This is the case of La Place Beauty Inc. v. AmGUARD Insurance Co., in the U.S. District Court for the Eastern District of Louisiana.

On Thursday, a cosmetics shop in Louisiana filed a lawsuit against AmGuard Insurance Company in federal court, claiming that the insurer made a predetermined, bad-faith decision to deny the store’s damage claim caused by Hurricane Ida.

Relevant Factual Background

In August 2021, Hurricane Ida made landfall near Port Fourchon, Louisiana, devastating the town of Grand Isle, and causing widespread destruction that resulted in power outages throughout the city. La Place Beauty Market sustained significant property damage during the storm.

The property was covered under a policy that was issued by AmGuard. The policy was effective during the period of February 10, 2021, through February 10, 2022, which covered the date of the incident.

The Plaintiff’s Argument

According to the complaint, Plaintiff accuses AmGuard of wrongfully refusing to pay on its claim for storm damage. The plaintiff claims AmGuard blamed the damage on what it called “preexisting deterioration,” which the store argues is nothing more than AmGuard’s attempt to avoid coverage.

Insurers' Failure to Mitigate Damages

According to the complaint filed on Thursday, the plaintiff claims that its building is still damaged due to AmGuard’s refusal to pay for repairs, which they say is creating an ongoing negative impact on their business.

The Plaintiff is seeking the full policy limits for damage and repairs, and to compensate the store for the unnecessary business interruption caused by AmGuard's denial of its damage claim, as well as for litigation expenses and penalties for bad faith violations.

Plaintiff’s Allegations of Bad Faith

La Place is represented by Michael S. Barcus of McClenny Moseley & Associates PLLC. In his argument, Barcus said, "Defendant wrongfully refused to pay plaintiff pursuant to the policy when it determined that although there was water damage to the business personal property — the water damage was not the result of a Hurricane Ida created opening."

He went on to say "Defendant's explanation that the water leakage into the property was due to deteriorated roof seams and sealants are a clear attempt to avoid coverage."

The complaint also says that the structural damage to the building led to further damage to the interior, which further disrupted the business, and all could have been avoided if AmGuard had properly handled their claim.

The Defendant's Anticipated Defense

Although AmGuard has not yet responded to the suit, counsel for La Place has anticipated its defensive posture by asserting in its complaint that AmGuard was given full access to its property and that AmGuard had "ample opportunity" to view any alleged “preexisting deterioration” before it issued its policy, and no such conditions were ever previously mentioned or documented.

Notwithstanding the plaintiff’s insistence that there was no preexisting water damage before the storm, AmGuard nonetheless rejected the store’s claim, instead concluding that the damage was the result of deterioration, and not hurricane Ida.

La Place argues in large part that AmGuard's actions were motivated and rooted in bad faith, and any defenses made to the contrary should be rejected.

Conclusion

The plaintiff alleges that to date, AmGuard has never provided any documentation to support its denial of coverage, nor has it rejected its proof of loss or even asked the plaintiff for any additional documents, which further goes to the issue of bad faith.

The plaintiff claims that as a direct result of Defendant’s breaches of contract, bad faith claims, and other bad acts, it is requesting the following relief:

1. Diminution in value of the Property;
2. Actual repair costs;
3. Reimbursement for personal repairs at the Property;
4. Actual costs related to personal property manipulation, cleaning, repair, and/or replacement;
5. Damages to business property/contents;
6. Business Interruption loss;
7. Penalties; and
8. Attorney’s fees, other professional fees, and litigation costs associated with the bringing of this action.