text:
    Randy N. TRAN, et al. v. Charles E. WILLIAMS, III, et al.
    No. 10-1030.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 9, 2011.

      Terry L. Rowe, Attorney at Law, Lafayette, LA, for Defendant Appellee, Michael M. Reyes, Charles E. Williams, III, State Farm Mutual Automobile Ins. Co. (as insurer).
    Jeffrey A. Rhoades, Swift & Rhoades, Lafayette, LA, for Defendant/Appellee, United Services Automobile Association.
    Ian Alexander Macdonald, Jones Walker, Lafayette, LA, for Defendant/Appellee, Progressive Security Ins. Co.
    Joseph G. Jevic III, St. Martin & Bo-urque, Houma, LA, for Plaintiffs/Appel-lees, Henry V. Vo, Thao Mai Vo, Randy N. Tran, Tiffany T. Vo, Hoa T. Truong.
    Timmy Lee Fields, Attorney at Law, New Orleans, LA, for Intervenors/Appel-lants, J. Ronald Denman, Shelly R. Sessions.
    Anh Quang Cao Esq., Attorney At Law, Gretna, LA, for Plaintiffs/Appellees, Randy N. Tran, Tiffany T. Vo, Henry V. Vo, Thao Mai Vo, Hoa T. Truong.

      Dawn L. Morris, Law Office of Dawn L. Morris, Lafayette, LA, for Intervenors/Ap-pellants, Shelly R. Sessions, J. Ronald Denman.
    Melanie G. Lagarde, St. Martin & Bo-urque, Houma, LA, for Plaintiffs/Appel-lees, Thao Mai Vo, Henry V. Vo, Tiffany T. Vo, Hoa T. Truong, Randy N. Tran.
    Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, JOHN D. SAUNDERS, and PHYLLIS M. KEATY, Judges.
   SAUNDERS, Judge.

11 This is a case of a discharged attorney filing an intervention seeking attorney’s fees earned after the case of the underlying plaintiffs was settled subsequent to her discharge. Over the course of their claim, plaintiffs’ first hired the discharged attorney, then an attorney who eventually could no longer handle their case due to his election to an office that disallowed him to retain their case, and, finally, their current attorney.

The plaintiffs current attorney took proceeds equal to the highest percentage of any of the three attorney’s contingency fee contracts out of the plaintiffs’ settlement totaling approximately $63,000.00 and set that money aside in her firms trust account in anticipation of this intervention’s adjudication. After a full hearing on the merits of the intervention, the trial court awarded one of the discharged attorney $1,400.00 in attorney’s fees. The trial court reached that amount by using the percentage of the discharged attorney’s contingency fee agreement multiplied by the amount of monies received from the med-pay provision of her former clients’ own insurance policy. These monies were obtained for plaintiffs by the discharged attorney prior to her dismissal. Even though the trial court found that the discharged attorney was dismissed for cause, it did not reduce the amount of attorney’s fees it awarded to her.

The discharged attorney has appealed. We affirm.

FACTS AND PROCEDURAL HISTORY:

On July 5, 2006, Randy N. Tran and Tiffany T. Vo individually, and on behalf of their minor children, David Tran and Kristin Tran, together with Thao Mai Vo, Henry V. Vo, and Hoa T. Truong (collectively “plaintiffs”) were in an automobile accident. On July 6, 2006, plaintiffs hired attorneys Shelly Sessions and Ronald 12Penman (collectively “Sessions” as Sessions was the attorney who performed the work on plaintiffs’ behalf) via a contingency fee agreement to represent them in pursuit of their personal injury claims.

Plaintiffs notified Sessions that they no longer wanted her to represent them on November 3, 2006. Sessions then filed suit on plaintiffs’ behalf on November 8, 2006. Plaintiffs then hired Anh Quang Cao (Cao) as attorney representation. Cao enrolled as counsel of record on November 30, 2006. Cao reimbursed Sessions for the expenses she had incurred in representing plaintiffs, inclusive of the costs of filing a petition for intervention on December 7, 2006. Sessions’ intervention sought attorney’s fees and is the subject of this appeal.

Cao was subsequently elected to the United States House of Representatives (the House) on December 6, 2008, and was sworn in on January 6, 2009. As a member of the House, Cao had to cease representing plaintiffs as he could no longer privately practice law for profit. Cao then arranged for plaintiffs to employ Melanie Lagarde (Lagarde) as their attorney. On March 9, 2009, Lagarde filed a motion to enroll as counsel of record. On March 16, 2009, Lagarde was orally enrolled as counsel for plaintiffs.

Lagarde negotiated a settlement on behalf of plaintiffs in July of 2009. On July 28, 2009, Lagarde filed a motion to approve settlement. This motion was granted, over opposition of Sessions, and a judgment was signed by the trial court on September 21, 2009. At that time, all monies owed to plaintiffs were dispersed, all medical and insurance liens were paid, and a forty-five percent (45%) attorneys’ fee was placed in the trust account of Lagarde’s firm pursuant to the court order | ^approving the settlement.

On February 1, 2010, a full hearing was conducted on the merits of Sessions’ intervention. After the hearing in which Sessions, Cao, and Legarde testified regarding the work each performed in representing plaintiffs, the trial court awarded Sessions $1,400.00 in attorney’s fees. Sessions appeals, alleging the following assignments of error:

ASSIGNMENTS OF ERROR:

1. The trial court committed legal error in failing to require joinder of all parties needed for just adjudication and, as a result, the judgment is null and void and the matter should be remanded for joinder of all necessary parties and a trial on the issue of attorneys’ fees.
2. Alternatively, the trial court committed legal error in failing to apply the proper standards for determining (a) whether Sessions was discharged with or without cause and (b) for determining the proper allocation of attorneys’ fees between all of plaintiffs’ attorneys.
3.The trial court also abused its discretion in sanctioning intervenors for alleged discovery deficiencies.

ASSIGNMENT OF ERROR NUMBER ONE:

Sessions alleges in her first assignment of error that the trial court committed legal error in failing to require joinder of all parties needed for just adjudication (specifically, Cao) and, as a result, the judgment is null and void and the matter should be remanded for joinder of all necessary parties and a trial on the issue of attorneys’ fees. We find this assignment lacking of merit.

Our review of the record indicates that Sessions did not file an exception on this issue nor did she bring this issue before the trial court. Thus, the trial court has not ruled upon this point.

Our supreme court was faced with an analogous situation in Prince v. Standard Oil Co. of Louisiana, 147 La. 283, 84 So. 657 (1920). In that case, the court stated:

|4It is argued in this court that to annul a lease all the owners must be joined as plaintiffs, and, as Giddens and the Natalie Oil Company do not appear as plaintiffs, that the suit must fail. But no exception was filed in the district court to the right of plaintiffs to sue for the annulment of the lease, and no such defense was set up in the answer. The point was not raised or passed upon in the trial court, and it cannot therefore be heard or considered in this court.

Id. at 658.

Given this directive, this court cannot hear this issue solely because it is now raised by Sessions. This directive is consistent with the statutory scheme set up in dealing the situation before us. Louisiana Code of Civil Procedure Article 645 states “[t]he failure to join a party to an action may be pleaded in the peremptory exception, of may be noticed by the trial or appellate court on its own motion.” The time for pleading peremptory exceptions is governed by La.Code Civ.P. art. 928(B), which states “[t]he peremptory exception may be pleaded at any stage of the proceeding in the trial court prior to a submission of the case for a decision.”

In the case before us, Sessions assigns this issue as error. Given the above, because the case was submitted for a decision, she has waived this exception. However, as noted by La.Code Civ.P. art. 645, this court can notice the failure to join a party on its own motion. We decline to do so.

Louisiana Code of Civil Procedure Article 641 states:

A person shall be joined as a party in the action when either:
(1) In his absence complete relief cannot be accorded among those already parties.
(2) He claims an interest relating to the subject matter of the action and is so situated that the adjudication of the action in his absence may either:
(a) As a practical matter, impair or impede his ability to protect that interest.
15(b) Leave any of the persons already parties subject to a substantial risk of incurring multiple or inconsistent obligations.

Our review of the record indicates that a full hearing on the merits of this intervention took place. The party that allegedly was necessary for a just adjudication was Congressman Cao. At the hearing, Congressman Cao voluntarily testified before the trial court via deposition. In that deposition, he extensively relayed what legal work he performed on the underlying claim for personal injuries. Thus, his interests in the matter were clearly protected, as the trial court was fully aware what work Cao performed in representing plaintiffs.

Sessions argues in brief that the supreme court case of Saucier v. Hayes Dairy Products, Inc., 373 So.2d 102 (La.1979) mandates this court to find that Congressman Cao be added as a party to the proceedings. While we need not address this argument, we choose to do so. Saucier is distinguishable from the case before us. In Saucier, the court did not have any record of the second attorney’s services performed for the client. Here, we have Congressman Cao’s deposition where he testified extensively to “the amount and character of his services.” Id. at 119. Further, the non-joinder of Cao does not hurt his interests pursuant to La.Code Civ.P. art. 641. Thus, Sessions’ argument is without merit.

ASSIGNMENT OF ERROR NUMBER TWO:

In her second assignment of error, Sessions argues that the trial court committed legal error in failing to apply the proper standards for determining (a) whether Sessions was discharged with or without cause and (b) for determining the proper allocation of attorneys’ fees between all of plaintiffs’ attorneys. Again, we find no merit to these arguments.

| fiIn the first part of this assignment of error, Sessions argues that the trial court’s finding that she was dismissed for cause was manifestly erroneous. We do not agree.

A determination of whether termination was with cause is factual and will be disturbed on appeal only upon manifest error. O’Rourke v. Cairns, 95-3054 (La.11/25/96), 683 So.2d 697.

In applying the manifest error-clearly wrong standard, the appellate court must determine not whether the trier of fact was right or wrong, but whether the factfinder’s conclusion was a reasonable one. Where there are two permissible views of the evidence, a factfinder’s choice between them can never be manifestly erroneous or clearly wrong. Thus, if the [factfinder’s] findings are reasonable in light of the record reviewed in its entirety, the court of appeal may not reverse, even if convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently.

