DUPREE v. LAFAYETTE INSURANCE COMPANY, 2009-2602 (La. 11/30/10)

an be determined if the particular damage is covered under Lafayette's homeowners' policy, because only windstorm was an insured peril. On that determination, the factfinder will then be called upon to decide when the adjustment was performed, who performed the adjustment, whether the pricing data actually used by either the independent adjuster or Lafayette's adjuster were the most appropriate when the claim was filed and adjusted, and whether supplemental payments were later made by Lafayette. There is no "common nucleus of operative facts" on which to find the defendant systematically misadjusted the plaintiffs' claims by using pre-Katrina pricing, because whether a claim was in fact knowingly underpriced will necessarily turn on a myriad of individual factual issues.

Lafayette also introduced the results of a statewide market study performed by the Louisiana Department of Insurance on the claims handling practices of Lafayette following Hurricanes Katrina and Rita. The purpose of the study was "to insure equitable treatment of Louisiana policyholders and claimants by the Company and to assure compliance by the Company with Louisiana statutes, rules, directives, bulletins and regulations, as well as the Company's own procedures and guidelines." Exhibit D7. Lafayette asserts this study establishes that its adjusting practices were generally in compliance with Louisiana law and the company's own guidelines. It is uncertain what weight, if any, the trial court gave to this evidence.

General Contractor Overhead and Profit for Roof Replacement or Repair

In this proposed subclass, the plaintiffs assert their claims were misadjusted "[b]y excluding in the repair or replacement estimates for roofs damaged by failing to include the cost of overhead and/or profit where a General Contractor is to be used or circumstances require, the inclusion of overhead and profit (sic)." The plaintiffs assert a common issue that predominates is whether Lafayette systematically failed to pay overhead and profit for roofs and other repairs. The trial court found the plaintiffs had offered evidence to show that Lafayette and/or its outside adjusters failed to include overhead and profit in the repair estimates in their adjustment of claims for roof damage. The trial court found that, "if the work undertaken for repairs necessitated the employment or contracting of a general contractor, overhead and profit should be included in the repair estimate and to systematically exclude overhead and profit in such a situation would result in an inadequate repair estimate and lower adjustment." As with the pricing claim, we find the trial court committed manifest error as there are no common factual issues that predominate with regard to whether roof replacement was necessary, whether a general contractor was necessary to replace the roof or make repairs, or whether the roof damage was the result of an insured peril.

Gina Dupree Kennel, whose deceased father was the original named plaintiff, Charles Dupree, testified the wind damage payments received from Lafayette were not sufficient or adequate. She first saw the property in 2006, and testified that she did not see flood lines on the home, though she did see pictures of the refrigerator on the roof. She admitted that one of her brothers, who were co-owners, would know more than she did about the damages and payments received; her father was a usufructuary. She admitted her father was paid under the flood policy and by Lafayette, but he did not obtain a contractor estimate or make a supplemental claim. She stated her complaint was that Lafayette offered an insufficient amount for damages, that her father was not reimbursed for his time away from the property, and that he was not allowed any rental income reimbursement.

Gordon Smith is a named plaintiff. He testified his roof was two-thirds gone when he returned to his home. He stated he could not move home because the home was uninhabitable. Although he was paid by Lafayette for replacement of his roof, when he was asked if he received the full amount necessary for repair, he responded that his roof should have been replaced with corrugated metal rather than plain flat metal. He testified he made a supplemental claim when he requested mediation.

Dennis Juneau, a named plaintiff, was at a local church during the storm. He saw roofs and trees flying during the storm, with flood waters coming in between 9:00 and 10:00 that morning. He admitted there may have been some water damage to the second floor of his home, but noted trees were on top of the roof. The roof was damaged and had shingles missing; he could not say what additional damage was caused by Hurricane Rita, which struck the area approximately six weeks after Katrina. His house had shifted, but he did not know the cause. He did not tell Lafayette that the cost of repairs exceeded what Lafayette had paid. He claimed he did not receive adequate compensation for the damages.

Shontel Campos testified her home suffered wind damage, though she admitted the water had been up to her shoulders. She claimed she was not paid amounts due her, though she never submitted in writing a claim for any additional amount. Her property was reinspected, however, and she was paid additional amounts. She claimed roofing shingles were torn off the roof of her home. She testified that, though the money she received was sufficient to repair the house's roof, it was not sufficient to repair other damages.

Jason Campos, Shontel's husband, testified he did not receive sufficient funds to cover wind-related damages, such as a new roof on his shed, a satellite dish, and missing soffit and fascia. He also complained he had received only enough money to clean his air-conditioning unit, when it should have been replaced.

Robert Barback, a named representative, testified there was some wind damage to his home, a one-story slab building. He claimed there was damage to the rear corner of the roof, shingles and tar paper were missing, and the roof was leaking. Although Lafayette sent him a check for the repairs, he did not negotiate it because he thought it would release Lafayette from further obligations. He claimed his roof cost $9,000.00 to replace, but Lafayette offered only $3,547.91. He testified he sent estimates but Lafayette disputed the additional cost. He admitted 7 ½ feet of water had entered the home. He nonetheless asserted Lafayette did not fairly estimate the amount and cost of repairs.

