In general, the
Louisiana Direct Action Statute allows an
injured person in a
car accident to bring suit against the
insurer of an automobile driver without the need of proceeding against the driver first.
To determine whether you may use the statute to sue the insurer directly,
(4) requirements must be met:
The policy must be a liability policy, not an indemnity policy;
The Louisiana court must have personal jurisdiction over the insurer;
Your case must meet the requirements set forth in the statute, as interpreted in the Louisiana jurisprudence; and
You must choose the right Louisiana court (venue), as set forth in the statute.
(1) The policy must be a liability policy.
There are two general types of insurance policies: liability policies and indemnity policies. Liability policies require the insurer to act as soon as the insured event (i.e. a car accident) occurs, and the insurer must defend its insured in court and pay any damages for the insured. An indemnity policy, on the other hand, only requires the insurer to make a payment to its insured after the insured has made a payment; in other words, the insurer indemnifies its insured for any monetary loss.
The direct action statute is only available against liability insurers because of the first sentence in Paragraph A: “No policy or contract of liability insurance … .” This paragraph, as part of the original drafting of the direct action statute in 1918, prevented insurance companies from paying any claims to injured persons unless their insureds were bankrupt and a judgment had been rendered against them.
While this requirement is important, the statute basically ensures that an insurance policy covering an automobile driver will be a liability, not an indemnity, policy.
(2) Louisiana must have personal jurisdiction over the insurer.
Personal jurisdiction is one of the most complicated concepts in the law for a layman to understand. In short, the U.S. Constitution requires that, in order for a Louisiana court to force an insurer to show up and defend the lawsuit, the insurer must have sufficient contacts in Louisiana such that the exercise of jurisdiction will not offend due process. This phrase has been the subject of numerous U.S. Supreme Court cases.
Louisiana has a statute that defines the jurisdiction of its courts over nonresidents, e.g. foreign insurers. That statute is La. R.S. 13:3201. While the statute does list several specific instances where nonresidents may be haled into court in Louisiana, the statute also allows the exercise of personal jurisdiction to the full extent allowed under the U.S. Constitution (see the above paragraph).
The good news is, if an agent for service of process is designated in the state, then Louisiana courts have personal jurisdiction over the nonresident. Insurers must appoint an agent for service of process in order to obtain a license to do business in the state. Further, if a car is involved in an accident in Louisiana, then the secretary of state is deemed to be the agent for service of process on the insurer, whether or not they are licensed to do business in the state. Therefore, as long the accident occurred in Louisiana or the insurer is licensed to do business in Louisiana, then the exercise of personal jurisdiction will pose no barrier in filing a lawsuit in Louisiana. And as we see below, these parallel the requirements for applying the direct action statute.
(3) The statutory requirements, as interpreted by the courts, must be met.
If the Louisiana legislature wanted to, it could draft the direct action statute to allow its application against any insurer over which the state may exercise personal jurisdiction. However, as interpreted by the courts, the legislature has chosen not to do so. The legislative and jurisprudential history is rather complicated and ambiguous. Fortunately, today we can boil down the application of the direct action statute to 2 alternative possibilities.
A person may apply the direct action statute when: (1) the policy is issued or delivered in Louisiana; or (2) the accident occurs in Louisiana.
While there may be some room to debate where a policy is “issued” or “delivered,” for the most part these requirements are pretty cut and dry. As long as one of these requirements is met, you may proceed against the insurer directly in a Louisiana court.
(4) You must choose the right Louisiana court, or venue, as defined in the statute.
The venue rules for the direct action statute may be found in Paragraph B. They require you to file the lawsuit in the court of the parish where the accident occurred or where the action could be brought under Article 42 of the Code of Civil Procedure.
So, if the accident occurred in Louisiana, the venue rule is easy: file suit in the courthouse of the parish where the accident occurred. If the accident occurred outside of Louisiana, but the policy was issued or delivered in Louisiana and you wish to file suit in Louisiana, the statute directs you to Article 42 of the Code of Civil Procedure.
You may check that article to be sure that you file in the right venue. But generally, if the insurer is headquartered in Louisiana, venue is proper in the parish where its registered office is located. If the insurer is a foreign insurer and is licensed to do business in Louisiana, the venue is proper where its primary place of business is located. Finally, if the insurer is foreign and not licensed to do business in the state, then venue is proper in East Baton Rouge parish.