Opinion
Civil Action No. 99-1991, Section: "J" (3)
June 23, 2000
Before the Court is defendant's Motion for Summary Judgment (Rec. Doc. 9). Plaintiff opposes the motion. The motion, set for hearing on June 21, 2000, is before the Court on briefs without oral argument.
BACKGROUND
This litigation arises from defendant Transportation Insurance Company's ("Transportation") alleged failure to honor insurance policy 1 63679613 issued to plaintiff Acadia Insurance Agency ("Acadia") for the period from February 22, 1997 until February 27, 1998. On January 19, 1998, Acadia reported a vandalism at 1670 Old Spanish Trail and submitted a $137,152.36 claim for the damage. Because plaintiff failed to tender payment on the policy until January 27, 1998, fifteen days after the January 12, 1998 deadline, the policy lapsed. Unaware the policy had been canceled, Transportation's claim department advanced $9,483.76 to Acadia on February 5, 1998.
Acadia filed this action seeking compensation for the full amount of the damages from the vandalism, less the $9,483.76 advance, a penalty for Transportation's arbitrary and capricious denial of the claim, and attorneys' fees. Transportation answered and submitted a counterclaim for return of the $9,483.76 advance, costs, and attorneys' fees. Transportation has since filed the instant motion.
DISCUSSION
The Court finds that the insurance policy had been canceled by the date of the vandalism and that Transportation complied with all the statutory requirements for cancellation of insurance policies, thereby warranting granting summary judgment in Transportation's favor. Neither side disputes that the policy was canceled for nonpayment of premiums effective January 12, 2000, that Acadia did not submit payment for the premium until January 27, 1998, or that Transportation advanced Acadia $9,483.76. Acadia likewise does not contest that Transportation satisfied the requirements of canceling an insurance policy under Louisiana law. Transportation issued timely, written notice which stated the effective date of the cancellation. LA. REV. STAT. §§ 22:636.4(C)(1)-(2). Lastly, Transportation's $9,483.76 payment to Acadia after the policy had been canceled neither resuscitates any canceled obligation under the policy, see Dear v. Blue Cross of Louisiana, 511 So.2d 73, 76 (La.App. 3d Cir. 1987) (holding that an erroneous payment of a claim does not constitute an acknowledgment of the alleged debt to the insured), nor does it create a new obligation, see Johnson v. State Farm Mutual Auto. Ins. Co., 334 So.2d 478, 479 (La.App. 1st Cir. 1976), rev'd on other grounds, Johnson v. State Farm Mutual Auto. Ins. Co., 342 So.2d 664 (La. 1977) (ruling that an erroneous payment "cannot create an obligation where none existed").
Acadia argues that, although the policy was canceled for nonpayment, cancellation actually occurred when Transportation processed the cancellation on January 27, 1998. This argument flies in the face of the clear terms of the contract and cancellation notice which stipulated that the policy cancellation was effective on January 12, 1998.
Consequently, as all of Acadia's claims are dismissed, and there are no disputes as to any material facts, the Court sua sponte finds that Transportation is entitled to summary judgment on its counterclaim for reimbursement of the $9,483.76 advance to Acadia. Accordingly,
IT IS ORDERED that Transportation's Motion for Summary Judgment is GRANTED and that all claims against Transportation should be and are hereby DISMISSED.
IT IS FURTHER ORDERED that Transportation should be and is hereby entitled to a judgment for $9,483.76 from Acadia.