Bayou Blue Assembly Of God Inc V Church Mutual Insurance Company Si

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

BAYOU BLUE ASSEMBLY OF CIVIL ACTION
GOD, INC.

VERSUS NO: 23-6378

CHURCH MUTUAL INSURANCE SECTION: “J”(4)
COMPANY, S.I.

ORDER AND REASONS

Before the Court are a Motion for Partial Summary Judgment Regarding
Extra-Contractual Claims (Rec. Doc. 17), filed by Defendant Church Mutual
Insurance Company, S.I., and an opposition filed by Plaintiff Bayou Blue Assembly
of God, Inc. (Rec. Doc. 22), to which Defendant replies (Rec. Doc. 26). Having
considered the motion and legal memoranda, the record, and the applicable law, the
Court finds that the motion should be GRANTED.
FACTS AND PROCEDURAL BACKGROUND
This case arises out of damage to Plaintiff’s property from Hurricane Ida.
Insured by Defendant, the property included Plaintiff’s church and thrift store.
Within a month of the storm, Defendant documented $476,670.98 in damage and,
after applying policy deductibles, tendered timely payment. Disagreements between
the parties, however, had already developed, with Plaintiff contending that the
damage assessment was inadequate and Defendant countering that Plaintiff’s
mitigation efforts had morphed into widespread property demolition. In early
November, Plaintiff submitted demands for $1.4 million related to tarping and
mitigation. Thereafter, Defendant revised its damage estimate to over $1 million and
again tendered payment for that amount after deductible application. At the same

time, Plaintiff made an additional demand of $2.19 million, which included estimates
for property damage and mitigation efforts; Plaintiff, however, subsequently
characterized this demand as “a preliminary estimate” and abandoned it as a
sufficient proof of loss. (Rec. Doc. 17-7 at 276 ll.21–23 (deposition of Plaintiff
representative)). Further complicating the accounting of Plaintiff’s demand, Big West
Buildings Services originally invoiced Plaintiff $1,720,431.30 for mitigation work but

later accepted $982,000 as full payment, having reduced the amount due to a
“gentleman’s agreement.” Id. at 143 ll.5–10, 144 l.25–145 l.1.
A month later, Defendant again revised its damage estimate to over $1.6
million and tendered payment. Five months later, Plaintiff submitted to Defendant
“a comprehensive evaluation of loss and replacement.” Id. at 287 ll.13–14. Totaling
$4,993,121.62, the estimate valued church damages at $4,456,688.12 and thrift store
damages at $476,433.50. Three months after the comprehensive estimate, however,

Plaintiff sent Defendant a “build back” proposal for the church totaling $1,827,915.
(Rec. Doc. 17-28). The August 2022 build back proposal was based on an estimate
that predated the comprehensive evaluation by a month. In a series of letters that
followed, Defendant requested more detailed costs in order to segregate out duplicate
and uncovered demands: “We can[]not accept the proposal as satisfactory proof of loss
as it is not itemized and appears to include the same disputed scope of repairs
necessary as a result of the mitigation contractors unagreed and unsupported scope
of demolition.” (Rec. Doc. 17-29 at 2 (Sept. 6, 2022 email to Plaintiff counsel)). With
no additional payment tendered by Defendant,1 Plaintiff filed this action, raising

claims of breach of insurance contract and for bad faith penalties.
Defendant now moves to dismiss the bad faith claim. Plaintiff opposes.
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as
to any material fact and that the movant is entitled to judgment as a matter of law.”

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R. Civ. P. 56); see Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a
dispute as to any material fact exists, a court considers “all of the evidence in the
record but refrains from making credibility determinations or weighing the evidence.”
Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th
Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but
a party cannot defeat summary judgment with conclusory allegations or

unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be
satisfied that “a reasonable jury could not return a verdict for the nonmoving party.”
Delta, 530 F.3d at 399.

1 In January 2025, fifteen months after the commencement of this litigation and after an inspection of
the work, Defendant again adjusted its damage estimate, finding a total replacement cost of
$1,697,418.98 and, after application of depreciation and deductible, issuing a total payment to Plaintiff
of $1,583,431.61. (Rec. Doc. 17-4).
If the dispositive issue is one on which the nonmoving party will bear the
burden of proof at trial, the moving party may satisfy its burden by merely pointing
out that the evidence in the record is insufficient with respect to an essential element

of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden then shifts
to the nonmoving party, who must, by submitting or referring to evidence, set out
specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may
not rest upon the pleadings but must identify specific facts that establish a genuine
issue for trial. See id. at 325; Little, 37 F.3d at 1075.
DISCUSSION

Defendant argues that it cannot be found to have arbitrarily declined to pay
all of Plaintiff’s damage demands because there are legitimate questions regarding
the scope and causation of the loss. Louisiana’s insurance “bad faith” laws, codified
in Louisiana Revised Statutes §§ 22:1892 and 22:1973, authorize recovery of bad faith
penalties from insurers who fail to pay legitimate claims in a manner that is
arbitrary, capricious, or without probable cause. Spears v. State Farm Ins. Co., No.
08-3183, 2009 WL 1674186, at *2 (E.D. La. June 12, 2009). “A party seeking relief

under either statute has the burden of establishing three things: (1) the insurer
received a satisfactory proof of loss; (2) the insurer failed to pay the claim within the
applicable statutory period (thirty or sixty days); and (3) the insurer’s failure to pay
the claim was arbitrary and capricious.” XL Specialty Ins. Co. v. Bollinger Shipyards,
Inc., 954 F. Supp. 2d 440, 444 (E.D. La. 2013) (citing Dickerson v. Lexington Insurance
Co., 556 F.3d 290, 297 (5th Cir. 2009)).
A refusal to pay is arbitrary, capricious, or without probable cause where the
refusal was vexatious, unjustified, or without reasonable or probable cause or excuse.
Dickerson, 556 F.3d at 300; Louisiana Bag Co. v. Audubon Indem. Co., 999 So. 2d

