LOUIS MERHIGE v. PACIFIC LIFE INSURANCE COMPANY BARNETT ASSOCIATES LLC AND JAMES BARNETT (2025)

Relators/defendants, Barnett & Associates, LLC and James Barnett (collectively “Barnett”) seek review of the portion of the trial court's October 3, 2024 judgment overruling in part Barnett's exception of peremption and co-defendant Pacific Life Insurance Company's (“Pacific Life”) exception of peremption and prescription against respondent/plaintiff, Louis Merhige, as to acts, omissions, and neglect “occurring after June 24, 2021, and discovered within one-year prior to June 24, 2024.” 1

For the reasons stated herein, we affirm the trial court's judgment overruling the exception of peremption as to plaintiff's claim against Barnett regarding his advice concerning the wash loan, and we deny that portion of Barnett's application.

We reverse the trial court's judgment overruling the exception of peremption regarding plaintiff's claims against Barnett regarding the conversion rider and selling the policy, and we grant the exception of peremption as to plaintiff's claims against Barnett regarding the conversion rider and selling the policy, and dismiss those claims with prejudice.

PROCEDURAL HISTORY and CLAIMS

In 2014, when plaintiff was 77 years old and a practicing lawyer, he purchased a five-million-dollar premium-financed index universal life insurance policy (“the policy”) from Pacific Life, through his long-time friend and insurance agent, 2 James Barnett. Plaintiff formed an insurance trust, the Louis Bernard Merhige Insurance Trust (“the trust”), which was named as the owner of the policy, with plaintiff as the named insured. Plaintiff's financial advisor, stockbroker, and long-time friend, Wilfred M. Kullman, Jr. (“Kullman”), was designated as the trustee of the trust.

Based on the policy illustrations prepared by Pacific Life and loan illustrations prepared by Succession Capital Alliance (“Succession Capital”), plaintiff chose the policy at issue and chose to finance the policy premiums 3 with loans provided by First Insurance Funding Corporation (“First Insurance Funding”), 4 a banking institution that provides loans to high-net-worth individuals, such as plaintiff, for the purchase of life insurance policies like the one at issue in this case. In acquiring the policy, plaintiff and the trustee, Kullman (1) signed all the required documents to obtain the policy and all the necessary financial loan documents to secure payment of the policy premiums; (2) confirmed that he had a net-worth of $10 million; and (3) confirmed he had sufficient assets to pay for the premiums needed to insure him at his age for that amount of coverage. Pacific Life issued the policy to plaintiff and a policy delivery receipt was signed in October 2014.

In April 2024, plaintiff sold the policy. Subsequently, on June 24, 2024, plaintiff filed the instant lawsuit against his insurance agent, Barnett, and the insurer, Pacific Life, for alleged acts, omissions, and neglect associated with the purchase of the policy. Plaintiff did not name any of the banking institutions (i.e., Succession Capital, First Insurance Funding, or Wintrust) as defendants.

Barnett and Pacific Life filed exceptions of peremption alleging essentially that all of plaintiff's claims against them are related to the sale of the policy in 2014, and as such, are perempted pursuant to La. R.S. 9:5606. Pacific Life also filed an exception of prescription, alleging plaintiff's claims were prescribed under La. C.C. art. 3492. After a lengthy contradictory hearing, the trial court rendered judgment sustaining Barnett's exception of peremption and Pacific Life's exceptions of peremption and prescription as to “acts, omissions, or neglect prior to June 24, 2021,” 5 and overruling the exceptions as to “acts, omission[s], and neglect occurring after June 24, 2021, and discovered within one-year prior to June 24, 2024.”

Barnett filed this writ application as to the portion of the trial court's judgment which partially overruled his exception of peremption. Barnett contends the trial court misinterpreted and misapplied La. R.S. 9:5606, by applying the statute backwards. Barnett states that the trial court improperly started by counting backwards three years from June 24, 2024 (the date the petition was filed), and then erred by ruling that any alleged acts, omissions or neglect that occurred within three years of the date of the petition and that were “discovered” within the year before June 24, 2024, were not extinguished. He contends the correct analysis of the statute required the court to count forward from the date on which the alleged errors were either discovered or should have been discovered to determine first, when the one-year and three-year time periods commenced, and second, whether any claims related to the alleged acts, omissions or neglect were extinguished by the running of these time periods. Barnett contends the trial court did not engage in either of these steps of the analysis.

Barnett also avers the trial court failed to apply or ignored the clear statutory language of La. R.S. 9:5606 that extinguishes all acts, omissions, and neglect that “should have been discovered” more than a year before plaintiff filed his petition. Barnett argues that all of the alleged acts, omissions or neglect in the petition relate to the sale of the policy in 2014, and/or the disclosures of the risks associated with the policy, which were provided to plaintiff in 2014. He contends that it is undisputed that plaintiff received the policy and disclosures in 2014, and that plaintiff admitted he did not read anything concerning the policy or financial documents. Therefore, Barnett contends that all of the plaintiff's claims are perempted. Barnett avers that plaintiff's claims that occurred after June 24, 2021 are also perempted because they were not filed within one year after each occurrence, or within one year of when plaintiff should have discovered the claims. Because of the trial court's legal errors, Barnett asserts the record should be reviewed de novo by this court.

