                         Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE                                            NEWS RELEASE #030


FROM: CLERK OF SUPREME COURT OF LOUISIANA



The Opinions handed down on the 27th day of June, 2018, are as follows:



PER CURIAM:

2017-C-2074       BRANDON FORVENDEL v. STATE      FARM   MUTUAL   AUTOMOBILE   INSURANCE
                  COMPANY (Parish of Jefferson)


                  In this case, we are called upon to decide whether an insurer
                  waived its defenses to plaintiff’s current claim by paying on an
                  earlier claim to him in error. For the reasons that follow, we
                  find that the insurer did not waive its rights. Accordingly, we
                  reverse the judgments of the courts below.

                  REVERSED.
06/27/18

                      SUPREME COURT OF LOUISIANA

                                  No. 2017-C-2074

                            BRANDON FORVENDEL

                                      VERSUS

                   STATE FARM MUTUAL AUTOMOBILE
                         INSURANCE COMPANY

        ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,
              FIFTH CIRCUIT, PARISH OF JEFFERSON

PER CURIAM

      In this case, we are called upon to decide whether an insurer waived its

defenses to plaintiff’s current claim by paying on an earlier claim to him in error. For

the reasons that follow, we find that the insurer did not waive its rights. Accordingly,

we reverse the judgments of the courts below.



                    FACTS AND PROCEDURAL HISTORY

      Plaintiff, Brandon Forvendel, was injured in a multi-vehicle accident in 2013.

At the time of the accident, plaintiff was driving a Chevrolet Equinox owned by him

and insured under a policy issued by State Farm Mutual Automobile Insurance

Company (“State Farm”), which included uninsured motorist (“UM”) coverage.

Plaintiff recovered the limits of his UM coverage under his State Farm policy.

      At the time of the 2013 accident, plaintiff lived in the household of his mother,

Deborah Forvendel, who was also insured by State Farm. Plaintiff also sought to

recover under his mother’s State Farm UM policy, which carried significantly higher
policy limits. State Farm refused to allow him to recover under his mother's policy,

citing the anti-stacking provisions of La. R.S. 22:1295(1)(c).1

      As a result, plaintiff filed the instant suit against State Farm. In his petition,

plaintiff alleged that the facts of the instant case were strikingly similar to an earlier

2007 accident in which State Farm allowed him to recover UM benefits under both

his own UM policy and his mother’s UM policy.

      At trial, plaintiff offered evidence regarding the 2007 accident. In particular,

he relied on a June 9, 2008 letter from a State Farm manager to plaintiff’s attorney.

This letter referenced to the 2007 accident and plaintiff’s claim under his mother’s

policy, stating, “your client does qualify as an insured for Uninsured Motorist

coverage.” Thereafter, State Farm allowed plaintiff to recover under both policies for

the 2007 accident. Ms. Forvendel testified State Farm did not notify her of any error

in permitting plaintiff’s recovery under her policy in 2007.




      1
          La. R.S. 22:1295(1)(c) provides:

                (c) If the insured has any limits of uninsured motorist coverage in a
                policy of automobile liability insurance, in accordance with the terms
                of Subparagraph (1)(a) of this Section, then such limits of liability
                shall not be increased because of multiple motor vehicles covered
                under such policy of insurance, and such limits of uninsured motorist
                coverage shall not be increased when the insured has insurance
                available to him under more than one uninsured motorist coverage
                provision or policy; however, with respect to other insurance
                available, the policy of insurance or endorsement shall provide the
                following with respect to bodily injury to an injured party while
                occupying an automobile not owned by said injured party, resident
                spouse, or resident relative, and the following priorities of recovery
                under uninsured motorist coverage shall apply:

                (i) The uninsured motorist coverage on the vehicle in which the
                injured party was an occupant is primary.

                (ii) Should that primary uninsured motorist coverage be exhausted
                due to the extent of damages, then the injured occupant may recover
                as excess from other uninsured motorist coverage available to him. In
                no instance shall more than one coverage from more than one
                uninsured motorist policy be available as excess over and above the
                primary coverage available to the injured occupant.

                                                  2
      State Farm’s representative, Aaron Angel, testified that the 2007 payment was

made in error. Paul Robichaux, a State Farm Auto Team Manager in 2008, testified

the 2007 claim was referred to him to consider whether plaintiff, as a resident

relative, could select UM coverage under Ms. Forvendel’s policy, but he did not

consider the anti-stacking statute. Mr. Robichaux stated he was unaware plaintiff

collected UM benefits under his own policy at the time, and he did not make any

determination regarding stacking.

