UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-30857
ROBIN PASSARO LOUQUE, Individually and on behalf of all others
similarly situated,
Plaintiff-Appellant,
versus
ALLSTATE INSURANCE COMPANY,
Defendant-Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________________________________________________
December 13, 2002
Before JOLLY, JONES, and BARKSDALE, Circuit Judges.
EDITH H. JONES, Circuit Judge:
The district court assumed removal jurisdiction and then
dismissed the case for failure to state a claim upon which relief
can be granted in this putative class action, which challenges
Allstate’s alleged policy of refusing to settle minor-impact, soft-
tissue injury actions against its insureds. The principal issue on
appeal is whether the amount-in-controversy requirement for
diversity jurisdiction was satisfied by the potential recovery of
attorney’s fees under Louisiana law pertaining to insurance claims
handling. We affirm the district court’s conclusion that
attorney’s fees could be recovered under Louisiana law, and that
such sum would satisfy the amount-in-controversy requirement. We
also affirm the dismissal granted to Allstate on the merits.
BACKGROUND
Allstate insured Robin Louque, the named class
representative, under an automobile policy providing $10,000 in
liability coverage. Louque alleges that she was in an automobile
accident in which another person was injured, she was sued by the
victim, and Allstate refused to settle. Judgment was entered
against Louque and Allstate for $7569, including $5000 in statutory
penalties for violations of LA. REV. STAT. ANN. § 22:1220 (requiring
an insurer to “make a reasonable effort to settle claims with the
insured or the claimant, or both”). Allstate satisfied the
judgment, but apparently successfully appealed the penalty award.
Louque contends that Allstate’s policy was to refuse to
settle minor-impact, soft-tissue injury (MIST) claims where the
claimant was represented by an attorney, regardless of a claim’s
merit. The resulting delays and judgments adversely affected
Allstate policy holders’ creditworthiness. Louque pleads that this
practice effected a breach of contract, breach of Allstate’s
fiduciary obligations under the policies, and violation of LA. REV.
STAT. ANN. § 22:1220, the provision at issue in the third-party
action. LA. REV. STAT. ANN. § 22:658, also at issue in this appeal,
is not mentioned in Louque’s complaint.
2
After Allstate removed this action to federal court based
on diversity jurisdiction, it moved to dismiss. Louque sought to
remand, asserting that the jurisdictional amount was not satisfied.
The district court denied remand and held that this action is
governed by § 22:658, a provision whose mandatory award of
attorney’s fees satisfies the jurisdictional amount. Louque v.
Allstate Ins. Co., No. 01-CV-1282, at 3-4 (E.D. La. June 21, 2001)
(unpublished). Dismissal was granted for failure to state a claim.
Id. at 5-8.
DISCUSSION
A. Removal Jurisdiction
The parties spar primarily over whether § 22:658 is
applicable, and, if not, whether the requisite amount in
controversy for diversity jurisdiction (greater than $75,000) is
otherwise satisfied. Diversity of citizenship is not at issue.
See 28 U.S.C. § 1332.
This court reviews the denial of remand de novo. Manguno
v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 722 (5th Cir.
2002). Louisiana prohibits Louque from stating an ad damnum in her
petition. Therefore, Allstate must establish the jurisdictional
amount by a preponderance of the evidence. Id. at 723. This is
accomplished if “(1) it is apparent from the face of the petition
that the claims are likely to exceed $75,000, or, alternatively,
(2) the defendant sets forth ‘summary judgment type evidence’ of
3
facts in controversy that support a finding of the requisite
amount.” Id. The district court held: “Because Louque intends to
represent a nationwide class of ‘tens of thousands, if not hundreds
of thousands of individuals’ and seeks both damages and penalties
for each class member, the Court finds that Louque’s attorneys’
fees will easily exceed the jurisdictional threshold.”
Along this line, LA. CODE CIV. PROC. provides:
The court may allow the representative parties
their reasonable expenses of litigation,
including attorney’s fees, when as a result of
the class action a fund is made available, or
a recovery or compromise is had which is
beneficial, to the class.