In opposition, plaintiff contends the trial court correctly applied La. R.S. 9:5606, finding the claims asserted against Barnett that were discovered within one year of the filing of the petition were not perempted. Plaintiff argues Barnett's writ application ignores evidence showing that his claims, which occurred in 2022 and 2023, and were not discovered by him until September 2023, are not perempted. Plaintiff contends that Barnett improperly focuses on his claims that occurred when the policy was originally issued in 2014, which he does not contest are preempted.

Specifically, plaintiff avers that in 2022, he was faced with decreasing returns on the policy, rising interest rates on the premium-financed loan(s), and reduced income due to the constantly increasing collateral demands, and that under those circumstances, he had three options; either: (1) convert the policy; (2) sell the policy; or (3) take out a wash loan. Plaintiff claims that instead of evaluating his options collectively and providing him with illustrations that would allow him to make an informed decision as to which option to exercise, Barnett and Pacific Life summarily dismissed the conversion option by evaluating it in isolation and determining that it was not beneficial to him. Plaintiff avers that Barnett then failed to pursue potential purchasers for the policy in 2022, and did not present plaintiff with a single proposal.

Finally, plaintiff contends that Barnett advised him to take out a 2.5 million wash loan with Pacific Life representing to him that the wash loan would pay down the premium finance loan and reduce the collateral required. Plaintiff asserts that he did not learn until September 2023, the next renewal date, that this representation was incorrect. Plaintiff also asserts that (1) no disclosures were provided to him as to the wash loan; and (2) the 2014 disclosures relied on by Barnett and Pacific Life do not address the failure to advise plaintiff of the conversion options under the policy, the failure to pursue the sale of the policy, the misrepresentations made regarding the impact of the wash loan on the collateral needs, or the impact of the wash loan on the life of the policy. Thus, he argues the trial court did not err in finding that his three claims, filed on June 24, 2024, were timely and not perempted under La. R.S. 9:5606.

APPLICABLE LAW

When an insurance agent undertakes to procure insurance for another, he owes an obligation to his client to use reasonable diligence in attempting to place the insurance requested and to promptly notify the client if he fails to obtain the requested insurance. Isidore Newman School v. J. Everett Eaves, Inc., 09-2161 (La. 07/06/10), 42 So.3d 352, 356, citing Karam v. St. Paul Fire & Marine Insurance Co., 281 So.2d 728, 730-731 (La. 1973). The client may recover from the agent the loss he sustains as a result of the agent's failure to procure the desired coverage if the actions of the agent warranted an assumption by the client that he was properly insured in the amount of the desired coverage. Id.

An insurance agent owes a duty of “reasonable diligence” to his client. Roger v. Dufrene, 613 So.2d 947, 949 (La. 1993). “Reasonable diligence” is satisfied when the agent procures the insurance requested. Isidore Newman School, 42 So.3d at 356; Karam, 281 So.2d at 730. Additionally, although an insurance agent owes a duty of “reasonable diligence” to advise his client, the Louisiana Supreme Court has held that this duty has not been expanded to include the obligation to advise whether the client has procured the correct amount or type of insurance coverage. Isidore Newman School, 42 So.3d at 359. The Supreme Court held that it is the insured's responsibility to request the type of insurance coverage, and the amount of coverage needed, and that it is not the agent's obligation to spontaneously or affirmatively identify the scope or the amount of insurance coverage the client needs. Id.

It is well settled that it is an insured's obligation to read the policy when received, since the insured is deemed to know the contents of the policy. Id.; McKernan v. ABC Insurance Company, 21-859 (La. 11/23/21), 328 So.3d 69 (per curiam). A party who signs a document or written instrument is presumed to know its contents and cannot avoid its obligations by contending that he did not read or fully understand the contents of the document, or that the other party failed to explain it to him. Emile v. Regal Remodelers, L.L.C., 23-174 (La. App. 5 Cir. 01/31/24), 380 So.2d 696, 705; Aguillard v. Auction Management Corp., 04-2804 (La. 06/29/05), 908 So.2d 1, 17.

