DUCOTE LLC v. PROGRESSIVE PALOVERDE INSURANCE COMPANY (2026)

This case is a claim for bad faith damages against an insurance company. The insurance company appeals the trial court's choice-of-law determination, ruling Louisiana law applies to Plaintiffs’ claims, on a cross-motion for partial summary judgment. We affirm the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On August 8, 2017, Austin Ducote (“Austin”) was responsible for a motor vehicle accident in Texas while running an errand for his employer, Monkey Shines 4 Kids, LLC (“Monkey Shines”).¹ The accident resulted in two deaths and bodily injury. As a result, three lawsuits were filed in Texas against Austin, Nicholas Paul Ducote ² (“Nicholas”), and Monkey Shines by the surviving family members in Texas, with Amanda Boley as the lead plaintiff (hereinafter referred to as “the Boley litigation”). The Boley litigation resulted in a $4.5 million judgment against Austin and Monkey Shines.

The matter presently before this court stems from a lawsuit filed in July 2022, by Austin, Nicholas, and Monkey Shines, alleging bad faith under La.R.S. 22:1973 ³ against Progressive Paloverde Insurance Company (“Progressive”), the commercial automobile insurer of Monkey Shines; and Progressive Security Insurance Company, the personal automobile insurer of Nicholas.⁴ Austin and Monkey Shines (hereinafter collectively referred to as “Plaintiffs”) seek recovery against Progressive for amounts in excess of the insurance limits for which they are liable to pay due to the judgment in the Boley litigation, and penalties for acting in bad faith, in violation of La.R.S. 22:1892 and La.R.S. 22:1973.

Plaintiffs filed a Motion for Partial Summary Judgment on Choice of Law. According to Plaintiffs, Progressive issued and delivered a commercial auto insurance policy (“the policy”) in Louisiana to Monkey Shines, a Louisiana company whose premiums were paid in Louisiana. Plaintiffs asserted that their claims arose directly from the obligations set forth in the policy; thus, they requested judgment declaring that Louisiana law applies because Louisiana has the greatest interest in having its law applied to Plaintiffs’ demands under the policy.

Progressive filed a Cross-Motion for Summary Judgment requesting that Texas law be applied in this case. Pointing to La.Civ.Code art. 3542, Progressive asserted “Texas law should apply to Plaintiffs’ bad faith claim against [Progressive] and the Stowers[⁵ ] interpretation because Texas ‘would be most seriously impaired if its laws were not applied.’ ”

Following a hearing, the matter was taken under advisement, and the parties were allowed to submit additional memoranda. Written Reasons for Ruling were issued on November 13, 2024, declaring Louisiana law applied. In a Final Partial Summary Judgment on Choice of Law signed June 27, 2025, the trial court denied Progressive's motion and granted Plaintiffs’ motion, ruling “Louisiana law applies to all issues in this case and Texas law applies to no issues in this case.” This suspensive appeal by Progressive followed.

ASSIGNMENT OF ERROR

In its sole assignment of error, Progressive argues:

The trial court erred when it granted [Plaintiffs’] motion for partial summary judgment on choice of law, holding that Louisiana law applies to all issues in this case and that Texas law applies to no issues.

APPELLANT'S ARGUMENTS

Progressive argues the trial court's decision violates the Louisiana choice-of-law principles that are mandated in the Civil Code and applied by the Louisiana Supreme Court in Champagne v. Ward, 03-3211 (La. 1/19/05), 893 So.2d 773, and this court Boutte v. Fireman's Fund County Mut. Ins. Co., 06-34 (La.App. 3 Cir. 5/10/06), 930 So.2d 305. It contends that Plaintiffs’ claims are based on Texas's Stowers doctrine and are based on factual allegations taking place in Texas, and therefore, La.Civ.Code arts. 3515 and 3542 point to application of Texas law because the policies of the state of Texas would be most seriously impaired if its laws were not applied.

APPELLEES’ POSITION

Plaintiffs argue the trial court's decision correctly applies the choice-of-law provisions for conventional obligations and is supported by the Louisiana Supreme Court's recognition in Smith v. Citadel Ins. Co., 19-52 (La. 10/22/19), 285 So.3d 1062, that the insurer's duty of good faith emanates from and depends on the insurance contract. They contend their bad faith claim is based on application of Kelly v. State Farm Fire & Cas. Co., 14-1921 (La. 5/5/15), 169 So.3d 328, to an insurance policy which contains a valid, dispositive clause selecting the law of the insured's business location, and therefore, La.Civ.Code arts. 3515 and 3537 point to application of Louisiana law because the policy was entered into and delivered in Louisiana, and the insured is located in Louisiana.

