Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

In Louisiana, Insurers Are Not Vicariously Liable For The Negligence Of A Roofer Who Was Provided To The Insured Under The Insurance Company's "Direct Repair Contractor Program"

In Rubin v. American Insurance Co., 193 So. 3d 408 (La. App. 2016), American Insurance Company had a direct repair contractor program which was a list of approved contractors. If the insured used one of the approved contractors, the program provided that AIC would "be responsible" for the roof it provided. In this case, the insureds agreed to use the approved contractor provided by AIC to repair a roof damaged by a hail storm. The insureds alleged that the roofer was negligent when it removed the roof, but did not adequately protect the roof thereafter, nor did the approved contractor return to the job for several days while it was raining. It was alleged that mold grew in the house because of this negligence. The insureds sued AIC, alleging that AIC was responsible for the contractor's negligence under theories of vicarious liability or joint venture. The case was tried to a jury, which rendered a verdict in favor of the insureds, although the jury found that the insurance company was not, itself, negligent. The trial court then granted AIC's motion for a directed verdict as to the complaint.

An AIC witness testified that the direct repair contractor program was created via a contract entered into between AIC's parent company (FFIC) and a third company (PTC). It was PTC that was in charge of screening and hiring contractors for the program. The agreement that existed between FFIC and PTC specifically stated that FFIC did not have the right to control or supervise PTC or its contractors within the PTC network. The agreement also stated that "[t]his agreement is not intended to and shall not create a partnership, joint venture, or business entity of any kind between the parties, nor shall it make either party the employee, agent, claims adjuster, or representative of the other party. [PTC] shall act in the capacity of an independent contractor in providing and performing the services described in this agreement." Given this language and the facts before the Court, the Court ruled that the insureds provided no evidence that an employer‑employee relationship existed between AIC and the roofer. Therefore, there could be no vicarious liability. As to the joint venture allegation, the agreement between FFIC and PTC expressly disavowed a "joint venture."

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