Art. 595 (emphasis added). Citing In re Abbott Laboratories, 51
F.3d 524, 526-27 (5th Cir. 1995), aff’d by an equally divided
court, 529 U.S. 333 (2000), the district court held that,
[u]nder . . . article 595, attorneys’ fees in a class
action lawsuit are wholly allocable to the named
plaintiff; and, when article 595 is coupled with a
statutory provision mandating an award of attorneys’
fees, federal courts will consider that potential award
when determining the amount in controversy.
District Court Opinion at 2. See Manguno, 276 F.3d at 723 (“For
purposes of determining the amount in controversy in a Louisiana
class action, it has been the belief of some courts that . . .
article 595 allocates to the class representative the aggregate
attorney’s fees sought for the entire class if a separate statute
provides for recovery of attorney’s fees as an element of
damages.”) (citing Abbott Laboratories, supra) (emphasis added).
4
Recently, our court has clarified that because art. 595
gives a court discretion to award attorney’s fees to a class
representative as “expenses of litigation,” such fees are
includable in a jurisdictional amount determination for diversity
purposes regardless of the existence of separate statutory
authorization of attorneys fees. Grant v. Chevron Phillips Chem.
Co., 2002 U.S. App. LEXIS 21266 (5th Cir. 2002). Unfortunately,
this new decision does not assist the resolution of this case,
because Allstate did not raise and preserve in the trial court the
applicability of art. 595 alone to support an attorney’s fee
award.1 We must proceed according to a pre-Grant analysis.
1
To preserve such an issue, the “raising party must present
the issue so that it places the opposing party and the court on
notice that a new issue is being raised.” Portis v. First Nat’l
Bank of New Albany, Miss., 34 F.3d 325, 331 (5th Cir. 1994).
Allstate’s removal notice stated, in addition to the possibility
that Louque’s claims seek recovery under § 22:658, that she “seeks
to certify a class action under . . . article 591, et seq., which
provides for recovery of attorneys’ fees by the named
representative.” The removal notice then string cited to precedent
purportedly holding that the “potential award of attorneys’ fees
allocated to plaintiff pursuant to Article 595 satisfies the amount
in controversy requirement.” We assume this stated the art. 595
issue. But, in responding to Louque’s remand motion, which briefly
referenced art. 595, Allstate did not address whether art. 595
alone could support a fee award. Our court has held that, “‘for
obvious reasons, [we] will not consider evidence or arguments . .
. not presented to the district court for its consideration in
ruling on the motion.’” Ellison v. Software Spectrum, Inc., 85
F.3d 187, 191 (5th Cir. 1996) (quoting Stults v. Conoco, Inc., 76
F.3d 651, 657 (5th Cir. 1996)) (emphasis added). As a general
rule, a party may not allude to an issue in the district court,
abandon it at the crucial time when the district court might have
been called to rule upon it, and then resurrect the issue on
appeal. See, e.g., Hargrave v. Fibreboard Corp., 710 F.2d 1154,
1163-64 (5th Cir. 1983). That Louque herself mentioned the issue,
5
In district court, Allstate maintained that Louque’s
claims are governed by the two earlier-described Louisiana
statutes: §§ 22:658 and 22:1220. While both provisions have been
held to sustain an attorney’s fee award, only § 22:658 mandates
such relief. Section 22:658(A) provides in pertinent part:
(1) All insurers . . . shall pay the amount of
any claim due any insured within thirty days
after receipt of satisfactory proofs of loss
from the insured or any party in interest.
(2) All insurers . . . shall pay the amount of
any third party property damage claim and of
any reasonable medical expenses claim due any
bona fide third party claimant within thirty
days after written agreement of settlement of
the claim from any third party claimant.