Gradney v. La. Commercial Laundry, 09-1465, pp. 2-3 (La.App. 3 Cir. 5/12/10), 38 So.3d 1115, 1118 (citations omitted)(internal quotation marks omitted).

Congressman Cao testified as to why plaintiffs discharged Sessions. In his testimony, the following exchange took place (emphasis added):

Q Do you remember stating [in the answer to petition for intervention] that [Sessions’ discharge] was for cause?
A Oh, I believe so. I believe so. But I cannot remember exactly what the words that I used.
Q Okay. But do you recall what the Tran family told you their disappointment was with Mr. Denman and Miss Sessions?
A There were very disappointed that they made repeated phone calls to the office, and they were frustrated with I guess communication or lack of communications.
A couple of the plaintiffs, they did not speak English very well[,] especially the older — the parents of Mr. Tran, and they had a hard time communicating. So that was a frustration for them.
|7But overall I believe they were simply disappointed in the fact that once they were retained, there was very little communication. They tried to contact them on a number of occasions, and they were never returned. So those were — I think those were the primary reasons.

This testimony supports the trial court’s finding of fact that Sessions deficiently communicated with plaintiffs and was terminated for cause. Our supreme court, in O’Rourke, 683 So.2d 697, determined that lack of communication between attorney and client was a basis for finding that an attorney was discharged for cause. Thus, the trial court’s determination that Sessions was discharged for cause is also reasonable. Accordingly, we find that this issue raised by Sessions lacks credence.

Next, Sessions argues that the trial court did not use the proper method in determining how to allocate the attorney’s fees between plaintiffs’ attorneys. We disagree.

This argument posits a question of law as to whether the trial court was proper in following our supreme court’s guidance provided in Saucier, 373 So.2d 102, and in O’Rourke, 683 So.2d 697. When an error of law is alleged, the applicable standard of review is that of de novo. Sanchez v. La. Nursery, 09-1247 (La.App. 3 Cir. 4/7/10), 34 So.3d 1047. As such, this court will determine whether the trial court was legally correct in its method of allocation of attorney’s fees.

In Saucier, our supreme court provided the framework for how lower courts are to allocate earned attorney’s fees from clients who, over the course of the claim, hired and/or discharged multiple attorneys under contingency fee contracts. Our supreme court, in O’Rourke, 683 So.2d at 704, explained how to apply that framework, stating:

[I]n cases of discharge with cause of an attorney retained on | scontingency, the trial court should determine the amount of the fee according to the Saucier rule, calculating the highest ethical contingency to which the client contractually agreed in any of the contingency fee contracts executed. The court should then allocate the fee between or among discharged and subsequent counsel based upon the Saucier factors. Thereafter, the court should consider the nature and gravity of the cause which contributed to the dismissal and reduce by a percentage amount the portion discharged counsel otherwise would receive after the Saucier allocation.

In directing a lower court how to determine the appropriate division of attorney’s fees, our supreme court, in Scott v. Kemper Insurance Co., 377 So.2d 66, 71 (La.1979), n. 6, cited factors from the former Code of Professional Responsibility DR2-106. Currently, the factors governing fees for legal services are located in La.Rules Prof.Conduct, Rule 1.5(a), which follows:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.

In the case before us, the trial court heard testimony from each of the three attorneys who represented plaintiffs over the course of the litigation. Each attorney’s testimony included assertions regarding the contracted upon attorney’s fees. The trial Rcourt determined that Sessions had contracted for the highest percentage of contingency fee or forty-five percent (45%). Sessions asserts in brief that the trial court erroneously did not determine whether that fee was proper under the Code of Professional Responsibility. We find this assertion curious, given that it was Sessions who contracted for that percentage of attorney’s fees. Regardless, it is clear that the trial court found that fee to be reasonable as it used that percentage in its calculations of the total attorney’s fees earned. Moreover, no party asserted that the fee percentage was unreasonable. Thus, we find that the trial court correctly completed the first step in allocation under Saucier and its progeny.

The trial court then awarded Sessions the full contingency fee of forty-five percent (45%) of the monies she collected while representing plaintiffs. It is true that the trial court did not annunciate the Saucier factors it used in reaching it determination. However, the information for an analysis for each of the factors listed was readily available to the trial court, as all of the testimony heard by the trial court on this matter dealt nearly exclusively with how each of plaintiffs’ three attorneys helped plaintiffs reach a resolution in their claim for damages.

Additionally, in Saucier, 373 So.2d at 118, the court stated (emphasis added) (footnote omitted):

The amount prescribed in the contingency fee contract, not quantum meruit, is the proper frame of reference for fixing compensation for the attorney prematurely discharged without cause. We choose to vindicate the contingency fee contract rather than render it nugatory. In this way the client is prevented from reaping any possible unfair advantage resulting from the discharge of his attorney. Similarly by this resolution the client is not exposed to the risk of being penalized by being required to pay excessive and duplicitous legal fees for having chosen to exercise his right to discharge one attorney and retain the services of another.

In awarding Sessions her fee, the trial court vindicated “the contengency fee | mcontract rather than render[ed] it nugatory,” as it awarded her the contracted upon forty-five percent (45%) of all monies she had collected while representing plaintiffs. We recognize that an allocation based on a bright-line rule that the attorney will receive his or her contracted fee percentage of whatever monies earned while representing a client will not hold in all circumstances, nor is that what Saucier directs. However, here, that allocation by the trial court did not run afoul of our supreme court’s motivation in deciding Saucier. Plaintiffs did not attempt at the last minute “to supplant his original attorney with another or to proceed in proper person so as to obviate responsibility for payment of a contingent fee after substantially all of the legal services contemplated by the contract have been performed and settlement or judgment has been obtained or is imminent.” Id., n. 8. Likewise, the result in this case does not expose plaintiffs “to the risk of being penalized by being required to pay excessive and duplicitous legal fees for having chosen to exercise his right to discharge one attorney and retain the services of another.” Saucier, 373 So.2d at 118.

Finally, we note that Sessions was discharged for cause. However, the trial court chose not to reduce its allocation to Sessions as it was free to do under the proper method of calculation as stated in O’Rourke.

Therefore, given the analysis above, we cannot say that the trial court’s method of allocation was erroneous. As such, this assignment of error lacks merit.

ASSIGNMENT OF ERROR NUMBER THREE:

In her final assignment of error, Sessions asserts that the trial court abused its discretion in sanctioning intervenors for alleged discovery deficiencies. In arguing this assignment, Sessions alleges that the trial court did not allow her to enter into evidence the time and effort expended by her while representing plaintiffs. We disagree.

“The standard of review used by this court in reviewing evidentiary rulings of a trial court is abuse of discretion.” Johnson v. First Nat’l Bank of Shreveport, 00-870, p. 32 (La.App. 3 Cir. 6/20/01), 792 So.2d 33, 56, writ denied, (La.1/4/02), 805 So.2d 212, writ denied, (La.1/4/02), 805 So.2d 213.

The record includes formal discovery propounded to Sessions requesting “a copy of any and all documents supporting” her response to an interrogatory regarding “the exact number of hours you claim you spent working on this case prior to being fired.” No response to that discovery is in the record. Additionally, according to opposing counsel Lagarde, she had to file a motion to compel in order to receive a response to that discovery, and Sessions’ response to that discovery was that no such document existed. These statements by Lagarde provide a basis for the trial court to find that it was Sessions’ failure to create and/or timely produce that document that prevented it from being entered into the record.

Further, our review of the record indicates that Sessions testified extensively regarding the time and effort she exerted in this case. While the trial court did not allow Sessions to enter into evidence a document she created in preparation for trial detailing exactly how many hours she worked on the case, Sessions was allowed to testify at length, and with incredible detail, of what work she performed for plaintiffs. Accordingly, we cannot say that the trial court’s exclusion of a written summary of Sessions’ hours worked prejudiced her in any manner. Therefore, like the two assignments before, we find no merit to this assignment of error.

CONCLUSION:

Sessions raises three assignments of error. We find no error by the trial court. 112A11 costs of this appeal are taxed to Sessions.

AFFIRMED.

      . Sessions testified that she thought she mailed the petition prior to receiving a fax from Cao on November 3, 2006, but that the petition was not filed by the Lafayette clerk until November 8, 2006.


source: Caselaw Access Project

author: GREMILLION, Judge.

license: Public Domain

text:
    Honei OTWELL v. Jody OTWELL.
    No. 10-1176.
    Court of Appeal of Louisiana, Third Circuit.
    Feb. 9, 2011.
    Charles Overton LaCroix, LaCroix, Levy & Barnett, LLC, Alexandria, LA, for Defendant/Appellant, Jody Otwell.

      Brandy McClure, Smith, Taliaferro & Purvis, Jonesville, LA, for PlaintiffiAppel-lee, Honei Otwell.
    Court composed of SYLVIA R. COOKS, BILLY HOWARD EZELL, and SHANNON J. GREMILLION, Judges.
   GREMILLION, Judge.

hThe defendant/appellant, Jody Paul Ot-well, appeals the judgment in favor of the plaintifi/appellee, Honei Brown Otwell, modifying a Georgia-issued child custody and support order. For the following reasons, we reverse.

FACTUAL AND PROCEDURAL HISTORY

Jody and Honei are the parents of two children, Savannah born in 1998, and Mar-leigh born in 2007. Jody and Honei entered into a Settlement Agreement in April 2009 and were divorced in May 2009 pursuant to a Final Judgment and Decree filed in the Superior Court of Henry Country, State of Georgia. The Final Judgment and Decree approved the agreement of the parties filed in April 2009. Honei and Jody were ordered to strictly comply with its terms.