General contractor Jonathan Drennan testified for the plaintiffs that almost every roof of the properties on which he had prepared a report needed to be replaced. His repair and cost estimates were thus based on completely replacing the roofs. With regard to general contractor overhead and profit, he testified that the amounts in the Lafayette files were frequently incorrect and that GCOP was not included properly. With regard to Dupree's claim, he testified a general contractor overhead often percent was allowed, but not on every item. With regard to the Campos claim, he testified general contractor overhead and profit was allowed, but not on every item on which it should have been allowed. He gave the same opinion with regard to other named plaintiffs. He opined that not every job requires a general contractor but that it is a personal preference. At his deposition, he insisted that, even if a roofing contractor had given a bid to replace a roof, Lafayette should have allowed general contractor overhead and profit, even when no general contractor was hired. He testified he would have charged twenty percent overhead and profit whenever he employed a sub-contractor.

Lafayette's representative, Bruce Miller, testified that general contractor overhead and profit was allowed and paid when applicable. He explained that GCOP is allowed if multiple trades are involved in the repair of the covered damage; however, GCOP would not be allowed if a roofer only was needed to perform the repair. He testified Lafayette never instructed adjusters to deny GCOP.

Helmick, the adjuster on Dupree's claim, testified there was minimal damage from wind to Dupree's roof. He noted the elevated portion of the rear addition roof had been "propped up with a pan" following the storm, which he deemed "pretty unusual." He further noted that a refrigerator was on top of the home's roof and that some wood had floated on top of the roof. He believed the home had not suffered any significant wind damage; instead, he testified flood water had risen above the roof line and possibly the ridge of the roof. He admitted the insured, who was present at the property, disagreed with the estimate, and claimed the wind had lifted the roof allowing significant water into the home. Helmick testified he included general contractor overhead and profit, but not for contents. He explained that a general contractor was not needed for certain losses, only for multiple damages, or when multiple trades, three or more, are needed to repair the covered damages. On cross-examination, the witness testified he thought flood water had caused the roof to lift.

Van Fisher testified for Lafayette as a civil engineer with an emphasis on structural engineering. He was the catastrophe leader for Project Time Cost, and he had developed its forensic engineering services. He explained that his job was to determine the scope of damages from wind versus storm surge. Factors he considered were density of the buildings in the area, height of buildings, differences in wind and storm-surge energy, and distance from the eye of the storm. To make a damage estimate, Fisher explained, he looked at the individual structure, the surrounding structures, the topography, wind speeds, and water heights. He opined that Katrina had affected each parish differently with respect to flooding and wind speed. Fisher testified that in southern St. Bernard Parish, there was significant wind and flooding, while in the northern part of the parish there was a lesser degree of wind, but a tremendous amount of flooding. Other parishes had similar differences, he noted. Plaquemines parish had mostly wind damage in Belle Chasse; in Jefferson parish, there was less wind further from the eye, no flooding on the West Bank, and on the East Bank, there was flooding but minor wind. In Orleans parish, he testified, there was major flooding but minimal wind. In St. Tammany parish, he noted, coastal areas experienced more surge, but Slidell also had high wind. Inland St. Tammany, St. Charles, Tangipahoa, and Terrebonne parishes experienced mostly wind, in Fisher's opinion. He noted wind effects varied from parish to parish, neighborhood to neighborhood, and even within neighborhoods.

With regard to Dupree's home, Fisher noted it had not been repaired, though it had been gutted. He saw only minor wind damage to the roof, with very few shingles missing; he disagreed with the plaintiffs' witness Drennan that a new roof was necessary. With regard to Barback, he noted the home had been repaired. He testified the Campos home had also been repaired, and that its roof showed only spot repairs. With regard to the Juneau home, he testified the home had not been repaired, but the roof had no significant damage, with only some areas showing signs of normal aging. He disagreed with Drennan that the Juneau home required a new roof.

This evidence shows similar factual questions might exist, but no common factual issues predominate with regard to the plaintiffs' assertion that Lafayette misadjusted their claims by excluding in the repair or replacement estimates for damaged roofs, overhead and/or profit where a general contractor was to be used or circumstances required the inclusion of such overhead and profit. Because the determination of whether the services of a general contractor would be reasonably likely to be required is a fact question that will be different for every insured, the trial court manifestly erred in finding that common factual issues exist and that such issues predominate over individual questions with regard to general contractor overhead and profit for wind-related roof damages. Before a plaintiff can establish that Lafayette misadjusted his or her claim by refusing to allow GCOP for repair or replacement of a roof damaged by windstorm, the factfinder must first determine whether the roof was damaged by a named peril, i.e., the scope of the damages. The plaintiffs will likely assert their roofs were damaged by a covered peril, windstorm, whereas the defendant will likely attempt to prove the roofs were damaged by an excluded cause, such as storm surge. Once that factual determination is made, the factfinder would next be required to determine whether the claimant's roof required replacement or could be repaired, the extent of the damages, and whether the complexity of the repair or roof replacement necessitated the engagement of a general contractor to supervise and coordinate the work. These are inherently individual factual issues which preclude a class-wide factual inquiry or resolution.

