                 UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                     Fifth Circuit

                                                                            FILED
                                                                           July 24, 2008
                                       No. 07-30171
                                                                      Charles R. Fulbruge III
                                                                              Clerk
In the matter of: WHITAKER CONSTRUCTION COMPANY, INC.,
                                  Debtor.

ST. PAUL FIRE & MARINE INSURANCE CO.,

                                                  Appellee,

v.

WHITAKER CONSTRUCTION CO.,

                                                  Appellant.


                    Appeal from the United States District Court
                       for the Western District of Louisiana
                              USDC No. 5:06-cv-1595


Before REAVLEY, BENAVIDES, and ELROD, Circuit Judges.
PER CURIAM:*
         Appellant Whitaker Construction Co. (Whitaker) filed claims under
insurance policies issued by Appellee St. Paul Fire & Marine Insurance Co. (St.
Paul).       Whitaker appeals the district court's ruling that policy provisions
foreclosing its claims do not violate Louisiana law and are therefore binding.
We affirm.
                                   I. BACKGROUND


         *
        Pursuant to Fifth Circuit Rule 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not be published and is not precedent except under the limited circumstances set forth in Rule
47.5.4.
                                        No. 07-30171

       St. Paul issued five one-year insurance policies ("the policies") to Whitaker
for the calendar years 1998 through 2002 respectively. These policies protected
Whitaker from financial losses resulting from the dishonesty of its employees.
       After filing for bankruptcy in 2003, Whitaker learned that one of its
employees, Michael Hutcheson, had embezzled over $500,000 from Whitaker by
forging checks on Whitaker's account over a period of several years. Whitaker
filed claims under the policies seeking to recover its losses. Of the $500,000 lost,
St. Paul paid Whitaker $110,000 under the 2002 policy, but refused to pay under
any of the prior policies. Whitaker sued. Of primary focus in the ensuing
litigation was a provision common to the four pre-2002 policies, which reads:
       We'll apply this agreement to covered losses that happen while this
       agreement is in effect. And you have up to one year after this
       agreement ends to discover the loss.
       Because it was, and still is, undisputed that Whitaker did not discover its
losses until November 2003, St. Paul filed for summary judgment in the
bankruptcy court, arguing, inter alia, that Whitaker's losses were not covered
under the pre-2002 policies because Whitaker failed to timely discover them.
For example, St. Paul argued that Whitaker's 1999 losses were not covered
because Whitaker failed to discover Hutcheson's 1999 acts of embezzlement
during that calendar year or within one year after the 1999 policy expired.
       Whitaker responded that this reading of the discovery provisions would
render them illegal under Louisiana Revised Statutes § 22:629, which
invalidates any insurance provision limiting the time within which an action
may be brought against the insurer—i.e., the "prescriptive period"—to less than
one year after a cause of action accrues. The bankruptcy court agreed with
Whitaker; accordingly, under § 22:629(C),1 it disregarded the discovery
provisions, thereby rendering Whitaker's losses covered under the revised terms.



       1
        "Any such condition, stipulation, or agreement in violation of this Section shall be void,
but such voiding shall not affect the validity of the other provisions of the contract."

                                                2
                                  No. 07-30171

The district court reversed, concluding that the discovery provisions do not
violate § 22:629, and therefore Whitaker's tardy discovery of its losses
disqualified those losses from coverage.
      For its part, St. Paul argued that because none of Whitaker's losses
triggered coverage, it is entitled to return of the $110,000 it unnecessarily paid
Whitaker under the 2002 policy. The district court, noting that St. Paul failed
to raise the argument previously, remanded the issue to the bankruptcy court
for a determination of whether, as a "court of equity," it believed St. Paul was
entitled to reimbursement notwithstanding the tardiness of its argument.
      Before this court, Whitaker argues that: (1) the district court erred in
ruling that the policies do not violate § 22:629; and (2) under the Bankruptcy
Code, 11 U.S.C. § 108(a), the time within which it could file a claim under the
2001 policy was extended by operation of law to two years from the bankruptcy
court's order of relief, thereby making timely Whitaker's claim for losses
incurred in 2001. Further, St. Paul argues on appeal that it is entitled to
recoupment of its 2002 policy payment to Whitaker.
                               II. DISCUSSION
A. Legality of the Discovery Provisions
      The policy provision common to the four pre-2002 policies reads:
      We'll apply this agreement to covered losses that happen while this
      agreement is in effect. And you have up to one year after this
      agreement ends to discover the loss.
Louisiana courts have described the type of policies at issue here as "discovery
policies," the hallmark of which is a requirement that the insured not only suffer
the claimed loss during the policy term but also discover that loss during the
policy period or within a limited time after the policy expires.        See, e.g.,
Livingston Parish Sch. Bd. v. Fireman's Fund Am. Ins. Co., 282 So. 2d 478, 481
(La. 1973).
      Louisiana Revised Statutes § 22:629(B) provides in relevant part that:


