Duplantis v. Odom

Full title: GERARD DUPLANTIS d/b/a JERRY LEE'S KWIK SHOP v. KEVIN ODOM, JACK HARLESS…

Court: STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT

Date published: Apr 12, 2019

NUMBER 2018 CA 1251 (La. Ct. App. Apr. 12, 2019)

Opinion

NUMBER 2018 CA 1251

04-12-2019

GERARD DUPLANTIS d/b/a JERRY LEE'S KWIK SHOP v. KEVIN ODOM, JACK HARLESS, AND HARLESS AGENCY, INC. d/b/a FIRST LOUISIANA INSURANCE

Brian M. Caubarreaux Emily G. Meche Wesley K. Elmer Marksville, LA Attorneys for Appellant Plaintiff - Gerard Duplantis d/b/a Jerry Lee's Kwik Shop Scott T. Winstead Doris Royce Phoebe A. Hathorn New Orleans, LA Attorneys for Appellees Defendants - Kevin Odom, Jack Harless and Harless Agency, Inc. d/b/a First Louisiana Insurance

WELCH, J.

NOT DESIGNATED FOR PUBLICATION

Appealed from the 19^th Judicial District Court In and for the Parish of East Baton Rouge, Louisiana
Trial Court Number 659813 Honorable Timothy E. Kelley, Judge Brian M. Caubarreaux
Emily G. Meche
Wesley K. Elmer
Marksville, LA Attorneys for Appellant
Plaintiff - Gerard Duplantis d/b/a
Jerry Lee's Kwik Shop Scott T. Winstead
Doris Royce
Phoebe A. Hathorn
New Orleans, LA Attorneys for Appellees
Defendants - Kevin Odom,
Jack Harless and Harless Agency, Inc.
d/b/a First Louisiana Insurance BEFORE: WELCH, CHUTZ, AND LANIER, JJ. WELCH, J.

The plaintiff, Gerard Duplantis ("Duplantis") d/b/a Jerry Lee's Kwik Shop, appeals a judgment sustaining a declinatory exception raising the objection of lack of subject matter jurisdiction and dismissing, without prejudice, his petition for damages against the defendants, Kevin Odom, Jack Harless, Harless Agency, Inc. d/b/a First Louisiana Insurance ("First Louisiana Insurance"), and American Automobile Insurance Company. For reasons that follow, we reverse the judgment of the district court and issue this memorandum opinion in compliance with Uniform Rules—Courts of Appeal, Rule 2-16.1(B).

BACKGROUND

This case arises out of the catastrophic flooding that occurred in August 2016 in East Baton Rouge Parish and the surrounding parishes. During the flood, Duplantis sustained damages to the building and business of Jerry Lee's Kwik Shop, and thereafter contacted his insurance broker, First Louisiana Insurance to file a claim for losses from the flood. However, Duplantis was subsequently notified that coverage for the losses he sustained due to the flood were not covered by the insurance policy that he was issued. Therefore, Duplantis commenced these proceedings on July 24, 2017, in district court seeking damages for First Louisiana Insurance's negligence or failure to procure proper insurance coverage and for its breach of contract.

According to the allegations of the petition, when Duplantis purchased the property on which Jerry Lee's Kwik Shop was located, he contacted his retail insurance agency, First Louisiana Insurance, and requested that insurance coverage be procured for Jerry Lee's Kwik Shop. In 1983 and in 2001, East Baton Rouge Parish suffered floods, which resulted in losses sustained by Duplantis at Jerry Lee's Kwik Shop. Duplantis filed a claim for the losses due to the 2001 flood for which he received compensation; however, the coverage amount was not sufficient. Therefore, after the 2001 flood, Duplantis requested that First Louisiana Insurance procure adequate types and amounts of insurance coverage for any damage to the building and contents of Jerry Lee's Kwik Shop to ensure that he would not suffer a loss should any future flooding occur, and First Louisiana Insurance agreed to procure coverage to protect Duplantis from future losses from a flood. Duplantis subsequently sent payment to First Louisiana Insurance to secure the type and limits of insurance that he requested and was provided with a policy by First Louisiana Insurance through New Hampshire Insurance Company and processed by Flood Insurance Processing Center. Duplantis has paid the premium on that policy each year.