Press v. Louisiana Citizens Fair Plan Property Ins. Corp., 08-1313 (La. App. 4 Cir. 4/22/09), 12 So.3d 392, writ denied, 09-1125 (9/4/09), 17 So.3d 967, is distinguishable from the instant case. In Press, the appellate court found the common issue that predominated was whether an insured was entitled to GCOP when the adjustment identifies three or more trades involved in the repairs to the damaged property. 08-1313, p. 5, 12 So.3d at 396. Because there was testimony from two claims supervisors that none of the claims they supervised, some 6,600 to 8,000 claims, included GCOP, the appellate court found a common issue existed as to whether GCOP was payable and should have been paid under the insurer's own policies and guidelines. In the instant case, there was no dispute that GCOP was allowed under the policy when applicable, i.e., when multiple trades were required to make the covered repair; furthermore, the record evidence demonstrated that GCOP was in fact paid to Lafayette's policyholders, including the named representatives. Thus, the factual disputes presented by the plaintiffs here turn on whether the policyholder's roof was damaged by a covered peril, whether the roof required complete replacement or could be repaired, and whether the roof repair or replacement was such that it was reasonably likely a general contractor would be necessary to make the covered repairs.

Permits and Sales Tax

The plaintiffs also assert their claims were misadjusted by Lafayette by failing to include the cost of permits and sales tax in repair estimates used to adjust their claims. They assert a common factual issue exists as to whether Lafayette systematically failed to pay for permits and to pay the proper amount of sales tax to the insureds. The trial court found the repair estimates should have included the cost of all required permits and sales taxes, and "[t]o the extent those items were excluded, the repair estimate is artificially low and inadequate to compensate the loss."

We find the trial court also manifestly erred in finding common factual issues with regard to permits and sales taxes and that these issues predominate over individual questions. Other than general assertions they were not paid sufficient amounts for wind damage, the named representatives did not specifically testify they were denied the costs of permits when a permit was required before the repair could be made or that they were paid improper sales taxes. Drennan generally testified, based on his reports, that Lafayette did not pay for permits or calculate taxes correctly; however, he admitted he had used the incorrect sales tax percentage in his own reports for St. Bernard Parish. Drennan also testified in his deposition that permits would be required for almost any repair work done by a contractor, though he conceded they might not be necessary for the homeowner under some circumstances. Lafayette's representative, Miller, agreed costs of permits and sales taxes were payable where allowed, and he stated Lafayette did not instruct adjusters to deny costs of necessary permits or disallow sales taxes when applicable. Indeed, Helmick, who adjusted Dupree's claim, testified he included sales taxes in his estimate. The other claim files submitted by the plaintiffs showed sales taxes had been included in the estimates. As with GCOP, then, the factfinder would have to determine whether the particular damage was due to a covered peril, whether a permit was required to repair the damage, and whether the claimant was denied costs of the permit. Similarly, for sales taxes, the factfinder would have to determine whether the damage was due to a covered peril and whether sales taxes on materials or labor necessary to make the covered repairs were properly calculated in the repair estimate. Again, these are inherently individual factual issues, which are not susceptible to class-wide inquiry or resolution.

Additional Living Expenses

As the trial court found, Additional Living Expense (ALE) under Coverage D of the Lafayette policies are only available when an insured peril, here windstorm, is the cause of the damage to the insured property "and certain expense due to the displacement from the insured property at alternative living locations is necessary during the time when the insured premises were uninhabitable within the definitions and limits of the policy." The plaintiffs contend Lafayette misadjusted their claims by systematically failing to pay ALE when applicable. They assert a common issue that predominates, then, is whether Lafayette systematically denied ALE payments under Coverage D.

The policy provided as follows:

COVERAGE D — Loss of Use

1. If a loss covered under this Section makes that part of your "residence premises" where you resided not fit to live in, we cover, at your choice, either of the following. However, if the "residence premises" is not your principal place of residence, we will not provide the option under paragraph b below:

a. Additional Living Expense, meaning any necessary increase in the living expenses incurred by you so that your household can maintain its normal standard of living, or

b. Fair Rental Value, meaning the fair rental value of that part of the "residence premises" where you reside less any expenses that do not continue while the premises is not fit to live in.

Payment under a or b will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time for your household to settle somewhere else.

