CIACCIO, Justice pro tempore.
This is a personal injury action arising out of a motor vehicle accident. The sole issue is whether this action was properly dismissed as abandoned pursuant to La. C. Civ. Pro. art. 561. Characterizing defendant-insurer's unconditional tender pursuant to the statutory requirement of La. Rev.Stat. 22:658 A(1) as a step in the defense, the trial court found the suit was not abandoned. Reversing, the court of appeal characterized the tender as a part of informal settlement negotiations, which are not on the record, and thus held it was not a step. We characterize the tender as an acknowledgment, which despite its informal nature constitutes a waiver, and thus hold that it served to interrupt the abandonment period and caused it to run anew.
On January 16, 1995, James Clark was involved in a motor vehicle accident in Shreveport, Louisiana. Clark was a guest passenger in a vehicle owned and operated by June Manasco. Clark and Manasco both were insured by State Farm Mutual Automobile Insurance Company, and they both had policies that included uninsured/underinsured motorist coverage (UM). Clark settled for policy limits his claim against the insurer of the driver of the other vehicle. On January 16, 1996, Clark commenced this suit against State Farm as UM insurer for both himself and Manasco, seeking to recover the remainder of his damages. Because settlement negotiations between the parties were ongoing, Clark withheld service, but sent State Farm a courtesy copy of the petition and copies of his medical records.
On October 14, 1996, State Farm made an unconditional tender of $3,000 to Clark. State Farm's purpose in making the tender
After plaintiff accepted the tender by cashing the check, an extended period of inactivity by either party followed. Then, on June 15, 1999, plaintiff took two actions. First, he filed a copy of the tender check and correspondence into the record. Second, he requested that State Farm be served with the petition. On June 22, 1999, State Farm was served.
On August 2, 1999, defendant filed an ex parte motion and order to dismiss the suit as abandoned. In compliance with La. C. Civ. Pro. art. 561, defendant submitted with its motion and order an affidavit of its counsel of record attesting that no step in the prosecution or defense of the action had taken place during the three-year abandonment period. On that same date, the trial court signed the ex parte order of dismissal. On August 27, 1999, plaintiff filed a motion for a rule nisi seeking to set aside the order of dismissal.
On March 6, 2000, the trial court rendered a judgment setting aside the dismissal and reinstating the suit. The trial court reasoned that defendant's unconditional tender was a "step" in the defense of the case under La. C. Civ. Pro. art. 561, which interrupted the running of the abandonment period and caused it to run anew.
On defendant's application for supervisory writs, the court of appeal reversed. As to plaintiff's argument that the tender was a step in the defense because it was made by defendant to comply with its statutory obligation under La.Rev.Stat. 22:658 and thereby to avoid penalties, the court stated:
33,960 at pp. 2-3 (La.App. 2nd Cir.9/27/00), 769 So.2d 176, 178 (emphasis supplied).
33,960 at p. 4, 769 So.2d at 178. The court of appeal thus dismissed Clark's suit as abandoned.
We granted Clark's application for certiorari to address the correctness of that decision. 2000-3010 (La.1/5/01), 777 So.2d 1237.
The controlling statutory provision in this case is La. C. Civ. Pro. art. 561, which provides in part:
Article 561 has been construed as imposing three requirements on plaintiffs. First, plaintiffs must take some "step" towards prosecution of their lawsuit. In this context, a "step" is defined as taking formal action before the court which is intended to hasten the suit toward judgment, or the taking of a deposition with or without formal notice.
Article 561 provides that abandonment is self-executing; it occurs automatically upon the passing of three-years without a step being taken by either party, and it is effective without court order. To avoid a possible waiver of the right to assert abandonment, a defendant is instructed by Article 561 on the proper procedure to utilize to obtain an ex parte order of dismissal. If despite some action by defendant during the three-year period that arguably constitutes a waiver the judge signs the ex parte dismissal order, the proper procedural mechanism is for the plaintiff to "rule defendant into court to show cause why the ex parte dismissal should not be vacated, alleging ... the court inadvertently dismiss[ed] the suit without noticing that defendant has taken a step in the defense of the suit within the previous [three] years." La. C. Civ. Pro. art. 561, cmt. (c)(1960).