      At the conclusion of trial, the district court entered judgment for plaintiff in the

amount of $50,000 in damages, plus interest and costs. In its reasons for judgment,

the district court explained “State Farm previously interpreted the agreement between

the parties to cover plaintiff under his mother's UM policy, and this fact can be

considered by the Court in interpreting the agreement between the parties in effect at

the time of the 2013 accident.”

      State Farm appealed. In a split decision, the Court of Appeal, Fifth Circuit,

affirmed, concluding the trial court did not err in finding State Farm waived any

defense to the 2013 claim by paying the 2007 claim in error. Forvendel v. State Farm

Mut. Auto. Ins. Co., 17-77 (La. App. 5 Cir. 11/15/17), 230 So.3d 687. The dissenting

judge rejected the majority’s reasoning, finding it would be in contravention of the

anti-stacking statute to find State Farm extended coverage to plaintiff beyond his

policy limits.

      Upon State Farm’s application, we granted certiorari to consider the correctness

of this decision. Forvendel v. State Farm Mut. Auto. Ins. Co., 17-2074 (La. 3/9/18),

___ So.3d ___.



                                    DISCUSSION



                                           3
      The anti-stacking statute, La. R.S. 22:1295 provides, in pertinent part:

             (c) If the insured has any limits of uninsured motorist
             coverage in a policy of automobile liability insurance, in
             accordance with the terms of Subparagraph (1)(a) of this
             Section, then such limits of liability shall not be increased
             because of multiple motor vehicles covered under such
             policy of insurance, and such limits of uninsured
             motorist coverage shall not be increased when the
             insured has insurance available to him under more than
             one uninsured motorist coverage provision or policy. .
             ..
             [emphasis added].

      Plaintiff does not dispute that the provisions of this statute apply under the

instant facts. However, he argues State Farm waived its right to assert this defense

based on its actions in connection with plaintiff’s earlier 2007 accident.

      In finding a waiver occurred, the court of appeal relied on our opinion in

Steptore v. Masco Constr. Co., 643 So.2d 1213 (La. 1994). In Steptore, we held an

insurer waived its right to assert a coverage defense by assuming and continuing the

defense of its insured in the face of facts indicating that it had a right to deny

coverage for the accident. We explained the law as follows:

             Waiver is generally understood to be the intentional
             relinquishment of a known right, power, or privilege. Tate
             v. Charles Aguillard Ins. & Real Estate, Inc., 508 So.2d
             1371 (La.1987); Ledoux v. Old Republic Life Ins. Co., 233
             So.2d 731 (La.App. 3d Cir.), cert denied 256 La. 372, 236
             So.2d 501 (1970); Peavey Co. v. M/V ANPA, 971 F.2d
             1168 (5th Cir.1992); Comment, Waiver and Estoppel in
             Louisiana Insurance Law, 22 La.L.Rev. 202 (1961); 16B
             Appleman, Insurance Law and Practice, § 9081 (1981);
             Couch on Insurance 2d, § 35:249 (Rev. ed. 1985). Waiver
             occurs when there is an existing right, a knowledge of its
             existence and an actual intention to relinquish it or conduct
             so inconsistent with the intent to enforce the right as to
             induce a reasonable belief that it has been relinquished.
             Tate, supra; Peavey, supra; Ledoux, supra; 16B Appleman,
             supra, § 9085. A waiver may apply to any provision of an
             insurance contract, even though this may have the effect of
             bringing within coverage risks originally excluded or not
             covered. Tate, supra.



                                          4
It is well established that an insurer is charged with
knowledge of the contents of its own policy. Youngblood
v. Allstate Fire Ins. Co., 349 So.2d 462 (La.App. 3d
Cir.1977); Davis v. Aetna Casualty & Surety Co., 329
So.2d 868 (La.App. 2d Cir.), writ denied, 333 So.2d 233
(1976); Pellets, Inc. v. Millers Mutual Fire Ins. Co., 241
So.2d 550 (La.App. 2d Cir.1970), writ denied, 257 La. 607,
243 So.2d 274 (1971). In addition, notice of facts which
would cause a reasonable person to inquire further imposes
a duty of investigation upon the insurer, and failure to
investigate constitutes a waiver of all powers or privileges
which a reasonable search would have uncovered. Swain
for and on behalf of Swain v. Life Ins. Co. of Louisiana,
537 So.2d 1297 (La.App. 2d Cir.1989), writ denied, 541
So.2d 895 (1989); Foret v. Terrebonne Towing Co., Inc.,
632 So.2d 344 (La.App. 1st Cir.1993); Peterson v. Pacific
Fire Ins. Co., 148 So. 283 (La.App.Orl.Cir.1933); Franz v.
United Casualty Co., 49 F.Supp. 267 (E.D.La.1943);
Comment, La.L.Rev. supra 206; 16B Appleman, supra §
9084.

