Alert

Timing is Everything: Retroactive Application of the Direct Action Statute Amendment

June 3, 2025

Louisiana’s Direct Action Statute was recently amended to remove the right of an injured person or, if deceased, the statutory beneficiaries, to bring a direct action claim against a tortfeasor’s insurer, except in certain, narrow exceptions, as set forth in the statute.¹ Since the amendment became effective on August 1, 2024, significant litigation has ensued regarding whether the amendment can be applied retroactively when a plaintiff has filed suit before the amendment’s effective date.

Different Approaches, Emerging Themes

Courts are currently divided on this issue, which hinges on whether the amendment to the statute is considered procedural or substantive. Under Louisiana law, the general rule against retroactive application of legislative enactments and exceptions to the rule are codified in article 6 of the Louisiana Civil Code, which provides that “[i]n the absence of legislative expression, substantive laws apply prospectively only.” On the other hand, “[p]rocedural and interpretative laws apply both prospectively and retroactively, unless there is a legislative expression to the contrary.” However, because the application of legislative enactments has constitutional implications under the due process and contract clauses of both the U.S. and Louisiana Constitutions, even when the legislature has expressed its intent to give a substantive law retroactive effect, the law may not be applied retroactively if it would impair contractual obligations or deprive a vested right.²

For example, in Howard v. J&B Hauling, LLC³, the court focused on the long line of cases by the Louisiana Supreme Court consistently interpreting the Direct Action Statute to be a procedural law. The Supreme Court has recognized that the Direct Action Statute “grants a procedural right of action against an insurer where the plaintiff has a substantive cause of action against the insured.”⁴ Additionally, the Court has stated that “no one has a vested right in any given mode of procedure.”⁵ Relying on these cases, the court in Howard reasoned that, because the Direct Action Statute has long been held to provide a procedural right of action against insurers, “any change to that procedural right of action against insurers reflects a change in procedural law, not a substantive right.”⁶ Accordingly, the court concluded that because the amendment reflects procedural law, it applies retroactively since there is no legislative expression to the contrary.⁷

Other courts, however, have held that if a plaintiff filed a direct action before the effective date of the amendment, a plaintiff cannot be retroactively divested of its procedural right granted by the Direct Action Statute because it is a “vested property right.”⁸ As one court noted: “[W]hile the procedural right to bring a direct action against an insurer is a ‘mere expectancy of a future benefit’ until exercised, once that procedural right has been properly invoked, the plaintiff acquires a vested right in the pending action – essentially, the right to pursue the insured’s substantive cause of action, i.e, the remedy sought to be effectuated by the Direct Action Statute.”⁹ Following this rationale, these courts have found that because plaintiff invoked plaintiff’s procedural right prior to the amendment’s effective date, the legislative amendment cannot be applied retroactively to divest plaintiff of that right.¹⁰

Appellate Jurisprudence

Although the Louisiana Supreme Court and the U.S. Court of Appeals for the Fifth Circuit have yet to address this issue, the Louisiana Fourth Circuit Court of Appeal and the Louisiana Fifth Circuit Court of Appeal both have held that the amendment cannot be applied retroactively to divest a vested right when plaintiff filed suit before the amendment’s effective date.¹¹

A question left unanswered by these earlier cases, but recently addressed by the court in Taylor v. Elsesser¹², is whether a plaintiff can file a claim under the Direct Action Statute when the accident occurred before the effective date of the amendment, but plaintiff filed suit against the insurer after the amendment’s effective date. Earlier cases did not address this issue because plaintiffs in those cases exercised their procedural right to sue prior to the amendment’s effective date.

Relying on Louisiana Supreme Court jurisprudence establishing that the Direct Action Statute “become[s] operative only when and if the remedy [it] serve[s] to facilitate is invoked,” the Taylor court concluded that “a plaintiff’s right under the Direct Action Statute is vested only when plaintiff files suit, as it is at that moment that a plaintiff invokes his or her remedy conferred by the Direct Action Statute.” Accordingly, because the amendment became effective before plaintiff filed suit, the amendment applied prospectively to the case and plaintiff could no longer directly sue the insurer, unless one of the provided statutory exceptions applied.

To summarize:

1. The amendment applies to suits against insurers filed after the amendment’s effective date, August 1, 2024, regardless of whether the accident occurred prior to the effective date;
2. The amendment does not apply retroactively to suits against insurers filed before the amendment’s effective date;
3. The amendment does not apply to direct actions filed after the amendment’s enactment, but before its effective date.

[1] La. Rev. Stat. 22:1269(B)(1). As amended, the statute provides that the injured person or beneficiaries shall have no right of direct action unless at least one of the exceptions set forth in subsections (a) to (g) apply.  

[2] See Keith v. U.S. Fid. & Guar. Co., 694 So. 2d 180 (La. 1997).

[3] 2024 U.S. Dist. LEXIS 200509 (E.D. La. Sept. 26, 2024).

[4] See Soileau v. Smith True Value & Rental, 144 So. 3d 771, 775-76 (La. 2013) (citing Descant v. Administrators of Tulane Educ. Fund, 639 So. 2d 246, 249 (La. 1994)).

[5] Id. at 256.

[6] See  Howard  at *4 (citing Soileau, 144 So. 3d at 775-76 and Descant, 639 So. 2d at 249).

[7] Id.

[8] See e.g., Baker v. Amazon Logistics, Inc., 751 F. Supp. 3d 666 (E.D. La. 2024); Smith v. Fortenberry, 2024 U.S. Dist. LEXIS 185194 (E.D. La. 2024); Tridico v. Allianz Underwriters Ins. Co., 2025 U.S. Dist. LEXIS 80616 (M.D. La. April 22, 2025).

[9] Baker, at *5 (discussing Church Mut. Ins. Co. v. Dardar, 145 So. 3d 271 (La. 2014)).  

[10] In addition to the “vested right” argument, the court in Maise v. River Ventures, LLC, 2024 U.S. Dist. LEXIS 170928 (E.D. La. Sept. 23, 2024), denied retroactive application of the amendment on the failure of due notice and an opportunity to be heard.  

[11] See Rogers v. Griffin, 2024 La. App. LEXIS 2252 (La. App. 5^th Cir. 12/20/24) and Hurel v. Nat’l Fire & Marine Ins. Co., 2025 La. App. LEXIS 424 (La. App. 4^th Cir. 2025).  

[12] 2025 U.S. Dist. LEXIS 25030 (E.D. La. Feb. 12, 2025) (Morgan, J.).