Construing Comment (c) to Article 561, former Justice (then Judge) Tate expounded that "an ex parte dismissal may be rescinded by rule to vacate it upon a showing that a cause outside the record prevented accrual of the five years required for abandonment." DeClouet v. Kansas City Southern Railway Co., 176 So.2d 471, 476 (La.App. 3rd Cir.1965)(Tate, J., dissenting from denial of reh'g)(emphasis supplied). Only two categories of causes outside the record are permitted; namely, those causes falling within the two jurisprudential exceptions to the abandonment rule.
Both sides agree that the defendant's unconditional tender, albeit outside the record, was the only action taken in the legislatively provided three-year abandonment period.
Liberal Construction Standard.
The jurisprudence has uniformly held that La. C. Civ. Pro. art. 561 is to be liberally construed in favor of maintaining a plaintiff's suit. The jurisprudence has echoed some general policy considerations that dictate this result. Oft-quoted is the following statement by Justice (then Judge) Lemmon in Kanuk v. Pohlmann, 338 So.2d 757, 758 (La.App. 4th Cir.1976), writ denied, 341 So.2d 420 (La.1977):
Quoting the above language from Kanuk, the appellate courts have declined to allow form to prevail over substance in determining whether an action has been abandoned.
In sum, abandonment is not meant to dismiss actions on mere technicalities, but to dismiss actions which in fact clearly have been abandoned.
Policy Considerations Underlying Abandonment
Abandonment is a device that the Legislature adopted "`to put an end to the then prevailing practice of filing suit to interrupt prescription, and then letting the suit hang perpetually over the head of the defendant unless he himself should force the issue.'" Sanders v. Luke, 92 So.2d 156 (La.App. 1st Cir.1957). Indeed, Louisiana abandonment jurisprudence is rich in cases, like this one, illustrating how the practice of withholding service facilitates a period of litigation inactivity. We take judicial notice of recent legislation enacted to deal more directly with the period of litigation inactivity created by the tactic of filing suit to interrupt the running of prescription, yet withholding service.
Abandonment functions to relieve courts and parties of lingering claims by giving effect to the logical inference that a legislatively designated extended period of litigation inactivity establishes the intent to abandon such claims. When the parties take no steps in the prosecution or defense of their claims during that legislatively ordained period, "the logical inference is that the party intends to abandon the claim and the law gives effect to
Abandonment is not a punitive concept; rather, it a balancing concept. Abandonment balances two equally sound, competing policy considerations: "on the one hand, the desire to see every litigant have his day in court, and not to lose same by some technical carelessness or unavoidable delay; on the other hand, the legislative purpose that suits, once filed, should not indefinitely linger, preserving stale claims from the normal extinguishing operation of prescription." Sanders, 92 So.2d at 159. The latter policy consideration parallels those served by prescriptive statutes —promoting legal finality, barring stale claims, and preventing prejudice to defendants. Gary v. Camden Fire Insurance Co., 96-0055 (La.7/2/96), 676 So.2d 553. More precisely, the latter prescriptive purpose on which abandonment is based promotes "the legislative intent and judicial policy of finality, requiring that suits not be permitted to linger indefinitely, that the legal process be expedited where possible, and that abandoned cases be removed from crowded dockets." 1 Judge Steven R. Plotkin, West Practice Group: Louisiana Civil Procedure 359 (2001). Given the balancing function served by abandonment, "Louisiana's jurisprudence tends to be inconsistent; no bright lines exist." Id. (emphasis supplied.)
Given the lack of any bright line abandonment rules, a review of the historical development of abandonment, with a focus on the defense-oriented concepts of step in the defense and waiver, is necessary to provide a framework for our analysis.
Historical Background of Abandonment— Step in the Defense and Waiver
Abandonment is both historically and theoretically a form of liberative prescription that exists independent from the prescription that governs the underlying substantive claim. Given its historical roots, abandonment unsurprisingly has been construed as subject to prescription-based exceptions, one of which is the waiver exception based on acknowledgment.
Insofar as Article 561 recognized that a step made by the defendant in defense of the action results in an interruption of abandonment, it changed the prior law. The prior law addressed directly only a plaintiffs step in the prosecution; a defendant's step in the defense was addressed indirectly through the jurisprudential waiver exception.
