Lorraine A. Ryan, James Ventle, Individually and On Behalf of His Minor Children, Erica and Tracy and Bill and Susan Wozniak, Individually and On Behalf of Their Minor Children, Crystal, Braden and Cody VS State Farm Mutual Automobile Insurance Company and Jackie D. Ventle (2010CA0961 Consolidated With 2010CA0962)
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STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NUMBER 2010 CA 0961
LORRAINE A RYAN BILL AND SUSAN WOZNIAK
INDIVIDUALLY AND ON BEHALF OF THEIR MINOR CHILDREN
CRYSTAL BRADEN AND CODY AND JAMES VENTLE INDIVIDUALLY
AND ON BEHALF OF HIS MINOR CHILDREN ERICA AND TRACY
VERSUS
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY ET AL
CONSOLIDATED WITH
NUMBER 2010 CA 0962
GUS HERNANDEZ
VERSUS
JACKIE VENTLE PAUL MANIFOLD STATE FARM MUTUAL
AUTOMOBILE INS CO CREDIT GENERAL INS CO AND
CANA TEX INTERNATIONAL INC
Judgment Rendered December 22 2010
Appealed from the
Eighteenth Judicial District Court
In and for the Parish of Pointe Coupee
State of Louisiana
Suit Number 32 c 32
101 w 497
Honorable James J Best Judge
Donald A Hoffman
Counsel for
Mary Ann Wegmann
New Orleans LA
Appellant
Intervenor
American Home Assurance
Company a AIG Worker
k
s
Compensation
Gerald A Melchiode
Counsel for
Mary E Lorenz
DefendantAppellee
Evanston Insurance Company
New Orleans LA
14k
C
Counsel for
Andrew P Sellers Jr
Baton Rouge LA
Defendant Appellee
National Union Fire Insurance
Co of Pittsburgh Pennsylvania
EMEMEM
BEFORE PARRO GUIDRY AND HUGHES JJ
2
GUIDRY J
American
Home
Assurance
Company
also
known
International Group Inc Worker Compensation AIGWC
s
as
American
appeals a summary
judgment of the trial court dismissing its claim for reimbursement against the
Evanston Insurance Company
Evanston
The underlying facts of this case
which has previously come before this court twice on appeal are not in dispute
and will only be recounted as necessary herein
In this appeal AIGWC has asserted several assignments of error that largely
center on two main allegations 1 that the trial court denied it due process of
law and fundamental fairness by setting aside its January 20 2009 Ruling of the
Court without notice and by failing to provide it notice that Evanston and
s
National Union Motions for Summary Judgment would be heard on September
s12J
11 2009
and 2 that the trial court erred in failing to find that the facts
surrounding the highlow agreement executed by Evanston and the plaintiffs
constituted a compromise made in violation of La R 23 for which
S 1102
1
C
Evanston
is
liable
to
AIGWC
for
reimbursement
of the
full
amount
of
compensation benefits and medical benefits paid to the plaintiffs
s
AIGWC first assignment of error is without merit As acknowledged by
AIGWC following remand of this matter to the trial court AIGWC Evanston and
National Union all filed cross motions for summary judgment on the issue of
whether the highlow agreement between Evanston National Union and the
plaintiffs constituted a compromise for which the insurers could be held liable
under La R 23 A hearing on the cross motions was held on August
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1
C
1
See Ran v State Farm Mutual Automobile Insurance Company 022303 La App 1 st Cir
03
27
6 unpublished opinion writ denied 03 2132 La 11 857 So 2d 503 and Ryan v
03
7
State Farn Mutual Automobile Insurance Company 05 0268 La App 1st Cir 02
06
10
unpublished opinion
2
National Union Fire Insurance Company of Pittsburgh Pennsylvania National Union also
referred to as AIG AIG Business Auto and AIG Primary in the record filed a separate
motion for summary judgment on the same grounds asserted by Evanston
C
8 2008 following which the trial court issued a Ruling of the Court signed
January 20 2009 wherein it stated that for the reasons stated in AIGWC brief it
s
granted AIGWC motion for summary judgment and denied Evanston motion for
s
s
summary judgment
The Ruling of the Court concluded with the instruction
udgment
j to be submitted accordingly
Thereafter AIGWC filed a motion for entry of final judgment wherein it
contended that it had drafted a proposed judgment in conformity with the trial
s
court January 20 2009 Ruling of the Court Evanston however objected to the
proposed judgment On the date the motion for entry of judgment was scheduled
to be heard the trial court held a status conference instead following which the
trial court issued a judgment with reasons signed September 28 2009
In that
judgment which is the judgment appealed herein after reciting certain findings of