In March 2010, Honei filed a Motion to Modify Visitation and Child Support in the Seventh Judicial District Court in Cata-houla Parish urging that venue was proper in Catahoula because the children had resided there for a more than a year. She claimed that circumstances had materially changed warranting a change in visitation and child support. Jody filed an Exception of Lack of Subject Matter Jurisdiction urging that the Georgia judgment could not be modified for lack of jurisdiction pursuant to La.R.S. 13:1815 and La.Ch. Code arts. 1306.11 and 1306.13. Following a hearing in June 2010, the trial court found Jody’s Exception untimely and, therefore, waived. However, in its July 2010 “Order” it found that ruling incorrect and determined the exception was timely filed and the merits were to be considered and ruled on. The July judgment in the record before us does not mention the Exception of Lack of Subject Matter Jurisdiction, but instead substantially modified the existing Georgia decree pertaining to visitation and support. Jody now | ^appeals and assigns as error the trial court’s denial of his Exception of Lack of Subject Matter Jurisdiction relating to child support and child custody.

DISCUSSION

Modification of the Georgia Custody Decree

A most basic tenet of our law is a court’s power to hear an action before it. “Jurisdiction is the legal power and authority of a court to hear and determine an action or proceeding involving the legal relations of the parties, and to grant the relief to which they are entitled.” La. Code Civ.P. art. 1. Subject matter jurisdiction is “the legal power and authority of a court to hear and determine a particular class of actions or proceedings, based upon the object of the demand, the amount in dispute, or the value of the right asserted.” La.Code Civ.P. art. 2. “The jurisdiction of a court over the subject matter of an action or proceeding cannot be conferred by consent of the parties. A judgment rendered by a court which has no jurisdiction over the subject matter of the action or proceeding is void.” La.Code Civ.P. art. 3. The issue of whether a court has subject matter jurisdiction can be raised at any time and by the court on its own motion. Boudreaux v. State, Dept. of Transp. and Development, 01-1329 (La.2/26/02), 815 So.2d 7. Furthermore, the court has the duty to examine subject matter jurisdiction sua sponte, even if the litigants have not raised the issue. Id. Whether a district court has subject matter jurisdiction over a case is subject to a de novo review. Hartman v. Lambert, 08-1055 (La.App. 8 Cir. 2/04/09), 7 So.3d 758.

The Uniform Child Custody Jurisdiction and Enforcement Act, found in La.R.S. 13:1801 et seq., effective August 2007, pertains to this litigation. Particularly applicable to these circumstances is La.R.S. 13:1815 which applies to the | jurisdiction of a Louisiana court to modify the determination of another court (emphasis added):

Except as otherwise provided in R.S. 13:1816, a court of this state may not modify a child custody determination made by a court of another state unless a court of this state has jurisdiction to make an initial determination under R.S. 13:1813(A)(1) or (2) and:
(1) The court of the other state determines it no longer has exclusive, continuing jurisdiction under R.S. 13:1814 or that a court of this state would be a more convenient forum under R.S. 13:1819; or
(2) A court of this state or a court of the other state determines that the child, the child’s parents, and any person acting as a parent do not presently reside in the other state.

Louisiana Revised Statute 13:1813 pertains to an initial determination of child custody and states:

A.Except as otherwise provided in R.S. 13:1816, a court of this state has jurisdiction to make an initial child custody determination only if:
(1) This state is the home state of the child on the date of the commencement of the proceeding, or was the home state of the child within six months before the commencement of the proceeding and the child is absent from this state but a parent or person acting as a parent continues to live in this state, or had been the child’s home state within twelve months before commencement of the proceeding and the child is absent from the state because he was required to leave or was evacuated due to an emergency or disaster declared under the provisions of R.S. 29:721 et seq., or declared by federal authority, and for an unforeseen reason resulting from the effects of such emergency or disaster was unable to return to this state for an extended period of time.
(2) A court of another state does not have jurisdiction or a court of the home state of the child has declined to exercise jurisdiction on the ground that this state is the more appropriate forum under R.S. 13:1819 or 1820; and
(a) The child and the child’s parents, or the child and at least one parent or a person acting as a parent, have a significant connection with this state other than mere physical presence.
(b) Substantial evidence is available in this state concerning the child’s care, protection, training, and personal relationships.
|4(3) All courts having jurisdiction have declined to exercise jurisdiction on the ground that a court of this state is the more appropriate forum to determine the custody of the child under La.R.S. 13:1819 or 1820; or
(4) No court of any other state would have jurisdiction under the criteria specified in Paragraph (1), (2), or (3) of this Subsection.
B. Subsection A of this Section is the exclusive jurisdictional basis for making a child custody determination by a court of this state.
C. Physical presence of, or personal jurisdiction over, a party or a child is not necessary or sufficient to make a child custody determination.

Under the express terms of this statute, a Louisiana court does not have subject matter jurisdiction over a custody issue if another state has rendered a child custody determination. Honei argues that because Louisiana is the “home state” of the children, a Louisiana court had subject matter jurisdiction to modify the order. This argument fails. When a custody determination has been issued by another state, a Louisiana court does not have jurisdiction unless the other state has determined that it no longer has jurisdiction or that the Louisiana court would be a more convenient forum. La.R.S. 13:1815(1). See Hughes v. Fabio, 07-1008 (La.App. 5 Cir. 3/25/08), 983 So.2d 946. Honei fails to distinguish that it is the court of the state that has already issued a child custody order that must determine if the other forum is more convenient. There is simply no indication in the record that a Georgia court has determined that it no longer has jurisdiction or that Louisiana would be a more convenient forum. Accordingly, the trial court erred in exercising subject matter jurisdiction over the child custody issues and that portion of the judgment is void.

Modification of the Georgia Support Award

The Uniform Interstate Family Support Act found in the La.Ch.Code arts. 1301.1 et seq. was enacted to unify the law among the states enacting the provisions. La.Ch.Code art. 1301.2. It has been adopted by every state in the United |sStates. Louisiana Children’s Code article 1306.11 provides for the modification of the child support order of another state:

A.After a child support order issued in another state has been registered in this state, the responding tribunal of this state may modify that order only if Article 1306.13 (Jurisdiction to modify child support order of another state when individual parties reside in this state) does not apply and, after notice and hearing, it finds that either:
(1) All of the following requirements are met:
(a) The child, the individual obligee, and the obligor do not reside in the issuing state.
(b) A petitioner who is a nonresident of this state seeks modification.
(c) The respondent is subject to the personal jurisdiction of the tribunal of this state.
(2) The child or a party who is an individual is subject to the personal jurisdiction of the tribunal of this state and all of the parties who are individuals have filed a written consent in the issuing tribunal for a tribunal of this state to modify the support order and assume continuing, exclusive jurisdiction over the order. However, if the issuing state is a foreign jurisdiction that has not enacted a law or established procedures substantially similar to the procedures under this Chapter, the consent otherwise required of an individual residing in this state is not required for the tribunal to assume jurisdiction to modify the child support order.
B. Modification of a registered child support order is subject to the same requirements, procedures, and defenses that apply to the modification of an order issued by a tribunal of this state and the order may be enforced and satisfied in the same manner.
C. A tribunal of this state may not modify any aspect of a child support order that may not be modified under the law of the issuing state. If two or more tribunals have issued child support orders for the same obligor and child, the order that controls and must be so recognized under the provisions of Article 1302.7 (Recognition of controlling child support order) establishes the aspects of the support order that are non-modifiable.
D. On issuance of an order modifying a child support order issued in another state, a tribunal of this state becomes the tribunal having continuing, exclusive jurisdiction.

Louisiana Children’s Code article 1306.13 provides:

|frA. If all of the parties who are individuals reside in this state and the child does not reside in the issuing state, a tribunal of this state has jurisdiction to enforce and to modify the issuing state’s child support order in a proceeding to register that order.
B. A tribunal of this state exercising jurisdiction as provided in this Article shall apply the provisions of Sections 1 and 2 of this Chapter, this Article, and the procedural and substantive laws of this state to the proceeding for enforcement or modification. Sections 3, 4, 5, 7, and 8 of this Chapter do not apply.

Honei argues that pursuant to La.Ch. Code art. 1302.1(2), the trial court “properly exercised personal jurisdiction for modification of the child support order.” This argument fails to distinguish between personal and subject matter jurisdiction. Jody continues to live in the state that issued the support order — Georgia. Again, according to the clear and express terms of the statutes, a Louisiana court has no subject matter jurisdiction to modify the child support award. Georgia continues to have exclusive jurisdiction over this matter. See La.Ch.Code art. 1302.5.

Furthermore, Honei’s argument that Jody made a general appearance and, thereby, waived “personal jurisdiction” is flawed in two respects. First, Jody’s attorney’s response to this suit is not a general appearance, and secondly, the issue is whether the trial court had subject matter jurisdiction, not personal jurisdiction. Assuming the trial court did have personal jurisdiction over Jody, it still does not have subject matter jurisdiction over the support issue. Accordingly, the trial court’s erroneous modification of the child support order is void and the Georgia support order is reinstated.

CONCLUSION

The judgment of the trial court modifying both the custody award and the support award is void for lack of subject matter jurisdiction. The Final Judgment and Decree rendered in May 2009, adopting the Settlement Agreement of April 2009 17entered into by the parties, by the Superior Court of Henry County is hereby reinstated. All costs of this appeal are assessed against the plaintifl/appellee, Honei Brown Otwell.

REVERSED.


author:
GAIDRY, J.
      WELCH, J.

text:
    STATE of Louisiana Through the DIVISION OF ADMINISTRATION, OFFICE OF RISK MANAGEMENT v. NATIONAL UNION FIRE INSURANCE COMPANY OF LOUISIANA and Aon Risk Services of Louisiana, Inc.
    No. 2010 CA 0689.
    Court of Appeal of Louisiana, First Circuit.
    Feb. 11, 2011.
    Rehearing Denied March 28, 2011.

      Robert I. Siegel, Krystena L. Harper, New Orleans, Louisiana, for Defendant/Appellant, National Union Fire Insurance Company of Louisiana, Inc.
    John P. Murrill, Baton Rouge, Louisiana, for PlaintiffiAppellee, State of Louisiana, Division of Administration, Office of Risk Management.
    Gus A. Fritchie, III, New Orleans, Louisiana, for Defendant/Appellee, Aon Risk Services of Louisiana, Inc.
    Before CARTER, C.J., GAIDRY and WELCH, JJ.
   GAIDRY, J.

l2An excess insurer of the State of Louisiana appeals a partial summary judgment, finding it liable to indemnify the State as insured for liability within the excess coverage and rejecting a contractual defense of late notice. For the following reasons, we affirm the judgment in part and reverse it in part.

