Opinion
NO. 2023 CA 0582
11-03-2023
Kareen GEORGE v. Byron TERRY, Terry Trucking, LLC and OOIDA Risk Retention Group, Inc.
Joseph C. Possa, Cullen R. Clement, Baton Rouge, Louisiana, Counsel for Plaintiff/Appellant Kareen George Christopher M. G’sell, Donald R. Klotz, Dominic J. Carmello, New Orleans, Louisiana, Counsel for Defendant/Appellee OOIDA Risk Retention Group, Inc.
Appealed from the 19th Judicial District Court, In and for the Parish of East Baton Rouge, State of Louisiana, Case No. 713726, The Honorable Judge Timothy E. Kelley, Presiding
Joseph C. Possa, Cullen R. Clement, Baton Rouge, Louisiana, Counsel for Plaintiff/Appellant Kareen George
Christopher M. G’sell, Donald R. Klotz, Dominic J. Carmello, New Orleans, Louisiana, Counsel for Defendant/Appellee OOIDA Risk Retention Group, Inc.
BEFORE; THERIOT, PENZATO, AND GREENE, JJ.
THERIOT, J.
2In this suit for damages arising from an automobile accident, the plaintiff appeals a judgment dismissing her claims against the tortfeasors’ liability insurer for failure to state a right of action. For the reasons set forth herein, we reverse.
FACTS AND PROCEDURAL HISTORY
Plaintiff, Kareen George, filed a petition for damages asserting claims arising from an automobile accident that occurred in Baton Rouge, Louisiana, involving a vehicle owned by Terry Trucking, LLC and operated by its employee, Byron Terry, In addition to Mr. Terry and Terry Trucking, LLC, Ms. George named Terry Trucking, LLC’s liability insurer, OOIDA Risk Retention Group, Inc. ("OOIDA"), a foreign insurer authorized to do and doing business in Louisiana, as a defendant. Ms. George’s petition alleged that Mr, Terry was in the course and scope of his employment with Terry Trucking, LLC at the time of the accident, that the vehicle owned by Terry Trucking, LLC was insured by a policy of liability insurance issued by OOIDA, and that Mr. Terry was a permissive user and therefore an insured under the OOIDA liability policy.
OOIDA filed a peremptory exception raising the objection of no right of action on the grounds that Ms. George "has no right of direct action against a risk retention group such as OOIDA[.]" OOIDA filed a memorandum in support of the exception, in which it asserted that it is a foreign risk retention group created pursuant to the federal Liability Risk Retention Act ("LRRA"), 15 U.S.C. § 3901 et seq., and that the LRRA preempts the application of Louisiana’s Direct Action Statute, La. R.S. 22:1269, to foreign risk retention groups.
Title 15, Section 3901 of the United States Code provides the following definition of "risk retention group":
(4) "risk retention group" means any corporation or other limited liability association
(A) whose primary activity consists of assuming, and spreading all, or any portion, of the liability exposure of its group members;
(B) which is organized for the primary purpose of conducting the activity described under subparagraph (A);
(C) which—
(i) is chartered or licensed as a liability insurance company under the laws of a State and authorized to engage in the business of insurance under the laws of such State; or
(ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one State that it satisfied the capitalization requirements of such State, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in this section before October 27, 1986);
(D) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;
(E) which—
(i) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or
(ii) has as its sole owner an organization which has as—
(I) its members only persons who comprise the membership of the risk retention group; and
(II) its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;
(F) whose members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;
(G) whose activities do not include the provision of insurance other than—
(i) liability insurance for assuming and spreading all or any portion of the similar or related liability exposure of its group members; and
(ii) reinsurance with respect to the similar or related liability exposure of any other risk retention group (or any member of such other group) which is engaged in businesses or activities so that such group (or member) meets the requirement described in subparagraph (F) for membership in the risk retention group which provides such reinsurance; and
(H) the name of which includes the phrase "Risk Retention Group".