The trial court found that, in the eight-parish geographical area, "the vast majority believe and the evidence supports a sequence, during and in the aftermath of the Hurricane, of strong hurricane force and often tornadic winds, lifting houses and boats, ripping off roofs, downing trees and power lines, followed by a surge of water causing the overtopping of levees and extreme flooding." The trial court relied on the testimony of Larry Ingargiola, the former Homeland Security Director for St. Bernard Parish, that only four homes were undamaged in the parish and only a handful of the parish's residents were not displaced by the storm. The trial court reasoned: "it is extremely difficult, in light of this pervasive damage and loss, to imagine that among all of the Defendant's insured no Additional Living Expense was paid by Lafayette to its insured for additional living expenses under these circumstances." Although the trial court conceded that displacement could have been caused exclusively by flood, Lafayette "made no attempt to apportion additional living expenses between those caused by wind or water." The trial court added that, in any event, it was limiting the class to those persons who suffered wind damage to insured property in the geographic area.

The testimony at trial does not support a finding that common issues of fact exist with regard to ALE payments, nor does it support a finding that these common issues predominate over individual issues regarding ALE. As Lafayette argues, and the trial court acknowledged, the payment of ALE is based on the nature and scope of the damage to the insured's property and the policy language. At the hearing, Baldwin, the plaintiffs' public adjuster witness, testified no ALE was paid "except on maybe two" of the eleven claim files he reviewed; however, he saw no indication in the files that Lafayette had instructed adjusters to uniformly deny ALE or that the denial of ALE in any particular claim was due to anything other than the primary adjuster's inspection of the property. Kennel testified her father, Dupree, was not reimbursed for time away from his home. Barback testified he received no living expenses. Campos testified her family members had to stay away from their home due to damage, and they also did not receive living expenses. Dennis Juneau testified he witnessed roofs and trees flying during the storm, but he conceded he did not ask for living expenses because he had stayed with relatives after the storm; however, he believed he was owed living expenses because he had had to pay for meals and had contributed to his relatives' household expenses.

Lafayette produced evidence and testimony that the company paid out across the eight parishes $2,184,239.44 in Coverage D losses, including $ 157,226.64 of such losses in St. Bernard Parish. Coverage D losses consisted of both ALE and civil authority living expenses; however, Lafayette could not determine how much of this total amount is attributable to ALE or to civil authority living expenses absent a review of each claim. Elliott, who had worked for Crawford Company, testified Lafayette did not instruct it or its adjusters to deny ALE. He explained that it was up to the independent adjuster to determine if the house was uninhabitable and the cause of the damage, whether wind or water. He explained Crawford adjusted Lafayette's claims just as it had for any other client insurer. Finally, Helmick, who had adjusted the Dupree claim, testified that, in his opinion, the Dupree home was uninhabitable due to flood, given that the water had risen above the roof line and possibly above the ridge of the roof, in light of the fact that a refrigerator was on top of the roof.

We find no common issues that predominate across the class with regard to ALE, which were paid to at least some of the putative class members. There is no dispute ALE was payable when applicable under the definitions and limits sections of the policies. As with the prior subclasses, the factfinder must determine the cause of the damage to each insured's property, whether wind or water, in order to ascertain whether the damage to each is a covered peril. The factfinder will then be called upon to determine the extent of the damage from the covered peril, and whether the damage as a result of the covered peril rendered the insured's property uninhabitable. As the record evidence demonstrates, the plaintiffs' claims and, just as importantly, Lafayette's defenses to those claims, will require individual proof of factual issues that are not suitable for class-wide resolution.

Civil Authority

The Lafayette policy provided for civil authority living expenses as follows: "If a civil authority prohibits you from use of the `residence premises' as a result of direct damage to neighboring premises by a Peril Insured Against in this policy, we cover the additional living expense and Fair Rental Value loss as provided [] above for no more than two weeks." The plaintiffs contend Lafayette misadjusted their claims by systematically failing to pay civil authority living expenses. They assert a common issue that predominates, then, is whether Lafayette systematically denied civil authority payments under Coverage D.

The trial court acknowledged that civil authority living expense "is very similar [to] or even considered a component of additional living expense," yet "differs from traditional additional living expenses in that it covers living expenses when a civil authority prohibits the use of a residence as a result of direct damage to neighboring property although the insured home may not have been damaged by the insured peril." In finding the plaintiffs had established a common issue, the trial court reasoned that, "in the event of the hurricane that neighboring properties were damaged by wind and the civil authority prohibited the occupancy or use of any residential property." The trial court found Lafayette had not paid any claims under civil authority coverage. The court noted: "This benefit could have reimbursed certain expenses for a period not to exceed two weeks. The civil authorities set up barricades and restricted entry to all but emergency personnel during daylight hours and prevented anyone from occupying their home." Implicitly finding the plaintiffs had demonstrated a common question predominating over individual claims, the trial court noted "some evidence indicates that adjusters did not even consider civil authority since they did not think it was covered by the policy."