FACTS AND PROCEDURAL HISTORY

On January 9, 1989, the Louisiana Division of Administration’s Office of Risk Management (ORM), the agency charged with the management of the State’s insurance and self-insurance, issued an “Invitation for Bids” for “following form” excess insurance coverage for the State and its various agencies. The policy period for the various excess coverages was to be from July 1, 1989, to July 1, 1990, with annual options to renew until July 1, 1992. Among the coverages for which bids were sought was “following form excess road and bridge hazard liability” coverage, in excess of the State’s $5,000,000.00 per occurrence primary self-insurance, covering claims against the Louisiana Department of Transportation and Development (DOTD).

Alexander and Alexander, Inc. (later merged into Aon Risk Services of Louisiana, Inc., and hereinafter referred to as “Aon”) was an independent insurance agency and brokerage firm that submitted a multi-coverage bid proposal in response to the Invitation for Bids. The proposal included two layers of excess liability coverage for comprehensive general liability and other risks, including road and bridge hazard liability coverage. The first layer of $20,000,000.00 per occurrence was to be provided by National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National |3Union). The Invitation for Bids required that each bid proposal be signed by authorized representatives of both the bidding agent or broker and each insurer providing coverage, and Aon’s proposal bore the signature of National Union’s regional manager as the “[ajuthorized [ijnsurance [cjompany representative.”

Aon’s bid was accepted by the State on May 26, 1989, and National Union subsequently issued the excess policy. ORM exercised the option to renew the excess policy for the successive policy periods. The policy period at issue was from July 1, 1991, to July 1,1992.

On September 18, 1991, Michael Williams was involved in a single-vehicle accident on a westbound overpass of Interstate Highway 10 in Lake Charles, Louisiana. Traffic ahead of the overpass was stalled due to a prior accident, but the congestion was not visible to approaching motorists until they reached the crest of the overpass. Mr. Williams evidently moved his truck from the right lane to the left upon observing the stalled traffic ahead. The truck then struck the overpass guardrail adjacent to the left lane, vaulting over the guardrail and falling to the street below. Mr. Williams suffered severe and disabling injuries, including a closed head injury with brain damage that rendered him functionally quadriplegic, confined to bed or a wheelchair, and unable to swallow and eat independently, requiring 24-hour supervision and care.

Due to the catastrophic nature of his injuries, Mr. Williams was interdicted, and on July 13, 1992, his stepfather and curator, Harry Odom, filed suit for damages, together with the mother of Mr. Williams’s two minor children. The defendants named in the original petition were the City of Lake Charles, its police department, and their respective liability insurers identified by pseudonyms. The plaintiffs alleged that the City of Lake 14 Charles and its police department were negligent by their failure to properly warn approaching motorists of the congestion caused by the prior accident, to monitor and reroute traffic to prevent further congestion and accidents, and to properly train the city police officers to handle such a situation. By an amended petition filed on February 8, 1993, DOTD was joined as a defendant. The plaintiffs alleged that DOTD was liable based upon the defective design and construction of the overpass guardrail.

Sometime in 1998, the City of Lake Charles and its police department settled with the plaintiffs and were dismissed, leaving DOTD as the sole remaining defendant. On August 19, 1998, Andrew Hall, a claims adjuster for ORM, wrote to Aon for the purpose of notifying it “of a possible excess claim” under the excess policy, and enclosed copies of the plaintiffs’ pleadings. The letter contained a brief account of the accident facts and described Mr. Williams’s injuries as “serious bodily injuries which has [sic ] rendered him a paraplegic.” Mr. Hall advised Aon that ORM felt that DOTD had “minimal exposure” and did not anticipate an award at trial exceeding the State’s self-insured retention. There is no evidence that any representative of ORM, DOTD, or the State notified either Aon or National Union of the claim made on behalf of Mr. Williams and his children prior to that time.

On January 5, 2000, Mr. Hall wrote again to Aon to provide a “status update.” He advised that the trial of the case was set to begin on January 18, 2000; that the plaintiffs made a settlement offer of $9,000,000.00; that ORM still felt DOTD had “minimal exposure”; and that ORM responded with a settlement offer of $400,000.00 “due to the extent of the medicals.” It is undisputed that Aon failed to convey the claim information received from IsORM to National Union on either occasion, and that National Union’s first actual notice of the claim was not received until after trial and judgment.

After a four-day bench trial, the trial court rendered judgment on January 24, 2000, in favor of the plaintiffs, finding DOTD 60% at fault and the City of Lake Charles 40% at fault and awarding total damages of $9,414,275.63. Mr. Odom, as Mr. Williams’s curator, appealed, as did DOTD. On June 1, 2000, Aon mailed a letter to National Union, advising that a judgment had been rendered against DOTD in the amount of $5,600,000.00 and that DOTD was appealing that judgment.

On January 31, 2001, the Third Circuit Court of Appeal reversed and amended the judgment in part to decrease the fault of the City of Lake Charles to 35% and to assess 5% contributory fault to Mr. Williams. The appellate court further amended the judgment to increase the award of future medical expenses from $2,230,207.23 to $4,201,632.21, thereby increasing the total amount of damages found to $11,385,700.61 (and the principal amount of the final judgment after reduction for Mr. Williams’s contributory fault to $10,816,415.58), and to include legal interest on the total award. Odom v. City of Lake Charles, 00-01050, pp. 20-21 (La. App. 3rd Cir.1/31/01), 790 So.2d 51, 63-4, unit denied, 01-1198 (La.6/22/01), 794 So.2d 787.

On August 18, 2001, after the Odom judgment became final and definitive, Mr. Hall of ORM wrote to National Union, enclosing copies of the trial court judgment and appellate decisions and presenting a claim for payment of the sum of $2,930,723.96 under its excess policy. A second |fidemand letter requesting payment of that amount was sent on December 3, 2001.

By letter dated April 23, 2002, a representative of National Union advised Mr. Hall that National Union declined coverage under its excess policy on the grounds that “the State failed to give [it] timely and adequate notice” of the Odom claim, thereby causing National Union “to suffer significant prejudice.” On December 27, 2002, the State, through ORM, filed this action against National Union and Aon for the sum of $2,930,723.96, representing that amount of its respective share of the Odom judgment in excess of its self-insured retention, plus additional interest on that sum from August 18, 2001 (the date of Mr. Hall’s demand letter for the stated amount) and statutory penalties and attorney fees.

National Union answered the State’s petition, denying liability and alleging that the State failed to provide timely notice of the Odom claim, thereby denying National Union the right to defend the claim and to minimize its exposure to liability. It further affirmatively alleged that the State failed to competently defend the claim and to mitigate its damages. Aon also answered the petition, denying liability and raising the same defenses.

On June 5, 2006, Aon filed a motion for summary judgment, seeking its dismissal as defendant on the grounds that the State’s claim against it was perempted under La. R.S. 9:5606. The trial court granted the motion, dismissing the State’s cause of action against Aon. The State appealed, and this court reversed, holding that a genuine issue existed as to whether each 17of Aon’s omissions to convey the State’s two notices of the Odom claim to National Union caused prejudice to National Union and the extent of any such prejudice, so as to give rise to immediately apparent damages to the State. State ex rel. Div. of Admin., Office of Risk Mgmt. v. Nat’l Union Fire Ins. Co. of La., 07-1134, pp. 11-12 (La.App. 1st Cir.2/8/08), 984 So.2d 91, 96-7, writ denied, 08-0548 (La.4/25/08), 978 So.2d 370.

On August 19, 2009, National Union filed a motion for summary judgment, seeking its dismissal on the basis of its coverage defense of late and inadequate notice of the Odom claim. The State in turn filed a cross-motion for summary judgment on October 7, 2009, seeking summary judgment for the principal amount of $6,707,376.49, legal interest on that amount from the date this action was filed, and statutory penalties and attorney fees.

Both motions for summary judgment were heard on November 23, 2009. Following argument, the trial court ruled that it would deny National Union’s motion and would grant the State’s motion in part as to the issue of adequacy of the notice of the claim to National Union, through Aon. The trial court’s judgment was signed on January 15, 2010, granting partial summary judgment in favor of the State on the issue of liability only, but denying the motion in all other respects, including the amount due and the claim for statutory penalties and attorney fees. The trial court also designated its partial summary judgment as final and appealable pursuant to La. C.C.P. art. 1915(B)(1). National Union now appeals both the partial | ¡^summary judgment granted in favor of the State and the judgment denying its motion for summary judgment.

ASSIGNMENTS OF ERROR AND ISSUES PRESENTED

National Union contends that the trial court erred in granting partial summary judgment in favor of the State on the issue of excess coverage liability and in denying its motion for summary judgment, and that the following issues are submitted for review in determination of this appeal:

1. Whether [National Union] received timely notice of [the Odom plaintiffs’] claims.
2. Whether [Aon] is the [State’s] broker or whether [Aon] is [National Union’s] agent,
3. Whether the [State’s] notice to Aon can be imputed to [National Union.]
4. Whether the law of the case [doctrine] applies to the instant proceeding considering the prior statements of [this court in the earlier appeal in this matter.]
5. Whether [National Union] was substantially prejudiced by the [State’s] untimely notice of its claims.

DISCUSSION

Appellate Review of Summary Judgment

Summary judgment is subject to de novo review on appeal, using the same standards applicable to the trial court’s determination of the issues. Berard v. L-3 Communications Vertex Aerospace, LLC, 09-1202, p. 5 (La.App. 1st Cir.2/12/10), 35 So.3d 334, 339-40, unit denied, 10-0715 (La.6/4/10), 38 So.3d 302. The summary judgment procedure is expressly |nfavored in the law, and is designed to secure the just, speedy, and inexpensive determination of non-domestic civil actions. La. C.C.P. art. 966(A)(2). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, admissions, and affidavits in the record show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B).