fact and conclusions of law intended to clarify and supersede its ruling on
January 20 2009 the trial court decreed that it was granting the motions for
summary judgment filed by Evanston and National Union on February 27 2008
and March 27 2008 respectively Pursuant to that decree the trial court dismissed
s
AIGWC claims against Evanston and National Union with prejudice and denied
s
AIGWC motion for entry of final judgment as moot
A final judgment can be inconsistent with the written reasons for judgment
Written reasons for judgment are considered to be interlocutory rulings and do not
carry the finality of a judgment Prior to final judgment a trial judge may at his
discretion
change
the
substance
or
the
result
of
interlocutory
rulings
Thurman v Thurman 521 So 2d 579 581 La App 1st Cir 1988 As previously
stated a hearing on AIGWC Evanston and National Union cross motions for
ss
s
summary judgment on the issue of whether the highlow agreement would
constitute a compromise under La R 23 was held on August 8
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2008 thus all interested parties were heard on the issue Although the trial court
C
initially indicated that it would render judgment in favor of AIGWC it still acted
within its authority and with due process in rendering the judgment appealed
Hence we reject this assertion of error
Accordingly we must now consider the primary issue in this appeal
whether the trial court erred in not finding that the highlow agreement was a
compromise pursuant to La R 23 That statute provides
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When a suit has been filed against a third party defendant in
which the employer or his insurer has intervened if the third party
defendant or his insurer fails to obtain written approval of the
compromise from the employer or his insurer at the time of or prior to
such compromise and the employee fails to pay to the employer or his
insurer the total amount of compensation benefits and medical
benefits out of the funds received as a result of the compromise the
third party defendant or his insurer shall be required to reimburse the
employer or his insurer to the extent of the total amount of
compensation benefits and medical benefits previously paid to or on
behalf of the employee to the extent said amounts have not been
previously paid to the employer or his insurer by the employee
pursuant to the provisions of Subsection B of this Section
Notwithstanding such payment all rights of the employer or his
insurer to assert the defense provided herein against the employee
s
claim for future compensation or medical benefits shall be reserved
Lorraine A Ryan Bill and Susan Wozniak individually and on behalf of
their minor children and James Ventle individually and on behalf of his minor
children plaintiffs
filed suit against several defendants including Evanston and
National Union relative to a car accident that occurred in Pointe Coupee Parish on
February 27 1 Soon after the plaintiffs filed suit in this matter AIGWC filed
997
a petition for intervention seeking reimbursement of any workers compensation
and medical payment benefits it paid to or on behalf of the plaintiffs
Prior to
litigating the issues of liability and damages the parties sought a ruling from the
trial court on the issue of coverage under the policies issued by Evanston and
National Union
Pending the trial court ruling on the coverage issue Evanston
s
3
A separate suit regarding the February 27 1997 accident tiled by Gus Hernandez was
consolidated with the plaintiffs suit A separate highlow agreement was offered to Hernandez
but is not at issue in this appeal
5
and National Union negotiated a highlow agreement with the plaintiffs that is
central to the present appeal
Evidence of the highlow agreement crafted by Evanston and National
Union with the plaintiffs is presented in a series of letters dated October 22 2001
November 7 2001 November 12 2001 and November 26 2001 Essentially the
terms of the agreement are outlined in the October 22 2001 letter from Evanston
which provided that in exchange for an immediate payment of 350 from
000
Evanston and 200 from National Union the plaintiffs agreed to cap their total
000
recovery at 5 in the event a jury found the insured liable and awarded
000
000
damages in excess of that amount In negotiating the agreement the right to try the
case to a jury on the issues of liability and damages was expressly reserved as well
as a request that any further litigation of the liability and damage issues be