Waiver principles are applied stringently to uphold the
prohibition against conflicts of interest between the insurer
and the insured which could potentially affect legal
representation in order to reinforce the role of the lawyer as
the loyal advocate of the client's interest. Employers
Mutual Liability Ins. Co. of Wisconsin v. Sears, Roebuck &
Co., 621 F.2d 746, 747 (5th Cir.1980); Pacific Indemnity
Co. v. Acel Delivery Serv., 485 F.2d 1169, 1173 (5th
Cir.1973), cert denied, 415 U.S. 921, 94 S.Ct. 1422, 39
L.Ed.2d 476 (1974); Parsons v. Continental National
American Group, 113 Ariz. 223, 550 P.2d 94 (1976);
Employers Casualty Co. v. Tilley, 496 S.W.2d 552
(Tx.1973); Transamerica Ins. Group v. Chubb and Son,
Inc., 16 Wash.App. 247, 554 P.2d 1080 (1976). Cf. Dugas
Pest Cont. v. Mutual Fire, Marine and Inland Ins. Co., 504
So.2d 1051 (La.App. 1st Cir.1987); Brasseaux v. Girourd,
214 So.2d 401 (La.App. 3d Cir.), writ denied, 253 La. 60,
216 So.2d 307 (1968); Storm Drilling Company v. Atlantic
Richfield Corp., 386 F.Supp. 830 (E.D.La.1974). See Rule
1.7, La.Rules of Professional Conduct; Restatement of the
Law (3rd), The Law Governing Lawyers, Chapter 8,
Introductory Note, §§ 201 & 202 (Tentative Draft 1990);
Opinion 342, Opinions of the Committee on Professional
Responsibility (La.State Bar Ass'n 1974); 15 McKenzie &
Johnson, Insurance Law and Practice § 216 (1986).
Accordingly, when an insurer, with knowledge of facts
indicating noncoverage under the insurance policy,
assumes or continues the insured's defense without
obtaining a nonwaiver agreement to reserve its

                              5
             coverage defense, the insurer waives such policy
             defense. Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th
             Cir.1992); Pitts By and Through Pitts v. American Sec. Life
             Ins. Co., 931 F.2d 351 (5th Cir.1991); Ideal Mut. Ins. Co.
             v. Myers, 789 F.2d 1196 (5th Cir.1986); Employers Mutual
             Liability Ins. Co. of Wisconsin v. Sears, Roebuck & Co.,
             621 F.2d 746, 747 (5th Cir.1980); 16C Appleman,
             Insurance Law and Practice § 9361.25 (1981). Cf. Tate v.
             Charles Aguillard Ins. & Real Estate, Inc., 508 So.2d 1371
             (La.1987); Ledoux v. Old Republic Life Ins. Co., 233 So.2d
             731 (La.App. 3d Cir.), cert denied 256 La. 372, 236 So.2d
             501 (1970).

             There is no genuine dispute as to the material facts
             pertinent to the waiver issue. Applying the foregoing
             precepts to those facts, we conclude that Ocean Marine
             waived its right to assert a coverage defense by assuming
             and continuing the defense of its insured in the face of facts
             indicating that it had a right to deny coverage for the
             accident.

             Id. at 1216-1217 [emphasis added].

      We find Steptore is factually distinguishable from the case at bar. Steptore

involved a waiver based on the actions of the insurer during the course of a single

proceeding. In sharp contrast to those facts, the plaintiff in the instant case is seeking

to rely on the insurer’s actions which occurred in connection with a prior 2007 claim

to find a waiver occurred in the context of the current 2013 claim.

      Although we have not had occasion to address this precise issue, the United

States Court of Appeals for the Fifth Circuit rejected a similar argument in American

International Specialty Lines Ins. Co. v. Canal Indemnity Co., 352 F.3d 254 (5th Cir.

