Opinion
No. 2914.
January 15, 1970. Rehearing Denied February 4, 1970.
APPEAL FROM NINTH JUDICIAL DISTRICT COURT, PARISH OF RAPIDES, FIELD V. GREMILLION, J.
Gold, Hall Skye, by Leo Gold, Alexandria, for defendants-appellants.
Howard N. Nugent, Jr., Alexandria, for plaintiffs-appellees.
Gist, Methvin Trimble, by H. B. Gist, Jr., Alexandria, for defendant-appellee-appellant.
Before TATE, FRUGÉ, SAVOY, HOOD and MILLER, JJ.
This is a workmen's compensation proceeding in which the trial court awarded the plaintiffs penalties and attorney fees for defendants' arbitrary and capricious refusal to pay compensation due the plaintiffs. Defendants appealed the assessment of penalties and attorney fees. Plaintiffs answered the appeal requesting $1,500.00 increase in attorney fees.
On July 27, 1968, Omar Dauzat in the course of his employment with defendant Pel State Oil Company, was murdered during an armed robbery. He was survived by his wife, Mrs. Betty Z. Dauzat, and three minor children.
Defendant, Allstate Insurance Company, had a contract of insurance with Pel State Oil Company covering Workmen's Compensation claims of Pel State's employees. On August 3, 1968, Pel State Oil Company received a demand for compensation benefits in a letter from plaintiffs' attorney dated August 1, 1968. On January 6, 1969, plaintiffs received the initial payment from defendants which covered all compensation then due. The events that transpired between those two dates are to determine whether or not the trial court was justified in awarding plaintiffs the statutory penalty provided in La.R.S. 22:658 of 12 percent of payments 60 days overdue and attorney fees of $2,000.00.
Pel State Oil Company, through its employee, Lloyd Rosier, was aware of Dauzat's death at the time it happened. Rosier, Dauzat's supervisor, also knew at that time that Dauzat was married and had three children. Allstate's initial attempt to contact Mrs. Dauzat was on August 3, 1968, when Mr. Jack Wilkinson telephoned the plaintiff on defendants' behalf but she was out and did not return his call. He called Plaintiff again on August 6, 1968, and was informed that she had employed Mr. Howard Nugent to handle the matter for her. Mr. Wilkinson called Mr. Nugent that same day and again on August 8, 9, and 30, before returning the file to Allstate on September 6, 1968.
Meanwhile, on August 3, 1968, Pel State Oil Company received a letter dated August 1, 1968 from Mr. Howard N. Nugent, Jr., advising them that he represented Mrs. Dauzat in the matter and giving notice of her and the minor children's claims.
On September 5, 1968, Mr. Joe Bourgeois, who had taken over the file from Mr. Wilkinson, called Mr. Nugent requesting the birth certificates of the children, the marriage license of Mr. and Mrs. Dauzat, and a family history. On September 10, Mr. Nugent gave Mr. Bourgeois the birth certificate personally and on September 27 sent a letter to Allstate Insurance Company with a copy of the marriage license and the family history.
On October 10, 1968, suit was filed on behalf of Mrs. Dauzat and the three minor children. Allstate retained Mr. Leo Gold, an Alexandria attorney, to defend the suit.
On October 15, Mr. Gold called Mr. Nugent asking for a delay. On October 21, Mr. Nugent received a letter from Mr. Gold confirming the delay and requesting the birth certificates of the children. Mr. Nugent responded to this letter by letter on October 24, advising Mr. Gold that birth certificates had already been given to Allstate. On the same day Mr. Nugent received a letter from Mr. Gold advising that Mr. Gold would "lay off" the case while Allstate negotiated with Mr. Nugent.
On October 31, 1968, Allstate withdrew its earlier instructions to defer action and the file was turned over to Mr. Jimmy Stoker, an attorney in Mr. Gold's office. Mr. Stoker called Mr. Nugent on November 4 or 5, asking for assistance in the matter. He followed this up with a letter to Mr. Nugent on November 11, 1968, requesting proof of various aspects of the family history. On November 14, 1968, Mr. Nugent sent Mr. Stoker a letter pointing out that sources of the information sought were given to Allstate prior to filing suit in the form of certificates or the statement (family history) by Mrs. Dauzat. He also advised Mr. Stoker to file an answer and offered to help obtain relevant information not readily available from the indicated sources.