The mover has the burden of proof that he is entitled to summary judgment. See La. C.C.P. art. 966(C)(2). If the mover will not bear the burden of proof at trial on the subject matter of the motion, his burden does not require him to negate all essential elements of the adverse party’s claim, action, or defense. Id. Rather, if the moving party points out that there is an absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense, then the nonmoving party must produce factual support sufficient to satisfy his evidentiary burden at trial. Id. If the mover has put forth supporting proof through affidavits or otherwise, the adverse party may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or otherwise, must set forth specific facts showing that there is a genuine issue for trial. La. C.C.P. art. 967(B).

Notice to the Broker as Notice to the Insurer

National Union contends that because Aon was not its authorized or licensed agent, authorized to bind coverage, but rather an independent insurance broker, the State’s notices to Aon of the Odom claim cannot serve as sufficient notice to it of that claim. In doing so, it relies upon the general principle that an insurance broker, in contrast to an insurance agent, acts as the agent of the insured in procuring an insurance policy. See Tassin v. Golden Rule Ins. Co., 94-0362, p. 7 (La.App. 1st Cir.12/22/94), 649 So.2d 1050, 1054. The evidence submitted in connection with the motions at issue |inindisputably establishes that Aon was acting as an independent insurance broker in its role as a responding bidder to ORM’s Invitation for Bids. However, it is also well settled that a court can find that the legal relationship of principal-agent exists, so as to bind the insurer, despite the failure of the person acting for the insurer to have been specifically licensed as its agent. Id.

Whether a broker in any particular transaction acts as the agent of the insurer or insured is a question of fact dependent on the particular circumstances of the case. Id., 94-0862 at p. 8, 649 So.2d at 1054. The State contends that National Union contractually agreed to allow Aon to serve as its agent for notice of claims under its policy, by virtue of the terms of the Invitation for Bids and Aon’s bid proposal, both of which were incorporated in its policy, along with the terms of ORM’s underlying primary policy of self-insurance.

Contracts have the effect of law for the parties. La. C.C. art. 1983. Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045. Each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. C.C. art. 2050. A provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective. La. C.C. art. 2049.

Interpretation of an insurance contract is usually a legal question that can be properly resolved in the framework of a motion for summary judgment. N. Am. Treatment Sys., Inc. v. Scottsdale Ins. Co., 05-0081, p. 19 (La.App. 1st Cir.8/23/06), 943 So.2d 429, 443, writs denied, 06-2918 (La.2/16/07), 949 So.2d 423, and 06-2803 (La.2/16/07), 949 So.2d 424. A following-form policy of excess liability insurance “follows” or adopts the |n conditions and agreements of the underlying primary liability insurance policy. See Toston v. Nat’l Union Fire Ins. Co. of La., 41, 567, p. 5 (La.App. 2nd Cir.11/3/06), 942 So.2d 1204, 1207, writ denied, 06-2881 (La.2/2/07), 948 So.2d 1086, citing Rivere v. Heroman, 96-1568, p. 2 (La.App. 4th Cir.2/5/97), 688 So.2d 1293, 1294, and Black’s Law Dictionary 821 (8th ed.2004). The terms of the ORM policy of self-insurance, being incorporated by reference in National Union’s policy, are therefore relevant to National Union’s rights and duties under its policy. See Toston, 41,567 at p. 5, 942 So.2d at 1207. Unless there is an express exception to the form of the underlying policy, the excess insurer under a following-form policy is governed by the underlying policy’s terms. Id.

In this case, ORM’s underlying primary policy was issued to DOTD as the named insured, and under its general conditions provided the following, in pertinent part:

2. Duties In The Event of Occurrence, Claim or Suit
a. You must see to it that we are notified promptly of an “occurrence” which may result in a claim. Notice should include:
(1) How, when and where the “occurrence” took place; and
(2) The names and addresses of any injured persons and witnesses.
b. If a claim is made or “suit” is brought against any insured, you must see to it that we receive prompt written notice of the claim or “suit.”
c. You and any other involved insured must:
(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or “suit;”
112(3) Cooperate with us in the investigation, settlement or defense of the claim or “suit;” ...

ORM’s policy defined “you” as “the Named insured shown in the Declarations” (DOTD) and “we” and “us” as “the Company providing this insurance.” As National Union provided the following-form excess policy, the words “we” and “us” as incorporated in its policy logically and necessarily referred to National Union. As posed by National Union, the question becomes, did the notice provisions of ORM’s policy, as incorporated in the excess policy, require the State to provide the required notice of the Odom claim directly to National Union as the insurer?

The Invitation for Bids contained the following provision:

Be aware that the actual contract between the State of Louisiana and the bidder I contractor shall consist of the following documents: (i) IFB [“Invitation for Bids’] and any amendments issued thereto, (2) the proposal submitted by the bidder/contractor in response to the IFB, and (3) the actual policy issued. In the event of a conflict in language between the three documents referenced above, the provisions and requirements set forth and/or referenced in the IFB shall govern. The ORM reserves the right to clarify any contractual relationship in writing and such written clarification shall govern in case of conflict with the applicable requirements stated in the IFB or the bidder/contractor’s proposal. In all other matters not affected by the written clarification, if any, the IFB shall govern. The bidder/contractor is cautioned that its proposal shall be subject to acceptance by the ORM without further clarification. In the event of any discrepancies between the insurance requirements delineated in these bid specifications and the model policy(ies) provided herein, the bid specifications shall govern.

(Emphasis added.)

In response to a requirement in the Invitation for Bids that the bidder provide a narrative description of the insurer’s claims handling procedures, the bid proposal submitted by Aon and accepted by ORM contained the following:

113The State shall provide a written report to the Agent or Companies within 72 hours of all occurrences involving Bodily Injury to one or more persons if the total claim is expected to be in excess of $1,000,000.00. A report should be made on all losses involving fatality, brain damage, paralysis or traumatic injury of any nature. A written report should also be submitted within 72 hours on any Property Damage loss that is expected to exceed $1,000,000.
The reports should include the date of the occurrence, the name or names of claimants, a brief description of the occurrence and the dollar reserve amount established by the ORM Claim Department.
The State should then submit quarterly loss runs listing all claims for which total reserves exceed $1,000,000.
An immediate telephone report should be made on any occurrence which is expected to penetrate an excess layer.

When National Union issued its policy in accordance with ORM’s acceptance of Aon’s bid, the foregoing notice provision became part of the policy terms, binding upon both National Union and the State as insured. As an express exception to the general notice provisions of ORM’s underlying policy of self-insurance, its language controls in the event of a conflict between its terms and those of ORM’s underlying policy. See Boston, 41,567 at p. 5, 942 So.2d at 1207. Under the language of the foregoing notice provision, the State could comply with its duty to notify its excess insurers providing coverage under Aon’s bid proposal of any claims by reporting the claims to either Aon or those insurers.

As the insurer issuing the policy at issue, National Union is charged with knowledge of its contents. See Lafauci v. Jenkins, 01-2960, p. 11 (La.App. 1st Cir.1/15/0S), 844 So.2d 19, 27, writ denied, 03-0498 (La.4/25/03), 842 So.2d 403. An insurer misconstruing the clear language of its own policy does so at its peril. Id., 01-2960 at p. 12, 844 So.2d at 28. The issue of whether notice to Aon of the claim served as notice to National Union is ultimately not dependent upon Aon’s legal status as an insurance broker or [ 14agent for underwriting purposes. Reading the terms of the policy as a whole, it is clear that by its bid proposal Aon contractually assumed the role of National Union’s agent for the limited purpose of receiving notice of claims from the State, and that National Union expressly consented to that arrangement being incorporated in the terms of its excess policy upon ORM’s acceptance of the bid. The trial court correctly concluded that notice to Aon met the requirements of the excess policy regarding notice of the claim to either Aon or to National Union directly.

Late Notice Must Cause Actual Prejudice to the Insurer

The legal effect of a liability policy provision requiring notice to an insurer of a claim has been described as follows:

The function of the notice requirements is simply to prevent the insurer from being prejudiced, not to provide a technical escape-hatch by which to deny coverage -in the absence of prejudice nor to evade the fundamental protective purpose of the insurance contract to assure the insured and the general public that liability claims will be paid up to the policy limits for which premiums were collected. Therefore, unless the insurer is actually prejudiced by the insured’s failure to give notice immediately, the insurer cannot defeat its liability under the policy because of the non-prejudicial failure of its insured to give immediate notice of an accident or claim as stipulated by a policy provision.

Miller v. Marcantel, 221 So.2d 557, 559 (La.App. 3rd Cir.1969). In that case, it was held that an insurer was not entitled to summary judgment dismissing a claim under its policy based upon only “the naked delay in notifying the insurer of the suits brought against the insured,” without other prejudice being alleged or shown. Id. at 560. Actual prejudice to an insurer by reason of untimely notice of a claim cannot be presumed from only the delay itself, absent unusual or aggravated circumstances, such as failure to provide notice until after trial on the merits. See Branzaru v. Millers Mut. Ins. Co., 252 So.2d 769, 770 (La.App. 1st Cir.1971).

115It is undisputed by the parties that no notice of the plaintiffs’ underlying claim was given to either Aon or National Union until almost seven years after the accident and over five years after DOTD was joined as a defendant. Under any reasonable interpretation of the terms, the notice finally given to Aon by the State can hardly be considered “immediate” or even “prompt.” But National Union did not submit any evidence of actual prejudice, apart from that delay, in support of its motion for summary judgment. Because it failed to establish a prim a facie case of delayed notice resulting in actual prejudice, its motion was appropriately denied by the trial court. See Burge v. Nw. Nat’l Ins. Co. of Milwaukee, 08-1396, p. 10 (La. App. 4th Cir.6/3/09), 14 So.3d 616, 623, writ denied, 09-1501 (La.10/9/09), 18 So.3d 1284. This conclusion is not determinative of the State’s cross-motion in this matter, however.

Is There Genuine Dispute on the Issue of Actual Prejudice?

