Perniciaro v. McInnis

255 So.3d 1223

Richard PERNICIARO & Robert Cleveland Individually and on Behalf of Paratech, LLC

v.Guy MCINNIS, Ray Lauga, Jr., Casey W. Hunnicutt, Richard Lewis & St. Bernard Parish Government, et al

NO. 2018-CA-0113

Court of Appeal of Louisiana, Fourth Circuit.

September 7, 2018

Frances McGinnis, George P. Hebbler, Jr., Thomas M. Young, HEBBLER & GIORDANO, LLC, 3501 North Causeway Boulevard, Suite 400, Metairie, LA 70002, COUNSEL FOR DEFENDANT/APPELLEE

James M. Garner, Debra J. Fischman, Joshua P. Clayton, Stuart D. Kottle, SHER GARNER CAHILL RICHTER KLEIN & HILBERT, L.L.C., 909 Poydras Street, 28th Floor, New Orleans, LA 70112-1033, David C. Jarrell, 34TH JDC, ST. BERNARD PARISH, Travelers' 2010 Pakenham Drive, Chalmette, LA 70043, COUNSEL FOR DEFENDANTS/APPELLANTS

(Court composed of Judge Rosemary Ledet, Judge Paula A. Brown, Judge Tiffany G. Chase )

Judge Paula A. Brown

This appeal involves an insurance policy coverage dispute between RSUI Indemnity Company ("RSUI") and its Insured, the St. Bernard Parish Government (the "SBPG") and its elected and appointed officials. The plaintiffs, ParaTech, LLC ("ParaTech"), Richard Perniciaro ("Mr. Perniciaro"), and Robert Cleveland ("Mr. Cleveland") (collectively, "the Plaintiffs") filed a petition for damages against the SBPG and several of its council members¹ —Guy Mclnnis ("Mr. McInnis"), Ray Lauga, Jr. ("Mr. Lauga"), Casey W. Hunnicutt ("Mr. Hunnicutt"), and Richard Lewis ("Mr. Lewis") (collectively the "Parish"), and RSUI.² RSUI filed a Motion for Summary Judgment contesting coverage. On September 1, 2017, the district court granted RSUI's motion for summary judgment and dismissed with prejudice all of Plaintiffs' direct action claims against RSUI. The Parish appeals, seeking review of this judgment. For the reasons set forth below, the district court's judgment is affirmed.

FACTUAL AND PROCEDURAL HISTORY

Mr. Perniciaro was a member/owner of ParaTech.³ On behalf of ParaTech, he entered into a contract with the SBPG to provide Information Technology ("IT") services to the SBPG. Mr. Perniciaro averred that on October 27, 2014, he was informed by a Council Member, Mr. McInnis, that the St. Bernard Parish Council (the "Parish Council") planned to hire Todd's Technology ("Todd's") to provide IT services and to establish a separate computer system for the Parish Council.⁴ Subsequently, between November 2014 and July 2015, the Parish Council passed several ordinances that mandated the Parish President to sign the contract with Todd's; that terminated the contract with ParaTech; that restricted ParaTech's access to the public buildings and computer systems; and that defunded the parish's IT department which resulted in ParaTech having outstanding invoices. Although the Parish President vetoed the ordinances, the Parish Council voted to override the vetoes. ParaTech's contract was officially terminated in July, 2015. The dispute between ParaTech and the Council Members was reported by news agencies—the Times Picayune and WGNO television New Orleans. Several of the Council Members were quoted in the news stories.

On November 7, 2014, ParaTech filed, in St. Bernard Parish, a "Petition for Damages, Breach of Contract, and Request for a Temporary Restraining Order" ("Para I") against the SBPG alleging breach of contract, intentional interference with contract, negligence, and defamation. Additionally, ParaTech sought to enjoin the SBPG from contracting or commencing IT work with any person or company other than ParaTech.

ParaTech filed an amended petition which named RSUI as a Defendant. RSUI issued a "Directors and Officers Liability Policy" to the SBPG. There were two policies issued during the relevant time period. One policy covered February 1, 2014 to February 1, 2015;⁵ the second policy covered February 1, 2015 to February 1, 2016.⁶ Both were claims-made-reported policies which contained identical pertinent language.⁷ In the policy, "Insured Persons" included the SBPG and its elected and appointed officials. The policy required RSUI to defend the Insured against any claim for which coverage applied under the policy.⁸

On October 27, 2015, Plaintiffs filed, in Jefferson Parish, a "Petition for Damages" ("Para II"). In Para II, the named defendants were Messrs. McInnis, Lauga, Hunnicutt, and Lewis, individually and in their capacity as council members for the SBPG, the SBPG, and RSUI.⁹ Plaintiffs alleged claims of defamation and injury against those Defendants and set forth a general allegation of "[a]ny and all other negligent and/or intentional acts perpetrated ... which will be proven or identified by discovery." Due to improper venue, Para II was dismissed without prejudice.

