HIXSON LLC v. PRIVILEGE UNDERWRITERS RECIPROCAL EXCHANGE (2026)

This appeal centers around a coverage dispute under a homeowners’ insurance policy. The homeowners and a limited liability company (LLC) appeal the granting of summary judgment in favor of the homeowners’ insurance company finding that the policy did not provide coverage for hurricane damage to separate outbuildings that the husband used for raising and training horses. The trial court found that the outbuildings were owned by the LLC, which was not a named insured or additional insured under the policy, and held that there was no coverage under the policy. For the following reasons, we reverse the judgment of the trial court and remand to the trial court for further proceedings.

FACTS

Edley Hixson, Jr. and his wife Susan Hixson owned a home located on Pine Island Ranch Lane in DeRidder, Louisiana.¹ Along with their home, the Hixsons owned a “horse ranch” which allowed Mr. Hixson to enjoy the hobby of breeding, raising, and training rodeo cutting horses. There were several outbuildings located on this part of the property. In 2016, the Hixsons donated the ranch property, consisting of approximately 240 acres, to an LLC, Pine Island Ranch, L.L.C. In exchange, the Hixsons received 100,000 membership units each. Pine Island Ranch was wholly owned by the Hixsons.

In 2017, the Hixsons sought insurance coverage from Arthur J. Gallagher Risk Management Services, Inc. (Gallagher). An insurance policy was issued by Privilege Underwriters Reciprocal Exchange (PURE) in 2017. Deposition testimony revealed that Mr. Hixson thought he was getting coverage on both his home and the horse ranch. The Hixsons continued to renew this policy each year. In 2020, after Hurricane Laura hit, the Hixsons sought coverage under the PURE policy. The PURE policy provided $844,000 in coverage for their dwelling and $226,167 in coverage for “other structures.” After investigation by PURE, the Hixsons received insurance proceeds on their home but were denied coverage for anything associated with the ranch. Repairs to the outbuildings were estimated at $995,000.

On August 25, 2021, the Hixsons and Pine Island Ranch filed suit against PURE and Gallagher seeking coverage for the outbuildings. Gallagher filed an exception of peremption, which was granted. Judgment was signed on July 11, 2022, dismissing Gallagher. That judgment is not before this court.

Subsequently, PURE filed a motion for summary judgment, which was opposed by the Hixsons. A hearing on the motion for summary judgment was held on May 1, 2025. Following a hearing, the trial court ruled that: “In this case, there is no ambiguity: the plaintiffs, individually, do not own the outbuildings for which damages are sought; and the outbuildings for which the plaintiff LLC seeks coverage are not owned by a named insured or additional insured under the policy. Accordingly, summary judgment is appropriate.” Plaintiffs appeal the judgment signed on October 3, 2025, after it was amended to reflect the proper decretal language.

On appeal, the homeowners claim that the insurance policy provides coverage for their outbuildings under the “other structures” coverage section of PURE's policy. The Hixsons claim that they had an insurable interest in the ranch's outbuildings because they had an oral lease with Pine Island Ranch. They also claim that they have a right to assert an indemnity claim for damages to the property as sole members of Pine Island Ranch.

SUMMARY JUDGMENT

“The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action, except those disallowed by Article 969. The procedure is favored and shall be construed to accomplish these ends.” La.Code Civ.P. art. 966(A)(2). “[A] motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law.” La.Code Civ.P. art. 966(A)(3).

In O'Neal v. Foremost Insurance Co., 24-212, p. 4 (La.App. 3 Cir. 6/25/25), 416 So.3d 809, 813, this court explained:

[T]he burden of producing evidence at the motion hearing is “on the mover, who can ordinarily meet that burden by submitting affidavits or by pointing out the lack of factual support for an essential element in the opponent's case.” Schultz v. Guoth, 10-343, p. 6 (La. 1/19/11), 57 So.3d 1002, 1006. Procedurally, therefore, the court's first task is to determine whether the moving party's motion, memorandum, affidavits, and supporting documents “are sufficient to resolve all material factual issues.” Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 28 (La. 7/5/94), 639 So.2d 730, 752. “To satisfy this burden, the mover must meet a strict standard of showing that it is quite clear as to what is the truth and that there has been excluded any real doubt as to the existence of a genuine issue of material fact.” Indus. Sand & Abrasives, Inc. v. Louisville & Nashville R.R. Co., 427 So.2d 1152, 1154 (La.1983).

The appellate standard of review on a motion for a summary judgment is de novo. 23rd Psalm Trucking, L.L.C. v. Madison Par. Police Jury, 24-808 (La. 6/27/25), 413 So.3d 370. “[A]n adverse party may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided above, must set forth specific facts showing that there is a genuine issue for trial.” La.Code Civ.P. art. 967(B).

INSURABLE INTEREST

The PURE policy insures “against all risks of sudden and accidental direct physical loss or damage to your dwelling, contents and other structures unless an exclusion applies.” “ ‘[Y]ou’ and ‘your’ refer to the ‘named insured’ shown in the Declarations and if the ‘named insured’ is an individual, the spouse if a resident of the same household.” Susan and Edley Hixson are listed as the named insureds. “Other Structures” are defined as “outdoor structures on the grounds of your residence premises set apart from the dwelling by clear space. This includes structures connected to the dwelling by only a fence, utility line or similar connection.” The outbuildings have the same address as the residence of the Hixsons.