On December 2, 1968, Mr. Stoker advised Mr. Nugent by letter that he would like to take Mrs. Dauzat's deposition on December 9, 1968, at 2:00 p.m. Mr. Nugent advised his client of this by letter of December 3, and her deposition was taken on December 9. On January 6, 1969, all compensation then due and owing including funeral benefits was paid.
Defendants contend that Mr. Nugent's refusal to allow an interview with Mrs. Dauzat made it impossible to settle the claim because of a lack of information, and the long time period between July 27, 1968 and January 6, 1969, when compensation was paid, was required to adequately investigate the matter. The trial court was of the opinion that "Allstate Insurance Company devoted too much time and effort toward defeating this claim and not enough toward a factual investigation and proper resolution of its obligations under its policy of Workmen's Compensation Insurance and the Workmen's Compensation Law."
It is apparent that Mr. Nugent declined to allow Allstate to interview his client. He preferred to supply Allstate with the needed information himself rather than let his client do it directly. This may have been an inconvenience to Allstate, but Mr. Nugent was within his rights in doing so.
Allstate contends that it never received adequate information to handle the claims in view of the previous marriages. (Omar had one son and Betty had two daughters.) It is fairly obvious from the record however, that these children were married or over 21 years of age and not living with or dependent on Omar Dauzat. Mr. Gold, Allstate's attorney, readily admitted that there was nothing to indicate that Omar Dauzat's son by a previous marriage was dependent on his father and on the face of documents provided by plaintiffs, he was over 21 years of age. (Allstate's investigation showed that he was living and working in Ville Platte, Louisiana.)
The record shows that the Dauzat claim was handled by Jack Wilkinson, an Allstate adjuster, Joe Bourgeois, an Allstate adjuster, Leo Gold, an attorney, and finally, Jimmy Stoker, an attorney in Mr. Gold's office. The reassignment of the file among these four parties did not serve to expedite the claim. In regard to Mr. Gold the court observed, "When suit was filed the matter was turned over to a very competent attorney, Mr. Leo Gold. It was turned over to him, however, not to handle, but merely to secure delay from plaintiff's attorney. Once this was accomplished, the file was recalled from Mr. Gold or he was notified to do nothing further on it because the company wanted to work the matter out with Mr. Nugent through its own agents."
"Mr. Gold's testimony points up the fact that the company did not seriously and in good faith turn the file over to him for defense."
While it is true that Mr. Nugent was not overly enthusiastic about cooperating with Allstate, we cannot say that the trial court was manifestly erroneous in holding that Allstate was arbitrary and capricious in failing to pay compensation benefits due the plaintiffs for a period of more than five months after the death of Omar Dauzat. The repeated delays and varied sources of information available to defendants justified the trial court in finding that their failure to pay compensation was arbitrary and capricious and in violation of La.R.S. 22:658.
The second issue in this case is whether or not $2,000.00 in attorney fees is inadequate or excessive. Defendants contend that they should be reduced to $350.00 at most, while plaintiffs contend that they should be increased to $3,500.00. The trial court has much discretion in assessing attorney fees in such a case. Mire v. Grigsby Brothers, Inc., 191 So.2d 362 (La.App. 3d Cir., 1966). Awards of $2,000.00 to $3,000.00 in such cases are not unusual. Of course such penalty fees are credited to the attorney fees already owed by the client to his attorney and therefore it inures to the benefit of the client primarily rather than his attorney.
Defendants cite several cases where penalty attorney fees were much lower than in the instant case. However, the quantum in those cases was considerably lower than in the instant case. Here the efforts of the plaintiff attorney, and the quantum involved justify an award of $2,000.00. Defendants felt that attorney fees should be minimal, since they finally admitted liability and the only issues actually tried were whether or not penalties were due and if so, how much. The trial court felt, however, that it was plaintiffs' attorney's efforts that brought about defendants' eventual capitulation, and the record shows that in addition to the trial, the case required plaintiff's attention for a period of several months. We cannot say that the trial court was manifestly erroneous in awarding attorney fees of $2,000.00.
