District Court Properly Granted State Farm’s Summary Judgment Motion in Class Action Challenging Conversion Of Homeowners Insurance Policies because Conversion did not Constitute Cancelation or Nonrenewal of Policies in Violation of Louisiana Law Fifth Circuit Holds
Plaintiff filed a class action in Louisiana state court against State Farm alleging that its conversion of homeowner insurance policies to new policy forms violated Louisiana law. Moore v. State Farm Fire & Cas. Co., ___ F.3d ___, 2009 WL 130204, *1 (5th Cir. January 21, 2009). Defense attorneys removed the class action to federal court on the basis of the Class Action Fairness Act of 2005 (CAFA), id., at *2. The class action followed State Farm’s participation in various administrative proceedings concerning rates to be charged for Louisiana homeowners’ insurance policies. Id., at *1-*2. According to the allegations underlying the class action, State Farm’s act of issuing new forms of homeowners’ insurance coverage at time of renewal amounted to “cancelation” of the policies, id., at *1. The class action was filed after plaintiff pursued administrative proceedings that were resolved in favor of State Farm, id., at *2. The parties filed cross motions for summary judgment; the district court granted defense counsel’s motion for partial summary judgment and for judgment on the pleadings, and denied plaintiff’s summary judgment motion, concluding that State Farm’s actions complied with state law. Id., at *1. Put simply, the federal court “determined that, at the end of the day, the parties’ motions ‘boil down to the same issue: Whether or not State Farm’s conversion of its [former] homeowner policies to its [new] homeowner policy form, effective February 1, 2005, was in violation of Louisiana law?’” Id., at *3. The district court ruled in favor of State Farm, and the Fifth Circuit affirmed.
Plaintiff argued that State Farm’s conversion of the homeowners’ policies “constituted a cancellation or nonrenewal of existing homeowner policies and violates the prohibitory laws of Louisiana, which disallow cancellation or nonrenewal of a homeowner insurance policy that has been in effect for more than three years.” Moore, at *3 (citations omitted). After discussing the standard of review, see id., at *4, the Fifth Circuit turned to its analysis of the statutory interpretation of Louisiana law, id., at *5-*6. The Circuit Court agreed with defense attorneys, and the district court, that Louisiana law “clearly and unambiguously provides that conversion is neither a cancellation nor a nonrenewal, and that such conversion is allowed when the insurer’s form is filed with and approved or deemed approved by the Commissioner.” Id., at *6. Accordingly, it affirmed the judgment of the district court dismissing the class action against State Farm, id., at *8.
NOTE: The Fifth Circuit rejected plaintiff’s claim that the district court’s order “leads to the unconstitutional and unauthorized impairment of private contracts,” see Moore , at *6, and rejected further plaintiff’s claim that the district court order violated the Anti-Injunction Act, see id., at *7-*8.