In a significant legal decision for the transportation and insurance industries, the Louisiana Supreme Court has ruled in favor of American Transportation Group Risk Retention Group, Inc., clarifying the requirements for appeal bonds. The case originated from a 2019 accident in Shreveport, Louisiana, where a vehicle driven by Huberto Martinez slid on ice and was struck by a tractor-trailer operated by Salah Dahir and owned by Starr Carriers, LLC. The ensuing lawsuits filed by Martinez and his passengers – Ada Licona, Rosa Rivera, and Salvador Flores – named Dahir, Starr Carriers, and their insurer, American Transportation Group Risk Retention Group, Inc. (ATG), as defendants.
While Martinez settled his claim before trial, the remaining plaintiffs were awarded damages exceeding ATG’s $1,000,000 policy limit. The First Judicial District Court of Caddo Parish upheld this verdict, totaling $2,802,054.66, plus interest and costs. Seeking a suspensive appeal, the defendants argued for a bond less than the full judgment amount, citing financial constraints. However, the trial court mandated a bond for the entire judgment, and ATG’s request for review was denied by the Second Circuit Court of Appeal despite their posting a bond for their remaining policy limits plus interest and costs.
Subsequently, the Louisiana Supreme Court intervened, reversing the lower courts’ decisions. The Supreme Court held that it is unconstitutional to compel an insurer like American Transportation Group LLC to post an appeal bond exceeding its policy limits. The court reasoned that such a requirement would unacceptably alter the agreed-upon contractual limits of liability and infringe upon the state constitution’s contract clause. The ruling allows American Transportation Group LLC to proceed with a suspensive appeal by posting a bond limited to their policy coverage, while pursuing a devolutive appeal for the remaining judgment amount. The case has been remanded for proceedings consistent with this decision, marking a key precedent concerning insurer liability and appeal bond obligations in Louisiana.