As for increasing attorney fees, even though the case has been appealed to this court and is subject to an application for rehearing and appeal to the Supreme Court, we cannot say that they should be increased at this time. Again, we cannot say that the judgment of the trial court is manifestly erroneous, and therefore it should be affirmed.
However, only an insurer and not an employer is subject to payment of penalties and attorney fees under La.R.S. 22:658 and 23:1201.2. Poindexter v. South Coast Corp., 204 So.2d 615 (La. App. 4th Cir., 1967); Bassemier v. W. S. Young Construction Co., 110 So.2d 766 (La.App. 1st Cir., 1959). Therefore, the judgment of the trial court is amended insofar as it holds Pel State Oil Company liable for penalties and attorney fees for which Allstate Insurance Company alone is liable.
For the foregoing reasons the judgment of the trial court is amended and affirmed at the cost of defendant-appellant.
Amended and affirmed.
SAVOY, J., dissents being of the opinion that defendant was not arbitrary and that attorney fees and penalties should not be allowed.
I do not feel that defendant Allstate should be condemned to pay penalties and attorney's fees in this case.
The evidence shows that defendants have always admitted liability, and that from the time they were first notified of the accident they have been ready and willing to pay the compensation which was due. Their only concern was in determining the persons to whom the payments should be made. I think defendants were extremely diligent and aggressive in their attempts to find out who the surviving dependents of the decedent were in order that payments could be started. The only reason why compensation payments were not started much earlier was because plaintiff and her counsel consistently refused to give defendant the facts which it had to have before it could safely make any payments.
Plaintiff employed an attorney within four days after the accident occurred, and she has never suggested that she was compelled to do so because of anything the defendants did. A formal demand was made on the decedent's employer three days after counsel had been engaged by plaintiff. On the same day that demand was made the employer's insurer, Allstate, attempted to contact plaintiff to obtain information as to her marital status and as to the names of Dauzat's dependents, in order that compensation payments could be made. It succeeded in reaching her the next day, but plaintiff refused to give the information requested, referring defendant to her attorney. Her attorney refused to allow defendant's agents or attorneys to talk to the claimant, and in spite of the fact that Allstate's agents contacted the attorney on numerous occasions during the next few weeks, almost daily during a part of that time, demanding information as to the decedent's marital status and dependents, plaintiff's attorney failed or refused to provide any such information until September 10, 1968, or 45 days after the accident occurred. On that date plaintiff's counsel furnished defendant with only a part of the needed facts, consisting of photocopies of birth certificates of the three children who allegedly were issue of her marriage to the decedent.
The defendant insurer had information that the decedent Dauzat had been married three times, and that he had had at least one child by a former marriage. It wanted, and was entitled to obtain, information as to the names of all the children which the decedent had had by former marriages, and whether they were dependent on him for support at the time of his death. Defendant also had been unable to determine whether either of the decedent's first two marriages had been dissolved before he married the plaintiff in the instant suit. It clearly was entitled to that information, since it had a direct bearing on the question of whether he was legally married to plaintiff when he died.
Defendant also had been informed that plaintiff, Mrs. Dauzat, had been married prior to her marriage to the decedent, and it had no proof that her prior marriage had ever been dissolved. They asked for this information, and I think they were entitled to have it.
After repeated demands made by defendant on plaintiff's counsel, the latter furnished defendant with (1) a photocopy of the marriage license, evidencing the marriage of plaintiff to decedent in 1951, and (2) a typed, unsigned statement to the effect that Mrs. Dauzat had been married to William Castleberry, "from whom she was divorced in Rapides Parish, Louisiana, around 1947," and that two children had been born of that marriage. The names of the two children were given. With reference to the decedent's marital status, the statement recites:
"Omar Dauzat was married three times, first unto Thelma Barton and of that marriage one son was born namely Donald S. Dauzat. Secondly, Omar Dauzat was married to Lizzie Wiley Morton in 1947. Thirdly, he was married to Betty Zimmerman Castleberry Dauzat."
