UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-30381
Summary Calendar
MIDWEST EMPLOYERS CASUALTY CO.,
Plaintiff-Counter Defendant-Appellee,
VERSUS
HARRIS MANAGEMENT INC.,
Defendant-Counter Claimant-Appellant.
Appeal from the United States District Court
For the Western District of Louisiana
(96-CV-1349)
November 4, 1997
Before JOLLY, BENAVIDES and PARKER, Circuit Judges.
PER CURIAM:*
Harris Management Inc. (“Harris”) appeals a declaratory
judgment in favor of Midwest Employers Casualty Company
(“Midwest”). Harris is self-insured for Louisiana workers’
compensation purposes. Midwest issued an “Excess Insurance Policy
for Self-Insurer of Workers’ Compensation and Employer’s Liability”
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
to Harris. The policy provides for reimbursement and
indemnification of the insured for benefits paid to one claimant
that exceed $150,000. The policy includes a clause which obligates
Harris to employ good faith in the settlement of all claims.
Midwest brought this action seeking a declaration that it owes no
further indemnity on two claims -- brought by Mary Brouillette and
Truedy Autin -- because Harris refused to employ good faith in the
settlement of those claims. There is no dispute that Brouillette
and Autin were injured in the course and scope of their employment
with Harris and that they had valid workers’ compensation claims
under Louisiana law.
After trial on the merits before a magistrate judge, pursuant
to consent of the parties, declaratory judgment was entered for
Midwest, holding that Harris breached its obligation “to not
unreasonably refuse to settle any claim which, in the exercise of
sound judgment, should be settled.”
The case is before us based on our diversity jurisdiction and
requires the interpretation of a Louisiana insurance policy. An
insurance policy is a contract and must be interpreted by using
ordinary contract principals and rules of interpretation found in
Louisiana law. Lewis v. Hamilton, 652 So.2d 1327, 1329 (La. 1995).
The first issue raised on appeal is essentially whether Harris’s
conduct amounted to a bad faith handling of the claims. The
question is one of fact, a finding as to which we cannot overturn
absent clear error. Rogers v. Government Employees Ins. Co., 598
So.2d 670 (La.App. 3rd Cir. 1992). Having reviewed the record and
the Memorandum Ruling on the Merits, we cannot say that the
findings of the magistrate judge were clear error.
Next, Harris argues that a lump sum payment would have been
required to settle the cases and that lump sum payments are
precluded by public policy as announced by the Louisiana
legislature, citing LSA R.S. 23:1271. In fact, 23:1271
specifically allows compromise and lump sum payments under certain
circumstances. The statute does not preclude such payments in
these cases.2
Finally, Harris argues that it should not be held to a duty of
good faith because another clause in the insurance contract
provides for a specific procedure by which Midwest could limit its
exposure. We agree with the district court that the good faith
clause is not ambiguous and that it obligates Harris to do exactly
what it says, that is, to use good faith to settle any claim and to
“not unreasonably refuse to settle any claim which, in the exercise
of sound judgment, should be settled.”
For the foregoing reasons, we affirm the declaratory judgment.
AFFIRMED.
2
LSA R.S. 23:1271 provides in pertinent part:
A lump sum payment or compromise settlement in exchange
for full and final discharge and release of the employer,
his insurer, or both from liability under this chapter
shall be allowed only:
(1) upon agreement between the parties, including the
insurer’s duty to obtain the employer’s consent;
(2) when it can be demonstrated that a lump sum payment
is clearly in the best interests of the parties; and
(3) upon the expiration of six months after termination
of temporary total disability.