Opinion
CIVIL ACTION NO. 03-2950, SECTION "K" (3)
January 28, 2004
MINUTE ENTRY
Before the Court is a Motion to Dismiss (Rec. Doc. No. 3) filed by Liberty Mutual Fire Insurance Company ("Liberty Mutual"). Having reviewed the pleadings, memoranda, and relevant law, the Court finds Defendant's position to be without merit and DENIES the motion.
I. BACKGROUND
Defendant Liberty Mutual, a fire and property damage insurer, issued Policy No. H32-291-910823-000-4 ("Policy") to plaintiffs Karen Bethke Cutrell and Clifford L. Cutrell, Jr. Among other things, the Policy provided coverage for damage sustained to Plaintiffs residence and property located at 110 Dogwood Drive, Covington, Louisiana ("Residence" or "Home"). The Policy had an effective date of August 1, 2000 and clearly provides that suit against Defendant must be brought within one year after the date of loss.
In September of 2000, Plaintiffs allegedly noticed various problems and deficiencies with the foundation and plumbing at the Home. Plaintiffs notified Defendant of the alleged problems with the plumbing and the foundation. In response to Plaintiffs' claim, Defendant dispatched a plumber to the Residence in order to assess the extent of the plumbing problem. The plumber performed an inspection of Plaintiffs' residence and advised Defendant of the extent of the work that would be required to remedy the defects. Additionally, Defendant employed an engineer and construction company in order to perform further inspections of the Residence and provide additional estimates. In December of 2000, the construction company inspected the Residence. In February of 2001, Defendant's engineer advised Defendant that plumbing repairs to the Home were required and, following the repairs, the foundation should be allowed to settle in order to determine the extent of the damages to the Residence and property.
In March of 2001, the sewer and water lines beneath the Residence were inspected. The invoice for the plumbing services performed in accordance with this inspection was forwarded to Defendant in April of 2001, and was subsequently paid by Defendant. In April of 2001, Defendant's contractor issued a report advising that the Residence would need to settle following some plumbing repairs before further repairs in accordance with the February 2001 findings of Defendant's engineer could occur. In August of 2001, Defendant's engineer advised Liberty Mutual via correspondence that additional surveys regarding the Residence and property were required. In February of 2002, Defendant's engineer advised Defendant of the status of their investigation and the potential long-term problems that could affect the Home and property. — In May of 2002, Defendant's contractor presented Defendant with an estimate of the interior work required at the Residence.
In August of 2002, Plaintiffs retained counsel and on August 30, 2002, Defendant's adjuster advised Plaintiffs' counsel that Defendant would be making a settlement offer on September 4, 2002. On September 10, 2002, the contractor sent Liberty Mutual another estimate regarding necessary repairs to the Residence.
On September 13, 2002, Defendant issued check number 11708556 to Plaintiffs in the amount of $46,550.00 to cover the estimate for repairs to the Home's foundation. On September 16, 2002, Defendant's adjuster advised Plaintiffs' counsel that a second check was going to be issued to Plaintiff for repairs to the Home.
On September 19, 2002, the contractor issued a report and estimate to Defendant regarding repairs to the Residence. The report specified that the estimate would change based upon the condition of the Home at the time the repairs are undertaken.
Between September and December of 2002, negotiations between Defendant's adjuster and Plaintiffs' counsel continued. On December 23, 2002, Defendant made a settlement offer in the amount of $155,339.41.
On September 12, 2003, Plaintiffs filed a Petition in Suit for Breach of Contract and for Damages in Civil District Court for the Parish of St. Tammany. Defendant filed a Notice of Removal (Rec. Doc. No. 1) with this Court on October 21, 2003 and filed the instant Motion to Dismiss (Rec. Doc. No. 3) on October 28, 2003. The Court heard the motion on November 12, 2003.
II. LAW ANALYSIS
Federal Rule of Civil Procedure 12(b)(6) permits a defendant to seek dismissal of a complaint based on the "failure to state a claim upon which relief can be granted." To determine whether a motion to dismiss has merit, Jefferson Parish v. Lead Ind. Ass'n. Inc., 106 F.3d 1245. 1250 (5th Cir. 1997) instructs that "[t]he standard to be applied to a motion to dismiss under Federal Rule 12(b)(6) is a familiar one." When considering a motion to dismiss under Rule 12(b)(6), district courts should construe the complaint liberally in favor of the plaintiff, assuming all factual allegations to be true and resolving any ambiguities and doubts in favor of the plaintiff. Fernandez-Montes v. Allied Pilots Ass'n., 987 F.2d 278, 284 (5th Cir. 1993); see Leleux v. United States, 178 F.3d 750, 754 (5th Cir. 1999). A complaint may not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. (quoting Lowrey v. Texas A M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997)); Leffall v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994); Fernandez-Montes, 987 F.2d at 284-85. However, conclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss. Fernandez-Montes, 987 F.2d at 284; Tuchman v. DSC Communications Corp., 14 F.3d 1061, 1067 (5th Cir. 1994).