[1–4] 3A hearing was held on OOIDA’s exception, at which no evidence was introduced in support of or in opposition to the exception. At the conclusion of the hearing, the trial court ruled in favor of OOIDA on the exception of no right of action. Thereafter, the trial court signed a written judgment on September 19, 2022, sustaining OOIDA’s exception and dismissing Ms. George’s claims against OOIDA with prejudice. This appeal followed, in which Ms. George argues that 4the trial court erred in finding that OOIDA earned its burden of proving that her petition fails to state a right of action.
Although OOIDA attached two exhibits to its reply memorandum in support of the exception, documents attached to memoranda do not constitute evidence and cannot be considered, even if physically placed in the record. See Denoux v. Vessel Management Services, Inc., 2007-2143, pp. 5-6 (La. 5/21/08), 983 So.2d 84, 88.
OOIDA’s exception raised only the objection of no right of action, and the trial judge, in ruling on the exception at the conclusion of the hearing, stated that he was granting "the no right of action." However, the judgment signed by the trial judge is titled "Judgment on Peremptory Exception of No Cause of Action," states that the matter was before the trial court on OOIDA’s "Peremptory Exception of No Right of Action," and finally states that "the Exception of No Cause of Action filed by OOIDA … is hereby sustained." Although the trial court may raise a peremptory exception of no cause of action sua sponte, it is clear from the record in this matter that the references in the judgment to a peremptory exception of no cause of action were inadvertent. See La. C.C.P. art. 927(B); Moreno v. Entergy Corp., 2010-2268, p. 3 (La. 2/18/11), 64 So.3d 761, 762; see also Scott v. Zaheri, 2014-0726, p. 3 (La.App 4 Cir. 12/3/14), 157 So.3d 779, 783, n.2 ("We note that the trial court’s judgment mislabels Dr. Zaheri’s exception of no cause of action as an exception of no right of action. No party makes an issue of this undoubtedly inadvertent mistake, and neither will we."). Nonetheless, our disposition of this matter would be the same even if the trial court had dismissed the claims against OOIDA sua sponte for failure to state a cause of action. The well-pleaded facts of Ms. George’s petition, accepted as true for purposes of the exception, state a cause of action against OOIDA; therefore, a judgment dismissing Ms. George’s claims for failure to state a cause of action would be in error. See Badeaux v. Southwest Computer Bureau, Inc., 2005-0612, p. 7 (La. 3/17/06), 929 So.2d 1211, 1217 ("an exception of no cause of action questions whether the law extends a remedy against the defendant to anyone under the factual allegations of the petition").
DISCUSSION
[5–7] The exception raising the objection of no right of action challenges whether the plaintiff has an actual interest in bringing the action. La. C.C.P. art. 927(A)(6). Whether a person has a right of action depends on whether the particular plaintiff belongs to the class in whose favor the law extends a remedy and raises the issue of whether the plaintiff has the right to invoke a remedy that the law extends only conditionally. Northshore Capital Enterprises v. St. Tammany Hospital District No. 2, 2001-1606, p. 4 (La.App. 1 Cir. 6/21/02), 822 So.2d 109, 112. The exception assumes that the cause of action asserted is valid and tests whether the plaintiff has an interest in judicially enforcing it. The question is simply whether the plaintiff has a light to sue the defendant to enforce the claim, Foster v. Bias, 2022-0329, p. 11 (La. App. 1 Cir. 12/22/22), 358 So.3d 520, 532, writ denied, 2023-00090 (La. 3/28/23), 358 So.3d 503. A defendant challenging a plaintiff’s right to proceed under Louisiana’s Direct Action Statute may do so by means of an exception of no right of action. Seibel v. Holmes, 2022-1107, p. 7 (La.App. 1 Cir. 8/16/23), 371 So.3d 1082, 1087–88.