2003). We quote with approval the sound reasoning set forth in the opinion of Judge

Carl Stewart:

             We also find that Louisiana's Code articles governing the
             “payment of a thing not owed” compel our conclusion that,
             contrary to Canal's argument, an insurer does not, by
             virtue of making a payment on a claim, waive the right
             to assert coverage defenses to a subsequent claim. See
             La. Civ. Code Ann. arts. 2299-2305 (2003). Indeed,
             Louisiana's intermediate appellate courts have relied on

                                            6
            these articles in holding that an insurer's erroneous, or even
            negligent, payment of a claim to its insured does not bar
            the insurer from later recouping the amount paid. Dear v.
            Blue Cross of Louisiana, 511 So.2d 73, 74-76 (La.Ct.App.
            3d Cir.1987) (holding that an insurer's erroneous payment
            to its insured for medical expenses arising from a
            preexisting condition that was excluded from coverage did
            not bar the insurer from recovering the amounts paid);
            Central Sur. & Ins. Corp. v. Corbello, 74 So.2d 341, 344
            (La.Ct.App. 1st Cir.1954) (allowing insurer to recover
            payments it made to its insured for costs related to an
            accident that occurred after the expiration of the policy);
            see also Pioneer Bank & Trust Co. v. Dean's Copy Prods.,
            Inc., 441 So.2d 1234, 1236-37 (La.Ct.App. 2d Cir.1983)
            (holding that a bank's negligence in mistakenly paying a
            judgment creditor who had no account with the bank did
            not bar the bank's claim for reimbursement of the amount
            of debt paid). Moreover, under Louisiana Civil Code
            article 2299, analyzed in detail below, even “a person who
            knowingly has paid a thing not owed may reclaim” the
            amount paid from the recipient. La. Civ.Code. Ann. art.
            2299 cmt. (d) (2003). Applied to the facts before us, even
            if AISLIC's payment to Canal for the Comal County loss
            were made knowingly, such knowing payment would not
            waive its right to reclaim that amount. We therefore are
            unpersuaded by Canal's assertion that AISLIC's payment of
            the Comal County claim can waive the right to contest the
            subsequent Bexar County claim, when under Louisiana law
            such payment would not even estop the payor, AISLIC,
            from reclaiming the amounts paid for the Comal County
            loss. In sum, we decline to extend application of the
            waiver rule articulated in Steptore to the relationship
            among insurers particularly when, under the facts
            presented, such application would contravene the
            Louisiana Civil Code and this Circuit's precedent.
            Therefore, like the district court, we reject the
            contention that AISLIC waived the right to rely on its
            “other insurance” clause to contest liability for the
            Bexar County loss by having paid the prior Comal
            County claim.

            Id. at 271 [emphasis added; footnotes omitted].

      Applying this reasoning to the present case, we find any purported waiver by

State Farm of its defenses with regard to the 2007 claim cannot constitute a waiver




                                          7
with regard to the current claim.2 Accepting plaintiff’s argument would result in the

absurd conclusion that State Farm is forever precluded from raising the anti-stacking

defense in any future claim filed by plaintiff.

       Accordingly, we find the court of appeal erred in affirming the judgment of the

district court which held plaintiff was entitled to recover beyond the limits of his UM

policy. That judgment must be reversed.



                                             DECREE

       For the reasons assigned, the judgment of the court of appeal is reversed.

Judgment is hereby rendered in favor of State Farm Mutual Automobile Insurance

Co. dismissing the claims of Brandon Forvendel with prejudice.




       2
          Because the 2007 claim is not before us, we need not pass on the question of whether the
law or public policy would countenance an action by an insurer which has the effect of expanding
coverage beyond the limits set forth in La. R.S. 22:1295, although we acknowledge this question has
prompted some divergence in the circuits. See Livas v. State Farm Mutual Automobile Ins. Co., 99-
1169 (La.App. 5 Cir. 7/18/00), 797 So.2d 694 (holding that a policy could extend coverage beyond
that required by the statute); Egle v. Allstate Ins. Co., 04-1144 (La. App. 3rd Cir. 12/08/04), 889
So.2d 413 (explaining the facts of Livas “are inapposite to the ones at hand, and we find this holding
inapplicable to this case.”). It suffices to say that for purposes of the facts before us, we find State
Farm has not waived its defenses under the statute or its policy.

                                                   8
