Arias-Benn v. State Farm Fire Ins

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United States Court of Appeals
Fifth Circuit
F I L E D
August 6, 2007
Charles R. Fulbruge III
Clerk
UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
No. 06-30771
MARIA ARIAS-BENN, Individually and On Behalf of the Class,
Plaintiff-Appellant,
versus
STATE FARM FIRE & CASUALTY INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
(2:05-CV-6269)
Before KING, DAVIS, and BARKSDALE, Circuit Judges.
RHESA HAWKINS BARKSDALE, Circuit Judge:
Maria Arias-Benn appeals the Federal Rule of Civil Procedure
12(b)(6) (failure to state a claim) dismissal, with prejudice, of
her complaint against State Farm Fire & Casualty Insurance Company,
concerning its refusal to replace policyholders’ freezer and
refrigerator units damaged by food putrefaction as a result of
power outages after Hurricane Katrina. AFFIRMED.
I.
Hurricane Katrina in August 2005 resulted in an extended loss
of electrical power. Accordingly, many residents of the affected
areas experienced refrigerator and freezer damage due to the

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spoilage and putrefaction of the contents. Arias-Benn, a State
Farm insured homeowner in New Orleans, Louisiana, submitted a claim
to State Farm for replacement of her damaged refrigerator. Her
claim was denied.
Accordingly, Arias-Benn filed this action in Louisiana state
court, seeking damages, individually and on behalf of a putative
class of State Farm insureds. She claimed State Farm breached the
insurance policy by refusing to replace insureds’ refrigerators and
freezers damaged by the spoilage of food caused by power outages
resulting from the hurricane. She further claimed negligence,
breach of fiduciary duty, fraud, misrepresentation, and violations
of Louisiana’s Unfair Trade Practices and Consumer Protection Law.
State Farm removed this action to district court. In response
to the court’s order to specify which provision of the homeowner’s
policy was breached, Arias-Benn amended her complaint to claim
State Farm breached its duty to cover personal property damaged by
a covered peril under “SECTION I – LOSSES INSURED – COVERAGE B –
PERSONAL PROPERTY”, quoted infra. On State Farm’s motion, pursuant
to Federal Rule of Civil Procedure 12(b)(6) (failure to state a
claim), the complaint was dismissed with prejudice.
II.
The Rule 12(b)(6) dismissal is reviewed de novo. E.g., Gen.
Elec. Capital Corp. v. Posey, 415 F.3d 391, 395 (5th Cir. 2005).
In determining whether Arias-Benn stated a claim sufficient to

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avoid dismissal under that Rule, the well-pleaded facts alleged in
her complaint are accepted as true and the allegations are
construed in the light most favorable to her. E.g., Muhammad v.
Dallas County Cmty. Supervision & Corrs. Dept., 479 F.3d 377, 379
(5th Cir. 2007). Nevertheless, “[w]e do not accept as true
conclusory allegations, unwarranted factual inferences, or legal
conclusions”. Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th
Cir. 2005).
Arias-Benn claims State Farm is required, pursuant to the
homeowner’s policy it issued to her and other members of the
putative class, to replace refrigerators and freezers damaged due
to the spoilage of their contents caused by the prolonged power
outage that occurred because of Hurricane Katrina. As noted, she
contends coverage exists under “SECTION I – LOSSES INSURED –
COVERAGE B – PERSONAL PROPERTY”, which states:
We insure for accidental direct physical loss
to property described in Coverage B caused by
the following perils, except as provided in
SECTION I – LOSSES NOT INSURED:
. . . .
2. Windstorm or hail. This peril does not
include loss to property contained in a
building caused by rain, snow, sleet, sand or
dust. This limitation does not apply when the
direct force of wind or hail damages the
building causing an opening in a roof or wall
and the rain, snow, sleet, sand or dust enters
through this opening.

