Brady v. State Farm Fire Cslt ( 2006 )

United States Court of Appeals
Fifth Circuit
IN THE UNITED STATES COURT OF APPEALS FILED
FOR THE FIFTH CIRCUIT March 8, 2006
_________________________ Charles R. Fulbruge III
Clerk
No. 05-30716
Summary Calendar
_________________________
RICHARD BRADY; SCHELLE BRADY; TRENT BRADY,
Plaintiffs-Appellants,
versus
STATE FARM FIRE & CASUALTY CO.,
Defendant-Appellee.
__________________________________________________
Appeal from the Unites States District Court
for the Western District of Louisiana
(No. 2:03-CV-1635)
__________________________________________________
Before BARKSDALE, STEWART, and CLEMENT, Circuit Judges.
PER CURIAM:*
In this diversity action, the district court granted summary judgment in favor of the defendant
and dismissed the plaintiffs’ claim with prejudice. We affirm.
I. FACTS AND PROCEEDINGS
Richard and Schelle Brady and their son Trent (collectively “the Bradys”) lived in a home in
Sulphur, Louisiana. At all relevant times, the home was covered under a homeowner’s insurance
*
Pursuant to 5th CIR. R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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policy issued by State Farm Fire & Casualty Co. (“State Farm”). The insurance policy contractually
limited the insured’s right to bring suit to within one year after the date of loss or damage.
On five occasions between September 1998 and April 2002, the Bradys suffered a covered
loss. Each incident involved some form of water damage to the home and each was covered under
the policy and paid by State Farm. The last incident, which involved a leaking air conditioner that
damaged a ceiling occurred on April 28, 2002.
During the repairs for the April 28 air conditioner leak, a contractor showed the Bradys a
moldy piece of sheet rock taken from the damaged area. On the advice of the contractor, the Bradys
took samples of mold from their home and sent them to be tested. An adjustor for State Farm spoke
to Mrs. Brady on April 30, at which time Mrs. Brady expressed concerns about the mold in her
house. Again, on June 13, Mrs. Brady called State Farm about the presence of “black mold” in the
home. The mold test results, which indicated positive for mold, came back to the Bradys by email
on June 25, 2002.1
The day after receiving the email concerning the positive mold test results, Mrs. Brady
discussed the mold issue with State Farm adjuster Scott Dory. Mrs. Brady told Dory that the house
had tested positive for mold. At that time, Dory explained that the homeowner’s policy contained
exclusions for certain mold damage. On August 12, 2002, Dory went to the Bradys’ home. Dory
did not dispute the existence of the mold, but told Mrs. Brady that the type of test used did not prove
that the mold was airborne. Dory recommended that the air be tested. No further tests were
conducted before April 2003.
State Farm denied co verage for the mold damage claim in September 2002. On April 14,
1
On July 7, 2002, the positive test results were again sent to the Bradys, this time by mail.
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2003, State Farm received a letter from the Bradys’ attorney demanding payment on the claim and
advising that the Bradys would take legal action if State Farm did not respond by Friday, April 18,
2003. St ate Farm replied on April 17, 2003, and again denied liability. The Bradys filed suit in
Louisiana state court on July 25, 2003. After State Farm removed the case to federal court, the
parties engaged in discovery.
Deposition testimony revealed additional facts relevant to the timeliness of the Bradys’ suit.
Mr. Brady recounted how the contractor had told him that there was mold in the house and that the
situation needed to be investigated furt her. He also described how both he and his son had been
having nosebleeds for up to a year. In her deposition, Mrs. Brady indicated that she had been
concerned about the mold for some time because the family had been sick for years. She specifically
stated that she had directed the repairmen to look for mold while affecting the April 2002 repairs
because she had seen soot-like black mold in the house previous to the air conditioning incident. She
specifically stated that the mold had been present in the house for five to six months before April
2002.
In his deposition, Dory, t he State Farm adjuster, stated that at the time of his August 12
inspection there was no way to determine if the mold was airborne based on the tests that had been
conducted. He testified that, in order to conclude that the mold was airborne, additional testing was
required. He specifically stated that he could not determine whether the mold was airborne at the
time of his inspection.
State Farm moved to dismiss the suit and, in the alternative, for summary judgment. Because
the parties referred to evidence outside the pleadings, the district court treated the motion as one for
summary judgment. State Farm pled a defense of prescription and that the claimed damage was
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excluded under the policy. The district court concluded that the covered events took place more than
a year before suit was filed and ruled in favor of State Farm. The district court di d not reach the
policy coverage issue.
II. STANDARD OF REVIEW
This court reviews a grant of summary judgment de novo and applies the same standards as
the district court. See Riverwood Int’l Corp. v. Employers Ins. of Wausau, 420 F.3d 378, 382 (5th
Cir. 2005). Summary judgment is appropriate if the pleadings, affidavits and other summary
judgment evidence show that there is no genuine issue of material fact and that the movant is entitled
to judgment as a matter of law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986); Riverwood Int’l, 420 F.3d at 382. For summary judgment, the initial burden falls on the
movant to identify areas essential to the nonmovant’s claim in which there is an “absence of a genuine
issue of material fact.” Lincoln Gen. Ins. Co. v. Reyna, 401 F.3d 347, 349 (5th Cir. 2005). If the
movant does so, the burden shifts to the nonmovant to show, by more than mere allegation, the
existence of a genuine fact issue for trial. Reyna, 401 F.3d at 349–50. At all times, “[a]ll evidence
and reasonable inferences must be viewed in the light most favorable to the nonmovant.” Id. at 350.
