Rec. Doc. 107.

252 Id. at p. 2 (citing Rec. Doc. 102-3 at p. 49).

253 Id. (citing Rec. Doc. 102-3 at p. 49).

254 Id. (citing Rec. Doc. 97-5 at pp. 26-27).

State Farm maintains Doucet-Speer would need to prove that forgeries occurred

with regard to the operating account and/or the client trust bank account to recover under

the Forgery or Alteration provision of the policy, which had a $10,000 limit.255 State Farm

255F

contends no criminal charges have been filed in Lafayette Parish against Mouton,

Toucheck, or any other Doucet-Speer employee.256

256F

To establish the coverage under additional policy provisions, Doucet-Speer bears

the burden of proving that the incident giving rise to a claim falls within the policy's

terms.257 Thus, Doucet-Speer is required to establish the existence of “the forgery or

257F

alteration” within the terms of the Policy. As shown by State Farm, Mouton had signature

rights on the firm’s operating account.258 Further, Speer instructed his employees on

258F

numerous instances to sign his name on checks.259 Doucet-Speer offers no evidence of

259F

the alleged forgeries other than Speer’s own self-contradicting testimony and the forensic

accounting to establish the loss. As for a forensic analysis or evidence of the actual

forgeries or alterations, however, the evidence is insufficient. And there is some record

evidence that, in many instances, Speer had employees sign on his behalf, even absent

signature rights. Thus, Doucet-Speer fails to establish that the alleged acts of theft and

forgery were covered under the Forgery or Alteration provision.

c. Loss of Income and Extra Expense Provision

Doucet-Speer also contends the Policy contains a “Loss of Income and Extra

Expense” Endorsement that provides:

255 Id. (citing Rec. Doc. 97-4 at pp. 6, 67).

256 Rec. Doc 107 at p. 2.

257 Coleman v. Sch. Bd. of Richland Par., 418 F.3d 511, 517 (5th Cir. 2005) (citing Doerr v. Mobil Oil Corp.,

2000-0947 (La. 12/19/00), 774 So.2d 119, 124).

258 Rec. Doc. 107 at p. 2 (citing Rec. Doc. 97-5 at pp. 26-27).

259 Id. (citing Rec. Doc. 103-2 at pp. 50-51).

We will pay for the actual “Loss of Income” you sustain due to the necessary

“suspension” of your operations “during the period of restoration.” The

“suspension” must be caused by accident direct physical loss to the

property at the described premises.260

260F

Doucet-Speer argues that the “Loss of Income and Extra Expense” endorsement

does not define “a direct physical loss;” thus, it contends the Court shall rely on the

dictionary definition of the word “loss.”261 Doucet-Speer claims Saltzman demonstrated

261F

that Doucet-Speer incurred financial losses.262

262F

State Farm counters that the loss of income/extra expense endorsement of the

Policy does not apply under the facts of this case,263 and Doucet-Speer cannot establish

263F

loss of income/extra expense endorsement within the terms of the Policy, which is his

burden.264

264F

The Loss of Income and Extra Expense endorsement specifically states that a loss

of income is covered when there is a necessary “suspension of operations” during the

period of restoration.265 The Policy provides that “suspension” must be caused by

265F

“accidental direct physical loss to property at the described premises. The loss must be

caused by a Covered Cause of Loss.”266 The Policy provides for exclusions to covered

266F

causes of loss, dishonest or criminal acts, or employee theft.267 State Farm contends the

267F

claimed acts of forgery are not caused by an accidental direct physical loss and are not

260 Rec. Doc. 103 at p. 3.

261 Id.

262 Id.

263 Rec. Doc. 107.

264 Coleman v. Sch. Bd. of Richland Par., 418 F.3d 511, 517 (5th Cir. 2005) (citing Doerr v. Mobil Oil Corp.,

2000-0947 (La. 12/19/00), 774 So.2d 119, 124).