An insured is on notice of any alleged claim or misrepresentation made regarding the sale of a policy, and the peremptive period begins to run, when the insured receives a copy of the policy. See Cerullo v. Heisser, 16-558 (La. App. 5 Cir. 02/08/17), 213 So.3d 1232, 1237; Shermohmad v. Ebrahimi, 06-512 (La. App. 5 Cir. 10/31/06), 945 So.2d 119, 122; Biggers v. Allstate Ins. Co., 04-282 (La. App. 5 Cir. 10/26/04), 886 So.2d 1179, 1181-1183; Bijeaux v. Broyles, 11-830 (La. App. 3 Cir. 02/08/12), 88 So.3d 523, 527, writ denied, 12-970 (La. 06/22/12), 91 So.3d 971; Chapital v. Harry Kelleher & Co., 13-1606 (La. App. 4 Cir. 06/04/14), 144 So.3d 75, 83. For each policy renewal to be the basis of a separate tort, the complained of conduct must consist of separate and distinct acts, each of which gives rise to immediately apparent damages. Biggers, 886 So.2d at 1182; Bustamento v. Tucker, 607 So.2d 532, 540 (La. 1992). If the policy was merely renewed without discussion, the subsequent renewals are “nothing more than a continuation of the ill effects of an original unlawful act” with no further opportunity for the agency to make misrepresentations about the policy. DA Exterminating Co., Inc. v. Discon, 24-116 (La. App. 5 Cir. 10/30/24), 398 So.3d 1239, 1245; Biggers, 886 So.2d at 1182.

Peremptive statutes are to be strictly construed against peremption and in favor of maintaining the claim. Lamar Contractors, LLC v. SRF Grp. Consulting, LLC, 22-213 (La. App. 5 Cir. 02/01/23), 358 So.3d 907, 909, writs denied, 23-305 (La. 05/23/23), 360 So.3d 1263 and 23-308 (La. 05/23/23), 360 So.3d 1260. Of the possible constructions of a peremptive statute, the one that maintains the claim, rather than the one that bars prosecution of the claim, should be adopted. Id.

The party who files an exception of peremption bears the burden of proof, unless the pleading is perempted on its face. Gattuso v. Nicaud, 15-670 (La. App. 5 Cir. 02/24/16), 186 So.3d 1238, 1241; Attain Speciality Ins. Co. v. Premier Performance Marine, LLC, 15-1128 (La. App. 1 Cir. 04/08/16), 193 So.3d 187, 191. However, if peremption is evident on the face of the pleading, the burden of proof shifts to the plaintiff. Gattuso, 186 So.3d at 1241; Southern Marble Specialties, Inc. v. Cholley, 22-602 (La. App. 3 Cir. 05/03/23), 365 So.3d 885, 890. If evidence is introduced at the hearing, the trial court's findings of fact are reviewed under the manifest error or clearly wrong standard of review. Gattuso, 186 So.3d 1241; Rando v. Anco Insulations, Inc., 08-1163 (La. 05/22/09), 16 So.3d 1065, 1082. If those findings are reasonable in light of the record reviewed in its entirety, an appellate court cannot reverse even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Rando, 16 So.3d at 1082. Credibility determinations are within the trial court's discretion and should not be disturbed upon review, where conflict exists in the testimony, absent a determination that the trial court abused its discretion. Lomont v. Bennett, 14-2483 (La. 06/30/15), 172 So.3d 620, 633.

When no specific findings of fact are issued, appellate courts consider the record as a whole in the light most favorable to the appellee. Ponthier v. Manalla, 06-632 (La. App. 5 Cir. 01/30/07), 951 So.2d 1242, 1253; Brannon v. Callon Offshore Production, Inc., 98-1272 (La. App. 4 Cir. 03/31/99), 731 So.2d 1014, 1017, writ denied, 99-1215 (La. 06/04/99), 745 So.2d 12; Revel v. Snow, 95-462 (La. App. 3 Cir. 11/02/95), 664 So.2d 655, 659, writ denied, 95-2820 (La. 02/02/96), 666 So.2d 1084. Additionally, in cases where the fact finder concludes that a party carried his burden of proof, a credibility determination can be implied from that finding. Thibodeaux v. Kaufman Trailers, Inc., 12-885 (La. App. 3 Cir. 02/06/13), 108 So.3d 1283, 1286.

La. R.S. 9:5606 A provides:

A. No action for damages against any insurance agent, broker, solicitor, or other similar licensee under this state, whether based upon tort, or breach of contract, or otherwise, arising out of an engagement to provide insurance services shall be brought unless filed in a court of competent jurisdiction and proper venue within one year from the date of the alleged act, omission, or neglect, or within one year from the date that the alleged act, omission, or neglect is discovered or should have been discovered. However, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the alleged act, omission, or neglect. [Emphasis added.]

The one-year and three-year periods of limitation as set forth in subsection A are deemed peremptive periods within the meaning of La. C.C. art. 3458, 6 and as provided in La. C.C. art. 3461, 7 may not be renounced, interrupted, or suspended. La. R.S. 9:5606 D.

TRIAL EVIDENCE and ANALYSIS

The issue before this court is whether plaintiff's claims against Barnett, “occurring after June 24, 2021, and discovered within one-year prior to June 24, 2024,” are perempted. In the instant case, the trial court heard extensive testimony from plaintiff and Barnett, and reviewed numerous exhibits admitted into evidence, regarding the alleged actions, inactions, and/or misrepresentations by Barnett concerning three claims (i.e., the conversion rider, selling the policy, and advice regarding the wash loan), the date(s) of the alleged acts, omissions, or neglect and when plaintiff discovered or should have discovered the alleged claims against Barnett.