Following the August 2016 flood, which caused extensive damage to Jerry Lee's Kwik Shop, Duplantis reported the damage to First Louisiana Insurance, made a demand for payment, and advised First Louisiana Insurance that a claim would be made under the previously requested flood coverage. At the beginning of the claims process, Duplantis discovered that First Louisiana Insurance had failed to procure contents coverage or advise him that such coverage was available under the flood insurance policy and that First Louisiana had failed to properly name him as the insured under the flood insurance policy obtained (i.e., the named insured on the policy was "Gerald" Duplantis rather than "Gerard" Duplantis). Thereafter, First Louisiana Insurance denied the existence of coverage for flood insurance and provided Duplantis with a document indicating that flood insurance was excluded from his policy. In addition, New Hampshire Insurance Company, through the Flood Insurance Processing Center, subsequently denied the claim made by Duplantis on the basis that he did not own the property on which he made the claim.

According to the record, on August 4, 2017, the plaintiff also filed a companion complaint in the United States District Court, Middle District of Louisiana ("federal court"), essentially asserting the same claims against the defendants for its failure properly procure insurance, its failure to insure the building and the business with flood insurance provided by the National Flood Insurance Program ("NFIP") under the National Flood Insurance Act of 1968, 42 U.S.C. § 4001, et seq. ("National Flood Insurance Act"), and for the manner in which his claim was processed. Named as an additional defendant in the federal court suit was New Hampshire Insurance Company, the National Flood Insurance Program insurer, which was not a party to the state district court action.

In response to the Duplantis's petition, the defendants filed a declinatory exception raising the objection of lack of subject matter jurisdiction. Essentially, the defendants asserted that Duplantis's claims could not be heard in district court because those claims arose under the National Flood Insurance Act and thus, fell under the exclusive jurisdiction of the federal court. The defendants also maintained that Duplantis's state law procurement-based claims would be subject to the federal court's pendent jurisdiction. Pursuant to a written judgment signed on April 16, 2018, the state district court sustained the objection of lack of subject matter jurisdiction and dismissed, without prejudice, Duplantis's petition for damages. From this judgment, Duplantis has appealed.

On appeal, Duplantis contends that the district court erred in: (1) sustaining the defendants' objection of lack of subject matter jurisdiction and dismissing the plaintiff's state law claims since his suit asserted well-recognized state law claims and causes of action; and (2) refusing to stay the state law action (in the district court) pending a determination by the federal court regarding pendent jurisdiction.

JURISDICTION AND INSURANCE

Jurisdiction is the legal power and authority of a court to hear and determine an action of the parties and to grant the relief to which they are entitled. La. C.C.P. art. 1. Jurisdiction over the subject matter is the legal power and authority of a court to hear and determine a particular class of actions or proceedings, based upon the object of the demand, the amount in dispute, or the value of the right asserted. La. C.C.P. art. 2. A court has jurisdiction over the subject matter only when the particular action falls within the class of proceedings that the court has been given authority to hear and decide. McCann v. McCann, 2011-2434 (La. 5/8/12), 93 So.3d 544, 547. Subject matter jurisdiction is created by the constitution or legislative enactment, and it cannot be conferred or waived by the parties. See McCann, 93 So.3d at 547; La. Const. Art. V; and La. C.C.P. arts. 2, 3, and 925(C). The determination of whether a district court has subject matter jurisdiction over a case is subject to de novo review. In re D.C.M., 2013-0085 (La. App. 1^st Cir. 6/11/13), 170 So.3d 165, 169, writ denied, 2013-1669 (La. 7/17/13), 118 So.3d 1102.

Courts are classified as courts of general jurisdiction or limited jurisdiction. McCann, 93 So.3d at 547. Courts of general jurisdiction have authority generally to adjudicate most kinds of actions, while courts of limited jurisdiction are established to provide expertise and expeditious handling of special types of cases. Id. Louisiana district courts are considered courts of general jurisdiction. See La. Const. Art. V, § 16(A).

