Recovery Caps Can Hinder Financial Awards in Wake of Accidents

Audrey Thompson was injured in an automobile accident that occurred when a vehicle driven by Chad Harp rear-ended a vehicle driven by Susan Young. This triggered a chain of events where three other vehicles, including the Thompson vehicle, were rear-ended as a result of Harp’s conduct. The Thompsons filed a lawsuit and named Harp, the driver allegedly at fault, and his insurer, State Farm, as defendants.

Because of the number of potential personal injury claimants and the belief the $300,000 per accident coverage limit of State Farm’s policy was “inadequate to cover the amount of damages suffered,” the Thompsons also named her uninsured/underinsured motorist (UM) insurance carrier, Government Employees Insurance Company (GEICO), as a defendant. The plaintiffs also sought recovery for loss of consortium, damages for medical expenses and “loss of the wife’s income” on behalf of the marital community. Moreover, they explicitly focused their damages to the “jurisdictional maximum” of the Alexandria City Court in addition to legal interest thereon from date of judicial demand, until paid in full as well as court costs.

In compliance with its jurisdictional limit, the Alexandria City Court entered judgment, awarding Audrey $50,000 in general damages and awarding Charles,on his own behalf, $20,000 for loss of consortium, and $30,000 for past and future medical expenses on behalf of the couple’s community. State Farm filed an exception claiming that the amount in dispute exceeded $50,000. Examination of the State Farm policy revealed a $100,000 limit per person and a $300,000 limit per accident, which exceeded the city court’s jurisdictional limits. According to the court of appeal, the trial court was required to transfer the action to a court with the appropriate subject matter jurisdiction, upon finding that the claims exceeded the jurisdictional limit. However, the court of appeal erred in its reading of plaintiffs’ petitions and our Code of Civil Procedure provisions governing the subject matter jurisdiction of city courts.

Subject-matter jurisdiction is the authority of a court to hear cases of a particular type or cases relating to a specific subject matter. It refers to the nature of the claim or controversy. For example, bankruptcy court has the authority to only hear bankruptcy cases. In addition to the legal issue in dispute, the subject matter jurisdiction of a court may be determined by the monetary value of the dispute—the dollar amount in controversy. According to La. Code Civ. Proc. art. 4841, the subject matter jurisdiction of city courts is limited by the nature of the proceedings and by the amount in dispute, which amount is determined by the amount demanded. However, the amount in dispute does not include interest, court costs, attorney fees, or penalties, whether provided by agreement or by law. Here, the court found that the Alexandria City Court had proper subject matter jurisdiction over the claim filed by the Thompsons. The court indicated that the plaintiffs “never sought to recover damages beyond the jurisdictional limits of the city court, but sought to ensure recovery by proceeding first against the tortfeasor’s insurer, State Farm, and then against their UM insurer only to the extent their damages exceeded the underlying coverage afforded by and available to them under Harp’s State Farm policy.” In their pleadings, both plaintiffs limited their demands to “an amount less than the jurisdictional maximum of …. yet within the jurisdictional limits of [the Alexandria city] court.” Therefore, contrary to the appellate court’s conclusion, subject matter jurisdiction always properly rested in the Alexandria City Court. However, the issue of the calculation of damages as to each plaintiff, individually, has not been addressed by the court of appeal.
Failure to bring a claim in a court with the proper subject matter jurisdiction can have devastating effects on a legal suit. Since the lack of subject-matter jurisdiction cannot be waived, any judgment from a court lacking subject-matter jurisdiction is a nullity. Moreover, if a court has to transfer a case due to improper subject matter jurisdiction, it will delay a lawsuit. It is important to consult an experienced attorney, such as those at the Berniard Law Firm, to ensure that cases are properly filed in the appropriate court.