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Based on this language, she asserts the policy covers all personal
property in a building for which there is “accidental direct
physical loss” caused by windstorm or hail, unless some exclusion
applies.
Arias-Benn maintains: Louisiana state law interprets “direct
loss” to mean a proximate or efficient cause of the loss; and,
accordingly, by causing the power outage and preventing residents
from returning to their properties to clean their refrigerators and
freezers, Hurricane Katrina was a proximate cause of the spoilage
that damaged the units.
State Farm responds that the policy has a provision
enumerating covered losses for damage caused by power interruption,
SECTION I – ADDITIONAL COVERAGES, subsection 7, quoted infra, which
specifically addresses the circumstances under which payment will
be made for damages associated with a refrigerator and freezer and
their contents. Because Arias-Benn’s claim does not fall within
that provision, State Farm asserts Arias-Benn has failed to state
a claim.
Louisiana contract law governs our interpretation of State
Farm’s policy. See ACS Constr. Co., Inc. of Miss. v. CGU, 332 F.3d
885, 888 (5th Cir. 2003). “Under Louisiana law, an insurance
policy is a contract between the parties, and it should be
construed according to the general rules of contract interpretation
set forth in the Civil Code.” Riverwood Int’l Corp. v. Employers

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Ins. of Wausau, 420 F.3d 378, 382 (5th Cir. 2005) (citing La. Ins.
Guar. Ass’n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La.
1994)). According to the Civil Code, contract interpretation is
“the determination of the common intent of the parties”. LA. CIV.
CODE ANN. art. 2045 (1985). That intent, reflected by the words in
the policy, defines the extent of coverage. Samuels v. State Farm
Mut. Auto. Ins. Co., 939 So. 2d 1235, 1240 (La. 2006). “Such
intent is to be determined in accordance with the general,
ordinary, plain and popular meaning of the words used in the
policy, unless the words have acquired a technical meaning.” La.
Ins. Guar. Ass’n, 630 So. 2d at 763. Furthermore, “[a]n insurance
contract is to be construed as a whole, and one portion thereof
should not be construed separately at the expense of disregarding
another”. Pareti v. Sentry Indem. Co., 536 So. 2d 417, 420 (La.
1988). Any ambiguity should be construed against the insurer. LA.
CIV. CODE ANN. art. 2056; e.g., Domingue v. Rodrigue, 686 So. 2d 132,
134 (La. Ct. App. 1996).
The policy provided coverage for personal property. That
coverage was limited to “accidental direct physical loss” from
those perils enumerated in the policy. Louisiana law equates
“direct loss” with proximate cause; an insurance policy, however,
may limit or otherwise define “direct loss”. See Lorio v. Aetna
Ins. Co., 232 So. 2d 490, 493 (La. 1970).

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Therefore, before determining whether Hurricane Katrina could
have proximately caused the damage, we must determine whether the
policy restricts or otherwise defines “accidental direct physical
loss” to prevent Arias-Benn from recovering under the circumstances
alleged in her complaint. Along that line, the above-referenced
“ADDITIONAL COVERAGES”, subsection 7, states:
Power Interruption. We cover accidental
direct physical loss caused directly or
indirectly by a change of temperature which
results from power interruption that takes
place on the residence premises. The power
interruption must be caused by a Loss Insured
occurring on the residence premises. The
power lines off the residence premises must
remain energized. This coverage does not
increase the limit applying to the damaged
property.
Although Arias-Benn asserts this provision must be read as
expanding upon those losses covered in the “Coverages” section of
the policy, this “Additional Coverages” provision must be read in
conjunction with the policy as a whole. See Pareti, 536 So. 2d at
420. The natural implication of the “Additional Coverages”
provision is that “accidental direct physical loss” excludes
personal property damaged by a power outage other than as
specifically described in the policy. The presence of expanded
coverage for one particular type of loss attributable to power
interruption (one “occurring on the residence premises”, with
“[t]he power lines off the residence premises ... remain[ing]

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energized”) indicates the exclusion of other, unspecified types of
loss attributable to such interruption.
Moreover, another provision in the “Additional Coverages”
section provides coverage for refrigerated products spoiled due to
power failure. Subsection 8 of SECTION I – ADDITIONAL COVERAGES
states:
Refrigerated Products. Coverage B is extended
to cover the contents of deep freeze or
refrigerated units on the residence premises
for loss due to power failure or mechanical
failure. If mechanical failure or power
failure is known to you, all reasonable means
must be used to protect the property insured
from further damage or this coverage is void.
This provision further evidences that the parties intended to
provide coverage for only particular types of damages caused by
power interruptions other than those occurring “on the residence
premises”. There is no indication they intended to include damage
to refrigerators and freezers caused by power outages occurring
outside the residence premises.
Arias-Benn does not claim the damage caused to her and others’
refrigerator and/or freezer was caused by a power outage that
occurred on the residence premises. As a result, she does not
state a breach-of-contract claim upon which relief can be granted.
Because her other claims depend on there being a valid breach-of-
contract claim, they likewise fail.

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III.
For the foregoing reasons, the judgment is
AFFIRMED.

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