A review of the record shows that all of plaintiff's claims, as alleged, were perempted on the face of his petition. Therefore, the burden shifted to plaintiff to show his claims were not perempted. Trial testimony and other evidence established the following regarding the three claims against Barnett, which plaintiff argued were not perempted under La. R.S. 9:5606.

Conversion Rider

It is undisputed that the policy issued to and received by plaintiff in October 2014 contained the conversion rider, and it provided that the conversion rider expired during the eighth year of the policy (i.e., 2022). Plaintiff explicitly testified he signed 8 all the documents related to his policy, but emphasized several times that he did not read the policy or any of the financial documents related to the policy. Nevertheless, he acknowledged that as a practicing lawyer, he advises his clients to read their insurance policies. Plaintiff testified that it is “theoretically” important to thoroughly review insurance policies and financial documents prior to signing them.

When defense counsel pointed out that the policy and illustrations delivered to plaintiff in 2014 contained the conversion rider, plaintiff testified he “didn't understand” what the conversion rider meant, reiterating he did not read the policy, and only relied on what Barnett informed him. Plaintiff reluctantly admitted that although he relied on what Barnett told him, he knew that the policy ultimately governed his relationship with Pacific Life and that the contract and its provisions constituted the entirety of the contract between him and Pacific Life. Plaintiff also testified he was “never” aware of his right to convert the policy. He then admitted he had discussions with Barnett about converting the policy in 2022, at which time Barnett told him that it was not worth converting the policy and it was a “bad move.” Specifically, plaintiff testified that Barnett informed him that “it was a bad deal, don't do it.” Plaintiff emphasized that during this time his focus was on selling the policy, not converting the policy, because he “could get out of the policy and make some money.” Plaintiff testified he was trying to get out of the policy because he was required to keep putting up “more and more money ․ and I wouldn't be able to use that amount of my income each year.” Plaintiff further testified that in 2022, he had discussions with Barnett about converting the policy and selling the policy, but he ultimately decided to take a wash loan. Plaintiff reluctantly agreed that he became aware that he had a right to convert the policy in 2022, at the absolute latest.

Barnett testified that he inquired about converting the policy in April of 2022. Barnett testified that he spoke to Succession Capital and Pacific Life about the conversion rider, that they both ran illustrations, and they both informed Barnett that at plaintiff's age, it made “no sense” to convert the policy to a new policy and was not in his client's best interest to do so. Barnett stated that he discussed all of this information with plaintiff, who confirmed in his testimony that the conversion rider was discussed. Barnett testified that the conversion rider was discussed again with plaintiff in August of 2022, after plaintiff received a letter from Pacific Life reminding him of the conversion rider's expiration in October of 2022. Barnett testified that he again inquired into converting the policy and was again informed that it was not in his client's best interest, which he discussed with plaintiff. Barnett's testimony was supported by evidence admitted at the hearing, specifically (1) the policy and illustration provided in 2014, containing the conversion rider; (2) the August 10, 2022 letter Pacific Life sent plaintiff informing him that the conversion rider had to be exercised prior to its expiration date of October 9, 2022; (3) the August 16, 2022 email from plaintiff to Barnett, which included a copy of the Pacific Life August 10, 2022 letter; (4) Barnett's e-mails to Pacific Life requesting information about converting the policy under the conversion rider; 9 and (5) the Pacific Life email informing Barnett that converting the policy was not beneficial to plaintiff.

Since plaintiff is presumed to know the contents of his insurance policy that he received in October of 2014, which contained the conversion rider (the date of the alleged act, omission or neglect or date when plaintiff should have discovered the alleged act, omission, and/or neglect), plaintiff had until October of 2015 to file this claim against Barnett. Consequently, plaintiff's conversion rider claim filed against Barnett on June 24, 2024 was untimely and perempted under La. R.S. 9:5606.

Even assuming that plaintiff was not aware of and did not discover the conversion rider until he received Pacific's Life's letter containing the expiration date of the conversion rider, plaintiff had one year from August 10, 2022 (the date plaintiff allegedly discovered or should have discovered this claim), or until August 10, 2023, to file this claim against Barnett. Because plaintiff did not file his suit until June 24, 2024, plaintiff's conversion rider claim against Barnett is untimely and perempted under La. R.S. 9:5606.

The trial court here did not state any findings of fact related to peremption. When the trial court makes no specific findings of fact in support of a fact-dependent ruling, the appellate court considers the evidence admitted and the record as a whole in the light most favorable to the party in whose favor the trial court ruled (here, the plaintiff). We have done so on this issue and likewise on the issues which follow, and further, we remain mindful that uncertainties and doubt are resolved against prescription and peremption, and in favor of maintaining the action. Nonetheless, the facts clearly show from well-developed evidence in the record that suit against Barnett was filed on the conversion rider claim long after the latest of every calculation of time limits under La. R.S. 9:5606 A, for the reasons explained above. We find that the trial court was manifestly erroneous in overruling Barnett's exception of peremption to this claim. Therefore, we reverse this portion of the trial court's judgment and sustain Barnett's exception of peremption as to plaintiff's conversion rider claim against Barnett, dismissing the same with prejudice.