In the instant matter, Defendant moves this Court pursuant to 12(b)(6) to dismiss Plaintiff's Complaint on the grounds that Plaintiff's suit against Defendant is barred by prescription. The Policy requires that any suit against Liberty Mutual arising under the Policy be "started within one year after the date of the loss." Defendant asserts that in September of 2000, Plaintiff noticed and reported a loss to Defendant in the form of damage to Plaintiff's foundation resulting from a broken drain or water line. Plaintiff did not file this suit until September 12, 2003, three years later. Accordingly, Defendant seeks to bar this action as untimely.
Under Louisiana law, an insurance policy covering loss caused by water pipe or plumbing may contain a prescriptive period limiting suit against the insurer to one year after the inception of the loss. Louisiana Revised Statute § 22:629(11)(b) permits policy conditions that do not limit the "right of action against the insurer to a period of less then twelve months next after the inception of the loss when the claim arises under any insurance classified and defined in R.S. 22:6(10), (11)," which includes insurance against loss or damage caused by water pipe or plumbing. La. Rev. Stat. § 22:629(11)(b) (West 1995).
In the instant matter, the issue of prescription involves questions of fact that the Court is unable to resolve on a Rule 12(b)(6) motion. The court therefore declines to find at this time that Plaintiff's' claims for breach of contract have prescribed. There is no dispute that Plaintiff's initially discovered the foundation problems afflicting the Residence in September of 2000, roughly three years prior to filing suit, nor is there any disagreement as to the Policy's language. However, the facts alleged in the Petition and subsequent filings indicate that uncertainty remains as to whether Defendant's actions interrupted the prescriptive period provided by Louisiana Revised Statute § 22:629(1) (l)(b) and the Policy.
In Lima v. Schmidt, 595 So.2d 624 (La. 1992), the Louisiana Supreme Court addressed the issue of prescription interruption through tacit acknowledgment:
A tacit acknowledgment occurs when a debtor performs acts of reparation or indemnity, makes an unconditional offer or payment, or lulls the creditor into believing he will not contest liability. Conversely, mere settlement offers or conditional payments, humanitarian or charitable gestures, and recognition of disputed claims will not constitute acknowledgments. These generalizations are reflected in the host of cases addressing the issue of what constitutes a tacit acknowledgment. Our courts have added to the above generalizations other criteria that evidence on acknowledgment, including undisputed liability, repeated and open-ended reassurances of payment, and continuous and frequent contact with the creditor throughout the prescriptive period. Conversely, our courts have recognized that mere recognition of a disputed claim, conditional payments, and settlement or compromise offers or negotiations do not evidence an acknowledgment.Lima, 595 So.2d at 634. (Footnotes omitted.) Louisiana's Appellate Courts have repeatedly confirmed the concept that prescription may be interrupted if the insured is lulled into believing the claim will be paid or if acknowledgment of the plaintiffs right to recover is otherwise tacitly conveyed. See Griffin v. Audubon Ins. Co., 94-0233, 649 So.2d 72, 74 (La.App. 1st Cir. 12/22/94); De Francesch v. Ralph Peterson Assoc. Ins. Agency, 508 So.2d 1014 (La.App. 5th Cir. 1987); Deville v. Louisiana Farm Bureau Ins. Co., 492 So.2d 895 (La.App. 3d Cir.), writ denied, 496 So.2d 332 (La. 1986); Richardson v. Louisiana Farm Bureau Mutual Ins. Co., 393 So.2d 200 (La.App. 1st Cir. 1980), writ denied, 398 So.2d 529 (La. 1981). "`Under the law, acknowledgment sufficient to interrupt prescription may be made verbally, in writing, by partial payment or in other ways . . .'" Mellon Financial Services Corp. #7 v. Lafayette Insurance Co., 616 So.2d 1273, 1277 (La.App. 4th Cir. 1993) (quoting Turner v. Willow Tree Townhomes Part., 533 So.2d 107, 108 (La.App. 4 Cir. 1988)).
The facts set forth in the Petition could infer that Plaintiff's' were lulled into believing Liberty Mutual would pay the claim. Defendant supplied Plaintiff's with virtually immediate and constant attention to their property damage claim for well over two years. Defendant retained the services of numerous professionals for the purpose of repairing Plaintiff's' home, including a plumber, an engineer, a contractor, and a construction company. Liberty Mutual assigned an adjuster to the case who offered to tender several checks to fund the repair. Furthermore, Defendant remained in continuous and frequent contact with Plaintiff's from the time of the initial damage claim until at least December 23, 2002. On numerous occasions, Defendant and the repair professionals Liberty Mutual retained informed Plaintiff's that a period of time must elapse before the Residence could be completely repaired.
Consequently, this Court finds that Plaintiff's' Petition presents allegations sufficient to create a question of fact as to whether Defendant interrupted the prescriptive period by tacitly acknowledging Plaintiff's' right to recover. Considering the Fifth Circuit's Rule 12(b)(6) standard requiring that courts construe the complaint liberally in favor of the plaintiff and resolve all ambiguities and doubts in favor of the plaintiff, Defendant's motion must be denied. See Fernandez-Montes v. Allied Pilots Ass'n., 987 F.2d at 284. Accordingly,
IT IS ORDERED that Defendant's Rule 12(b)(6) Motion to Dismiss (Rec. Doc. No. 3) is hereby DENIED.