On the other hand, federal courts are courts of limited jurisdiction and must have statutory or constitutional power to adjudicate a claim. See Home Builders Ass'n of Mississippi, Inc. v. City of Madison, 143 F.3d 1006, 1010 (5^th Cir. 1998); Arnouville v. Crowe, 2016-0046 (La. App. 1^st Cir. 9/16/16), 203 So.3d 479, 488. Federal courts have subject matter jurisdiction over cases arising under the Constitution, laws, or treaties of the United States, or over civil cases in which the amount in controversy exceeds $75,000, exclusive of interest and costs, and in which the parties are diverse in citizenship. 28 U.S.C. §§ 1331, 1332. In addition, when there is a federal claim which has enough substance to confer jurisdiction on the federal court, and there are also pendent state law claims that derive from the same operative facts, the federal court has pendent jurisdiction over the state law claims. See Reeder v. Succession of Michael B. Palmer, 623 So.2d 1268, 1273 (La. 1993), cert. denied, 510 U.S. 1165, 114 S.Ct. 1191, 127 L.Ed.2d 541 (1994). However, pendent jurisdiction is a doctrine of discretion; it allows the federal court a wide latitude of choice in deciding whether to exercise that jurisdiction. See Reeder, 623 So.2d at 1273.

An insurance agent who undertakes to procure insurance for another owes an obligation to his client to use reasonable diligence in attempting to place the insurance requested and to notify the client promptly if he has failed to obtain the requested insurance. The client may recover from the agent the loss he sustains as a result of the agent's failure to procure the desired coverage if the actions of the agent warranted an assumption by the client that he was properly insured in the amount of the desired coverage. Isidore Newman School v. J. Everett Eaves, Inc., 2009-2161 (La. 7/6/10) 42 So.3d 352, 356, quoting Karam v. St. Paul Fire & Marine Insurance Co., 281 So.2d 728, 730-731 (La. 1972).

Thus, an insurance agent owes a duty of reasonable diligence to his customer. This duty of reasonable diligence is fulfilled when the agent procures the insurance requested. Jurisprudence has suggested that an insured has a valid claim against the agent when the insured demonstrates that: (1) the insurance agent agreed to procure the insurance; (2) the agent failed to use reasonable diligence in attempting to procure the insurance and failed to notify the client promptly that the agent did not obtain insurance; and (3) the agent acted in such a way that the client could assume he was insured. Isidore Newman School, 42 So.3d 356-357.

The National Flood Insurance Program, created under the National Flood Insurance Act, provides coverage for property losses resulting from flood damage. See Gowland v. Aetna, 143 F.3d 951, 953 (5^th Cir. 1998). The Federal Emergency Management Agency ("FEMA") operates the program and issues policies either directly to insureds or through private insurers. Id. All claims are paid directly from the federal treasury and policies are issued in the form of a standard flood insurance policy. Id.; 44 C.F.R. §§ 61.4(b), 61.13(d). Both Louisiana district courts and federal courts have recognized the National Flood Insurance Act and the federal regulations governing a standard flood insurance policy provide federal courts with exclusive original jurisdiction over disputes regarding the denial and adjustment of flood claims. See 42 U.S.C. § 4072 and 44 C.F.R. Pt. 61, App. A(1), art. VII(R); Ferraro v. Liberty Mutual Insurance Company, 796 F.3d 529, 531 5^th Cir. 2015) ("42 U.S.C. § 4072 ... provides exclusive federal jurisdiction over litigation arising out of the [National Flood Insurance Program]."); Landry v. Louisiana Citizens Prop. Ins. Corp., 2007-0247 (La. App. 3^rd Cir. 8/28/07), 964 So.2d 463, 467 n.1, affirmed in part, vacated in part on other grounds, 2007-1907 983 So.2d 66 (La. 5/2/08); Landry v. State Farm Insurance Company, 428 F.Supp.2d 531, 532-33 (E.D. La. 4/25/06). Stated differently, federal law preempts state-law tort claims arising from the adjustment or handling of flood insurance claims; however, federal law does not preempt state-law insurance procurement based claims. Campo v. Allstate Insurance Co., 562 F.3d 751, 754 and 757 (5^th Cir. 2006).

As noted above, in response to Duplantis's petition, the defendants filed a declinatory exception raising the objection of lack of subject matter jurisdiction arguing that Duplantis's claims could not be heard in district court because his claims arose under the National Flood Insurance Act, and as such, fell under the exclusive original jurisdiction of the federal court. The defendants also argued that Duplantis's state law procurement-based claims were subject to the federal court's pendent jurisdiction. Accordingly, the defendants sought the dismissal of Duplantis's petition filed in district court.

