Pipes Miles Obtains Summary Judgement Enforcing Policy's 12 Month ALE Limit in Federal Court
On February 11, 2022, the U.S. District Court for the Western District of Louisiana adopted the Magistrate Judge’s report and recommendation granting summary judgment in favor of PMB’s client, a homeowners insurer. At issue was the interpretation of two provisions in a homeowners insurance policy relating to the payment of additional living expenses (“ALE”). One policy provision limited ALE to “12 consecutive months following the date of loss,” while the other provision read that “Payment will be for the shortest time required to repair or replace the damage or to permanently relocate your household elsewhere.”
PMB argued that the plain language of the policy provisions, when read together, limit a claim for ALE to 12 months from the date of loss, i.e., that the policy must be read to state that the insurer will pay “for the shortest time required to repair or replace the damage or to permanently relocate your household elsewhere” with a cutoff of 12 months. The plaintiff, on the other hand, argued that the two policy provisions were ambiguous and, under Louisiana law, effect must be given to the provision most favorable to the insured.
The Court ruled in favor of PMB’s client, granting summary judgment and enforcing the 12 month ALE limit:
The “subject to” language requires the insurance client to pay ALE for a maximum of twelve months, subject to a shorter period if the restoration is completed within one year. The opposite conclusion – that Liberty must pay ALE for as long as the insured’s restoration or relocation takes – would be nonsensical as it would render void the twelve-month period in the Increased Limit provision. As contract interpretation requires provisions to be read together, the undersigned recommends that the court find that the insurance client was required to pay ALE until Mayes restored his property or relocated, but that this obligation was capped at twelve months. As it is undisputed that Mayes was paid for more than twelve months, there is no issue of material fact as to whether the insurance client owed Mayes additional ALE.
This decision is a notable win. Prior to this decision, no court in Louisiana had addressed the interpretation of these two provisions. In fact, decisions on similar issues had only been decided by the United States District Court for the District of Minnesota and United States District Court for the Eastern District of Michigan. PMB’s win, therefore, marks an important precedent in the state.
For more information please contact any of the attorneys involved in the case.