The Hixsons claim that they regularly used Pine Island Ranch's outbuildings under a verbal lease agreement which created a genuine issue of material fact that they had an insurable interest in the ranch outbuildings. In order to establish the existence of the lease, the Hixsons provided a 2025 affidavit from their son, Clint, who stated: “My parents had a verbal agreement with Pine Island Ranch, LLC, to lease the outbuildings for Edley Hixson's hobby.”

Pursuant to La.R.S. 22:853(B), an “ ‘[i]nsurable interest’ ” is defined as “any lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage.” Ownership is not a prerequisite for establishing an insurable interest in property. Barham v. USAA Cas. Ins. Co., 49,121 (La.App. 2 Cir. 6/25/14), 144 So.3d 1166.

In Louisiana, a verbal lease of land and buildings is legally permissible, but the party asserting the existence of such a lease bears the burden of proving its terms and existence through credible evidence. La.Civ.Code art. 2681; Ranson v. Cooper, 16-29 (La.App. 1 Cir. 9/19/16), 228 So.3d 1254; Four Seasons, Inc. v. New Orleans Silversmiths, Inc., 231 So.2d 575 (La.App. 4 Cir. 1970). Furthermore, “[a] lease of an immovable is not effective against third persons until filed for recordation in the manner prescribed by legislation.” La.Civ.Code art. 2681.

The Hixsons cite Haddad v. Elkhateeb, 10-214, 10-308 (La.App. 4 Cir. 8/11/10), 46 So.3d 244, writ denied, 10-2076 (La. 11/12/10), 49 So.3d 895, for the proposition that a lessee has an insurable interest even though he does not own the property. In Haddad, the lessee had a written lease with the owner of a convenience store building and its business personal property. The lessee purchased a commercial business insurance policy covering the business personal property. This court found that the lessee had a significant and substantial economic interest in preserving the business personal property such that he had an insurable interest when he bought the insurance and at the time of the loss.

Unlike Haddad, there is no written lease in this case. The only evidence concerning the lease is the statement by Clint Hixson. There are no other facts concerning the terms of the lease. Furthermore, as a third party, any oral lease would have no effect against PURE since it was not recorded. There is simply no documentary evidence of a valid lease.

However, Louisiana courts have recognized insurable interests based on various arrangements, including oral agreements and informal occupancy rights, as long as the person demonstrates a substantial economic interest in preserving the property. In Stokes v. Republic Underwriters Ins. Co., 387 So.2d 1261, 1263 (La.App. 1 Cir. 1980), the court found that the plaintiff had an insurable interest where she “had a substantial economic interest in the preservation of the house, and she had the right of occupancy,” without requiring proof of a written lease.

Likewise, in Brewster v. Michigan Millers Mutual Insurance Co., 274 So.2d 213 (La.App. 2 Cir. 1973), the second circuit held that a father had a substantial economic interest in a home destroyed by fire that he had previously conveyed to his sons but had the right of occupancy and control, including the collection of rents. Also see Young v. State Farm Fire & Casualty Insurance Co., 426 So.2d 636 (La.App. 1 Cir. 1982), writs denied, 433 So.2d 148, 171 (La.1983), which found that a father who invested substantial time and money in construction of a house and was in possession of the house three to four months prior to a fire, had an insurable interest in the house. The court observed that the right of occupancy alone generated an insurable interest.

The key factor is whether the Hixsons “had a lawful and substantial economic interest in the preservation of this property.” Bohn v. La. Farm Bureau Mut. Ins. Co., 482 So.2d 843, 853 (La.App. 2 Cir.), writs denied, 486 So.2d 750, 752 (La.1986).

Evidence introduced in opposition to the motion for summary judgment indicated that Mr. Hixson used the land and buildings of Pine Island Ranch to raise and train rodeo cutting horses. He also owned cows that he used to train the horses. Additionally, the land was used to bale and sell hay. When Mr. Hixson went into the hospital in October 2023, these operations ceased.

The trial court recognized that LLC property is not owned by its members and concluded that members have no insurable interest in such LLC property by virtue of their membership. La.R.S. 12:1329. However, as we previously discussed, ownership of property is not necessary to establish an insurable interest. While the Hixsons are not permitted to own outbuildings as members of Pine Island Ranch, there is nothing prohibiting them from having an insurable interest in the outbuildings.

Therefore, we find that there are questions of material fact of whether the Hixsons had an insurable interest in the outbuildings of Pine Island Ranch. Judgment of the trial court granting summary judgment in favor of Privilege Underwriters Reciprocal Exchange is reversed. This case is remanded to the trial court for further proceedings. Costs of this appeal are assessed to Privilege Underwriters Reciprocal Exchange.

REVERSED AND REMANDED.

FOOTNOTES

1.   Since the filing of this suit, Mr. Hixson has died.

BRADBERRY, Judge.