Louisiana Court of Appeal Holds Insurer Cannot Claim Its Insured Failed To Mitigate Damages If The Insurer Failed To Approve the Insured’s Efforts to Mitigate

A Louisiana Court of Appeal upheld a jury’s finding that an insured did not fail to mitigate further damage to its property because the insurer did not approve the insured’s request to perform repairs and remediation. PVCA, Inc. v. Pac. W. TD Fund LP, 2020-0327 ( La. App. 4 Cir 1/20/21).

Hurricane Isaac damaged a condominium complex, and the complex owner submitted a claim under a commercial wind and hail policy. The insurer disputed the amount claimed and issued payment for a lesser amount. The complex owner sued the insurer for failing, among other things, adequately to adjust and tender payment under the policy, and the jury returned a verdict in favor of the complex owner.

On appeal, the insurer argued that the complex owner failed to mitigate its damages. The complex owner asserted that the insurer withheld approval to tarp the buildings to prevent further damage and that it was too expensive to begin remediation without the insurer’s payment under the policy. The court stated that an obligee’s duty under Louisiana Civil Code Article 2002 to mitigate damages exists only if it is reasonable under the circumstances to do so. The court upheld the jury’s finding that the complex owner did not fail to mitigate damages because the insurer prevented the owner’s efforts to move forward with the repairs and remediation by withholding approval.