As the party bearing the burden of proof as to its motion, the State had the burden of establishing its right to coverage under the terms of National Union’s policy, including its provisions requiring notice to that insurer. The partial summary judgment in its favor on the issue of National Union’s liability for coverage is dependent upon the absence of any genuine issue of material fact relating to National Union’s coverage defense, particularly the crucial issue of actual prejudice to National Union caused by the timing of notice of the Odom claim. In order to shift the burden of proof of “factual | ifisupport sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial” to National Union on its defense, the State was required to show “absence of factual support for one or more elements” essential to that defense. See La. C.C.P. art. 966(C)(2).

Each case involving delayed notice to an insurer of a claim under its policy must stand upon its own facts and circumstances. Jackson v. State Farm Mut. Auto. Ins. Co., 211 La. 19, 24, 29 So.2d 177, 179 (La.1946). The jurisprudence has identified various factors appropriate for consideration in determining whether late notice will operate to relieve a liability insurer of its obligations under its policy. These include: (1) the time frame specified by the policy for notice of an accident, occurrence, claim, or lawsuit; (2) when the insured first discovered the occurrence or injury or that a claim would be made; (3) the length of the delay in notice to the insurer, and the time of notice relative to trial of a lawsuit on the claim; (4) whether the insured substantially complied with the time and form of notice required by the policy; (5) whether the claim is a direct action by the injured person against the insurer under the Louisiana Direct Action Statute, La. R.S. 22:1269 (formerly La. R.S. 22:655), and when the injured person discovered the existence and identity of the insurer; (6) whether the insurer has suffered actual prejudice to its defense of the claim because of the delay in notice; (7) the good faith of the insured and the injured person; (8) whether the insured was an average policyholder, inexperienced in the law |17or insurance claims procedure; and (9) the existence of any special circumstances, such as fraud or collusion. See Jackson, 211 La. at 22-25, 29 So.2d at 178-79; West v. Monroe Bakery, Inc., 217 La. 189, 203, 46 So.2d 122, 127-28 (La.1950); and Miller, 221 So.2d at 559-60.

Our courts have held that an insurer’s defense of late notice of a claim is more strictly construed when the injured party is asserting a direct action against the insurer than when the dispute concerns only the parties to the insurance contract. See West, 217 La. at 203-11, 46 So.2d at 127-30. The present action does not involve an injured plaintiff asserting a third-party direct action against National Union; the Odom plaintiffs never sued National Union, and the judgment in their favor has already been satisfied. Accordingly, we need not consider the equities upon which the Direct Action Statute is based. Additionally, it is certainly significant that the named insured, DOTD, is a sophisticated state agency frequently involved in litigation related to its insured operations and that both its insurance coverage and defense were managed by ORM, another sophisticated state agency statutorily charged with virtually the same duties imposed upon private liability insurers.

The relative length of the delay in notice to the insurer is an important factor, and for good reason. Time is obviously an important factor in both the prosecution and defense of personal injury actions. In defending a claim of such magnitude as the Odom claim, it is obvious that promptness, diligence, and thoroughness in investigation, discovery, trial preparation, and negotiation are even more crucial. Brain injuries and paralysis are |18among the most devastating and disabling personal injuries, and both general and special damages for such injuries typically fall within the highest range of judgment awards. The notice provision of Aon’s bid proposal emphasized that the State as insured was required to make written reports to Aon or National Union of claims involving “brain damage” and “paralysis.” The contractual obligation of the State, as insured, to provide prompt notice of the Odom claim could hardly have been more specific under the circumstances.

The State failed to introduce any evidence to excuse its failure to provide any notice to its excess insurer of the plaintiffs’ claims between 1993 and 1998, despite the fact that the character of Mr. Williams’ catastrophic injuries (brain damage resulting in functional quadriplegia) and their effects (mental and physical disability requiring interdiction and constant healthcare supervision) were indisputably known by the State long before 1998. At the very least, there is genuine dispute as to when the State “expected” the Odom claim “to be in excess of $1,000,000.00.”

A fact is “material” when its existence or nonexistence may be essential to the plaintiffs cause of action (or the defendant’s defense) under the applicable theory of recovery. See Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La.7/5/94), 639 So.2d 730, 751. In addition to its failure to establish the timeliness of its notice to Aon under the policy terms, the State further failed to adequately establish the “absence of factual 1iasupport” for the other element “essential to the adverse party’s ... defense,” or the lack of actual prejudice by reason of the delayed notice. See La. C.C.P. art. 966(C)(2). Just as prejudice to an insurer cannot be presumed merely from late notice of a claim under the strict policy language, lack of prejudice to the insurer cannot be presumed merely from the fact that notice of the claim is given to the insurer some time prior to trial and rendition of judgment. Because the State did not establish the absence of any essential element of National Union’s defense of late notice by affidavit or other competent evidence, National Union was not required to come forward with opposing evidence, and could properly rely on the “allegations or denials” of its answer in opposing summary judgment. See La. C.C.P. art. 967(B).

If ORM as primary self-insurer in fact failed to competently defend the action prior to 1998, as affirmatively alleged by National Union in its answer, then National Union may have been prejudiced by the lack of reasonable opportunity to defend the action during the five-year interval between 1993 and 1998. Given the State’s extensive delay in reporting the underlying claim (a delay of years that appears virtually unprecedented in our jurisprudence) and the lack of any contrary evidence on this point, the existence of actual prejudice to National Union, as alleged in its answer, clearly remains a disputed issue of material fact here.

CONCLUSION

The State, as the party seeking summary judgment on its right to indemnity under the policy, did not establish a prima facie case of absence of prejudice to National Union by simply establishing that it provided notice to National Union, through Aon, in 1998, given the notice requirements of the excess policy and the specific circumstances of the Odom claim. Despite the fact that notice was provided to Aon some 17 months prior to trial, that |2ninterval must be viewed in the context of the claim’s duration of 89 months from inception in 1992 to trial in 2000 and in light of the claim’s potential monetary value over the course of its duration. In short, the question of “whether, when, and to what extent National Union ... was prejudiced” by the State’s delay in notifying Aon and National Union of the Odom litigation remains an unresolved issue of material fact, precluding summary judgment. See State ex rel. Div. of Admin., Office of Risk Mgmt., 07-1134 at p. 11, 984 So.2d at 97.

While we affirm the trial court’s judgment as to the legal issue of the validity of notice to Aon constituting notice of the claim under the terms of National Union’s policy, we conclude that the trial court erred in granting summary judgment as a matter of law on the issue of National Union’s liability under its policy, based upon lack of prejudice, and reverse its judgment in part on that issue. We further affirm the trial court’s judgment denying National Union’s motion for summary judgment. The costs of this appeal are assessed to the opposing parties, the State and National Union, in the same respective proportions, the portion of the State being fixed at $1,676.57, or one-half of the total costs.

AFFIRMED IN PART AND REVERSED IN PART.

WELCH, J.

Concurs in Part and Dissents in Part.

|XI concur in the opinion to the extent that it reverses the granting of the State’s motion for partial summary judgment on the issue of liability. However, I dissent from that portion of the opinion affirming the denial of National Union’s motion for summary judgment.

First, I disagree with the finding that notice to Aon met the notice requirements of the excess policy of insurance. The notice provisions of the ORM policy, expressly incorporated into the National Union policy, clearly placed a duty on the State to notify National Union of the Odom claim and lawsuit. I do not believe that the narrative description of Aon’s claims handling procedures set forth in the bid proposal obviated this basic contractual obligation.

Secondly, I disagree with the finding that there is a genuine dispute on the issue of whether the State’s late notice of the claim was prejudicial to National Union. In my opinion, a case of actual prejudice simply could not be more clear. Because National Union was not notified of the Odom claim until after judgment had been rendered in the lawsuit, National Union was deprived of its ability to conduct an investigation of the underlying facts, to defend itself and its insured against the claim, and to participate in settlement negotiations and the trial of the matter.

I find that under the undisputed facts of this case, the State’s failure to notify National Union of the Odom lawsuit until after judgment had been rendered following a full trial on the merits constituted actual prejudice relieving National |9Union of liability under the excess policy. Therefore, I would reverse the trial court’s judgment and render summary judgment in favor of National Union on the liability issue.

      . Under the bid proposal, various insurers were to provide the excess coverages for the different listed categories of risks in the Invitation for Bids.

      . The Louisiana Department of Public Safety and Corrections was later named as a defendant, but was dismissed by summary judgment.

      . As it was not listed as a party to the appeal in the reported decision, National Union apparently did not independently appeal the judgment, as it could have done under the authority of La. C.C.P. art. 2086. Its omission in that regard may have been attributable to Aon’s failure to communicate any notice of the Odom claim prior to the expiration of the deadline for instituting such an appeal.

      . The actual principal amount of DOTD’s monetary share of liability in excess of the State’s $5,000,000.00 self-insured retention was $1,489,849.35 (based upon $6,489,849.35, or 60% of $10,816,415.58), so the figure of $2,930,723.96 presumably represented the total of that excess principal and accrued legal interest on that figure. National Union has denied receiving the first demand letter of August 18, 2001.

      . The State at some point satisfied the judgment against DOTD by payment of the sum of $11,707,376.49 to the Odom plaintiffs. The sum paid presumably represented the principal amount of $6,489,849.35 plus accrued legal interest from July 13, 1992, through the date of payment, as well as DOTD's share of court costs. In its cross-motion for summary judgment, in contrast to its petition in this matter, the State claimed that National Union as excess insurer owed the sum of $6,707,376.49, the entire amount paid in excess of its self-insured retention of $5,000,000.00, including interest on both the self-insured retention limit and the excess judgment. See n.4, supra.