STANDARD OF REVIEW

“Choice of law determinations are, by their very nature, questions of law that we review de novo.” Underwriters at Lloyd's Syndicate 1036 v. Danos & Curole Marine Contractors, L.L.C., 14-375, p. 5 (La.App. 3 Cir. 10/1/14), 149 So.3d 877, 881 (citing Wooley v. Lucksinger, 06-1140 (La.App. 1 Cir. 12/30/08), 14 So.3d 311, rev'd in part on other grounds, 09-571 (La. 4/1/11), 61 So.3d 507). Summary judgments are also reviewed de novo, using the same criteria applied by trial courts to determine whether summary judgment is appropriate. Succession of Holbrook, 13-1181 (La. 1/28/14), 144 So.3d 845. Moreover, “the appellate court assigns no special weight to the trial court and, instead, conducts a de novo review of questions of law and renders judgment on the record.” Domingue v. Bodin, 08-62, p. 2 (La.App. 3 Cir. 11/5/08), 996 So.2d 654, 657.

The law favors the summary judgment procedure, and it shall be construed “to secure the just, speedy, and inexpensive determination of every action[.]” 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). Consequently, we will review the record to determine whether summary judgment is appropriate, i.e., whether there is any genuine issue of material fact and whether the moving party is entitled to judgment as a matter of law.

ANALYSIS

When a case has contacts with multiple states, such as the present one, a choice-of-law analysis under La.Civ.Code arts. 3515 and 3537 is the appropriate starting point for determining which state's law applies. Champagne, 893 So.2d 773. Louisiana's choice of law provisions aim “to identify the state whose policies would be most seriously impaired if its laws were not applied to the issue at hand.” Id. at 786.

Louisiana Civil Code Article 3515, the general rule concerning determination of which state's law applies, provides:

Except as otherwise provided in this Book, an issue in a case having contacts with other states is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.

That state is determined by evaluating the strength and pertinence of the relevant policies of all involved states in the light of: (1) the relationship of each state to the parties and the dispute; and (2) the policies and needs of the interstate and international systems, including the policies of upholding the justified expectations of parties and of minimizing the adverse consequences that might follow from subjecting a party to the law of more than one state.

More specifically, in relation to conventional obligations, i.e., contracts, La.Civ.Code art. 3537 states:

Except as otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.

That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.

Articles 3515 and 3537 use the same core standard; however, they direct courts to examine different factual contacts when identifying the state whose policies would be most seriously impaired if its laws were not applied.

Arguing before this court, Progressive defined Plaintiffs’ action as extracontractual because it is not a claim for coverage; rather, it is a claim for penalties based on how the insurance company responded to an opportunity to settle the case. Progressive argued for application of La.Civ.Code art. 3542 to determine which state's law applies. The relevant contacts enumerated in Article 3542 are instead “the place of conduct and injury, the domicile, habitual residence, or place of business of the parties, and the state in which the relationship, if any, between the parties was centered[.]” La.Civ.Code art. 3542. Beyond the general policies of Article 3515, Article 3542 also incorporates the “deterring of wrongful conduct and of repairing the consequences of injurious act.”

Progressive's reliance on Article 3542 is misplaced. Plaintiffs’ claim arises out of a contractual obligation. “The duty of good faith is an outgrowth of the contractual and fiduciary relationship between the insured and the insurer, and the duty of good faith and fair dealing emanates from the contract between the parties.” Smith, 285 So.3d at 1069. Thus, Article 3537 governs conventional obligations and contains the relevant contacts which must be considered.

Louisiana Civil Code Article 3537 mandates that the law of the state whose policies would be most seriously impaired if its laws were not applied to that issue shall govern. As stated above, this determination involves evaluating the strength and pertinence of relevant policies of the states involved by considering contacts such as negotiation, formation, performance, domicile, and the nature and purpose of the contract, as well as broader policy considerations such as orderly planning and protecting from undue imposition.