LA. REV. STAT. ANN. § 22:658(A) (emphasis added). Subpart (B)(1)
provides:
Failure to make such payment within thirty
days after receipt of such satisfactory
written proofs and demand therefor, as
provided in . . . [§] 22:658(A)(1), or within
thirty days after written agreement or
settlement as provided in . . . [§] 22:658
(A)(2) when such failure is found to be
arbitrary, capricious, or without probable
cause, shall subject the insurer to a penalty,
. . . together with all reasonable attorney
fees for the prosecution and collection of
such loss.
LA. REV. STAT. ANN. § 22:658(B)(1) (emphasis added).
which Allstate then failed to brief, is insufficient to preserve
Allstate’s error. See Hargrave.
6
Louque sued under § 22:1220(A), which provides, inter
alia:
An insurer . . . owes to his insured a duty of
good faith and fair dealing. The insurer has
an affirmative duty to adjust claims fairly
and promptly and to make a reasonable effort
to settle claims with the insured or the
claimant, or both.
LA. REV. STAT. ANN. § 22:1220(A) (emphasis added). Subpart (C)
states that,
[i]n addition to any general or special
damages ... for breach of the imposed duty,
the claimant may be awarded penalties assessed
against the insurer in an amount not to exceed
two times the damages sustained or five
thousand dollars, whichever is greater.
LA. REV. STAT. ANN. § 22:1220(C) (emphasis added). The award of
attorney’s fees is not mentioned.
This court, noting the similarity of these provisions,
has permitted the same type of recovery under either one, even
where one of the provisions was not expressly cited. In re
Hannover Corp. of America, 67 F.3d 70, 75 (5th Cir. 1995). On the
basis of Hannover, Allstate maintained, and the district court
held, that, even though Louque did not plead § 22:658, it may
nevertheless govern her entitlement to attorney’s fees. See Reed
v. Recard, 744 So. 2d 13, 20 (La. Ct. App. 1998), writ denied, 738
So. 2d 572 (La. 1999).
7
On its face, § 22:658 does not squarely cover a claim by
Louque for Allstate’s excessive, injurious delay in litigating and
paying off a claim after judgment. The statute penalizes instead
arbitrary or capricious failures either to pay (1) a claim due the
insured “within thirty days after receipt of satisfactory proofs of
loss,” or (2) a third-party claim “within thirty days after written
agreement of settlement.” § 22:658(A)(1) and (2). Nevertheless,
Louisiana courts have for two decades allowed an award of
attorney’s fees in cases where an insurer’s bad faith refusal to
settle led to an excess judgment. See Smith v. Audubon Ins. Co.,
656 So. 2d 11, 17 (La. Ct. App. 1995), rev’d on other grounds, 679
So. 2d 372 (La. 1996). Smith cited § 22:658 and relied on earlier
decisions. See Maryland Casualty Co. v. Dixie Ins. Co., 622 So. 2d
698 (La. App. 1993), writ denied, 629 So. 2d 1138 (La. 1993); Roy
v. Glaude, 494 So. 2d 1243 (La. Ct. App. 1986); Fertitta v.
Allstate Ins. Co., 439 So. 2d 531 (La. App. 1983), aff’d on other
grounds, 462 So. 2d 159 (La. 1995); Domangue v. Henry, 394 So. 2d
638 (La. App. 1980). This court has previously acknowledged that
these cases establish Louisiana law. Parich v. State Farm Mut.
Auto. Ins. Co., 919 F.2d 906 (5th Cir. 1990), cert. denied sub nom.
Judice v. Parich, 499 U.S. 976 (1991).
When Smith reached the Louisiana Supreme Court, one judge
criticized, in dissent, the lower court’s handling of attorneys’
fees and the caselaw on which the lower court relied. Smith, 679
8
So. 2d at 378-80 (Calogero, J., dissenting). This is irrelevant.
The Louisiana Supreme Court should not have reached this issue, as
it decided the case on a dispositive antecedent ground. Moreover,
we can hardly accord a solo dissenting opinion any weight as an
expression of Louisiana law.