      . When an unrestricted appeal is taken of a final judgment determinative of the merits, the appellant is generally entitled to seek review of all adverse interlocutory judgments prejudicial to him, in addition to the review of the final judgment. See Judson v. Davis, 04-1699, p. 8 (La.App. 1st Cir.6/29/05), 916 So.2d 1106, 1112, writ denied, 05-1998 (La.2/10/06), 924 So.2d 167. In the case of an appeal of a partial judgment or partial summary judgment designated as final under La. C.C.P. art. 1915(B), an appellant may also appeal an interlocutory judgment involving the same or related issues, such as a judgment denying a cross-motion for summary judgment. See Dean v. Griffin Crane & Steel, Inc.,
        05-1226, p. 4 n.3 (La.App. 1st Cir.5/5/06), 935 So.2d 186, 189 n. 3, writ denied, 06-1334 (La.9/22/06), 937 So.2d 387.

      . In our prior decision in this action, we reversed summary judgment dismissing the State's claims against Aon on the grounds that the issue of any actual prejudice suffered by National Union was in dispute. In this appeal, National Union insists that our prior holding constitutes the “law of the case,” and that we should simply reverse the trial court’s judgment on that basis. We disagree. The "law of the case” doctrine embodies the rule that an appellate court will not consider its own rulings of law in the same case. Lejano v. Bandak, 97-0388, p. 23 (La.12/12/97), 705 So.2d 158, 170, cert. denied sub. nom Lejano v. K.S. Bandak Assuranceforeninger Gard, 525 U.S. 815, 119 S.Ct. 52, 142 L.Ed.2d 40 (1998). The doctrine is the proper procedural principle, as opposed to res judicata, governing prior judgments by either trial or appellate courts on issues within the same case. Bank One, Nat'l Ass’n v. Velten, 04-2001, p. 6 (La.App. 4th Cir.8/17/05), 917 So.2d 454, 458-59, writ denied, 06-0040 (La.4/28/06), 927 So.2d 283, cert. denied, 549 U.S. 826, 127 S.Ct. 349, 166 L.Ed.2d 44 (2006). It does not apply when the underlying operative facts upon which the court’s prior decision was based have changed. Id., 04-2001 at p. 7, 917 So.2d at 459. The initial denial of summary judgment on an issue does not bar a second motion for summary judgment on the same issue, as the initial denial of summary judgment is interlocutory in nature and the second motion must be decided upon the facts presented when it is heard. See Saizan v. Pointe Coupee Parish Sch. Bd., 10-0757, p. 8 (La.App. 1st Cir. 10/29/10), 49 So.3d 559, 563. Thus, the "law of the case” doctrine cannot apply here. See McIntyre v. St. Tammany Parish Sheriff; 02-0700, p. 6 (La.App. 1st Cir.3/28/03), 844 So.2d 304, 308.

      . One of ORM’s express statutory duties is to promulgate rules and regulations promoting "the early reporting of all accidents, ... the investigation of such reports, and the compromise of a claim or lawsuit where appropriate” where a state agency might be liable. La. R.S. 39:1535(B)(12).

      . Significantly, the substantive law in effect at the time of the accident in 1991 provided that a joint tortfeasor was solidarily liable for up to 50% of a plaintiff's damages where that tortfeasor’s respective proportion of fault was 50% or less and greater than the plaintiff’s proportion of comparative fault. See former La. C.C. art. 2324 (1991). For example, if DOTD was found even only 2% at fault for Mr. Williams’s injuries, and Mr. Williams found 1% at fault, DOTD could still be held liable for up to 50% of any monetary award for Mr. Williams’s catastrophic injuries. Thus, DOTD's potential exposure to monetary liability was not necessarily strictly proportionate with the percentage of fault assessed to it, and this circumstance should certainly have been taken into account by ORM in its ongoing evaluation of the Odom claim between 1993 and 1998.


author: CARTER, C.J.

text:
    LOUISIANA WORKERS’ COMPENSATION CORPORATION v. Will FOWLER.
    No. 2010 CA 1367.
    Court of Appeal of Louisiana, First Circuit.
    Feb. 11, 2011.

      Stacy C. Auzenne, Alexandria, LA, for Defendant/Appellant, Will Fowler.
    Chad S. Berry, Paul-Michael Fryday, Baton Rouge, LA, for Plaintiff/Appellee, Louisiana Workers’ Compensation Corporation.
    Before CARTER, C.J., GAIDRY and WELCH, JJ.
   CARTER, C.J.

12WilI Fowler appeals a default judgment taken against him by Louisiana Workers’ Compensation Corporation in a suit for collection of an unpaid premium due on an insurance policy issued by plaintiff. For the following reasons, we affirm the trial court’s confirmation of the default judgment.

FACTS AND PROCEDURAL HISTORY

A petition was filed against defendant/appellant, Will Fowler, on April 7, 2009, to obtain an account audit and for the recovery of an unpaid premium due on an insurance policy issued by plaintiff. This petition was followed by a supplemental petition filed June 16, 2009. Despite being properly served, Fowler filed no responsive pleadings, and a preliminary default was entered on March 22, 2010. A petition to confirm the default judgment was filed April 28, 2010. On May 12, 2010, the default judgment was granted and notice of signing of judgment was mailed to Fowler.

Fowler now appeals challenging the confirmation of default judgment on grounds of fraud and/or ill practice and the admissibility of evidence accepted by the district court.

DISCUSSION

When reviewing default judgments, the appellate court is restricted to determining the sufficiency of the evidence offered in support of the judgment. Arias v. Stolthaven New Orleans, LLC, 08-1111 (La.5/5/09), 9 So.3d 815, 818. This determination is governed by the manifest error standard of review. Id.

Fraud and/or III Practice Claim

In his first assignment of error, Fowler argues that the default judgment should be annulled on the basis of fraud and/or ill practice, which is a vice of substance. La. C.C.P. art.2004. The record in this case does not include any | ^evidence illustrating evidence of fraud and/or ill practice on the part of the plaintiff. A direct action to annul the judgment is the proper procedure to seek an annulment for vices of substance not apparent in the record or on the face of the judgment. Dileo v. Dileo, 09-597 (La.App. 5 Cir. 1/12/10); 30 So.3d 1004, 1007. This is not a direct action to annul the judgment based on fraud and/or ill practice, so this part of the appeal will not be considered. Accordingly, this assignment of error pertaining to fraud and/or ill practice has no merit.

Admissibility of Evidence Claim

Fowler also argues that the affidavit of Bill Mathews, submitted by plaintiff in its motion to confirm the default judgment, should not have been admitted into evidence and contains inadmissible hearsay evidence. Generally, the rules of evidence apply at the hearing for the confirmation of the default judgment. La. C.E. art. 1101(A); Arias, 9 So.3d at 820. However, there are statutory exceptions to the rule. For the confirmation of default judgments, when the demand is based on a conventional obligation, proof by affidavit can be sufficient. La. C.C.P. art. 1702(B); Arias, 9 So.3d at 820. Louisiana Code of Civil Procedure Article 1702(B)(1) provides:

When a demand is based upon a conventional obligation, affidavits and exhibits annexed thereto which contain facts sufficient to establish a pri-ma facie case shall be admissible, self-authenticating, and sufficient proof of such demand. The court may, under the circumstances of the case, require additional evidence in the form of oral testimony before entering judgment. (Emphasis added.)

In the instant case, the demand was based on a conventional obligation, namely, Fowler’s insurance policy issued by plaintiff; therefore, it was proper for the district court to consider an affidavit in reaching its judgment.

Plaintiff also challenges the admissibility of Mathews’s affidavit, alleging it contains inadmissible hearsay. “ ‘Hearsay’ is a statement, other than one made by ]4the declarant while testifying at the present trial or hearing, offered in evidence to prove the truth of the matter asserted.” La. C.E. art. 801(C). In Brown v. Adolph, 96-1257 (La.App. 1 Cir. 3/27/97), 691 So.2d 1321, plaintiff argued that an affidavit written by defendant company’s CPA and liquidator, Girouard, contained hearsay evidence because the facts stated in the affidavit were based on Girouard’s review of the lawsuit and files of the defendant companies rather than upon his personal knowledge. This court found no merit in the assignment of error and stated that Girouard testified concerning his knowledge as CPA and liquidator of the company based on his personal review of the records. Brown, 691 So.2d at 1326. This court also noted that Girouard’s testimony was supported by the very documents about which he testified. Id.

Similarly, in this matter, Mathews’s affidavit states that he is employed by the plaintiff and familiar with Fowler’s account. He also attests to the amount owed and refers specifically to the policy number. These assertions pertain to Mathews’s own personal knowledge gained from his review of the plaintiffs regularly kept business records pursuant to his position as a representative of the plaintiff and were appropriate to consider. Moreover, in support of its motion to confirm default judgment, plaintiff filed into the record, pursuant to La. C.C.P. art. 1702.1, a certification by plaintiffs attorney attesting that “[a]ll necessary Invoices, Affidavits and/or Notes are attached to the original Petition filed herein.” The attached invoice corroborates the statements made in Mathews’s affidavit regarding the policy and amount owed. Thus, the affidavit of Bill Mathews submitted by plaintiff in its motion to confirm default judgment was properly admitted into evidence.

The confirmation of a default judgment requires “proof of the demand sufficient to establish a prima facie case.” La. C.C.P. art. 1702(A); Arias, 9 So.3d |aat 820. In order to prove his case, “the plaintiff must present competent evidence that convinces the court that it is probable that he would prevail at trial.” Arias, 9 So.3d at 820. A plaintiff seeking to confirm a default judgment must prove both the existence and the validity of his claim. Id. A default judgment cannot be different in kind from what is demanded in the petition, and the amount of damages must be proven to be properly due. La. C.C.P. art 1703; Arias, 9 So.3d at 820. In addition to the affidavit of Bill Mathews, the plaintiff submitted a certified copy of the policy of insurance, an invoice showing a balance due of $56,577.00, and a policy summary statement. These documents prove both the existence and validity of the plaintiffs claim as well as the amount of damages due.

DECREE

Based on the evidence included in the record, this court finds that the plaintiff made a prima facie showing that he would likely prevail on the merits of the case. Accordingly, we find the district court correctly granted the default judgment. Costs of this appeal are assessed to the defendant/appellant, Will Fowler.

AFFIRMED.