265 Doc. 107 at p. 3 (citing Rec. Doc. 97-4 at p. 32).

266 Id. at p. 3 (citing Rec. Doc 97-4 at p. 32).

267 Id. (citing Rec. Doc. 97-4 at pp. 61-64).

covered under the Loss of Income portion of the policy, except through the Employee

Dishonesty Endorsement under which the claim was paid.268

268F

The Policy provides the following:

1. Loss of Income

a. We will pay for the actual “Loss of Income” you sustain due to the

necessary “suspension” of your “operations” during the “period of

restoration.” The “suspension” must be caused by accidental direct physical

loss to property at the described premises. The loss must be caused by a

Covered Cause of Loss. . . .

* * *

b. We will only pay for “Loss of Income” that you sustain during the “period

of restoration” that occurs after the date of accidental direct physical loss

and within the number of consecutive months for Loss of Income and Extra

Expense shown in the Declarations. We will only pay for “ordinary payroll

expenses” for 90 days following the date of accidental direct physical loss.

2. Extra Expenses

a. We will pay necessary “Extra Expense” you incur during the “period of

restoration” that you would not have incurred if there had been no accidental

direct physical loss to property at the described premises. The loss must be

caused by a Covered Cause Of Loss. . . .269

269F

As the Policy clearly indicates, dishonest or criminal acts are unambiguously

excluded from covered causes of loss as follows:

SECTION I – COVERED CAUSES OF LOSS

We insure for accidental direct physical loss to Covered Property unless the

loss is:

1. Excluded in SECTION I – EXCLUSION; or

2. Limited in the Property Subject to Limitations provision.270

270F

* * *

268 Id. at p. 4.

269 Rec. Doc. 97-4 at pp. 32-33.

270 Id. at p. 61.

SECTION I – EXCLUSIONS, as modified by CMP-4561.1 Policy Endorsement

* * *

f. Dishonesty

(1) Dishonest or criminal acts by you, anyone else with an interest in the

property, or any of your or their partners, “members”, officers, “managers”,

employees, directors, trustees, authorized representatives, whether acting

alone or in collusion with each other or with any other party; or

(2) Theft by any person to whom you entrust the property for any purpose,

whether acting alone or in collusion with any other party.

This exclusion applies whether or not an act occurs during your normal

hours of operation.

This exclusion does not apply to acts of destruction by your employees; but

theft by your employees is not covered.271

271F

As to the Loss of Income and Extra Expense Endorsement, Doucet-Speer fails to

establish that its losses were caused by an “accidental direct physical loss” to its

premises, as required under the terms of the policy. As such, Doucet-Speer fails to

establish coverage exists under the Loss of Income and Extra Expense provision of the

Policy.

2. Doucet-Speer is not entitled to mental anguish and emotional distress

damages.

State Farm also correctly notes that Doucet-Speer did not contest the dismissal of

its claims for damages in the form of mental anguish and emotional distress.272 “[L]imited

272F

liability companies cannot sustain damages for mental anguish.”273 Therefore, Doucet-

273F

271 Rec. Doc. 97-4 at pp. 61, 21.

272 Rec. Docs. 97-2 at p. 6. 103, 107 at p. 1.

273 Fetty v. Louisiana State Bd. of Priv. Sec. Examiners, 611 F. Supp. 3d 230, 247 (M.D. La. 2020) (citing

Pontchartrain Gardens, Inc. v. State Farm Gen. Ins. Co., No. 07-7965, 2009 WL 86671, at *3 (E.D. La. Jan.

13, 2009) (citing AT & T Corp. v. Columbia Gulf Transmission Co., No. 07-1544, 2008 WL 4585439 at *3

(W.D. La. Sept. 15, 2008)); see also One River Place Condo Ass’n v. Axis Surplus Ins. Co., 629 F.Supp.2d

613, 617 (E.D. La. May 8, 2009) (“[N]either corporations nor limited liability companies can incur damages

for mental anguish or emotional distress.”).

Speer cannot claim mental anguish and emotional distress damages, and these claims

should be dismissed.

3. Doucet-Speer fails to establish arbitrary and capricious, or “vexatious,”

conduct to support claims for bad faith penalties and attorney’s fees

against State Farm.

