## Facts

- Renola Equity Fund, II, LLC (Renola) owned a condominium building located at 217 Plantation Drive in Chalmette, Louisiana.
- Renola obtained a flood-insurance policy for the property from Imperial Fire and Casualty Insurance Company (Imperial Fire). Renola was the only named insured on the policy.
- In August 2012, Hurricane Isaac struck Louisiana. Plaintiffs (former unit owners and tenants/residents) alleged that hurricane-related flooding damaged the building and led to toxic mold.
- Parish officials allegedly declared the building uninhabitable and ordered residents to vacate.
- Plaintiffs sued Renola, Imperial Fire, and other parties seeking damages, including damages tied to toxic-mold exposure.
- As to Imperial Fire, plaintiffs asserted Louisiana statutory bad-faith claims under La. R.S. §§ 22:1892 and 22:1973 in connection with the flood-insurance policy.
- Imperial Fire moved for summary judgment, arguing plaintiffs lacked contractual rights under the policy (they were not insureds) and that no timely flood-loss claim was made.
- Imperial Fire supported its motion with evidence that it had no record of any Hurricane Isaac flood-loss claim submitted under the policy and that service of the lawsuit was its first notice of the alleged loss.
- Plaintiffs did not produce competent evidence that they were insureds or otherwise entitled to policy benefits, or that a timely claim (or other required proof) had been submitted and mishandled.

## Issues

1. Whether plaintiffs who were not named insureds under the flood-insurance policy could pursue Louisiana statutory bad-faith claims against the insurer based on that policy.
2. Whether plaintiffs could establish insurer bad faith under La. R.S. §§ 22:1892 and 22:1973 without evidence of a timely or properly presented flood-loss claim (or other required notice/proof) to the insurer.
3. Whether summary judgment was proper when the insurer presented record evidence negating plaintiffs’ contractual status and claim submission, and plaintiffs produced no evidence creating a genuine dispute of material fact.

## Decision

- The court granted Imperial Fire’s motion for summary judgment.
- The court dismissed with prejudice plaintiffs’ claims against Imperial Fire arising under the flood-insurance policy.
- The court found plaintiffs failed to produce evidence that they had enforceable rights under the policy or that Imperial Fire received a timely flood-loss claim that could support statutory bad-faith liability.

## Legal Principles

- Summary judgment is appropriate under Rule 56 when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law; once the movant supports its motion with evidence, the nonmovant must respond with specific evidence showing a triable issue.
- Louisiana bad-faith penalty statutes (La. R.S. §§ 22:1892 and 22:1973) require a showing that the insurer owed and breached duties in handling a valid insurance claim, such as failing to pay timely after receiving satisfactory proof of loss.
- A plaintiff generally cannot recover statutory penalties for alleged bad-faith claim handling without showing an enforceable right to benefits under the insurance contract at issue.
- When the undisputed evidence shows the insurer had no record of any reported loss or claim before suit, and the plaintiff offers no contrary proof, the plaintiff cannot establish claim-handling misconduct as required for statutory bad-faith remedies.

## Conclusion

The court entered summary judgment for Imperial Fire and dismissed the claims with prejudice because plaintiffs were not named insureds on Renola’s flood policy and offered no competent evidence that a timely, properly presented Hurricane Isaac flood-loss claim was made and mishandled, which is necessary to support Louisiana statutory bad-faith penalties.


Douglas v. Renola Equity Fund, II, LLC, 2015 U.S. Dist. LEXIS 124986 (2015)