Understanding Property Damage Claims and Amount of Time to File Suit

In Mallett v. McNeal, 939 SO.2d 1254, 2005-2289 (La. 10/17/06), the Supreme Court of Louisiana held that an unconditional payment of a property damage claim constitutes an acknowledgement sufficient to interrupt prescription. Thus, for example, an insurance company’s tender of an unconditional payment to an injured third-party claimant is an acknowledgement, and this acknowledgment interrupts prescription. In appropriate cases, Mallett may be of assistance to plaintiffs’ attorneys, who file actions to help injury-victims recover against tortfeasors and insurance companies after the victim’s case has prescribed on its face.

The Court’s holding in Mallett was based upon two consolidated cases. In the first case, plaintiff Jason Mallett (“Mallett”) suffered injuries on January 8, 2004, when his vehicle was struck from behind by defendant Paola McNeal (“McNeal”). McNeal carried an automobile liability policy issued by defendant United States Automobile Association (“USAA”). In November 2004, USAA issued two checks to Mallett: the first for payment of property damage, and the second for additional repairs. On February, 2005, more than a year after the accident, Mallett filed suit against McNeal and USAA, claiming damages for injuries. Because the one year prescription period had run on its face, Mallett’s claim would have been barred, unless USAA’s November 2004 payments interrupted the prescriptive period.

In the second case, plaintiff Charles Richey (“Richey”) was involved in an automobile collision with defendant Kameron Dixon, who was driving a car owned by Keith Dixon (“Dixon”). Dixon was insured by defendant Infinity Insurance Company (“Infinity”). Following the collision, Infinity issued a check to Richey and stated that the check represented payment for the total loss of Richey’s vehicle. Before the end of the prescriptive period, Richey filed suit in an improper venue. Under Louisiana law, if an action is commenced in an improper venue, prescription is interrupted only as to defendants served with process within the prescriptive period. Unfortunately for Richey, no defendants were served before the end of the prescriptive period. Therefore, Richey’s claim would have been barred, unless Infinity’s issuance of checks had interrupted the prescriptive period.

In resolving the issue of prescription, the Court had to resolve two questions of law. First, the Court held that an unconditional payment constitutes an acknowledgement sufficient to interrupt prescription. Second, the Court had to determine whether this holding conflicted with La. R.S. 2:611. La. R.S. 2:611 provides:

“No settlement made under a motor vehicle liability insurance policy of a claim against any insured thereunder arising from any accident or other event insured against for damage to or destruction of property owned by another person shall be construed as an admission of liability by the insured, or the insurer’s recognition of such liability, with respect to any other claim arising from the same accident or event.”

After reviewing case law, the Court held that an unconditional payment is not a “settlement” within the meaning of the statute. The Court then applied this holding to the cases before it.

In regards to the first case, the Court noted that there was no evidence that Mallett 1) took the checks subject to any conditions, 2) released USAA from any further obligations, or 3) signed a document evidencing a settlement. Because these facts indicate that USAA’s actions constituted unconditional payment, and not settlement, the Court determined that USAA’s actions constituted an acknowledgement sufficient to interrupt prescription.

As to the second case, the Court remanded, reasoning that the issue of improper venue may have caused the defendants to be “surprised” by the plaintiff’s exception to prescription theory.

Injury-victims with questions about prescription, and exceptions to prescription, may contact the Berniard Law Firm.