{"id":902156,"date":"2024-01-23T15:59:02","date_gmt":"2024-01-23T22:59:02","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902156"},"modified":"2024-01-23T15:59:32","modified_gmt":"2024-01-23T22:59:32","slug":"bad-faith-claims-louisiana-supreme-court","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/bad-faith-claims-louisiana-supreme-court\/","title":{"rendered":"LA Supreme Court Clarifies Contract Controls Prescriptive Period For First-Party Bad Faith Claims"},"content":{"rendered":"\n<p>Caroline F. Crosby and Hunter Williams C. | <a href=\"https:\/\/www.mondaq.com\/unitedstates\/insurance-laws-and-products\/1412584\/la-supreme-court-clarifies-contract-controls-prescriptive-period-for-first-party-bad-faith-claims-?email_access=on\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Phelps Dunbar<\/a><\/p>\n\n\n\n<p>The Louisiana Supreme Court\u00a0<strong><a href=\"https:\/\/www.lasc.org\/opinions\/2024\/23-1320.CC.PC.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">recently ruled<\/a><\/strong>\u00a0that an insurance policy&#8217;s two-year limitation on the institution of suits by a policyholder creates a two-year prescriptive period for a policyholder&#8217;s bad faith claim against the insurer, even though the claim otherwise would have a 10-year prescriptive period.<\/p>\n\n\n\n<p>In 2023, Plaintiff sued her insurer, Louisiana Citizens Property Insurance Corporation, for bad faith, alleging that Citizens failed to timely tender payments for first-party losses she sustained in 2020. Citizens filed an exception of prescription, arguing that the lawsuit was barred by a provision in the insurance policy stating that &#8220;[n]o action can be brought unless the policy provisions have been complied with and the action is started within two years after the date of loss.&#8221; Plaintiff, relying on\u00a0<strong><a href=\"https:\/\/www.lasc.org\/opinions\/2019\/19-00052.CC.OPN.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\"><em>Smith v. Citadel Ins. Co<\/em><\/a><\/strong><em><strong>.<\/strong>,<\/em>\u00a0argued her suit was timely because the alleged bad faith constituted breach of a contractual obligation and thus is subject to a 10-year prescriptive period. The trial court agreed with Plaintiff and denied Citizens&#8217; peremptory exception. The court of appeal denied Citizens&#8217; application for writs. Citizens then filed an application for supervisory writ to the Louisiana Supreme Court.<\/p>\n\n\n\n<p>The Louisiana Supreme Court reversed the trial court&#8217;s denial of the peremptory exception and dismissed Plaintiff&#8217;s lawsuit, with prejudice. In doing so, the Court distinguished the\u00a0<em>Smith<\/em>\u00a0case relied on by Plaintiff because\u00a0<em>Smith<\/em>\u00a0&#8220;did not involve an insurance policy which contained a contractual limitation on institution of suits by the insured.&#8221; The Court cited its own\u00a0<strong><a href=\"https:\/\/www.lasc.org\/opinions\/2011\/10C0105.opn.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">precedent<\/a><\/strong>, holding that &#8220;in the absence of a statutory prohibition, a clause in an insurance policy fixing a reasonable time to institute suit is valid.&#8221; The Court noted that a two-year prescriptive period is expressly allowed by La. R.S. 22:868(B) (which prohibits &#8220;any condition, stipulation, or agreement limiting right of action against the insurer to a period of less than twenty-four months next after the inception of the loss when the claim is a first-party claim . . . .&#8221;) Accordingly, the Louisiana Supreme Court enforced the insurance policy&#8217;s two-year limitation to file and held that Plaintiff&#8217;s claim had prescribed.<\/p>\n\n\n\n<p>The\u00a0<em>Wilson<\/em>\u00a0ruling reinforces the longstanding rule that the insurance contract is the law between the parties. Parties to an insurance policy are free to contract for a different prescriptive period than that set forth by statute and, absent a statutory prohibition, the prescriptive period agreed on by the parties will be enforced. This decision is significant for insurers and policyholders alike, as it clarifies the applicable prescriptive period for <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/prescriptive-period-for-louisiana-first-party-bad-faith-claims\/\">first-party bad faith claims<\/a> and enforces the contractual limitation on suits by the insured.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Caroline F. Crosby and Hunter Williams C. | Phelps Dunbar The Louisiana Supreme Court\u00a0recently ruled\u00a0that an insurance policy&#8217;s two-year limitation on the institution of suits by a policyholder creates a two-year prescriptive period for a policyholder&#8217;s bad faith claim against the insurer, even though the claim otherwise would have a 10-year prescriptive period. In 2023,&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/bad-faith-claims-louisiana-supreme-court\/\">Continue reading <span class=\"screen-reader-text\">LA Supreme Court Clarifies Contract Controls Prescriptive Period For First-Party Bad Faith Claims<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10720],"tags":[9895,302,6602],"class_list":["post-902156","post","type-post","status-publish","format-standard","hentry","category-bad-faith-insurance-coverage","tag-advise-consult","tag-bad-faith-claims","tag-louisiana","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>LA Supreme Court Clarifies Contract Controls Prescriptive Period For First-Party Bad Faith Claims - Advise &amp; 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