Turning to Doucet-Speer’s bad faith claims, State Farm argues Doucet-Speer fails

to prove that State Farm’s actions were arbitrary, capricious, or without probable

cause.274 Doucet-Speer alleges it filed a claim with State Farm and began mitigating its

274F

loss as quickly as possible by paying off all debt to third parties created by Speer’s former

staffs’ actions.275 Doucet-Speer further alleges that, on or about December 2, 2019, a

275F

notarized Proof of Loss affidavit along with an itemized list of liabilities owed by Doucet-

Speer were presented to State Farm.276 State Farm sent back blank copies of State

276F

Farm’s forms and asked that the Proof of Loss be resubmitted using the forms.277 Speer

277F

allegedly did so and returned the forms on or about December 12, 2019.278 After 60 days

278F

had passed, Speer allegedly began to press Hargrove and the underwriting department

of the CGL Policy.279 Doucet-Speer alleges State Farm denied the claim, except for the

279F

Employee Dishonesty Coverage, and tendered a check in the amount of $10,000,

ignoring its own set deductible amount,280 and State Farm failed to timely tender

280F

insurance proceeds despite receiving satisfactory proof of loss.281

281F

274 Rec. Doc. 97-2 at pp. 17-18.

275 Rec. Doc. 41 at p. 4.

276 Id.

277 Id.

278 Id.

279 Id.

280 Id.

281 Id. at p. 6.

Doucet-Speer dedicates a one paragraph response to State Farm’s assertions as

to the bad faith claims,282 arguing that State Farm fails to offer any evidence to support

282F

that it was not arbitrary and capricious.283 Further, in conclusory fashion, Doucet-Speer

283F

claims Speer’s Affidavit, along with his anticipated testimony at trial,284 “creates the

284F

presumption that Plaintiff will carry its burden at trial and that State Farm has identified

no evidence in response to the allegations in the lawsuit.”285

285F

Speer attested that Doucet-Speer sustained financial losses due to widespread

theft, fraudulent acts, forgeries, conversions, etc. by and between its former

employees.286 He also attested that, “[o]nce these losses were discovered, I submitted a

286F

Sworn Proof of Loss to State Farm, detailing the financial damages sustained.”287 Speer

287F

attested that “State Farm, at no point in time, contacted me individually or commenced

any investigations into the losses that were detailed in the Sworn Proof of Loss despite

the fact that State Farm provided me with the Sworn Proof of Loss form that was used.”288

288F

He further attested “[t]o my knowledge, State Farm, to date, has never contacted my

former office to confer with any staff member, client, or anyone regarding the losses

detailed in the Sworn Proof of Loss.”289

289F

Doucet-Speer seeks penalties under La. R.S. 22:1892 and La. R.S 22:1973.290

290F

The Louisiana Insurance Code places “a duty of good faith and fair dealing” on insurers,

“including ‘an affirmative duty to adjust claims fairly and promptly and to make a

282 Rec. Doc. 103 at pp. 15-16.

283 Rec. Doc. 103 at p. 15.

284 Speer passed away after the filing of Doucet-Speer’s Opposition. Rec. Doc. 109.

285 Rec. Doc. 103 at pp. 15-16.

286 Rec. Doc. 103-5 at p. 1.

287 Id.

288 Id.

289 Id.

290 Rec. Doc. 41 at pp. 5-10.

reasonable effort to settle claims with the insured.’”291 A plaintiff that proves an insurer's

291F

breach of its duty to adjust claims fairly and promptly—i.e., an insurer's bad faith—may

recover statutory penalties, including double damages,292 and attorneys’ fees and

292F

costs.293 Louisiana's statutes assigning penalties for an insurer's bad faith “are penal in

293F

nature and must be strictly construed.”294

294F

A plaintiff asserting bad faith against an insurer must show that his insurer: “(1)

received satisfactory proof of loss, (2) failed to pay within the required time, and (3) acted

in an arbitrary and capricious manner.”295 Importantly, the Louisiana Supreme Court has

295F

repeatedly emphasized that the third element—that the insurer acted in an “arbitrary and

capricious” manner—is satisfied only by proof that the insurer's conduct was

“vexatious.”296 Further, “‘vexatious refusal to pay’ means unjustified, without reasonable

296F

or probable cause or excuse.”297 Thus, “arbitrary and capricious” or “vexatious” conduct

297F

describes “an insurer whose willful refusal of a claim is not based on a good-faith

defense.”298

298F

Nevertheless, statutory penalties are inappropriate when the insurer has a

reasonable basis to defend the claim and acts in good-faith reliance on that defense.