This statement was furnished to defendants on September 27, 1968, that being 62 days after the accident occurred, and long after the information was first requested by defendants.
Upon receiving this statement, defendant's agents promptly checked the records of Rapides Parish and found that in the divorce suit between plaintiff and her first husband, Castleberry, only one child was listed as being issue of that marriage, whereas the statement which had just been furnished to defendant showed two children. A question arose as to whether this second child was actually the issue of her union with Dauzat, and defendant felt that more information was needed as to that child since that person was not listed as a dependent in the petition. Also, the information furnished in that statement failed to show whether the first and second marriages of the decedent had been dissolved before his third marriage to plaintiff, and whether his son by a prior marriage was a dependent. They again demanded this information, and plaintiff failed or refused to provide it. And, finally, although plaintiff alleges that the three children named in the petition were dependent on the decedent at the time of his death, a W-4 form (required by Internal Revenue Service) executed by the decedent shortly before his death showed that he claimed a total of only two dependents, including his wife, indicating that only one child was dependent on him at the time of his death.
Suit was filed by plaintiff against defendant on October 10, 1968. This was 75 days after the accident had occurred, and only a few days after the unsigned statement had been furnished providing a part of the marital status and dependency information which defendants needed. Since defendant was unable to get the rest of the information it needed from plaintiff or her attorney, it resorted to discovery procedures to get it. The discovery deposition of Mrs. Dauzat was taken on December 9, and it was only by that procedure that defendant was able to obtain enough information about the decedent's marital status and dependents to enable it to pay compensation benefits. The payment of such benefits was begun shortly after that deposition was taken.
As I have already noted, defendants have never denied liability for compensation benefits. They were persistent in their efforts to find out the persons to whom the payments should be made, and I am convinced that they were in good faith.
The majority concedes that plaintiff's counsel "declined to allow Allstate to interview his client," that he "was not overly enthusiastic about cooperating with Allstate," and that plaintiff never furnished defendant with the vital information which it needed and had been demanding until she was compelled to do so by defendant's resort to the discovery procedure. They brush all of that aside, however, and hold that the insurer was arbitrary, capricious, and without probable cause because of other "varied sources of information available to defendants," and because it was " fairly obvious * * * that these children were married or over 21 years of age and not living with or dependent on Omar Dauzat."
The majority observes that the insurer "did not seriously and in good faith turn the file over to him (its attorney) for defense," but that it did so "merely to secure delay from plaintiff's attorney." It is true that the file was not turned over to the attorney for the purpose of resisting payment or defeating the claim, because the company has always been ready and willing to pay compensation benefits. It merely sought to defer further action in the pending suit until it could obtain from plaintiff the facts which it had to have before payment could be made.
LSA-R.S. 22:658 provides for the payment of penalties and attorney's fees only in cases where the refusal or failure of the insurer to pay within the prescribed time is arbitrary, capricious, or without probable cause. Being penal in nature, the statute is not favored, and it must be strictly construed. Home Insurance Company v. A. J. Warehouse, Inc., 210 So.2d 544 (La.App. 4 Cir. 1968); Ranzino v. Allstate Insurance Company, 210 So.2d 907 (La.App. 1 Cir. 1968).
I am unable to agree with my colleagues that in this case the defendant insurer was arbitrary, capricious, or without probable cause in delaying the payment of compensation benefits until it could determine the names of the people to whom such payments should be made. I think it violates the purpose and express provisions of LSA-R.S. 22:658 to require defendant to pay these penalties to plaintiff, when defendant has actively and persistently tried to make the payments and has been handicapped and delayed solely by plaintiff's refusal to provide it with the information which it needed.
For these reasons, I respectfully dissent.
On Application for Rehearing.
Rehearing denied.
SAVOY and HOOD, JJ., are of the opinion that a rehearing should be granted.