For the same reasons discussed above, we find the trial court erred in concluding the record evidence establishes a common legal or factual question that predominates over individual claims for civil authority living expenses. The parties stipulated to the introduction of official evacuation orders, disaster declarations, and press releases regarding the eight parishes, except for St. Bernard Parish, which had not issued a mandatory evacuation order, according to Larry Ingargiola, the former Homeland Security director for the parish. Ingargiola testified no official order was issued either to evacuate before the storm or to prevent residents from returning after the storm; instead, residents were strongly encouraged to leave with the caution that the parish would "not have enough body bags to cover all of you all." He stated that wind speeds exceeded 150 mph during the storm and that, from his vantage point at day break, he could see trees and power lines down. He testified that within half an hour after he had emerged from his location, the water began to come in. He stated that, a couple days after the storm, the parish set up barricades manned by sheriff's deputies at three of the four entrances to the parish, the fourth being the entrance from Plaquemines Parish. According to Ingargiola, no official order prevented return other than barricades, and some residents were allowed in through Paris Road. The witness believed the restrictions on access were necessary due to wind-related conditions that occurred before the flooding. He cited other reasons for not allowing unrestricted access: crime coming from New Orleans and the Murphy Oil spill. Baldwin, the plaintiff's public adjuster, testified civil authority was not paid on any of the eleven files he reviewed; however, he conceded he had not physically inspected any of the properties, had not spoken to any of the insureds, had not spoken to the primary adjusters, and had not reviewed flood maps, civil orders, or evacuation orders. On cross-examination, he affirmed he had seen nothing in the files indicating adjusters were instructed to deny uniformly civil authority living expenses; indeed, the files did not discuss civil authority.

Lafayette's Miller testified that Coverage D payments, which included ALE and civil authority, were paid in lump sums in St. Bernard and the seven other parishes, although the company could not segregate the amounts paid for each without a review of each claim file. Miller explained that civil authority living expenses are not triggered by an evacuation order and that such payments are allowed only when there is actual damage to a neighboring property as a result of a covered peril. Miller testified, as with ALE, that it was the independent adjuster who made the physical inspection and determined the scope of the damage and whether the property was inhabitable or not. He stated Lafayette gave no instructions to the independent adjusters, leaving it to them as experienced adjusters and noting they could call the toll-free number if they had questions as to coverage. He conceded Dupree was not paid civil authority living expenses. Helmick, who had adjusted the Dupree claim, testified he had looked at the damage to Dupree's neighboring structures, which he had determined suffered little wind damage. He explained he did not make the inspection of neighboring structures upon instructions from Lafayette, but did so in usual course as an adjuster. Further, he made no recommendation to Lafayette regarding civil authority. On cross-examination, Helmick admitted he had not thought civil authority was an included element under the policy. Elliott, the former Crawford supervisor, testified Crawford did not make recommendations on civil authority but instead forwarded all evacuation orders to Lafayette along with any information provided by the insured. Lafayette made the decision on civil authority, according to Elliott. The plaintiffs also introduced an email from an independent insurance agent indicating Lafayette had taken the position that ALE and civil authority would not be paid until an examination of the property was made and a determination was made that the property had been rendered uninhabitable by a covered peril.

As with ALE, we find no common legal or factual issues that predominate across the class with regard to civil authority living expenses. Lafayette did not dispute that civil authority living expenses were payable when applicable under the definitions and limits of the policies. The trial court apparently made blanket legal and factual determinations that civil authority living expenses were triggered by evacuation orders and general restrictions on access, that these evacuation orders and restrictions were the result of windstorm-related damages prior to the arrival of flood waters, and that windstorm damages had rendered homes in St. Bernard Parish uninhabitable prior to the arrival of flood waters. However, to determine whether a policyholder is entitled to civil authority, the factfinder must determine the cause or causes of the damages to the neighboring structures of each insured's property, whether wind or water or some other cause, in order to ascertain whether the damages to the neighboring structures are the result of a covered peril. The factfinder then will be called upon to determine the extent of the damages to the neighboring structures from the covered peril, whether the damages to the neighboring structures as a result of the covered peril rendered the insured's property uninhabitable, and what length of time the insured's property was rendered uninhabitable as a result of covered damages to the neighboring structures. Contrary to the trial court's apparent conclusion, then, the plaintiffs' claims for civil authority living expenses and Lafayette's defenses to those claims will require individual proof of factual issues that are not suitable for class-wide resolution.

Failure to Timely Pay Claims

Lastly, the plaintiffs contend Lafayette misadjusted their claims, entitling them to damages, penalties, attorney fees, and costs, by failing to pay claims within thirty or sixty days. In affirming class certification for statutory penalties, the trial court relied on two recent decisions from the court of appeal: Oubre v. Louisiana Citizens Fair Plan, 07-66 (La. App. 5 Cir. 5/29/07), 961 So.2d 504 (affirming class certification in action by policyholders against property insurer seeking penalties under La.Rev.Stat. 22:1220 for failure to initiate loss adjustment within thirty days after notice of hurricane damage), writ denied, 07-1329 (La. 9/28/07), 964 So.2d 363; and Chalona v. Louisiana Citizens Property Ins. Corp., 08-0257 (La. App. 4 Cir. 6/11/08), 3 So.3d 494 (affirming class certification in action by policyholders against insurer seeking mandatory penalties under La.Rev.Stat. 22:658 for failure to offer timely to settle property claims arising from Hurricanes Katrina and Rita), writ application withdrawn.