postponed until the issue on coverage is resolved on appellate review In addition
to limiting exposure for damages Evanston stated in the letter that the cost
savings in discovery is the incentive for payment on the low end
Although the October 22 2001 letter stated that the highlow agreement was
conditioned upon National Union and AIGWC acceptance the condition that
s
s
AIGWC accept the terms of the agreement was eliminated pursuant to the
November 7 2001 acceptance letter from National Union In that letter National
Union acknowledged that a teleconference had been conducted by counsel for the
plaintiffs Evanston and National Union and pursuant thereto National Union was
confirming in writing its agreement to the terms of the highlow agreement as
outlined in Evanston October 22 2001 letter however National Union also
s
confirmed that the terms of the highlow agreement were to be kept confidential
between the plaintiffs Evanston and National Union
Finally by a letter dated November 12 2001 the plaintiffs confirmed in
writing their acceptance of the highlow agreement as outlined in Evanston
s
C
October 22 2001 letter and modified by National Union November 7 2001 letter
s
By a letter dated November 26 2001 Evanston remitted payment to the plaintiffs
in the amount of 350
000
At the time the parties negotiated the highlow agreement La C art 3071
provided in pertinent part
A transaction or compromise is an agreement between two or
more persons who for preventing or putting an end to a lawsuit
adjust their differences by mutual consent in the manner which they
agree on and which every one of them prefers to the hope of gaining
balanced by the danger of losing
4
AIGWC relies on Lavergne y Quality Fabricators of Eunice Inc 020548
La App 3d Cir 12 832 So 2d 1176 writ denied 03 0127 La 3
02
11
03
21
840 So 2d 540 for the proposition that a highlow agreement constitutes a
compromise under the prior version of La C art 3071 We reject the assertion
that the holding of that case mandates that all highlow agreements be deemed
compromises in accordance with the prior version of La C art 3071
It was
expressly noted in the Lav opinion that in exchange for the highlow
crgne
agreement the parties agreed that there would be no posttrial motions or appeals
filed by the parties Lavergne 020548 at 2 832 So 2d at 1178 Consequently
the court found that the agreement put an end to the lawsuit between the injured
employee and the thirdparty tortfeasor Lavergne 020548 at 3 832 So 2d at
1179 see also Lavergne v Quality Fabricators of Eunice Inc 04 125 pp 45 La
App 3d Cir 12 888 So 2d 1147 1151 writ denied 050046 La 3
04
8
05
18
896 So 2d 1007
In the matter before us the plaintiffs Evanston and National Union
confected the highlow agreement prior to the parties receiving a ruling by the trial
4
1 Articles 3071 through 3083 of the Louisiana Civil Code
under the title Of Transaction or Compromise were amended and reenacted Following
amendment and reenactment in 2007 La C art 3071 now provides a compromise is a
By 2007 La Acts No 1
38
contract whereby the parties through concessions made by one or more of them settle a dispute
or an uncertainty concerning an obligation or other legal relationship
7
court on the issue of insurance coverage and prior to any determination of the
liability of the insured Consequently and unlike the agreement in Lavergne the
subject highlow agreement expressly reserved to Evanston and National Union
the right to try the case to a jury on liability and damages and further indicated
that appellate review would not only be allowed but would be sought to resolve
the issue of coverage
Indeed the June 24 2002 judgment of the trial court
declaring coverage for the plaintiffs claims under the Evanston and National
Union policies was not only appealed to this court by the insurers but the plaintiffs
sought subsequent review of this court decision by the Louisiana Supreme Court
s
Hence the highlow agreement in this case did not terminate the litigation
between Evanston National Union and the plaintiffs
Nor could it be said to
restrict or limit any of the issues presented in the lawsuit rather the agreement
simply provided that in exchange for receiving a guaranteed minimum recovery
the plaintiffs agreed to waive their right to receive any money in excess of the
maximum amount allowed
There was no waiver or restriction on the plaintiffs
right to seek a judicial determination of what amount of compensation if any may
be owed to them
Instead the highlow agreement at issue in this case is best
characterized as a sale of the plaintiffs right to take full advantage of a