III. DISCUSSION
In Louisiana, “insurance companies have the right to limit coverage in any manner they desire,
so long as the limitations do not conflict with statutory provisions or public policy.” Edwards v.
Daugherty, 883 So. 2d 932, 947 (La. 2004). The prescriptive period at issue here originates in the
State Farm insurance policy. Under the terms of the policy, an “action must be started within one
year after the date of loss or damage.” This limitation is consistent with Louisiana’s insurance code:
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No insurance contract delivered or issued for delivery in this state and
covering subjects located, resident, or to be performed in this state or
any group health and accident policy insuring a resident of this state,
regardless of where made or delivered shall contain any condition,
stipulation, or agreement . . . [l]imiting right of action against the
insurer . . . to a period of less than one year from the time when the
cause of action accrues in connection with all other insurances unless
otherwise specifically provided in this Code.
LA. REV. STAT. § 22:629(A)(3).
The parties do not dispute that the last water damage incident took place on April 28, 2002.
Under the terms of the insurance policy, the Bradys had until April 28, 2003, to commence an action
to recover under the policy. The Bradys did not commence this action until July 25, 2003. In their
petition, the Bradys alleged that the family residence “suffered several sudden and accidental events
resulting in water damage to the home,” and that “[i]n August of 200[2],2 [the Bradys], for the first
time discovered toxic mold colonies had grown in their home as a result of the water damage ensued
by the covered events under State Farm’s policy.”
Under the doctrine of contra non valentem non currit praescriptio, Louisiana law suspends
the running of prescription, among other reasons, “where the cause of acti on is not known or
reasonably knowable by the plaintiff, even though this ignorance is not induced by the defendant.”
Carter v. Haygood, 2004-C-0646, pp. 11–12 (La. 1/19/05); 892 So. 2d 1261, 1268. The Bradys
contend that, under the discovery doctrine of contra non valentem, the running of prescription was
suspended until at least August 12, 2002, because, according to the Bradys, no one knew or could
2
Throughout the Bradys’ petition, the date of discovery is identified as August 2003. This
appears to be a scrivener’s error; the event the Bradys rely on to show their lack of awareness is the
August 12, 2002, inspection.
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have known as of that date that the residence had mold damage. In support of this assertion, the
Bradys refer to the deposition testimony of State Farm’s adjuster, Scott Dory. However, the
referenced testimony does not go so far as the Bradys would like. Dory stated only that, given the
nature of tests that had been completed, he could not tell and the Bradys could not prove that the
mold was airborne.
Louisiana courts are clear: “[M]ere unawareness of a potential cause of action is not enough
to invoke contra non valentum.” Bell v. Kreider, 03-CA-300 (La. App. 5 Cir. 9/16/03); 858 So. 2d
58, 62. Rather, plaintiffs “‘will be deemed to know that which [they] could have learned from
reasonable diligence.’” Id. (quoting Hospital Serv. Dist. No. 1 of Jefferson Parish v. Alas, 94-CA-
897 (La. App. 5 Cir. 6/28/95); 657 So. 2d 1378, 1383). See also Corsey v. State, Through Dep’t.
of Corrs., 375 So. 2d 1319, 1322 (La. 1979) (“This principle will not except the plaintiff’s claim from
the running of prescription if his ignorance is attributable to his own willfulness or neglect; that is, a
plaintiff will be deemed to know what he could by reasonable diligence have learned.”). Indeed, the
burden falls to the plaintiff asserting the suspension of prescription to “show that he did not know or
discover such facts, and that the lack of knowledge is not attributable to his fault.” Bell, 858 So. 2d
at 62 (internal quotation omitted).
There is no question that reco rd evidence shows that the Bradys knew that the mold was
present as early as April 2002. The Bradys do not dispute State Farm’s characterization of the
deposition testimony as showing that both Mr. and Mrs. Brady were aware of the mold when the
repairmen came to their home in April 2002. Nor do the Bradys contest the fact that the sample they
submitted for testing proved positive for mold. Their deposition test imony regarding the family’s
illnesses and the presence of the black soot-like mold only supports the district court’s finding. The
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Bradys conflate the determination of whether the mold was airborne with that of the mold’s existence.
To the extent that the question is whether the Bradys knew the mold was airborne, they have not
argued that the test necessary to determine whether the mold was airborne was unavailable to them.
They simply did not exercise due diligence in pursuit of their claim. Accordingly, the doctrine of
contra non valentem does not suspend the claim’s prescription. The district court did not err in
concluding that the Bradys’ action was prescribed.
IV. CONCLUSION
Finding no error, we AFFIRM.
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