We find these cases to be distinguishable on their facts. In Chalona, the plaintiffs alleged they had notified the defendant of their losses following Hurricanes Katrina and/or Rita, but the defendant failed to make a written offer to settle their property damage claims within thirty days, in violation of its statutory duty under La.Rev.Stat. 22:658(A)(4). The Chalona plaintiffs sought statutory penalties pursuant to La.Rev.Stat. 22:658(B)(1). The appellate court found the common question of law or fact to be whether the defendant failed to provide the plaintiffs with written offers of settlement within thirty days as required by statute. The Chalona court's apparent reasoning that commonality, as well as predominance and superiority, had been established by the plaintiffs was based primarily on the testimony of the chief executive officer of the defendant insurer, who admitted, as of the date of his deposition on December 1, 2005, that some eighty percent of the 59,000 claims filed against the insurer remained outstanding and that only twenty percent of those filed claims had been concluded.

La.Rev.Stat. 22:658(A)(4) (2003) provides in pertinent part:

All insurers shall make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim.

La.Rev.Stat. 22:658(B)(1) (2003) [revised and now found in La.Rev.Stat. 22:1892] provides:

B. (1) Failure to make such payment within thirty days after receipt of such satisfactory written proofs and demand therefor or failure to make a written offer to settle any property damage claim, including a third-party claim, within thirty days after receipt of satisfactory proofs of loss of that claim, as provided in Paragraphs (A)(1) and (4), respectively, or failure to make such payment within thirty days after written agreement or settlement as provided in Paragraph (A)(2), when such failure is found to be arbitrary, capricious, or without probable cause, shall subject the insurer to a penalty, in addition to the amount of the loss, of twenty-five percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater, payable to the insured, or to any of said employees, or in the event a partial payment or tender has been made, twenty-five percent of the difference between the amount paid or tendered and the amount found to be due.

Two judges dissented, believing the definition of the proposed class was insufficient to allow a policyholder to determine whether he or she might be a putative class member. See Chalona, 08-0257, 3 So.3d at 504 (Murray, J., and Kirby, J, dissent with reasons).

In Oubre, the plaintiffs alleged they suffered damages to their property after Hurricanes Katrina and/or Rita, and notified the insurer of their losses, but the insurer failed to comply with its statutory duty under La.Rev.Stat. 22:658(A)(3) to initiate loss adjustment in a timely and adequate manner. Therefore, they asserted, the insurer was liable for the statutory penalties provided in La.Rev.Stat. 22:1220. The appellate court found the evidence supported the trial court's finding that a common factual question predominated as to whether the insurer had failed to initiate loss adjustment within the statutory thirty-day limit. The Oubre court likewise had noted the testimony of the chief executive officer of the same defendant insurer that as of December 1, 2005, the insurer had some 59,000 claims filed and eighty percent of those remained outstanding.

La.Rev.Stat. 22:658(A)(3) (2003) provides in pertinent part:

. . . .In the case of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim within thirty days after notification of loss by the claimant. Failure to comply with the provisions of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1220 [now found in La.Rev.Stat. 22:1973].

La.Rev.Stat. 22:1220, now found in La.Rev.Stat. 22:1973, "Good faith duty; claims settlement practices; cause of action; penalties," provides in pertinent part:

A. An insurer, including but not limited to a foreign line and surplus line 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. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.

B. Any one of the following acts, if knowingly committed or performed by an insurer, constitutes a breach of the insurer's duties imposed in Subsection A:

(1) Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.

(2) Failing to pay a settlement within thirty days after an agreement is reduced to writing.

(3) Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.

(4) Misleading a claimant as to the applicable prescriptive period.

(5) Failing to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.

(6) Failing to pay claims pursuant to R.S. 22:658 [now found in formerly La.Rev.Stat. 22:1892] when such failure is arbitrary, capricious, or without probable cause.

C. In addition to any general or special damages to which a claimant is entitled 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. Such penalties, if awarded, shall not be used by the insurer in computing either past or prospective loss experience for the purpose of setting rates or making rate filings.

In the instant case, the plaintiffs seek statutory penalties under La.Rev.Stat. 22:658 and La.Rev.Stat. 22:1220(B)(5). The plaintiffs seek additional penalties under La.Rev.Stat. 22:1220(C). A cause of action for penalties under La.Rev.Stat. 22:658 requires a showing that (1) an insurer has received satisfactory proof of loss, (2) the insurer fails to tender payment within thirty or sixty days of receipt thereof, and (3) the insurer's failure to pay is arbitrary, capricious or without probable cause. See Louisiana Bag Co., Inc. v. Audubon Indem. Co., 08-0453, pp. 11-12 (La. 12/2/08), 999 So.2d 1104, 1112-13. An insurer also owes a duty of good faith and fair dealing under La.Rev.Stat. 22:1220(A), and violates that duty if it fails "to pay the amount of any claim due any person insured by the contract within sixty days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause." La.Rev.Stat. 22:1220(B)(5).