[8–10] The party raising the objection of no right of action bears the burden of proof. Foster, 2022-0329 at p. 11, 358 So.3d at 532. At the hearing, the exception may be submitted on the pleadings, or evidence may be introduced either in support of or to controvert the objection raised when the grounds thereof do not appear from the petition. La. C.C.P. art. 931; Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, 2010-2267, p. 6 (La. 10/25/11), 79 So.3d 246, 255. 5Evidence introduced at the hearing of the peremptory exception must be competent, relevant evidence. Division of Administration, Office of Community Development - Disaster Recovery Unit v. Stewart, 2022-0574, p. 8 (La.App. 1 Cir. 12/15/22), 357 So.3d 407, 412-13, citing Kirby v. Field, 2004-1898, p. 9, n.8 (La. App. 1 Cir. 9/23/05), 923 So.2d 131, 137, n.8, writ denied, 2005-2467 (La. 3/24/06), 925 So.2d 1230 ("A hearing or trial of an exception (other than the exception of no cause of action) is just that - a trial at which competent, relevant evidence should be presented for the trier of fact’s consideration.").
[11–13] The standard of appellate review for the peremptory exception raising the objection of no right of action is de novo. Foster, 2022-0329 at p. 11, 358 So.3d at 532. An appellate court considering an exception of no right of action should focus on whether the particular plaintiff has a right to bring the suit and is a member of the class of persons that has a legal interest in the subject matter of the litigation, assuming the petition states a valid cause of action for some person. Rebel Distributors Corp., Inc. v. LUBA Workers’ Comp., 2013-0749, p. 10 (La. 10/15/13), 144 So.3d 825, 833. Where doubt exists as to the appropriateness of an exception of no right of action, this Court must resolve that doubt in favor of finding a right of action. Louisiana Environmental Action Network, Inc. v. Brown, 2019-0607, p. 7 (La. App. 1 Cir. 1/9/20), 294 So.3d 1066, 1071, Writ denied, 2020-00246 (La. 4/27/20), 295 So.3d 950.
[14] Louisiana’s Direct Action Statute, La. R.S. 22:1269, grants a right of direct action against an insurer to a tort victim who has a substantive cause of action against the insured. This right of direct action exists regardless of whether or not the insurance policy sued upon was written or delivered in the State of Louisiana and whether or not the policy contains a provision forbidding such direct action, provided that the accident or injury occurred within the State of Louisiana. See La. R.S. 22:1269; 6 Cacamo v. Liberty Mut. Fire Insurance Company, 1999-3479, pp. 2-3 (La. 6/30/00), 764 So.2d 41, 43. However, in Courville v. Allied Professionals Insurance Co., 2013-0976, p. 19 (La.App. 1 Cir. 6/5/15), 174 So.3d 659, 672, writ denied, 2015-1309 (La. 10/30/15), 179 So.3d 615, this Court held that the Louisiana Direct Action Statute is inapplicable to risk retention groups chartered in another state.
[15] As the party raising the objection of no right of action, OOIDA had the burden of proving that Ms. George does not have the right to invoke a remedy that the law extends only conditionally, i.e., to sue Terry Trucking, LLC’s insurer directly. To satisfy its burden of proof on the exception, OOIDA must prove that it is a risk retention group under the provisions of the LRRA and that it is chartered in another state. Because the grounds of OOIDA’s objection do not appear from the petition, OOIDA was required to introduce evidence to support the objection. The record reflects that OOIDA failed to do so. Thus, the trial court erred in dismissing Ms. George’s claims against OOIDA on an exception of no right of action. See Industrial Companies, Inc. v. Durbin, 2002-0665, pp. 12-13 (La. 1/28/03), 837 So.2d 1207, 1216-17.
DECREE
For the reasons set forth herein, the September 19, 2022 judgment of the trial court dismissing all claims against OOIDA Risk Retention Group, Inc. with prejudice is reversed. Costs of this appeal are assessed to OOIDA Risk Retention Group, Inc.
REVERSED.