What the Heck is Peremption?

Peremption and Statutes of Limitation Require Evidence

Since the beginning of the common law four centuries ago those who sat on their rights and took years to file suit were prevented from moving forward by statutes of limitation and Peremption statutes to prevent stale claims from going forward in litigation. To prevent such stale actions from going forward the defendant must produce evidence that the person seeking relief acted slothfully and failed to file suit within the period allowed by law.

Every insurance agent or broker who takes on a special duty from the an insured to provide the insurance the client needs must fulfill that special duty or be sued for insurance agent and broker malpractice.

In Ray Periso V. Ban Vu, Court of Appeal of Louisiana, 2016 WL 7407397, 2016-0665, 2016 CA 0665, (La.App. 1 Cir. 12/22/16) third party plaintiff, Ban Vu, appealed a judgment granting an exception raising the objection of peremption (the absolute extinguishment of a right that prevents the bringing of an action) filed by third party defendants, Jamie Frazier and Frazier Insurance Agency, Inc., and dismissing his claims with prejudice.

FACTS

This matter began as a tort suit filed by Ray Periso after he fell at least fifteen (15) feet to the ground on April 28, 2011, when a balcony railing collapsed at the property located in  Slidell, Louisiana. Periso alleged that he was an invitee on the property owned by Vu when the incident occurred. Periso alleged that Vu was negligent and that he suffered severe and permanent injuries to his feet, legs, head, body, and mind. Vu filed a third party demand against Southern Fidelity Insurance Company (Southern Fidelity), Frazier Insurance Agency, Inc. (Frazier Insurance), and Jamie Frazier (collectively referred to as “Frazier”). Vu alleged that Southern Fidelity issued a policy of insurance that provided insurance coverage for the rental property he owned in Slidell, Louisiana (insurance policy).

In a prior appeal, the Court of Appeal affirmed the summary judgment dismissing Southern Fidelity, as the insurance policy relied upon by Vu did not provide personal liability coverage.

In the instant case, Vu’s third party demand alleges that Frazier was negligent in not procuring a policy that provided personal liability coverage, which he alleges he requested, or in failing to notify Vu that it had not obtained the requested coverage. Frazier filed a peremptory exception raising the objection of peremption, which the trial court granted dismissing the Vu’s claims against Frazier.

LAW AND DISCUSSION

Vu’s only assignment of error is that the trial court erred in calculating when the peremptive period began and when he was put on notice or should have known that Frazier did not obtain the liability insurance as he requested. In both this appeal and the prior appeal, Vu has mentioned that he is an immigrant from Vietnam, who came to the United States in 1976 with his family. English is not Vu’s first language.

In support of its exception raising the objection of peremption, Frazier relies on a Louisiana statute that governs actions against insurance agents that requires suit within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered. However, even as to actions filed within one year from the date of such discovery all events such actions must be filed at the latest within three years from the date of the alleged act, omission, or neglect.

The one-year and three-year periods of limitation provided in the statute are peremptive periods. According to the statute the three-year peremptive period commences on the date of the alleged act, omission, or neglect. The one-year peremptive period commences to run when the insured receives a copy of the policy.

No evidence was introduced at the hearing in support of the exception of peremption. In the absence of evidence, an exception of peremption must be decided based upon the facts alleged in the petition with all of the allegations accepted as true. If no evidence is introduced to support or controvert the exception, the manifest error standard of review does not apply, and the appellate court’s role is to determine whether the trial court’s ruling was legally correct.

Since no evidence was introduced at the hearing on this exception, the appellate court must accept the allegations of Vu’s third party demand as true. The third party demand was filed on April 24, 2012. Vu alleged that “on or before June 2010,” he conveyed to Frazier that he needed an agent to procure all necessary insurance on his properties, including the property in Slidell, Louisiana, for personal and property protection. Vu alleged that he was never informed by Frazier that the insurance he purchased did not provide personal liability coverage, and that “‘he had specifically requested personal liability coverage on his policy” and “was assured by [Frazier] that he would obtain said insurance….”

Regarding the one-year peremptive period, there is no specific allegation in the third party demand as to Vu’s receipt of the policy at issue. Vu alleges that he did not discover the Frazier’s alleged neglect until May 23, 2011, when he was informed that his policy did not provide personal liability coverage for Periso’s accident. The third party demand was filed on April 24, 2012, within one year of the date of Vu’s alleged discovery of the negligent act. Accepting the allegations of Vu’s third party demand as true, the claims are not perempted. Because Vu’s claims against Frazier are not perempted on the face of the third party demand, the burden was on Frazier to prove the facts to support its exception of peremption.

No evidence was introduced at the hearing and, on the face of the record Frazier failed to carry that burden. The trial court legally erred in sustaining the exception of peremption and dismissing Vu’s third-party demand against Frazier.

The trial court’s judgment granting the exception of peremption and dismissing Ban Vu’s third party demand against Jamie Frazier and Frazier Insurance Agency, Inc. is reversed.

ZALMA OPINION

Mr. Vu, with an inadequate knowledge of English and insurance sought the advice and assistance of a professional insurance agent and broker. Unlike most people who fail to read their insurance policy it appears that the agent, Frazier, knew or should have know that Vu could not read the policy. In addition, Frazier failed to present evidence that the time period set by the statute of limitation (peremption) had run.

ZALMA-INS-CONSULT                      © 2016 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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