In addition to the provisions provided above, La.Rev.Stat. 22:658(A)(1) (2003) provided, in pertinent part:

A. (1) All insurers issuing any type of contract, other than those specified in R.S. 22:656, R.S. 22:657, and Chapter 10 of Title 23 of the Louisiana Revised Statutes of 1950, 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.

We recently explained that "an insurer need not pay a disputed amount in a claim for which there are substantial, reasonable, and legitimate questions as to the extent of the insurer's liability or of the insured's loss." Louisiana Bag Co., 08-0453, pp. 16-17, 999 So.2d at 1116 (citing Reed v. State Farm Auto. Ins. Co., 03-0107 (La. 10/21/03), 857 So.2d 1012, 1021). However, we noted, an insurer must pay any undisputed amount over which reasonable minds could not differ. Id. (citing McDill v. Utica Mut. Ins. Co., 475 So.2d 1085, 1092 (La. 1985). "Any insurer who fails to pay said undisputed amount has acted in a manner that is, by definition, arbitrary, capricious or without probable cause, [ Hammett v. Fire Ass `n of Philadelphia, 181 La. 694, 160 So. 302, 304-05 (1935)], and will be subject to penalties therefore on `the difference between the amount paid or tendered and the amount found to be due.'" Id., pp. 16-17, 999 So.2d at 1116 (quoting La.Rev.Stat. 22:658).

We find the trial court manifestly erred in apparently concluding the issue of statutory penalties in this case can be and is best resolved on a class-wide basis. La. Code Civ. Proc. art. 591(C) specifically mandates that certification "shall not be for the purpose of adjudicating claims or defenses dependent for their resolution on proof individual to a member of the class." Unlike the plaintiffs in Chalona and Oubre, the plaintiffs here have not introduced any evidence that Lafayette failed to initiate adjustment of their claims within thirty days of the notice of the loss or failed to make a written offer to settle their claims within thirty days after receipt of satisfactory proofs of loss. There was no testimony offered that Lafayette failed to do either. Instead, the plaintiffs assert Lafayette has misadjusted or denied their claims in violation of its statutory duties of good faith and fair dealing. As our discussion of the prior proposed subclasses reveals, the plaintiffs essentially assert the amounts they received were insufficient to satisfy their claims because Lafayette acted arbitrarily, capriciously or without probable cause in misadjusting their claims by using pre-Katrina pricing, by failing to pay adequate GCOP for roof repairs or replacement, by failing to pay for costs of permits and to pay correct sales taxes, by failing to pay ALEs, and by failing to pay civil authority living expenses. Given the nature of these claims against Lafayette, more than a simple calculation of damages must necessarily be made on an individual basis. Accordingly, whether Lafayette is liable to the plaintiffs for statutory penalties, because it breached the contract with the policyholder and/or breached its duty of good faith and fair dealing, will necessarily require intensive review of the individual facts of each putative class member's damage claim, which under these circumstances are not suitable for resolution on a class-wide basis.

We note also that it is within the factfinder's discretion whether to impose additional penalties under La.Rev.Stat. 22:1220, including subsection (C), and thus whether Lafayette is liable for such additional penalties will require an individual examination of Lafayette's conduct with regard to each policyholder. See generally Sultana Corp. v. Jewelers Mut. Ins. Co., 03-0360 (La. 12/3/03), 860 So.2d 112; Calogero v. Safeway Ins. Co. of Louisiana, 99-1625 (La. 1/19/00), 753 So.2d 170.

Predominance and Superiority

In addition to the commonality prerequisite, we find the trial court manifestly erred in finding that common factual or legal issues predominate over individual questions and that a class action is superior to other available methods for the fair and efficient adjudication of the plaintiffs' claims. La. Code Civ. Proc. art. 591(B). As discussed above, individual liability issues and defenses thereto predominate over any common issues, none of which we found to be substantive. Whether the plaintiffs had homeowner policies with Lafayette and suffered wind damage as a result of Hurricane Katrina are not sufficiently substantive issues militating in favor of class certification.

Nor have the plaintiffs established that the class action is superior to other methods under these circumstances. We stressed in Brooks that the trial court must evaluate, quantify and weigh the relevant factors to determine to what extent the class action would in each instance promote or detract from the goals of effectuating substantive law, judicial efficiency, and individual fairness." Brooks, 08-2035, p. 10, 13 So.3d at 554. The basic goal or aim of any procedural device is "to implement the substantive law, and to implement that law in a manner which will provide maximum fairness to all parties with a minimum expenditure of judicial effort." Stevens v. Bd. of Trustees of Police Pension Fund of City of Shreveport, 309 So.2d 144, 151 (La. 1975).