                                        3
                                       No. 07-30171

       No insurance contract . . . issued . . . in this state . . . shall contain
       any condition . . . or agreement limiting [the] right of action against
       the insurer to a period of less than . . . one year from the time when
       the cause of action accrues . . . .
Whitaker argues that because it was barred under the policies from filing suit
upon discovery of its losses in November 2003, the discovery provisions are
necessarily illegal. We disagree.
       Discovery provisions are not categorically impermissible. The Louisiana
Supreme Court has held that "[w]here a policy unambiguously and clearly limits
coverage to acts discovered and reported during the policy term, such limitation
of liability is not per se impermissible." Livingston Parish, 282 So. 2d at 481.
Relying on case law such as Livingston Parish, we have held that policy
provisions of the type involved here are not inherently violative of § 22:629. See
Scarborough v. Travelers Ins. Co., 718 F.2d 702, 712 (5th Cir. 1983) (holding a
claims-made provision permissible under § 22:629).                   Louisiana case law
subsequent to our holding in Scarborough has confirmed that provisions in
claims-made2 policies that do not have the practical effect in a given case of
establishing a prescriptive period of less than one year should be upheld.
Anderson v. Ichinose, 98-2157 (La. 09/10/99); 760 So. 2d 302; Regions Bank v.
Kountz, 05-1106 (La. App. 3 Cir. 05/31/06); 931 So. 2d 506; Robicheaux v. Adly,
00-1207 (La. App. 3 Cir. 02/01/01); 779 So. 2d 1048.
       For example, in Robicheaux, the Louisiana appellate court addressed
whether an insured who failed to timely file a claim with the insurer under a
claims-made policy was entitled to coverage by operation of § 22:629. After
noting that the legality of claims-made policies under § 22:629 turns on the effect


       2
         We reject Whitaker's argument that case law addressing claims-made policies are
inapposite to this appeal. Discovery policies are treated by Louisiana courts as a type of
claims-made policy, and thus have treated the two labels as interchangeable in contexts such
as the present. See, e.g., Livingston Parish, 282 So. 2d at 481; Hedgepeth v. Guerin, 96-1044,
p. 5 (La. App. 1 Cir. 03/27/97); 691 So. 2d 1355, 1359. Thus, the principles announced in
Louisiana case law with regard to claims-made policies are applicable here.

                                              4
                                       No. 07-30171

of the timeliness provision in a given case, the court concluded that the policy at
issue was not violative of § 22:629 because the insured had waited until more
than one year post-injury to file a claim, thereby making the operation of the
claim-filing obligation permissible. As the court explained:
           If the alleged [injury] occurs within the policy period, and a claim
           is filed outside of the policy period but within one year of the alleged
           incident, and the insurer is notified of the claim within one year of
           the alleged incident, coverage will be afforded under the claims
           made policy in order to conform to Louisiana law.
Id. at 1054. However, the court distinguished the scenario before it:
       The event triggering coverage in a claims made policy is the making
       of a claim. The plaintiffs did not bring a claim within the . . . policy
       period. Additionally, the plaintiffs did not report the claim to the
       insurer . . . within one year of the date from accrual of the cause of
       action.
Id. at 1054-55 (emphasis added). The court thus concluded that the policy did
not violate § 22:629. Id. at 1054. In other words, because the plaintiffs did not
report a claim to the insurer within one year of accrual, the policy limitation did
not have the effect of providing to them less than one year to file suit; the
plaintiffs were more than a year late anyway. See also Regions Bank v. Kountz,
05-1106, pp. 17-18 (La. App. 3 Cir. 05/31/06); 931 So. 2d 506, 517 (Because the
given "claim was made . . . long after the end of the policy term and more than
sixty . . . days thereafter as well as more than a year after the date of the
wrongful act . . . the policy language did not impermissibly limit the statutory
time granted to assert the claim" (emphasis added)).3



       3
         One Louisiana court has stated that after the Louisiana Supreme Court's decision in
Anderson, which dealt with a different provision, this "effects test" has been thrown into
question and that such claims-made provisions are now categorically permissible regardless
of how they operate in context. Burns v. CLD, Inc., 38-998 (La.App. 2 Cir. 10/27/04); 886 So.
2d 607. However, the other Louisiana circuit courts to have addressed the issue have rejected
this view of Anderson and have continued to apply the case-specific approach. See Kountz, 931
So. 2d at 515; LeBlanc v. Succession of Raggio, 00-2407, pp. 4-6 (La.App. 1 Cir. 02/20/02); 818
So. 2d 140, 143.