WELCH, J. concurs without reasons.


author: McClendon, j.

text:
    SWC SERVICES, LLC v. ECHELON CONSTRUCTION SERVICES, LLC and Chenier Property Partners, LLC and Travelers Casualty and Surety Company of America.
    No. 2010 CA 1113.
    Court of Appeal of Louisiana, First Circuit.
    Feb. 11, 2011.
    Clint L. Pierson, Covington, LA, Inter-venor/Appellee In Proper Person.
    David J. Krebs, Marc L. Domres, Sandra Sutak, New Orleans, LA, for Counsel for Defendant/Appellant Travelers Casualty and Surety Company of America.
    Lloyd N. Shields, Elizabeth L. Gordon, Katy B. Kennedy, New Orleans, LA and Richard C. Stanley, W. Raley Alford, III, Michael J. Palestina, New Orleans, LA, for Counsel for Defendant/Appellee Chenier Property Partners, LLC.
    Before WHIPPLE, McDONALD, and McCLENDON, JJ.
   McClendon, j.

| ¾A payment bond insurer appeals a trial court judgment against it that awarded sanctions to a subcontractor’s previous counsel personally after settlement of the underlying dispute. For the following reasons, we vacate in part the judgment of the trial court.

FACTS AND PROCEDURAL HISTORY

On January 18, 2007, Chenier Property Partners, L.L.C. (Chenier), as owner, and Echelon Construction Services, L.L.C. (Echelon), as general contractor, entered into a contract for the construction of the project known as Chenier Apartments located in Mandeville, Louisiana. A payment bond in the amount of $30,011,467.00 was secured on January 18, 2007, naming Echelon as principal, Travelers Casualty and Surety Company of America (Travelers) as surety, and Chenier as obligee. Pursuant to the Private Works Act, the contract and statutory bond were filed with the parish before work began on the project. Sometime thereafter, SWC Services, L.L.C. (SWC) entered into a subcontractor agreement with Echelon to perform work on the project. In December of 2008 and February of 2009, SWC recorded liens against the property, claiming that it had provided labor and equipment for the project and that it had not been paid $122,331.63, the principal balance due and owing, despite amicable demand.

On March 6, 2009, SWC filed the present lawsuit against Echelon, Chenier, and Travelers to collect the unpaid balance, alleging that SWC provided labor and equipment to the project and that Echelon failed to pay SWC the $122,331.63 outstanding balance. In Paragraph 3 of its Petition, SWC alleged that “Travelers executed a Payment Bond, which is also recorded with the Contract and in which Travelers assumed the role as surety of all claims for labor and material used or furnished in performance of the Contract.” On April 20, 2009, Echelon and Travelers, through their counsel, answered the petition, specifically denying the allegations of Paragraph 3. Further, as an affirmative defense in Paragraph 16 of their Answer, Echelon and Travelers alleged that “[t]he claims of SWC against Travelers are barred by the applicable provisions of lathe payment bond.” When SWC, through discovery, in May of 2009, tried to ascertain what provisions of the payment bond allegedly barred SWC’s claims, Travelers objected to the request, responding that the document was the best evidence of its contents. On May 28, 2009, counsel for Travelers withdrew.

Thereafter, on August 18, 2009, SWC filed a Motion for Partial Summary Judgment and for Sanctions, seeking to have the payment bond declared valid and to sanction Travelers for having wrongfully filed pleadings that it knew or should have known were false and only for delay purposes. Travelers opposed the motion claiming that it was improper in that it sought to compel discovery responses instead of a judgment and, further, that SWC was not entitled to judgment as a matter of law. Travelers also opposed the motion for sanctions contending that its responses were accurate and were made in good faith and upon reasonable belief or inquiry, not with the purpose to cause undue delay.

A hearing was held on September 29, 2009, after which the trial court orally ruled, granting SWC’s motion for summary judgment and awarding sanctions against Travelers’ certifying attorney in the amount of $1,500.00. However, because the certifying attorney was not given notice of the hearing, the matter was reset for November 3, 2009. Meanwhile, on October 5, 2009, SWC settled all claims with Travelers. Upon discovering that SWC and Travelers settled the matter, counsel for SWC withdrew as counsel for SWC on October 20, 2009. Subsequently, after learning that the settlement proceeds were going to be deposited into the registry of the court, SWC’s former counsel filed a petition for intervention, on October 23, 2009, urging the court to retain one-third of the settlement amount.

At the November 3, 2009 hearing, there was lengthy discussion between the trial court and counsel for the parties regarding the history of this matter. At the conclusion, the trial court orally reiterated its ruling of September 29, 2009, awarding sanctions, but removed the sanctions against the certifying attorney band sanctioned only Travelers in favor of the mover’s attorney. The trial court further granted the parties’ motion to dismiss the underlying matter based on the settlement. Judgment on the motion to dismiss was signed on November 5, 2009, specifically reserving the rights of all parties and counsel “to pursue any claims for sanctions.”

Judgment was signed on November 30, 2009, granting SWC’s motion for summary judgment and confirming that the Travelers bond was a valid and enforceable Private Works Act bond under LSA-R.S. 9:4801, et seq. The judgment further granted sanctions and ordered Travelers to pay $1,500.00 in attorney fees to the “Mover’s Attorney” and court costs associated with the motion for summary judgment. Travelers appealed the award of sanctions.

DISCUSSION

At the time that sanctions were imposed in this matter, LSA-C.C.P. art. 863 provided, in pertinent part:

A. Every pleading of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated. A party who is not represented by an attorney shall sign his pleading and state his address.
B. Pleadings need not be verified or accompanied by affidavit or certificate, except as otherwise provided by law, but the signature of an attorney or party shall constitute a certification by him that he has read the pleading; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact; that it is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
D. If, upon motion of any party or upon its own motion, the court determines that a certification has been made in violation of the provisions of this Article, the court shall impose upon the person who made the certification or the represented party, or both, an appropriate sanction which may include an order to pay to the other party or parties the amount of the reasonable expenses | ¿incurred because of the filing of the pleading, including a reasonable attorney’s fee.
E. A sanction authorized in Paragraph D shall be imposed only after a hearing at which any party or his counsel may present any evidence or argument relevant to the issue of imposition of the sanction.

Article 863 is derived from Rule 11 of the Federal Rules of Civil Procedure. Because there is limited jurisprudence interpreting and applying Article 863, federal decisions applying Rule 11 have provided guidance to Louisiana courts. Sanchez v. Liberty Lloyds, 95-0956, p. 5 (La.App. 1 Cir. 4/4/96), 672 So.2d 268, 271, writ denied, 96-1123 (La.6/7/96), 674 So.2d 972. Both Rule 11 and Article 863 apply to the signing of pleadings, motions and other papers, imposing upon attorneys and litigants affirmative duties as of the date a document is signed. The court must determine whether the individual, who certified the document purported to be viola-tive, has complied with those affirmative duties. Id. The obligation imposed upon litigants and their counsel who sign a pleading is to make an objectively reasonable inquiry into the facts and the law. Sanchez, 95-0956 at p. 6, 672 So.2d at 271.

The comments to Federal Rule 11 recognize that the purpose of Rule 11 sanctions is to deter rather than to compensate. Further, as a general rule, an award of attorney fees is a type of penalty imposed not to make the injured party whole, but rather to discourage a particular activity on the part of the opposing party. See Langley v. Petro Star Corp. of La., 01-0198, p. 3 (La.6/29/01), 792 So.2d 721, 723. Thus, penal statutes are to be strictly construed. Id.

In its appeal, Travelers claims that LSA-C.C.P. art. 863 does not provide for sanctions to the “mover’s attorney.” It asserts that Article 863 is unambiguous and runs only to the benefit of the party and, because SWC settled all claims with Travelers on October 5, 2009, the award of sanctions to SWC’s | fiprevious counsel was inappropriate. Chenier argues, however, that because LSA-C.C.P. art. 863 D provides that an appropriate sanction “may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, including a reasonable attorney’s fee,” the language makes no restrictions on sanctions to be imposed, including to whom the sanctions may be awarded. (Emphasis added.) We disagree. Being penal in nature, Article 863 must be strictly construed. The language regarding appropriate sanctions simply addresses one of the possible sanctions that may be imposed upon a party or parties, not to whom they can be paid. A similar conclusion has been reached by our brethren on the fourth circuit in Green v. Wal-Mart Store # 1163, 96-1124, p. 3 (La.App. 4 Cir. 10/17/96), 684 So.2d 966, 968. There, they concluded that it was error to direct sanctions payable to the client’s attorney, rather than to the client, since the article restricts payment of the sanction to the other party or parties.

We thus conclude that it was error for the trial court to award $1,500.00 in sanctions to the “Mover’s Attorney” in its judgment of November 30, 2009. Further, SWC did not pursue the sanctions claim following its settlement with Travelers, despite the reservation of rights in the judgment of dismissal allowing it to do so. Accordingly, that portion of the judgment awarding sanctions must be vacated.

CONCLUSION

Based on the above, that portion of the November 30, 2009 judgment of the trial court, awarding sanctions to the “Mover’s Attorney” is hereby vacated. Costs of this appeal shall be shared equally between the intervenor/appellee and Travelers.

JUDGMENT VACATED IN PART; MOTION TO STRIKE DENIED.

      . Former counsel also asked for an increase in the amount of attorney fees awarded as sanctions.

      . We note however that the mere reservation of the right to pursue sanctions cannot confer a right that does not exist under the law.

      . We do not address the propriety of the judgment confirming the validity of the bond, as this issue has not been raised by the parties, nor has it been assigned as error.

      . Louisiana Code of Civil Procedure Article 863 was amended by Acts 2010, No. 540, § I.

      . Although Rule 11 is worded somewhat differently from LSA-C.C.P. art. 863, that distinction is not pertinent to our discussion herein.

      . Travelers has filed a motion to strike the opposition of Chenier or, alternatively a reply brief. We deny said motion and treat it as a reply brief, and note that our decision is based solely on the record before us and not on argument of counsel.

      . While there may well be merit in the sanctions imposed on Travelers, based on our opinion, that issue is pretermitted.