Selling the policy (i.e., failure to pursue the sale of the policy in 2022)

Barnett testified that sometime after plaintiff was required to post approximately $30,000 in additional collateral in May of 2022, plaintiff began exploring the idea of selling the policy. 10 On June 2, 2022, Barnett sent an email to Joe Robles with Succession Capital stating that plaintiff was inquiring about selling the policy and he requested information about a current payoff on plaintiff's loan. Robles responded the same day with the current cash surrender value and attached the policy summary, payoff amount, and per diem. A few hours later, Barnett sent an email with plaintiff's information to Ryan Brusca, with Coventry First (“Coventry”), and inquired about selling the policy. The next day, Brusca responded stating that they were interested, but he did not guarantee that the policy could be sold. Brusca stated he had talked to his underwriter and they felt that “based on current market conditions, there is capital out there that would enable us to get close to the loan or higher, and we'd love to give this a go.” Brusca attached an authorization form for plaintiff to sign to start the process. Barnett immediately forwarded the email to plaintiff informing him that if he wanted to sell his policy, “there is now a chance that we can do it.” [Emphasis added.] Barnett asked plaintiff to sign the authorization form and to return it to him to start the process “to see if [it is] possible to sell it.” A few hours later, plaintiff responded “Jim, always interested in a deal.” Plaintiff also asked Barnett questions about the “buildup value” and tax implications. On July 5, 2022, Barnett forwarded the plaintiff's signed authorization to Brusca “to see if there is a market for his policy.” Barnett testified that Coventry responded that they were not interested in buying the policy at that time. Specifically, Barnett testified that after they received plaintiff's medical records and made an “assessment,” Coventry informed him that plaintiff was “too healthy” and therefore, they were not interested in buying the policy. Barnett testified that selling a premium-financed universal life policy, like plaintiff's, is handled differently than a regular policy that someone might sell because the policy is financed. Barnett testified that he always informed plaintiff about anything related to his policy and that he had no reason to keep anything from plaintiff.

Barnett testified that shortly thereafter, plaintiff received his September 2022 renewal package. He stated plaintiff complained to him about, and they discussed, the additional and increasing collateral requirements. Plaintiff also testified that he discussed with Barnett, at length, the fact that “they” kept “requiring more and more money to be put up” and that he “was putting up $750,000 a year of my stock.” Plaintiff testified that Barnett stated he could sell the policy, which they “discussed that at length.” However, Barnett also told him that at that time, the policy had a negative cash value. When he asked Barnett what that meant, Barnett replied, “we sell the policy, you have to pay some money.” Plaintiff testified he would have had to pay from $800,000 “up to like over a million dollars” out of pocket to “get out of the policy.” Barnett testified that around October of 2022, he and plaintiff also discussed the option of taking a wash loan to pay down some of his debt. Barnett testified that efforts or inquiries were still being made to try and sell the policy even while they proceeded with the wash loan (i.e., documents for the wash loan were signed by plaintiff on March 7, 2023). As previously discussed supra, plaintiff testified that in 2022, he and Barnett discussed all three options (i.e., the conversion rider, selling the policy, and taking a wash loan) but he ultimately elected to take out a wash loan.

Barnett further testified plaintiff did not get serious about selling the policy until “2024 or 2023.” Barnett stated he advised plaintiff not to sell the policy because it was a $6.6 million asset, but stated it was plaintiff's policy to “do whatever he wants to with it.” Barnett testified that in 2024, two companies competed over the opportunity to purchase plaintiff's policy, Coventry and Settlement Masters, with the policy ultimately being sold to Coventry. Plaintiff testified that in April of 2024, he decided to sell the policy, and the policy was sold in July or August. Counsel pointed out that the policy was actually sold in April of 2024. 11 At the time the policy was sold, plaintiff acknowledged that there was a net benefit of $6.6 million for his beneficiaries, which showed that the policy actually outperformed all the prior projections provided to plaintiff. 12

Therefore, the evidence shows that plaintiff discussed selling the policy in May of 2022 with Barnett. Barnett made inquiries, Coventry indicated it was not interested in purchasing the policy, and plaintiff was informed of this decision. Around the same time plaintiff and Barnett discussed selling the policy, they also discussed the option of taking a wash loan. Plaintiff explicitly testified that in 2022, he discussed with Barnett the conversion rider and selling the policy, but he ultimately decided to take out the wash loan. Thus, at the latest, once plaintiff signed the wash loan documents and the wash loan was confirmed (both of which occurred in March of 2023), and decided not to pursue selling the policy, plaintiff had one year or until March of 2024, to file his claim against Barnett for failure to pursue the sale of the policy in 2022. Because plaintiff's lawsuit was not filed until June of 2024, plaintiff's claim against Barnett regarding selling the policy was untimely and perempted under La. R.S. 9:5606.