On August 5, 2016, Plaintiffs filed, in St. Bernard Parish, a "Petition for Damages" ("Para III") which is the instant suit. Para III named the same parties and alleged the same causes of action as Para II.¹⁰ Particularly, Plaintiffs alleged Messrs. McInnis, Lauga, Hunnicutt, and Lewis, personally and as council members of the SBPG, and the SBPG were liable to Plaintiffs for negligent and/or intentional acts which included:

• Defaming and injuring the Plaintiffs by their public statements to the press and others;

• Defaming and injuring the Plaintiffs by entering into an illegal contract with Todd's and that contract was recorded in the public record;¹¹

• Defaming and injuring the Plaintiffs by initiating and voting on illegal ordinances that terminated ParaTech's contract with the parish, prevented ParaTech from entering any public building in the parish, and refused to pay money owed to ParaTech all in violation of the St. Bernard Parish Charter; and

• "Any and all other negligent and/or intentional acts... which will be proven or identified through discovery."

Messrs. Perniciaro and Cleveland sought damages for public embarrassment and humiliation, mental anguish and anxiety, loss of income, loss of earning capacity, loss of enjoyment of life, and loss of and damage to reputation. ParaTech prayed for damages for loss of business, loss of business partners and members, and loss of and damage to its reputation in the industry.

On March 29, 2017, RSUI filed a motion for summary judgment asserting the following grounds:

• The SBPG untimely notified RSUI of the claims asserted by ParaTech in Para I. RSUI asserted the petition in Para I was served on November 12, 2014, but the claim was not reported to RSUI until August 31, 2015. RSUI explained the applicable policy required a claim to be reported during the policy period, not to exceed sixty days after the expiration date of the policy;¹²

• The claims alleged by ParaTech in Para III are deemed to be a single claim which arose in Para I. Because the single claim was untimely reported by the SBPG, RSUI did not owe the SBPG a defense; and

• The policies excluded coverage for Plaintiffs' claims of breach of contract, defamation, and mental anguish.

Before the hearing on the motion for summary judgment was held, the Council Members filed a motion to compel discovery and a notice to depose RSUI, pursuant to La. C.C.P. art. 1442.¹³ In response, RSUI filed a motion to quash the notice of deposition, requested a protective order, and filed an opposition to the motion to compel. On June 14, 2017, a hearing was held, and the district court rendered judgment on June 20, 2017, denying the Council Members' motion to compel, and granting RSUI's motion to quash and request for a protective order.¹⁴

On August 22, 2017, the district court heard RSUI's motion for summary judgment. The district court's judgment, rendered on September 1, 2017, provided in pertinent part:¹⁵

[T]he Court finds there is no coverage afforded to St. Bernard Parish Government, Guy McInnis, Ray Lauga, Jr., Casey W. Hunnicutt, and Richard Lewis under RSUI Directors and Officers Liability Policy no. HP655864 (2/1/2014–2/1/2015) and RSUI Directors and Officers Liability Policy no. HP661160 (2/1/2015–2/1/2016) for Plaintiffs claims, and there is a judgment herein dismissing with prejudice all claims asserted by Plaintiffs against RSUI ....

From this judgment, the Parish appeals.

DISCUSSION

On appeal, the Parish assigns essentially two errors: (1) the district court erred in denying the Council Members' motion to compel discovery and request to depose RSUI, and granting RSUI's motion to quash and protective order; and (2) the district court erred in granting the summary judgment based on certain policy exclusions including excluding coverage for Plaintiffs' general tort liability claims; in considering an argument not raised by the moving party contrary to La. C.C.P. art. 966(f) ; and by finding Plaintiffs' claims asserted in Para III fell outside of the policy period.

Discovery

The Parish asserts the district court erred by denying the Council Member's motion to compel discovery and notice to depose RSUI and by granting RSUI's motion to quash the deposition and protective order. RSUI asserts the Parish untimely seeks review on appeal of the interlocutory rulings. Alternatively, RSUI argues further discovery was not needed for the district court to decide the coverage issue on summary judgment.

In Sporl v. Sporl , 00-1321, p. 2 (La. App. 5 Cir. 5/30/01), 788 So.2d 682, 683-84, the appellate court explained:

An interlocutory judgment determines "preliminary matters in the course of the action" and is generally non-appealable. La. Code Civ. P. arts. 1841 and 2083. When an unrestricted appeal is taken from a final judgment, the appellant is entitled to a review of all adverse interlocutory rulings prejudicial to him, in addition to the review of the correctness of the final judgment from which the party has taken the appeal. Bielkiewicz v. Ins. Co. of North America , 201 So.2d 130 (La. App. 3 Cir.1967).

The granting of the summary judgment is a final appealable judgment; thus, the denial of the motion to compel discovery is properly before this Court on appeal.

The Parish asserts the district court erred in denying the...