Progressive argues that because Plaintiffs’ petition alleges Progressive did not timely respond to the Stowers demands made in the Boley litigation, Texas has the superior interest in the jurisprudential development of the Stowers doctrine. We disagree. Our review reveals Plaintiffs allege bad faith pursuant to La.R.S. 22:1973. Plaintiffs’ petition simply provides facts supporting their claim, including a detailed history of Stowers demands allegedly made during the course of the Boley litigation. Progressive lobbies for these details to control our analysis. They do not. Louisiana's interest in protecting its jurisprudential development of an insurer's duty in handling claims is equally important.

Plaintiffs’ cause of action, filed in July 2022, arose from Progressive's “affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both.” La.R.S. 22:1973(A). Progressive's commercial auto policy was issued in Louisiana to Monkey Shines, a Louisiana business. Louisiana has a compelling interest in applying its own law. “The integrity of the contract is a substantial and real interest.” Boutte, 930 So.2d at 317. Moreover, “courts of this state have often found that the state where the insurance policy was issued had a more substantial interest in applying its laws than the state where the accident occurred.” McKnight v. Villareal, 23-157, p. 7 (La.App. 1 Cir. 10/18/23), 377 So.3d 294, 301.

Under a conflict of law analysis, we conclude Louisiana's policies will be most seriously impaired if its law is not applied in this case. Accordingly, the trial court did not err in finding Plaintiffs were entitled to summary judgment as a matter of law.

Finally, it is necessary to mention that Plaintiffs’ Motion for Partial Summary Judgment on Choice of Law was supported by evidence which is detrimental to or inconsistent with Progressive's present stance. First, Plaintiffs present the commercial auto policy issued by Progressive to Monkey Shines. They contend that contained therein is a choice of law provision, which states (emphasis added):

If any provision of this policy fails to conform to the statutes of the state listed on your application as your business location, the provision shall be deemed amended to conform to such statutes. All other provisions shall be given full force and effect. Any disputes as to the coverages provided or the provisions of this policy shall be governed by the law of the state listed on your application as your business location.

Second, Plaintiffs’ Statement of Undisputed Facts declared, in relevant part (footnotes omitted):

7. Progressive Paloverde filed a Declaratory Judgment suit in the District Court of Kaufman County, Texas, entitled Progressive Paloverde Insurance Company, et al. v. Austin Wayne Ducote, Nicholas P. Ducote and Monkey Shines 4 Kids, LLC, bearing docket number 101026-86.

8. In the Declaratory Judgment Action, Progressive Paloverde filed a Motion for Summary Judgment in which it admitted that “Louisiana has the most significant relationship to the transaction and the parties.”

Plaintiffs’ evidence included a copy of the motion for summary judgment which Progressive filed in its Texas lawsuit seeking a declaratory judgment. Our review thereof reveals that Progressive argues Louisiana law applies to the policies at issue and to the coverage sought under those policies by virtue of Texas choice-of-law analysis. In fact, Progressive bolsters its argument by pointing to the exact provision in the policy upon which Plaintiffs in this case now rely. Here, we note Progressive's arguments are relevant, duplicitous, and unquestionably insupportable.

DECREE

The judgment of the trial court is affirmed. All costs of this appeal are assessed to Defendant/Appellant, Progressive Paloverde Insurance Company.

AFFIRMED.

FOOTNOTES

1.   Monkey Shines was in the business of renting inflatable bounce houses and water slides, and this accident occurred when Austin was transporting a damaged inflatable to Dallas for repairs.

2.   Nicholas owned the vehicle being driven by Austin and had a personal automobile policy issued by Progressive Security Insurance Company.

3.   When this suit was filed, La.R.S. 22:1973(A) provided:An insurer, including but not limited to a foreign line and surplus line insurer, owes to the insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.

4.   Nicholas was dismissed following exceptions of no right of action and no cause of action. Neither Progressive Security Insurance Company nor Nicholas are parties to this appeal.

5.   A Stowers demand refers to a settlement demand made to a liability insurer by a plaintiff to settle a claim within the insured's policy limits, the rejection of which—if arbitrary or in bad faith—can expose the insurer to liability for any excess judgment rendered against the insured. See G.A. Stowers Furniture Co. v. American Indem. Co., 15 S.W.2d 544 (Tex. Comm'n App. 1929).

PERRY, Judge.