After considering the evidence admitted and the record as a whole, in the light most favorable to plaintiff because the trial court did not state any findings of fact, we find the trial court was manifestly erroneous in overruling Barnett's exception of peremption as to plaintiff's claim against Barnett concerning selling the policy. Accordingly, we reverse this portion of the judgment overruling Barnett's exception of peremption, and sustain Barnett's exception of peremption as to plaintiff's claim against Barnett regarding selling the policy, dismissing this claim with prejudice.

The wash loan

As previously discussed, plaintiff was sent renewal documents in September of 2022, which required plaintiff to post approximately $600,000 in additional collateral and showed an increased interest rate. Despite the additional collateral requirement and increased interest rate, plaintiff signed the renewal documents. The testimony also established that around that time, Barnett discussed with plaintiff the option of taking out a wash loan 13 from the policy's cash value to pay down some of the First Insurance Funding loan debt, which was now owned or administered by Wintrust.

On October 28, 2022, Lauren Forlizzi of Wintrust sent Barnett an email regarding the wash loan. On October 31, 2022, Barnett responded to Forlizzi, explaining to her that he spoke to “Mark” about the wash loan. Specifically, Barnett stated, in pertinent part:

We can take a wash loan from Pacific Life and pay off a sizable amount of the debt on [plaintiff's] loan. Due to the rise of the interest rates at almost 6% all of the debt we pay off will at least earn him what he would be paying in interest. I sent his total account value as per Mark's request. We want to substitute collateral at [Wintrust] for the loan amount and then we will pay off as much of the loan as possible. He should still have over $1 million of debt. Once the loan is paid off we will leave as much collateral as needed by [Wintrust] and then the rest of the collateral can be released.

On February 15, 2023, Barnett subsequently emailed Robles with Succession Capital, asking him to send the paperwork so that plaintiff could take out a $2,500,000 wash loan with Pacific Life to pay off that amount of the Wintrust loan debt. Robles responded that he would inform the lender and get back with him when he had an update. On March 7, 2023, Barnett's assistant sent an email to Robles attaching plaintiff's signed loan documents to Pacific Life requesting the wash loan.

On May 19, 2023, Barnett sent another email to Robles, which was copied to plaintiff, stating that plaintiff “took out a loan from [Pacific Life] to pay 2.5 million debt at [Wintrust]. He or I have not received anything showing the debt was paid down.” He asked Robles to check on it and let him know. On May 23, 2023, Robles responded “Confirming funds were received by the carrier on March 17th. The lender is drafting up an updated balance letter, and I should have it for you by the end of the day.” Plaintiff responded to Robles on the following day, thanking him for his assistance. On May 25, 2023, Liliana Barajas of Succession Capital emailed to plaintiff an updated balance letter, copying Barnett. Later that evening, plaintiff forwarded the email from Succession Capital to Barnett, stating in part, “Jim this shows loan balance. Is this before or after I borrowed & paid the $2.5 mil? If after the 2.5 deduction, what is this years $$$ I need to pledge as collateral?”

In September of 2023, plaintiff was sent another renewal package, showing the loan interest rate and requiring plaintiff to post additional collateral in the amount of $227,663, with a due date of October 9, 2023. The renewal package information was also emailed to Barnett, which he forwarded to plaintiff on September 12, 2023. After notification that plaintiff did not comply and renew by the renewal date, Barnett resent plaintiff the renewal documents via email on October 11, 2023. Plaintiff then emailed Robles with Succession Capital on October 14, 2023, stating, “Joe, I'm confused.” Plaintiff stated he did not receive the “usual bill for $65k,” and he asked Robles “how” he was supposed to make out the “$227k check” and where it was to be mailed. On October 16, 2023, Robles responded, informing plaintiff that “the lender is requiring documents to be signed and for $228k to be added into the brokerage account. This is the cash amount required.”

Plaintiff forwarded the Robles email to Barnett the same day, stating:

WHAT THE F**K IS HE TALKING ABOUT? MY DEBT WAS REDUCED THIS YEAR BY THE LOAN, NOW HE'S SAYING NOT ONLY PAY THE SAME $65K INTEREST, BUT ALSO THE $32K. DON'T WASTE TIME REPONDING [sic] ․ I DON'T HAVE TIME TO F**K WITH THIS NOW. I'M PAYING THE $65K TOMORROW SINCE CATHY NOW SENT THE PAPER FOR ME TO GO HAVE SIGNED AND NOTARIZED ․ AGAIN. AND WILL BE IN YOUR OFFICE TOMORROW.

In response, Barnett sent plaintiff an email stating, in pertinent part:

Lou. Calm down. Please pay the 65000. Cathy sent you the bank documents this morning. Please sign and have Heather sign and take to my office. You do not have to pay the $32000. They are sending it back to you from pacific life. Call me if you have any questions.