The prior law of abandonment was found in La. C.C. art. 3519 (1870), which was located in the section of the code addressing causes which interrupt prescription; it read:
In 1960, the procedural rules were removed from the Civil Code and transferred to the Code of Civil Procedure; former C.C. art. 3519 was transferred to La. C. Civ. P. art. 561. As to the waiver exception, Article 561 differed from former C.C. art. 3519 in two respects: (1) it expressly declared that abandonment is selfoperative; and (2) it provided "that a failure by the parties to take any steps in the prosecution or defense of the suit leads to abandonment," and thus made no distinction as to which party must take a step. Chevron Oil Co. v. Traigle, 436 So.2d 530, 533 (La.1983). The latter change was construed as codifying the defense-oriented waiver exception as a step in the defense. Melancon v. Continental Casualty Co., 307 So.2d 308, 312 (La.1975).
In Melancon, we stated that Article 561 "incorporated the waiver exception only to the extent that a formal step taken by a defendant in his defense interrupts the [three-]year abandonment period and commences it running anew." 307 So.2d at 312 n. 2. Describing the present rule, we noted that "the formal action of a defendant is properly regarded as like an acknowledgment that interrupts the [abandonment] period, causing it to run anew." 307 So.2d at 312.
Likewise, in Chevron, we noted that the Legislature in Article 561 clearly expressed the intention in the comments to Article 561 that, as to actions taken by defendant during the abandonment period, the concept of waiver was retained. 436 So.2d at 534. In so doing, we quoted the pertinent comment to Article 561, which reads:
Id. (quoting La. C. Civ. Pro. art. 561, Official Cmt. (b)(1960)). As a result we equated a step in the defense with a pre-abandonment waiver.
Pre-abandonment waiver was cabined to the same requirements as step in the prosecution or defense, including the requirement of formal action on the record, as a result of the following broad remark in Melancon: "extrinsic proof of such a waiver cannot be permitted." 307 So.2d at 312. (emphasis supplied). For several reasons, we find that remark mistaken.
Melancon was a divided decision of this court. Melancon held that a defendant's verbal agreement not to proceed with a state court suit while the plaintiff was pursing a parallel federal court suit, asserting federal constitutional issues, did not result in a waiver of the defendant's right in the state court suit to assert abandonment. Both this court and the commentators have criticized that case. The commentators have noted "the logic of contrary reasoning." Maraist & Lemmon, supra § 10.4 at 243. This court has held that certain dicta language in Melancon was mistaken. Chevron Oil Co. v. Traigle,
Timing of Defendant's Actions Constituting a Waiver
An inherent distinction has been noted between a plaintiff's acts in relation to abandonment and those of a defendant. Unlike a plaintiff whose post-abandonment actions cannot serve to revive an abandoned action, a defendant's post-abandonment actions can serve to waive his right to plead abandonment. "Once abandonment has occurred, action by the plaintiff cannot breathe new life into the suit." Maraist & Lemmon, supra § 10.4 at 243. "No `definite action' by a plaintiff or inaction by a defendant after accrual of the [three-]year period can be construed as a waiver of abandonment by the defendant, although a defendant by `definite action' may waive the abandonment." Middleton, 526 So.2d at 860. That a defendant's conduct occurred before the abandonment period elapsed as opposed to after is thus a distinction without a difference.
The timing of a defendant's conduct cannot logically be construed as altering its character insofar as whether it is sufficient to constitute a waiver of the right to plead abandonment. Logic dictates that the same standard for determining if action of the defendant results in waiver and thereby an interruption of abandonment should apply regardless of whether the conduct occurred before or after the abandonment period elapsed.
For those reasons, we conclude that a defendant's conduct that would amount to a waiver as an acknowledgment if taken after the abandonment period has elapsed can also be established by evidence outside the record to be a pre-abandonment waiver based on acknowledgment and serve to recommence the abandonment period running anew.
Defendant's Unconditional Tender
The issue presented in this case is whether defendant's pre-abandonment, unconditional tender was sufficient conduct to constitute a waiver. In resolving this issue, we address the two possible characterizations of the tender: (i) informal settlement negotiations (as the court of appeal
Informal Settlement Negotiations
"Extrajudicial efforts," such as informal settlement negotiations between the parties, have uniformly been held to be insufficient to constitute a step for purposes of interrupting abandonment. Maraist & Lemmon, supra § 10.4 at 242. To distinguish such informal actions, which were insufficient to prevent abandonment, the jurisprudence crafted the requirement of "`some formal action before the court.'" DeClouet, 176 So.2d at 475 (Tate, J., dissenting in denial of reh'g). Applying that requirement, the jurisprudence has required "certainty of formal action in the judicial proceedings themselves, rather than the uncertainty of informal action by counsel outside thereof, as necessary to interrupt the running of the [legislatively ordained abandonment period] during which action is required." Sanders v. Luke, 92 So.2d at 159.