                                              5
                                  No. 07-30171

      Applying Louisiana law to the facts of this case, the discovery provisions
do not violate § 22:629 so long as they did not have the effect in this instance of
limiting to less than one year post-accrual the time within which Whitaker could
sue under a given policy.       The discovery provisions here had no such
impermissible effect. Central to this conclusion is our understanding of when
Whitaker's causes of action "accrued" under Louisiana law.
      Whitaker relies on the premise that its causes of action against St. Paul
accrued when Whitaker discovered its losses, not when it suffered them. Using
Whitaker's reasoning, then, the discovery provisions had the practical effect of
giving Whitaker no prescriptive period, much less one year, within which to
bring its claims or file suit because its attempt to sue on its losses immediately
after discovering them met with dismissal. The district court soundly rejected
this argument.
      Case law on which Whitaker relies in arguing that its causes of action
accrued upon discovery of its losses—decisions such as Cole v. Celotex Corp., 620
So. 2d 1154 (La. 1993)—are primarily those in which Louisiana courts have
applied the doctrine of contra non valentem, which delays commencement of the
prescriptive period "where the cause of action is not known or reasonably
knowable by the plaintiff." Id. at 1156. This doctrine represents an equitable
exception in that it requires the plaintiff invoking it to "show that he did not
know or discover such facts [giving rise to the cause of action,] and that the lack
of knowledge is not attributable to his fault." Bell v. Kreider, 03-300, p. 7 (La.
App. 5 Cir. 09/16/03); 858 So. 2d 58, 62 (quoting Hosp. Serv. Dist. No. 1 of
Jefferson Parish v. Alas, 94-897, p. 9 (La. App. 5 Cir. 6/28/95), 657 So. 2d 1378,
1383).
      In its briefing, Whitaker does not attempt to argue that it qualifies for the
benefit of contra non valentem; indeed, it fails to even expressly invoke the
doctrine. Instead, Whitaker's position appears to be that a failure to discover a
loss renders that loss "unknowable" for tolling purposes without application of

                                        6
                                  No. 07-30171

a specific equitable tolling doctrine. That proposition is without support in
Louisiana law. Indeed, Louisiana courts have declared quite the opposite: "Mere
unawareness of a potential cause of action is not enough to invoke contra non
valentum." Bell, 858 So. 2d at 63; see also Hospital Serv., 657 So. 2d at 1383
(stating that a plaintiff "will be deemed to know that which he could have
learned from reasonable diligence"). It follows that if contra non valentem is an
equitable exception, and Whitaker fails to show that it is entitled to the benefit
of that exception, the default accrual standard applies.
      "Under Louisiana law, '[a] cause of action accrues when a plaintiff may
bring a lawsuit.'" Grenier v. Med. Eng'g Corp., 243 F.3d 200, 203 (5th Cir. 2001)
(quoting Brown v. R.J. Reynolds Tobacco Co., 52 F.3d 524, 526-27 (5th Cir.
1995)); Prejean v. Dixie Lloyds Ins. Co., 94-2979, p. 3 (La. 09/15/95); 660 So. 2d
836, 837 (La. Sept. 15, 1995) ("In Louisiana, a cause of action accrues when a
party has a right to sue."). Assuming generously that Whitaker suffered all of
its losses on the last day of the most recent policy term at issue—the 2001 policy
term—Whitaker did not seek indemnification for those losses until more than
one year thereafter. Under the terms of the polices, then, Whitaker was allowed
one year after its causes of action accrued to claim its losses, or commence an
action for coverage. Thus, the discovery provisions did not impermissibly limit
Whitaker's prescriptive period, and they therefore do not violate § 22:629.
B. Alleged Extension to File a Claim under 11 U.S.C. § 108(a)
      Whitaker next argues that even if the policies do not offend Louisiana law,
11 U.S.C. § 108(a) of the Bankruptcy Code extended the time for it to file a claim
under the 2001 policy. Whitaker failed to raise this argument below; therefore,
it is waived. See ICEE Distribs. v. J&J Snack Foods Corp., 325 F.3d 586, 595
n.29 (5th Cir. 2003).
C. St. Paul's Recoupment Argument
      Unlike the other policies, the 2002 policy covered only losses Whitaker
suffered and discovered during the policy term. Whitaker stipulated below that

                                        7
                                  No. 07-30171

it did not discover any of its losses until November 2003. Nevertheless, before
commencement of this litigation, St. Paul paid Whitaker $110,000 under the
2002 policy.
      Believing that the 2002 policy was never triggered, St. Paul argued in its
appellate brief that it is entitled to recoup the $110,000 it unnecessarily paid.
The district court refused to address this argument, a decision St. Paul initially
challenged before this court even though it did not file a cross-appeal. St. Paul's
failure to file a cross-appeal deprives this court of jurisdiction to address the
issue. Miller v. Butcher Distribs., 89 F.3d 265, 267 (5th Cir. 1996) ("The failure
to file a cross-appeal in a timely manner as mandated by Rule 4 of the Federal
Rules of Appellate Procedure" precludes an appellee's attack on a lower court's
order). Indeed, at oral argument St. Paul conceded that this issue is not
properly before us. We therefore do not address it.
      The judgment of the district court is AFFIRMED.




                                        8