The concurrence suggests that the applicability of
§ 22:658 is a novel issue as to which an Erie guess is required of
this court. Under the present circumstances — in which we are
determining whether Louque’s petition raised claims over $75,000
for the sole purpose of determining her satisfaction of the federal
jurisdictional requirement — we find that course unnecessary to
pursue. First, it is plain that Louisiana courts have condoned
attorney fee-shifting in certain bad faith insurance claim handling
cases for years. Like the district court, we do not think it
inappropriate to consider all possible bases for an attorney’s fee
award to Louque where she pleaded one statutory ground of recovery:
Other grounds are readily available in Louisiana; both this court
(Hannover, supra) and Louisiana courts (Reed, supra) have
recognized overlap in the grounds for recovery; and Louque, as
mistress of her complaint, did not disavow her intention to seek a
recovery of fees.
Second, it is not for us to second-guess whether
Louisiana courts will ultimately find the Smith-Maryland Casualty-
Domangue line of cases congruent with, supplemental to, or
contradicted by § 658. Those cases presently afford a basis for
9
recovery of attorney’s fees by an insured, and we are Erie-bound to
respect their authority.2
Third, when determining the amount in controversy for
diversity purposes, a federal court need not pre-try the
sufficiency of the plaintiff’s complaint. Subject matter
jurisdiction is not defeated by the possibility that the complaint
ultimately fails to state a claim on which Louque could actually
recover attorney’s fees. As this court has explained,
there is no inconsistency in the district court’s action
of denying remand and then dismissing [plaintiff’s]
claims. . . . “Jurisdiction . . . is not defeated ...
by the possibility that the averments might fail to state
a cause of action on which [plaintiff] could actually
recover.”
Hawkins v. Nat. Ass’n of Sec. Dealers, Inc., 149 F.3d 330, 331 (5th
Cir. 1998) (quoting Bell v. Hood, 327 U.S. 678, 682 (1946)).
Thus, the question before us is whether the complaint,
fairly read, states a claim exceeding $75,000.3 A successful
2
In her brief, Louque criticizes the district court’s
distinguishing, in its merits determination, cases, like those
cited above, against an insurer for bad faith refusal to settle.
The district court had observed that those cases required an excess
judgment against the insured. Louque then says:
Appellant respectfully suggests that the facts and
damages as alleged by the Appellant are res nova and are
no different than an excess judgment situation. In fact,
Allstate’s actions in these instances could be much more
damaging than an excess judgment.
Louque cannot rely on these cases for affirmative recovery while
disavowing their applicability to the amount in controversy
determination.
3
No pertinent jurisdictional amount facts are in dispute.
10
result for Louque on the merits of her claims that Allstate failed
‘to adjust all claims fairly and promptly and to make reasonable
efforts to settle’ would put her in line to recover class action
attorney’s fees far exceeding $75,000. The court accordingly had
jurisdiction over her claim and, through its exercise of
supplemental jurisdiction, over the claims of the class. See 28
U.S.C. § 1367; Abbott Laboratories, supra.
B. Merits
Louque’s challenge to the dismissal of her case is
perfunctory. In two pages of briefing, she cites — once each — LA.
REV. STAT. ANN. §§ 22:658 and 1220, but no caselaw.4 She argues,
without quoting or citing the insurance contract, that her
pleadings reference “a policy provision which has been breached by
Allstate.” She asserts as a conclusion that Allstate breached its
fiduciary duty to her. She draws an analogy to the bad-faith
refusal-to-settle cases. See n.2, supra. Louque’s brief, in
short, may not even pass muster under the minimum criteria that we
require for a reasoned, record-based presentation of a party’s
position. 5TH CIR. R. 28.2; see also FED. R. APP. P. 28(a)(9)(A);
United States v. Martinez, 263 F.3d 436 (5th Cir. 2001).