As noted above, the legislature has since codified the considerations it deemed pertinent to such an analysis in La. Code Civ. Proc. art. 591(B)(3). With regard to "the interest of the members of the class in individually controlling the prosecution or defense of separate actions," La. Code Civ. Proc. art. 591(B(3)(a), we find the claims are so highly individualized that class certification likely will be unfair to members who have claims stronger than the named representatives. As this court has noted, the requirements of predominance and superiority mandate "caution, especially where individual stakes are high and disparities among the class members great." Brooks, 08-2035, p. 19., 13 So.3d at 560. Also militating against class certification is the fact that individual suits raising similar insurance adjusting claims have already been filed widely — and many have been resolved — with respect to damages arising out of Hurricane Katrina, as Lafayette's representative attested to and the trial court itself acknowledged. Because we find no common substantive issues exist among the putative class members in this case, and the merits of each claim will turn on individual proof of liability, the extent and nature of the litigation already commenced by putative class members do not suggest class certification will add to fairness and efficiency. La. Code Civ. Proc. art. 591(B)(3)(b).

Next, there has been no showing that concentrating the litigation in St. Bernard Parish is more desirable over other fora and that it contributes to fairness and efficiency. La. Code Civ. Proc. art. 591(B)(3)(c). Indeed, we note that, aside from the St. Bernard Parish residents, residents of the remaining seven parishes in the putative class will be required to present and prove their highly individual damage claims outside of their home parishes, and there has been no discussion, much less proof, that requiring these class members to litigate their claims in another forum is preferable to litigating in their home forum. As we have concluded, no common factual or legal issues exist that would militate in favor of having the plaintiffs' claims adjudicated in a single forum.

Nor do we find the difficulties in managing a class action will be outweighed by a gain in efficiency in adjudicating the controversy. La. Code Civ. Proc. art. 591(B)(3)(d). As discussed in detail above, the individual claims are such that the class action would necessarily devolve into a series of mini-trials on the liability of Lafayette with respect to each putative class member. The plaintiffs have also not demonstrated they lack the practical ability to pursue their claims without class certification. La. Code Civ. Proc. art. 591(B)(3)(e). Although they contend some claims are so small the policyholder might be discouraged from filing suit on his or her own, we note the plaintiffs are also seeking statutory damages and penalties under La.Rev.Stat. 22:658 and 22:1220, which provide for minimum penalties of $1,000 and $5,000 if the factfinder determines they are merited. Moreover, the plaintiffs have not shown the trial court cannot manage similar cases efficiently under the rule of joinder and the cumulation of actions. See La. Code Civ. Proc. arts. 461 et seq.

Finally, we do not find the vindication of public policies or legal rights justifies the costs and burdens of class litigation. La. Code Civ. Proc. art. 591(B)(3)(f). As we have noted, proof that Lafayette breached its duties of good faith and fair dealing and acted arbitrarily, capriciously and without probable cause will require an intensive review of the facts individual to each putative class member. The burdens on Lafayette of defending such claims in a class action would be substantial, and in our view, unwarranted in light of legislative policy that class certification "shall not be for the purpose of adjudicating claims or defenses dependent for their resolution on proof individual to a member of the class." La. Code Civ. Proc. art. 591(C). "When there are a myriad of individual complaints that ultimately will require plaintiff-by-plaintiff adjudication of liability issues, this will militate against a finding of predominance of common character and the superiority of the class action procedure." Davis v. Jazz Casino Co., L.L.C., 03-0005 (La. App. 4 Cir. 11/14/04), 864 So.2d 880, 889 (citing Banks, supra, 737 So.2d at 1281), writ denied, 04-0572 (La. 4/23/04), 870 So.2d 304.

When it suggested the trial court on remand should excise the "when such is arbitrary, capricious or without probable cause" language from the class definition, the appellate court recognized that the plaintiffs, to be awarded statutory penalties, must necessarily establish Lafayette acted arbitrarily, capriciously or without probable cause when it misadjusted or denied their claims. Although the appellate court acknowledged that "the determination of whether an insurer's failure to pay was arbitrary and capricious must be made at trial and goes to the merits of each individual claim," Dupree, 09-0321, p. 14, ___ So.3d at ___, the court neglected to determine whether "the disallowance of individual trials" by certifying the class is "warranted by a subjective gain in efficiency" injudicial administration over some other available procedure. Daniels v. Witco Corp., 03-1478 (La. App. 5 Cir. 6/1/04), 877 So.2d 1011, 1015-16, writs denied, 04-2283 (La. 11/19/04), 888 So.2d 204, and 04-2287 (La. 11/19/04), 888 So.2d 205.

CONCLUSION

For the reasons set forth above, we conclude the trial court manifestly erred in finding common factual or legal issues exist as required by La. Code Civ. Proc. art. 591(A)(2). The trial court also erred in finding, under La. Code Civ. Proc. art. 591 (B)(3), that common substantive issues of law or fact predominate over individual questions and that the class action procedure is superior to other available methods for fairly and efficiently adjudicating the claims asserted. Accordingly, we conclude the trial court abused its discretion in certifying the class. We therefore reverse the appellate court's judgment affirming the trial court's class certification, reverse the trial court's ruling granting the motion to certify the class, and remand the case for further proceedings.

REVERSED AND REMANDED