The evidence shows that plaintiff actually sent a check for the $32,000 to Pacific Life on October 6, 2023, prior to his October 16, 2023 email to Barnett, and that he told Barnett it was mailed. Thereafter, Barnett engaged in several emails with representatives of Pacific Life seeking a refund of the $32,000 check because plaintiff inadvertently sent the money to Pacific Life instead of to Wintrust. Barnett informed Pacific Life that the money should have gone to Wintrust along with plaintiff's $65,000 payment. On November 1, 2023, a representative of Pacific Life emailed Barnett stating that a refund check was mailed to plaintiff on October 31, 2023. Barnett forwarded the email to plaintiff informing him that the check was in the mail, he was currently on vacation, and he would see him next week. Plaintiff's response was friendly, he commented on Barnett's vacation, stated he would see Barnett next week, and concluded with the casual comment “ps did you sell my insurance policy yet?” Barnett replied “I am waiting on a response as to pricing. I sent them everything.”

Barnett conceded that initially, it was his understanding that paying down the Wintrust loan with the $2.5 million wash loan would reduce plaintiff's collateral demand. He also conceded that he “probably” informed plaintiff of his understanding of the wash loan. Barnett further admitted that he did not understand that the $2.5 million wash loan would reduce “the value in the policy so that the collateral need does not go down.”

Barnett agreed that plaintiff began exploring the idea of “selling or getting out from the policy” in 2022 after he received notice about the need to post additional collateral ($30,000 in June 2022 and $594,000 in October 2022). Barnett acknowledged that after plaintiff posted the approximately $600,000 in additional collateral, plaintiff received an email indicating that he was in default and he needed to post even more collateral. On December 7, 2022, Barnett sent an email to Wintrust inquiring as to why plaintiff was in default when he just posted the collateral requested. Barnett also admitted that he is the one who communicated with Succession Capital about running the illustrations or projections for the wash loan. Plaintiff testified that in 2022, he discussed the conversion rider and selling the policy with Barnett, but ultimately decided to make the wash loan. The documents were signed and the wash loan was processed in March of 2023.

A review of the evidence and testimony established that plaintiff and Barnett did not discover until the September 2023 renewal documents, or at the latest via emails in October of 2023, that the wash loan did not pay down the debt like they both thought it would. Thus, plaintiff's lawsuit on this claim, filed less than a year later on June 24, 2024, was timely and not perempted as to plaintiff's claim against Barnett regarding advice on the wash loan.

Considering the evidence and the record as a whole, in the light most favorable to plaintiff because the trial court did not state any findings of fact, we find the trial court was not manifestly erroneous in overruling Barnett's exception of peremption as to plaintiff's claim against him concerning his advice regarding the wash loan. Accordingly, this argument is without merit.

CONCLUSION

After a thorough review of this writ application, opposition, extensive exhibits, and the approximately 400-page transcript, we find the trial court's judgment overruling Barnett's exception of peremption as to plaintiff's claim against him concerning his advice regarding the wash loan is reasonably supported by the testimony and evidence presented and was not manifestly erroneous. Therefore we deny that portion of Barnett's writ application, and affirm the trial court's judgment overruling the exception of peremption as to plaintiff's claim against Barnett concerning his advice regarding the wash loan.

However, we find the trial court's judgment overruling the exception of peremption as to plaintiff's claims against Barnett concerning the conversion rider and selling the policy is not reasonably supported by the testimony and evidence for the reasons stated supra, and therefore, the trial court was manifestly erroneous in overruling Barnett's exception of peremption as to those claims. Consequently, we grant that portion of Barnett's writ application, reverse the trial court's judgment overruling the exception of peremption regarding plaintiff's claims against Barnett concerning the conversion rider and selling the policy, grant the exception of peremption as to plaintiff's claims against Barnett concerning the conversion rider and selling the policy, and dismiss those claims with prejudice. 14

DECREE

For the reasons stated herein, we affirm the trial court's judgment overruling the exception of peremption as to plaintiff's claim against Barnett regarding his advice concerning the wash loan, and we deny that portion of Barnett's application.

We reverse the trial court's judgment overruling the exception of peremption regarding plaintiff's claims against Barnett regarding the conversion rider and selling the policy, and we grant the exception of peremption as to plaintiff's claims against Barnett regarding the conversion rider and selling the policy, and dismiss those claims with prejudice.

AFFIRMED IN PART AND REVERSED IN PART

FIFTH CIRCUIT

101 DERBIGNY STREET (70053)

POST OFFICE BOX 489

GRETNA, LOUISIANA 70054

www.fifthcircuit.org

SUSAN M. CHEHARDY CHIEF JUDGE

FREDERICKA H. WICKER

JUDE G. GRAVOIS

MARC E. JOHNSON

STEPHEN J. WINDHORST

JOHN J. MOLAISON, JR.