In opposition to the objection of lack of subject matter jurisdiction, Duplantis maintained that the claims he made in district court were subject to state law and were properly asserted in district court. Duplantis further maintained that he filed two separate lawsuits in order to preserve his rights and causes of action—one in district court for his state law claims relating to the defendants' failure to procure coverage and one in federal court regarding the processing or handling of his claim under the NFIP of the National Flood Insurance Act. Duplantis also pointed out that the federal court's exercise of pendent jurisdiction was purely discretionary and that there was no guarantee that the federal court would exercise its discretion and maintain the claims of the plaintiff that were based on Louisiana law, i.e. its breach of contract and negligence claims that the defendant failed to procure contents coverage and failed to properly name Duplantis and Jerry Lee's for the flood insurance policy. Thus, Duplantis maintained that the objection of lack of subject matter jurisdiction should be overruled. In the alternative, Duplantis maintained that in lieu of a dismissal of the district court claims, the district court proceedings should be stayed pending the federal court's decision as to whether it would exercise pendent jurisdiction over those claims.

After the hearing on the exception,¹ the trial court ruled as follows:

1 No evidence was offered at the hearing on the objection of lack of subject matter jurisdiction. If no evidence is introduced, the court must accept the allegations of the petition as true for the purpose of ruling on the exception. Bannister Properties, Inc. v. State, 2018-0030 (La. App. 1

... I ... agree with [the defendants] ... but the exclusive jurisdiction is with the federal court for the [NFIP] claims, and these are so closely related to that that the pendent jurisdiction would apply there. So, I am going to grant the lack of subject matter jurisdiction in this and dismiss the state [district] court claims. They are already pending in federal court.


* * *

...I do not see any reason for a stay. I think this one is really clear, so I am going to deny a stay, but I am going to grant the exception of lack of subject matter jurisdiction. These are exclusive federal

jurisdiction and pendent jurisdiction matters for the federal court. (R100-101)

Based on our de novo review of the record, we find the district court's ruling on the objection of lack of subject matter jurisdiction was erroneous. As set forth above, the failure of First Louisiana Insurance (or its agents) to procure insurance coverage for Duplantis is an action recognized in and arising under Louisiana law. As such, Duplantis's claims against First Louisiana Insurance regarding the defendants' failure to procure contents coverage, as well as its failure to properly name Duplantis and Jerry Lee's on a flood insurance policy (its failure to procure such insurance), are state law claims that fall under the general jurisdiction of the district court. While the denial of or other issues pertaining to the manner in which Duplantis's claim was handled or processed are subject to the federal court's exclusive original jurisdiction, the claims set forth in the petition filed in the district court pertaining to the defendants' failure to procure insurance are governed by Louisiana law and thus, fall under the general jurisdiction of the district court.

To the extent that the federal court could exercise its pendent jurisdiction over these state law claims because they arise out of the same operative facts as those set forth in Duplantis's petition filed in federal court, we note that the federal court's exercise of pendent jurisdiction over Duplanits's state law claims is discretionary. See Reeder, 623 So.2d at 1273. The record before us does not reveal that the federal court has exercised that discretion and there is no guarantee that the federal court will exercise its pendent jurisdiction over Duplantis's state law claims. Accordingly, we find that the district court had subject matter jurisdiction over Duplantis's action and that it erred in sustaining the objection of lack of subject matter jurisdiction and in dismissing, without prejudice, Duplantis's petition in district court.

CONCLUSION

For all of the above and foregoing reasons, the April 16, 2018 judgment of the district court sustaining the declinatory exception raising the objection of lack of subject matter jurisdiction and dismissing, without prejudice, the petition for damages filed by Gerard Duplantis d/b/a Jerry Lee's Kwik Shop against the defendants, Kevin Odom, Jack Harless, Harless Agency, Inc. d/b/a First Louisiana Insurance, and American Automobile Insurance Company, is reversed.

All costs of this appeal are assessed to the defendants, Kevin Odom, Jack Harless, Harless Agency, Inc. d/b/a First Louisiana Insurance, and American Automobile Insurance Company.

REVERSED.

st Cir. 11/2/18), ___ So.3d.___, ___, writ denied, 2019-0025 (La. 3/6/19), ___ So.3d ___.