Johnson v. Laney
2007 La. App. LEXIS 1486, 964 So.2d 418, 2007 WL 2177322 (2007)
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Rule of Law:
Under Louisiana Civil Code article 617, when property subject to a usufruct is damaged, the usufruct attaches to any insurance proceeds paid for the loss. This rule applies even if the property is only partially destroyed, and the naked owner being listed as an 'additional insured' does not constitute the 'separately insured interest' required to defeat the usufructuary's claim to the proceeds.
Facts:
- John Laney, III, bequeathed to his mother, Charmaine Johnson, a usufruct of the home he lived in with her at 751 Filmore Avenue.
- The will bequeathed the naked ownership of the property to a trust for his two minor sons, John A. Laney, IV, and Troy C. Laney, with their mothers acting as trustees.
- An insurance policy, originally purchased by John Laney, III, was amended to name Charmaine Johnson as the insured with the notation 'usufruct,' and the trustees for the sons were listed as 'additional insureds'.
- Ms. Johnson lived in the home and was responsible for paying the insurance premiums.
- On August 29, 2005, Hurricane Katrina severely damaged the home, rendering it uninhabitable.
- The insurer, State Farm, issued checks to compensate for the damage to the building and its contents, payable to Johnson as usufructuary and the trustees for the naked owners.
Procedural Posture:
- Charmaine Johnson filed a petition for declaratory judgment in a Louisiana trial court against the trustees for John A. Laney, IV, and Troy C. Laney.
- The trial court ordered the disputed insurance checks from State Farm to be deposited into the registry of the court.
- The defendants filed an answer and a reconventional demand alleging Johnson had abused her usufruct.
- Johnson filed a motion for summary judgment on her claim for the insurance proceeds.
- The trial court granted summary judgment in favor of Johnson, holding that her usufruct attached to the proceeds.
- The defendants, as appellants, appealed the trial court's grant of summary judgment to the Louisiana Fourth Circuit Court of Appeal.
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Issue:
Does a usufruct over a residential property attach to insurance proceeds paid for damages that rendered the home uninhabitable, but did not totally destroy it, when the naked owners were listed as additional insureds on the policy?
Opinions:
Majority - Patricia Rivet Murray, Judge
Yes. A usufruct attaches to insurance proceeds paid for damage to the underlying property. The court applied Louisiana Civil Code article 617, which explicitly states that a usufruct attaches to insurance proceeds due on account of loss or destruction of the property. The court rejected the defendants' argument that the property had to be totally destroyed, distinguishing Article 617 from Article 613, which governs the termination of a usufruct and requires 'permanent and total loss.' The court found that Article 617 applies to any insured loss, not just a total one. Furthermore, the court rejected the naked owners' claim that they had separately insured their interest; merely being listed as 'additional insureds' on a policy paid for by the usufructuary does not meet the statutory exception, which requires obtaining a separate policy for one's specific interest.
Analysis:
This decision clarifies the application of Louisiana Civil Code article 617, establishing that a usufructuary's rights automatically extend to insurance proceeds for any compensated loss, not just a total destruction of the property. It sets a clear precedent that for a naked owner to claim insurance proceeds directly, they must do more than be listed as an additional insured on the usufructuary's policy; they must obtain their own, separate insurance. This ruling solidifies the usufructuary's position and places a higher burden on naked owners to affirmatively protect their interest in insurance payouts.