The purpose of this "formal action" requirement has been summarized as follows:
DeClouet, 176 So.2d at 476 (emphasis supplied).
The rationale for the judicial engraftment of a formal action requirement onto Article 561 was that allowing informal, ex parte actions to serve as a step in the prosecution "might interrupt prescription against abandonment without the opposing parties formally learning of them for months or years, to their possible prejudice." Id.
The rule requiring a party's action be on the record is designed to protect a defendant. The rule is intended to ensure notice to the defendant of actions taken that interrupt abandonment. The purpose underlying the rule is not present when, as here, it is the defendant taking action and doing so in defense of plaintiffs suit to avoid penalties and attorney's fees. Based on this rationale, we concluded earlier in this opinion that the remark in Melancon precluding the consideration of conduct not on the record in determining if defendant's conduct constituted a waiver was mistaken. Repeating, we conclude that to the extent a defendant's conduct would amount to a waiver as an acknowledgment if taken after the abandonment period has elapsed, such pre-abandonment acknowledgment can also be established by evidence outside the record to be a waiver, which serves to recommence the abandonment period running anew.
An unconditional tender is made to a plaintiff "not in settlement of the case, but to show [the insurer's] good faith in the matter and to comply with the duties imposed upon them under their contract of insurance with the insured." McDill v. Utica Mutual Insurance Co., 475 So.2d 1085, 1091-92 (La.1985). A tender made to satisfy the requirements of La.Rev.Stat. 22:658(A)(1) must be unconditional, i.e., with "no strings attached," and thus, by definition, cannot be a settlement offer. The court of appeal's characterization of the tender as part of informal negotiations was thus erroneous.
A similar mischaracterization of an unconditional tender as a settlement offer was made by the trial court in Johnson v. Protective Casualty Insurance Co., 572 So.2d 355 (La.App. 1st Cir.1990). Reversing, the appellate court in Johnson explained the difference between a tender and a settlement offer as follows:
572 So.2d at 357 (emphasis supplied) (citations omitted). Applying this principle, the court concluded that the trial court erred in finding the insurer's unconditional tender to be an attempted compromise given the unambiguous language used in the transmittal letter and the notation on the check. The court emphasized that the insurer's purpose in making the tender was to avoid penalties and attorney's fees; simply stated, the insurer "was merely protecting its interests under LSA-R.S. 22:658." Id. By analogy, defendant's purpose in making the tender was to protect its interest under La.Rev.Stat. 22:658, and the court of appeal's characterization of the tender as part of informal negotiations was erroneous.
Tender as an Acknowledgment and a Waiver
The historical and theoretical nature of abandonment as a species of prescription renders it appropriate to consider prescriptive principles in analyzing res nova abandonment issues such as the issue presented in this case by defendant's tender. See Sterling v. Insurance Co. of Pennsylvania, 572 So.2d 835 (La.App. 4th Cir.
An acknowledgment is "a simple admission of liability resulting in the interruption of prescription that has commenced to run, but not accrued, and may be made on an informal basis." Lima v. Schmidt, 595 So.2d 624, 634 (La.1992)(emphasis supplied).
595 So.2d at 634 (emphasis supplied). Applied here, the unconditional tender by defendant was, at least for purposes of abandonment, an acknowledgment.
A similar result was reached in Sterling, supra. Characterizing a defendant's monthly payments of workers' compensation benefits and medical expenses as an acknowledgment and thus a continuing waiver of the right to plead abandonment, the Sterling court reasoned:
572 So.2d at 837. In so holding, the Sterling court further noted the "real world" implications of defendant's payment actions and the unfairness that would enure to plaintiff in having his suit dismissed as abandoned under the facts.
In determining whether a waiver of the right to assert abandonment occurred, the jurisprudence has recognized the appropriateness of considering the qualitative effect of the defendant's conduct. Articulating this standard, one court stated:
Middleton, 526 So.2d at 860-61 (citations omitted)(emphasis supplied).
