Segura v. Frank - 93-C-1271 ( La. 1/14/94), 630 So. 2d 714

Rule:

If the statute in question was not in effect at the time of contracting, it cannot be retroactively applied to alter the obligation of that contract, even though the act giving rise to the obligation occurs after the effective date of the statute. 

Facts:

On August 1, 1989, Matthew Rey was injured when his car was struck by an automobile driven by Wendy Guidry. Rey filed suit on July 30, 1990 against Guidry, Dixie Lloyds Insurance Company as Guidry's liability insurer, and Allstate Insurance Company as Rey's uninsured motorist (UM) carrier. After Dixie Lloyds was liquidated on December 20, 1990, Rey amended the petition to name the Louisiana Insurance Guaranty Association (LIGA) as Dixie Lloyds' successor. Andrea Segura was injured on March 12, 1990 when she was struck in a pedestrian crosswalk by an automobile driven by Russell Goodie and owned by Melissa Frank. Segura filed suit on March 4, 1991 against Goodie, Frank, American Manufacturers Mutual Insurance Company (American) as Segura's UM carrier, and LIGA as successor to Dixie Lloyds, the liability insurer of the Frank vehicle on the date of the accident. In both cases, LIGA argued La. R.S. 22:1386, as amended by Act 130 of 1990 and which had become effective on September 7, 1990, required the plaintiffs to exhaust their UM coverages before recovering against LIGA. Both trial courts disagreed with LIGA, applied the law as it existed prior to the amendment, and held LIGA primes the plaintiffs' UM insurers. On appeal, Segura’s case was affirmed but Rey’s was reversed.

It must be noted that Rey and Segura were injured on August 1, 1989 and March 12, 1990, respectively; Act 130 of 1990, amending La. R.S. 22:1386, became effective on June 29, 1990; and Dixie Lloyds, the tortfeasors' liability insurer, was declared insolvent on December 20, 1990. Under La. R.S. 22:1386 as it existed on the dates of the accidents, Rey and Segura would be entitled to proceed immediately against LIGA as Dixie Lloyds' successor. Under the statute as it existed on the date of Dixie Lloyds' liquidation, they would first have to exhaust their UM coverages with American and Allstate before proceeding against LIGA.

Issue:

Does the 1990 Amendment apply to the plaintiffs’ cases?

Answer:

No.

Conclusion:

The Court disagreed with LIGA's contention that application of the 1990 amendment to Rey's and Segura's claims would operate prospectively only. LIGA's reasoning, as well as the reasoning of the fifth circuit in Rey and the first circuit in Hebert, failed to take into account the amendment's effects on the existing rights and obligations of the UM insurers. Those rights and obligations arose not on the date of insolvency, nor on the dates of the accidents, but on the dates the UM policies were issued. Here, at the times the American and Allstate UM policies were issued, La. R.S. 22:1386 and Hickerson limited the UM insurers' liability under those policies to claims in excess of a tortfeasor's liability insurance coverage even in the event of the insolvency of the tortfeasor's insurer. If, however, the 1990 amendment to La. R.S. 22:1386 was applied, under those same policies the UM insurers would be primarily liable for plaintiffs' claims against Dixie Lloyds. In other words, the amendment would retroactively increase the UM insurers' obligations under the policies. Moreover, because generally a statute cannot be retroactively applied to alter the obligations of a contract "even though the act giving rise to the obligation occurs after the effective date of the statute," the fact that Dixie Lloyds' liquidation occurred after the effective date of the amendment does not preclude our finding that application of the 1990 amendment would retroactively increase the UM insurers' obligations under policies issued prior to the amendment's effective date.