Particularly when there is a reasonable and legitimate question as to the extent and

291 Est. of Christman v. Liberty Mut. Ins. Co., No. CV 20-00739-BAJ-RLB, 2022 WL 481435, at *5–6 (M.D.

La. Feb. 16, 2022) (citing Hammerman & Gainer, LLC v. Lexington Ins. Co., No. 18-cv-6729, 2019 WL

2603637, at *6 (E.D. La. June 25, 2019) (Brown, C.J.)); see also La. R.S. § 22:1892.

292 La. R.S. § 22:1973(C).

293 La. R.S. § 22:1892.

294 Est. of Christman, 2022 WL 481435, at *5-6 (citing Gaspard v. S. Farm Bureau Cas. Ins. Co., 2013-

0800 (La. App. 1 Cir. 9/24/14), 155 So. 3d 24, 37).

295 Dickerson v. Lexington Ins. Co., 556 F.3d 290, 297 (5th Cir. 2009).

296 Reed v. State Farm Mut. Auto. Ins. Co., 2003-0107 (La. 10/21/03), 857 So. 2d 1012, 1021.

297 Id. (quoting Louisiana Maint. Servs., Inc. v. Certain Underwriters at Lloyd's of London, 616 So. 2d 1250,

1253 (La. 1993)).

298 Id.

causation of a claim, bad faith should not be inferred from an insurer's failure to pay within

the statutory time limits when such reasonable doubts exist.299 “When an insurer has a

299F

good-faith reason to believe that an exclusion bars coverage, it does not act in bad faith

by not paying on the claim and instead choosing to litigate the question of coverage.”300

300F

The burden is on the claimant to prove arbitrariness and capaciousness or lack of

probable cause.301 Also, when a reasonable disagreement exists between an insurer and

301F

an insured, the insurer is not arbitrary and capricious or without probable cause to deny

payment on the claim that is in dispute.302 Whether an insurer's action was arbitrary,

302F

capricious, or without probable cause is essentially a fact issue to be determined by the

trial court.303 However, summary judgment has been found to be appropriate when there

303F

is no evidence of an insurer's bad faith conduct.304

304F

When questioned if he disputed that the sworn proof of loss was not sent to State

Farm until February of 2020, Speer could not remember the date; he only recalled that it

was after the second visit by Hargrove.305 When asked if he had facts to support his

305F

assertion that State Farm did not timely investigate his claim, Speer recalled he submitted

a proof of claim form with $2 million in damages listed but received no return contact.306

306F

299 Id. (citing Rudloff v. Louisiana Health Services and Indemnity Co., 385 So.2d 767, 771 (La. 1980)).

300 Bellina v. Liberty Mut. Ins. Co., No. 19-cv-13711, 2021 WL 1295018, at *7 (E.D. La. Apr. 7, 2021) (Vance,

J.).

301 McDonald v. Am. Fam. Life Assurance Co. of Columbus, 10-1873 (La. App. 1 Cir. 7/27/11), 70 So.3d

1086, 1093.

302 Id.

303 Reed, 857 So.2d at 1021.

304 See Duhon v. State Farm Mut. Auto. Ins. Co., 06-1413 (La. App. 3 Cir. 3/7/07), 952 So.2d 908; Jouve

v. State Farm Fire & Cas. Co., 10-1522 (La. App. 4 Cir. 8/17/11), 74 So.3d 220, 225-28, writ denied, 11-

2250 (La. 11/23/11), 76 So.3d 1157.