1104, 1114 (La. 2008) (quoting Reed v. State Farm Auto. Ins. Co., 857 So.2d 1012,
1021 (La. 2003)). Thus, bad faith should not be inferred when “there is a reasonable
and legitimate question as to the extent and causation of a claim.” Reed, 857 So. 2d
at 1021. The statutory penalties should only be imposed when the facts “negate
probable cause for nonpayment,” and penalties are not imposed “when the insurer
has a reasonable basis to defend the claim and acts in good-faith reliance on that

defense.” Louisiana Bag Co., 999 So. 2d at 1114 (quoting Guillory v. Travelers Ins.
Co., 294 So. 2d 215, 217 (La. 1974) and Reed, 857 So. 2d at 1021); see also Spears,
2009 WL 1674186, at *2 (granting summary judgment on bad faith claim).
In this case, Plaintiff bears the burden of proving its claim for bad faith
damages, including proving that Defendant’s refusal to tender further payments was
arbitrary and capricious. Accordingly, on summary judgment, Defendant may satisfy
its burden by pointing out that the evidence in the record is insufficient with respect

to the arbitrary-and-capricious element. Defendant argues that, because of the
legitimate questions as to whether the alleged damage to Plaintiff’s property was
caused by Hurricane Ida or by unnecessary or deficient work of Plaintiff’s contractor
Big West, summary judgment on the bad faith claim is appropriate.
Plaintiff does not deny that Big West’s mitigation work amounted to
widespread demolition of the church building. Instead, Plaintiff directs attention to
a “Water Restoration and Mold Remediation Protocol” issued by Defendant’s
consultant three weeks after Hurricane Ida: “By Defendant’s Logic, Plaintiff should
have waited 24 days after Hurricane Ida before it began mitigating it’s [sic] severely

water[-]damaged buildings according only to JS Held’s protocols.” (Rec. Doc. 22 at 6).
Plaintiff’s argument, however, misses the mark. The issue presented is not whether
any mitigation should have occurred but whether such drastic demolition work
presents a reasonable and legitimate basis for Defendant to question the mitigation
and resulting rebuild. Plaintiff’s use of the “Water Restoration and Mold Remediation
Protocol” drives home the point: only certain perimeter walls were marked for total

removal. (Rec. Doc. 22-10). Plaintiff’s mitigation efforts and associated rebuilding in
areas less affected by Hurricane Ida damage may ultimately present a covered claim,
but Defendant’s refusal of payment cannot be described as vexatious, unjustified, or
without reasonable or probable cause or excuse. See Dickerson, 556 F.3d at 300.
This conclusion is further supported by Plaintiff’s shifting damage amounts.
In November 2021, Plaintiff demanded $2.19 million for property damage and
mitigation efforts, but later abandoned the demand, describing it as only “a

preliminary estimate”. (Rec. Doc. 17-7 at 276 ll.21–23). Relatedly, Big West initially
charged Plaintiff $1,720,431.30 for mitigation work but later accepted $982,000 as
full payment, having reduced the amount due to a “gentleman’s agreement.” Id. at
143 ll.5–10, 144 l.25–145 l.1. Plaintiff makes no effort to explain this discrepancy.
Finally, Plaintiff offered “a comprehensive evaluation of loss and replacement[,]”
totaling nearly $5 million. Three months later, however, Plaintiff demanded over $1.8
million to build back the church, based on a proposal that predated—but was not
included in—its comprehensive evaluation. Defendant repeatedly communicated its
concern and confusion over the proposal, arising from Big West’s demolition work.

In sum, Defendant reasonably questioned the scope and causation of the
claimed damage. Put another way, as it is Plaintiff’s burden to prove Defendant’s bad
faith, Defendant has pointed to an insufficiency with respect to an essential element
of Plaintiff’s claim, namely, that Defendant’s failure to pay the claim was arbitrary
and capricious.
Accordingly, the summary-judgment burden shifts to Plaintiff, who must set

out specific facts showing that a genuine issue exists that Defendant had no
reasonable basis for claim denial. Simply, Plaintiff fails to do so. Plaintiff attempts to
justify certain repairs as necessary (HVAC) or as within the amount of replacement
cost value (roof). Plaintiff may have additional claims deserving coverage, but such is
not the issue before the Court. There are genuine issues over the coverage and
causation of the property damage. Thus, Defendant’s withholding of further claim
payment is reasonable, not vexatious. In turn, the bad faith claim is ripe for

summary-judgment resolution.

CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Church Mutual Insurance
Company, S.I.’s Motion for Partial Summary Judgment Regarding Extra-Contractual
Claims (Rec. Doc. 17) is GRANTED.
New Orleans, Louisiana, this 23rd day of July, 2025.

OK fale
_ JA\KA SAN [Ni ( /
CARL J. BARBIFR V
UNITED STATHS DISTRICT JUDGE