The qualitative effect of defendant's unconditional tender is that it served to protect defendant's interests under La.Rev. Stat. 22:658(A)(1). The tender served to place defendant in such a position as to avoid penalties and attorney's fees if, after trial, it is ultimately proven that coverage under the policy existed. The tender thus provided defendant with protection from liability exposure for penalties and attorney's fees at the conclusion of the case.
Given this substantive effect that flowed from defendant's tender, it would defy the
Equity dictates recognizing the tender as an acknowledgment and thus within the waiver exception, which results in an interruption of abandonment and a recommencement of the abandonment period from the date of the tender. To place itself in a position where its post-trial exposure for penalties and attorney's fees is limited and thereby protecting its own interest, defendant made a tender to plaintiff. It would be inequitable to allow defendant to obtain that protection, yet to disallow plaintiff to invoke the tender as a basis for avoiding dismissal on abandonment. This result is consistent with the policy considerations underlying abandonment that require any doubt be construed in favor of maintaining a plaintiff's action.
Accordingly, we hold that defendant's October 14, 1996 unconditional tender served as an acknowledgment and thus a waiver, which served to recommence the three-year abandonment period. Since plaintiff undisputedly took steps in the action within three years of that tender, the court of appeal erred in dismissing this action as abandoned.
For the foregoing reasons, the judgment of the court of appeal is reversed, and the matter is remanded to the district court for further proceedings.
VICTORY, J. dissents and assigns reasons.
TRAYLOR, J., dissents for reasons assigned by VICTORY J.
VICTORY, J., Dissenting.
La.Code Civ. P. art 561 provides in pertinent part:
The issue in this case is whether an unconditional tender made by the defendant pursuant to the statutory requirement of La. R.S. 22:568 A(1), but which was
The majority concedes that for an action of either party to interrupt the statutory three year period it must: 1) be a formal action
In order to avoid the result dictated by the law, the majority effectively overrules
We held in Melancon that plaintiff's actions in federal court, albeit on the record of that proceeding and unmistakably taken to advance the prosecution of his case in state court, nevertheless did not interrupt the statutory abandonment period. We concluded:
Just as in Melancon, the action taken by the defendant in this case, although perhaps a step in the defense of the action, was not taken
Prior to 1960, the rules on abandonment were found in Civil Code art. 3519, which spoke only of the inaction of the
Furthermore, it should be noted that even under the jurisprudence on abandonment that developed under Civil Code art. 3519, action of the defendant pleaded as a waiver to defeat his claim of abandonment
In Melancon, we specifically rejected the claim that an agreement of defendant not to take action in state court during the pendency of the federal proceeding constituted a waiver of the type that could defeat abandonment because the agreement was not filed
I see no justification for a departure from the application of the law as written by the legislature and interpreted by this court in Melancon. The majority's representation that it must liberally interpret the law so that only actions "which in fact have been clearly abandoned" will be dismissed begs the question. It is for the legislature to define the circumstances under which a case is deemed abandoned. The legislature has done so. In this case those circumstances have been met.
As recently as our decision last term in State v. Kennedy, 2000-1554 (La.4/03/01), ___ So.2d ___, 2001 WL 316170, we reiterated that courts are obliged to give effect to the law as written. Chief Justice Calogero reminded us that our court must "desist from the exhortation to legislate." And like Kennedy, this case tests our "resolve in upholding the law as written and as consistently followed by this court for nearly thirty years." The right to make a change in the law falls within the province of the legislature.
Accordingly, I respectfully dissent.
Defendant further argues, citing the express formal discovery exception set forth in La. C. Civ. P. art. 561(B), that extrinsic evidence of the unconditional tender cannot be considered. By creating this exception for formal discovery, defendant contends that the Legislature intended to retain for all other type actions the general formal action requirement, i.e., the requirement that to be considered a step, such action must occur on the record before the trial court. Continuing, defendant contends that since, as the appellate court held, a tender is not discovery, the exception for formal discovery does not apply; instead, the general formal action rule applies. Under the general rule, the tender is extrinsic evidence that should not be considered and thus, by definition, cannot be a step. Repeating the novel argument the court of appeal rejected, plaintiff argues the tender was an admission of liability and thus falls within the broad ambit of the formal discovery exception. Because we characterize the tender as an acknowledgment and thus within the waiver exception to abandonment, we pretermit this issue.