Louque’s arguments are, in any event, fully disposed of
by the district court’s opinion, which we quote:
4
As Louque did not argue the merits of her claims under §§
1220 or 658 on appeal, they are waived. St. Paul Mercury Ins. Co.
v. Williamson, 224 F.3d 425, 445 (5th Cir. 2000).
11
a. Breach of Contract
To state a claim for breach of an insurance contract
under Louisiana law, a plaintiff must allege a breach of
a specific policy provision. See Bergeron v. Pan Am.
Assurance Co., 731 So. 2d 1037, 1045 (La. App. 4th Cir.
1999). In the instant case, although Louque claims that
Allstate refused to settle “valid” claims, she fails to
cite any policy provision that requires Allstate to
settle claims before trial. In fact, the only policy
provision Louque cites provides that Allstate has
unfettered discretion in deciding whether to settle
cases:
We will defend an insured person sued as the
result of a covered auto accident, even if the
suit is groundless, false or fraudulent. We
will choose the counsel. We may settle any
claim if we believe it is proper.
Def.’s Ex. A at 5.
In Employers Surplus Line Ins. Co. v. City of Baton
Rouge, 362 So. 2d 561, 564 (La. 1978), the Louisiana
Supreme Court construed a similar policy provision. The
Employers policy provided that the insurance company was
authorized to “make such investigation, negotiation and
settlement of any claim or suit it deems expedient.” Id.
at 565. The Louisiana Supreme Court explained that:
This provision vests the insurer with absolute
authority to settle claims within the limits
of the policy with the insured’s having no
power to compel the insurer to make
settlements or prevent it from doing so.
Id. As in Employers Surplus, Allstate is given absolute
discretion over whether or not to settle a claim.
Because Allstate’s policy does not obligate it to settle
any claim before trial, the Court finds that Louque fails
to state a claim for breach of contract.
b. Breach of Fiduciary Obligation
Louque also alleges that Allstate breached a
fiduciary obligation by failing to settle “valid claims”
before trial. However, as stated above, Allstate was not
contractually bound to settle Louque’s claim; and
Louisiana law does not recognize an extracontractual
obligation where there is no risk of exposing the insured
to excess liability. See, e.g., Ragas v. MGA Ins. Co.,
12
1997 WL 79357, at *2 (E.D.La. Feb. 21, 1997) (McNamara,
J.) (holding that an insured has no cause of action
against its insurer for bad faith refusal to settle in
the absence of an adjudicated excess judgment against the
insured). In the case at bar, Louque has neither an
“adjudicated excess judgment” nor even any claim that
Allstate’s decision to go to trial exposed her to excess
liability. To the contrary, Louque avers that prior to
trial the “third party was claiming damages well below
the $10,000 policy limits of [Louque’s] policy.” Compl.
at ¶ 5. Because Louque does not allege that Allstate’s
alleged refusal to settle exposed her to excess
liability, the Court finds that she has failed to state
a cause of action for breach of fiduciary obligation.
For these reasons, Louque’s complaint against Allstate
failed to state a claim upon which relief can be granted. FED. R.
CIV. PROC. 12(b)(6).
CONCLUSION
The district court correctly assumed removal jurisdiction
and correctly entered judgment dismissing Louque’s complaint.
AFFIRMED.
13
RHESA HAWKINS BARKSDALE, Circuit Judge, specially concurring:
I concur in the majority's holding: (1) Allstate did not
preserve in district court the applicability of article 595
(therefore, our recent Grant decision is not applicable); and (2)
pursuant to Rule 12(b)(6), Louque failed to state a claim upon
which relief can be granted.
I have some misgivings, however, concerning whether the
diversity jurisdictional amount is satisfied. Therefore, I concur
dubitante in holding § 22:658 applicable. (In my view, the
applicability vel non of § 22:658 in its present form (amended in
1989) has not been decided by Louisiana courts; an Erie-analysis is
required. In any event, in the light of Grant's holding concerning
article 595, it may well be that this § 22:658 issue will seldom,
if ever, surface again.)