305 Rec. Doc. 97-5 at p. 94.

306 Id. at pp. 94-95.

Speer acknowledged he did not have the dates his claim was submitted,307 but he testified

307F

that he had no basis to dispute that it was submitted in February of 2020.308

308F

When asked what evidence supported his untimely investigation claim, Speer

testified, “Nobody ever called me up and investigated anything that was on that proof of

claim form, nor did anybody say, ‘Jeff, you know, we looked at it and decided no, you’re

not covered[.]’”309 But Speer admitted he could not recall a March 7, 2020 telephone

309F

conference with a State Farm adjuster to review the documents and details of the loss.310

310F

Speer also admitted he suffered from health issues that affected his memory and testified

that he could not swear one way or another about a date that he cannot recall.311 He

311F

further testified: “I just know that I should have been paid more than that 10 grand when

I was assured I had the coverage.”312 He admitted conflating the issue of timeliness and

312F

the amount paid: “To me, it’s all the same.”313

313F

The Court finds that Doucet-Speer has offered no evidence to support its

conclusory allegations that State Farm acted in an arbitrary and capricious manner.

There is no record evidence showing the exact date it allegedly submitted a satisfactory

proof of loss to support the claim that State Farm failed to pay within the required time.314

314F

There is also no evidence before the Court to conclude that State Farm’s conduct was

307 Id. at p. 95.

308 Id.

309 Rec. Doc. 97-5 at pp.95-96.

310 Id. at p. 96.

311 Id. at pp. 96-97.

312 Id. at p. 97.

313 Id.

314 Even with “satisfactory proof of loss,” State Farm’s denial other than payment of the Employee

Dishonesty Endorsement Limit was justified because there was a “reasonable and legitimate” question as

to additional coverage of the property damages. NAZ, L.L.C. v. United Nat'l Ins. Co., 779 F. App'x 200, 205

(5th Cir. 2019) (quoting Guillory v. Lee, 2009-0075 (La. 6/26/09), 16 So. 3d 1104, 1112).

“vexatious” and, thus, arbitrary and capricious.315 Moreover, it is undisputed that State

315F

Farm paid Doucet-Speer the $10,000 limit for the Employee Dishonesty Endorsement

Limit.316 Accordingly, Doucet-Speer has failed to demonstrate a triable issue as to bad

316F

faith penalties and attorney’s fees under La. R.S. 22:1892 and La. R.S. 22:1973, and

State Farm is entitled to summary judgment on these claims.

III. CONCLUSION

For the foregoing reasons, Doucet-Speer’s Motion for Partial Summary

Judgment317 is DENIED. State Farm’s Motion for Summary Judgment318 is GRANTED IN

317F 318F

PART and DENIED IN PART. State Farm’s motion is GRANTED as to Jeffrey Speer’s

individual claims and Doucet-Speer’s claims for mental anguish, emotional distress, bad

faith penalties, and attorney’s fees under La. R.S. 22:1892 and La. R.S. 22:1973. State

Farm’s motion is DENIED as to whether the alleged employee dishonesty is collectively

one “occurrence” under the Policy or whether each individual employees’ dishonesty is a

separate “occurrence” under the Policy.

The following claims are DISMISSED WITH PREJUDICE: (1) All individual claims

made by Jeffrey Speer against State Farm; and (2) Doucet Speer’s claims against State

Farm for mental anguish, emotional distress, bad faith penalties, and attorney’s fees

under La. R.S. 22:1892 and La. R.S. 22:1973.

Signed in Baton Rouge, Louisiana on June 12, 2025.

S

________________________________

SHELLY D. DICK

CHIEF DISTRICT JUDGE

MIDDLE DISTRICT OF LOUISIANA

315 Reed v. State Farm Mut. Auto. Ins. Co., 2003-0107 (La. 10/21/03), 857 So. 2d 1012, 1021.

316 Rec. Docs. 97-3 at p. 2 (citing Rec. Doc. 97-5 at p. 14), 103-1.

317 Rec. Doc. 95.

318 Rec. Doc. 97.