SCOTT U. SCHLEGEL

TIMOTHY S. MARCEL

JUDGES

CURTIS B. PURSELL CLERK OF COURT

SUSAN S. BUCHHOLZ CHIEF DEPUTY CLERK

LINDA M. TRAN FIRST DEPUTY CLERK

MELISSA C. LEDET DIRECTOR OF CENTRAL STAFF

(504) 376-1400

(504) 376-1498 FAX

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY

I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY JULY 16, 2025 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

CURTIS B. PURSELL CLERK OF COURT

24-C-524

E-NOTIFIED

24TH JUDICIAL DISTRICT COURT (CLERK)

HONORABLE DONALD L. FORET (DISTRICT JUDGE)

JOSEPH L. MCREYNOLDS (RELATOR)

PAUL J. POLITZ (RESPONDENT)

STEPHEN O. SCANDURRO (RESPONDENT)

RAYMOND C. LEWIS (RELATOR)

SAMANTHA P. GRIFFIN (RESPONDENT)

TIMOTHY D. SCANDURRO (RESPONDENT)

NICHOLAS A. HART (RESPONDENT)

ANNE B. HOSKINS (RESPONDENT)

MAILED

KEVIN C. CARTER (RELATOR)

ATTORNEY AT LAW

755 MAGAZINE STREET

NEW ORLEANS, LA 70130

FOOTNOTES

1.   Pacific Life and plaintiff have also filed writ applications with this court, 24-C-520 and 24-C-522 respectively, seeking review of the trial court's October 3, 2024 judgment.

2.   It is undisputed that prior to 2014, Barnett was not plaintiff's insurance agent.

3.   Plaintiff borrowed $1 million to fund the policy's premium for the first year and $750,000 per year for six years to fund the remaining premiums. The premium finance loan had to be 100% collateralized by either the cash value of the policy or plaintiff's investments. Plaintiff was required to post additional collateral each year as the balance of the premium finance loan increased. The balance continued to increase annually because all interest above $65,000 was deferred so that plaintiff would only have to pay $65,000 per year in interest payments. Plaintiff testified that he was not aware that the premiums paid for the policy were being invested in the stock market until he had “some long discussions” with Barnett about it when he was trying to sell the policy the first time in 2017, when he had a problem with one of the beneficiaries to the trust, Heather Gonzales, who he thought had stolen money from him.

4.   It was undisputed that the First Insurance Funding loan(s) was later owned or administered by Wintrust Life Finance (“Wintrust”).

5.   At the hearing, and in his brief to this court, plaintiff conceded that his claims concerning the original sale and issuance of the policy in 2014 as well as the early management of the policy are perempted under La. R.S. 9:5606 unless and until he can plead a fraud claim related to the same. Therefore, this part of the judgment is not before this court in this writ application.

6.   La. C.C. art. 3458 provides:Peremption is a period of time fixed by law for the existence of a right. Unless timely exercised, the right is extinguished upon the expiration of the peremptive period.

7.   La. C.C. art. 3461 provides:Except as otherwise provided by law, peremption may not be renounced, interrupted, or suspended.

8.   It is also undisputed that all of the required documents related to the policy and financial loan documents were also signed by the trustee, Kullman, and that once Kullman resigned in 2021, plaintiff and his new co-trustee and a beneficiary of the trust, Gonzales, thereafter, signed all the required documents relating to the policy and financial loan documents.

9.   The evidence also supported Barnett's testimony that he inquired about the conversion rider in April of 2022.

10.   This was not the first time plaintiff inquired about selling the policy. Plaintiff testified that in 2017, when he thought one of the beneficiaries of the trust, Gonzales, was stealing money from him, and he sued the beneficiary. On advice of his lawyers, he consulted with Barnett about selling the policy and getting individual policies for each beneficiary. Plaintiff ultimately did not sell the policy, he dropped the lawsuit, and made Gonzales a co-trustee of the trust and a signatory on the policy at issue.

11.   Barnett notified Brusca via email dated April 19, 2024, that plaintiff authorized him to accept Coventry's offer on the sale of the policy. Barnett sent plaintiff an email on May 2, 2024, providing him with the release of all collateral and payoff letter on the policy. Barnett also informed plaintiff that the money would be transferred that afternoon and that he would also receive a check for the overpayment of interest to Wintrust. Later that day, Barnett informed plaintiff that the money was transferred to plaintiff's account and it was “[a]ll done.”

12.   The net benefit was determined by using the value of the policy at the time it was sold ($9.1 million) minus the amounts due on the premium finance loans taken out by plaintiff to equal the net benefit. The transcript reflects that in discussing these amounts, counsel and the witnesses used approximate values instead of the exact amounts as shown in the exhibits.

13.   Although Barnett testified he had nothing to do with the financial aspects of the policy and the financial institutions would be in a better position to answer questions regarding the premium finance loan documents they prepared, the evidence does establish that Barnett often relayed financial information and documents to plaintiff that were sent to him and discussed financial options with plaintiff in dealing with payment of the premiums for the policy.

14.   Considering plaintiff's opposition argued only that three claims were not perempted, we find the judgment was overly broad in stating it was overruling the exceptions as to “acts, omissions, or neglect occurring after June 24, 2021 and discovered within one year of filing suit.” This broad language could imply that plaintiff alleged more than the three claims discussed in this disposition against Barnet and Pacific Life during this time period. Thus, pursuant to our ruling as stated above, plaintiff has only one remaining cause of action against Barnett that is not perempted (i.e., plaintiff's claim against Barnett concerning his advice regarding the wash loan).

STEPHEN J. WINDHORST JUDGE