potentially favorable judgment or to fully enforce any rights potentially to be
conferred by judgment In either case the litigation is maintained and as such
would not constitute a valid compromise under the law as it existed at the time the
highlow agreement was confected See Reinecke v Pelham 199 So 521 523 24
La App Orleans 1941 that an agreement purporting to be a compromise
holding
but not meeting the technical requirements of a compromise should be regarded as
a sale if made for consideration and a donation if made without consideration
5
While we are troubled by this conclusion we observe that under the current version of La
C art 3071 such a result would now be precluded
Nor do we find that the mere negotiation of the check issued by Evanston
was
sufficient to convert the agreement into a compromise for which the
provisions of La R 23 would attach For there to be a valid accord
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and satisfaction of a debt or claim there must be a disputed claim a tender of a
check for less than the amount of the claim by the debtor and an acceptance of the
tender by the creditor Essential to a valid accord and satisfaction is that the
creditor understands that the payment is tendered in full settlement of the dispute
Harrington v Aetna Life and Casualty Company 441 So 2d 1255 1256 La App
1st Cir 1983 McClelland v Security Industrial Insurance Company 426 So 2d
665 669 70 La App 1st Cir 1982 writ denied 430 So 2d 94 La 1983 The
check negotiated in this case referenced a claim number the date of loss and
simply stated settlement on the payment stub attached to the check Notations on
the back of the check indicate that the check was deposited on November 28 2001
A creditor must fully understand and be aware that if payment is accepted
the claim will be deemed to have been paid in full and if the written notation is
insufficient to put the creditor on notice of the nature of the compromise being
offered there can be no accord and satisfaction
See Cowley Corporation v
Shreveport Packing Company Inc of Kansas 440 So 2d 1345 1352 La App 2d
Cir 1983 writ denied 444 So 2d 122 La 1984 In the subject case the use of
the word settlement alone does not unequivocally convey that the payment was
tendered in full payment of any debt or claim that may be owed
But more
importantly no accord and satisfaction can be premised on the subject negotiated
check because the accompanying letter by which the check was tendered to the
plaintiffs plainly stated that the check was being offered pursuant to the high
low
agreement As provided in La C art 3073 prior to the 2007 amendment
Transactions regulate only the differences which appear clearly
to be comprehended in them by the intention of the parties whether it
be explained in a general or particular manner unless it be the
I
necessary consequence of what is expressed and they do not extend
to differences which the parties never intended to include in them
The letter accompanying the check in this case plus the preceding letters of
October 22 2001 November 7 2001 and November 12 2001 all clearly indicate
that the check was issued in fulfillment of the highlow agreement and not as full
payment of the plaintiffs claim
Also we note that prior to 2007 while it has been held that an accord and
satisfaction is similar to a compromise it was not strictly speaking a compromise
Prior to 2007 accord and satisfaction was solely a jurisprudentially recognized
method by which an obligation could be extinguished whereas the law of
compromise has always been established by statute to prevent or put an end to a
lawsuit
See Aufrichtig v Aufrichtig 34 pp 12 13 La App 2d Cir
909
01
22
8 796 So 2d 57 65 Harrington 441 So 2d at 1256 McClelland 426 So
2d at 670 n See also La C art 3079 comment a
2
CONCLUSION
Having carefully considered the applicable facts and law governing this
matter we find that the highlow agreement confected by Evanston National
Union and the plaintiffs did not constitute a compromise under the applicable
version of La C art 3071 Thus neither the agreement nor the cashing of the
check issued pursuant thereto can be construed as being confected in violation of
La R 23 Therefore finding the judgment of the trial court to be
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correct under the applicable law we affirm All costs of this appeal are assessed to
the appellant American Home Assurance Company also known as AIG Worker
s
Compensation
AFFIRMED
III
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