This newsletter discusses a number of recent coverage decisions in Louisiana—not surprisingly, a number involve UM coverage. But note the damages award affirmed by the First Circuit Court of Appeal in Rentrop. And any day I am expecting to have definitive news to share regarding the publishing by Claitor’s of our Louisiana handbook on insurance coverage law.
Damages—Neck and Back
It helps to get the right jury. In a case where the plaintiff, who was a 59-year-old school bus driver at the time of the accident, had cervical and lumbar fusions, a St. Mary Parish jury awarded damages totaling $1,852,500. Specifically, the jury awarded $500,000 for physical pain and suffering, $250,000 for mental pain and anguish, $125,000 for disability and disfigurement, $200,000 for loss of enjoyment of life, $400,000 in past and future medical expenses, $177,500 for loss of income, and $250,000 for loss of consortium. With the exception of the award for medical expenses, the Louisiana First Circuit Court of Appeal affirms the award, finding no abuse of the jury’s discretion. Finding that there was no evidence of future surgery presented at trial, the court of appeal reduced the medical expense award from $400,000 to $150,000, which was the amount in past medical expenses introduced at trial. Rentrop v. Arch Insurance Company, 2017-0635 (12/29/17).
Brenda, a passenger on a motorcycle operated by her husband Randy, was injured when Randy lost control of the motorcycle. Randy and Brenda had three separate policies with State Farm. Randy, who bought the motorcycle during his marriage with Brenda, had a policy on the motorcycle on which he was the only named insured. Also, Randy and Brenda both owned a 2004 SUV and a 2005 truck, and purchased separate policies covering those vehicles from State Farm on which both Randy and Brenda were listed as named insureds.
As a result of the accident, Brenda collected the $50,000 in liability coverage provided by the motorcycle policy. Could Brenda collect UM under the motorcycle policy and the two motor vehicle policies? Affirming the trial court’s summary judgment to State Farm, the Louisiana Second Circuit Court of Appeal says no.
First, because Brenda collected liability coverage under the motorcycle policy, she was precluded from recovering UM under that motorcycle policy.
Second, the policies stated that “uninsured motor vehicle” did not include a land motor vehicle owned by “you or any resident relative.” Further, the policies contained a UM exclusion stating there was no coverage for an insured while occupying a motor vehicle owned by the insured unless the vehicle was an insured vehicle on the policy or a newly acquired car. The court noted that Brenda was an owner of the motorcycle because the motorcycle was community property. Mills v. Mills, 51,509 (1/10/18)
UM Exclusion For Motor Vehicle Insured Under Another Policy
Peterson and Gibson jointly owned a motorcycle. While operating the motorcycle, Peterson was killed because of the fault of an SUV driver. American Southern Home insured the motorcycle in a policy issued to Green, Peterson’s resident girlfriend, with the policy listing Peterson as a rated driver. Motorcycle co-owner Gibson had an automobile liability policy issued by Allstate, which included UM coverage. American Southern Home paid UM under the motorcycle policy. Could UM be obtained under the Allstate motor vehicle policy issued to Gibson? Affirming summary judgment to Allstate, the Louisiana First Circuit Court of Appeal says no.
In this case, the Allstate policy contained an exclusion for “bodily injury to anyone while in, on, getting to or out of, or when struck by a motor vehicle you own which is insured for this coverage under another policy.” Because the motorcycle was insured under another policy issued by American Southern Home, the court applied the exclusion.
The court noted that because the motorcycle did not meet the policy definition of an insured auto for liability purposes under the Allstate policy, Peterson was not entitled to UM coverage under that policy as a liability insured under the policy.
In this case, there was a lengthy dissent by Judge Whipple, who argued that the Allstate provision in question was not really an exclusion, but an other-insurance “escape” clause.
Umbrella Insurance—Underlying Insurance
Jeane, the elected marshal of Pineville, caused a serious accident when he crossed the centerline, striking a car occupied by the plaintiffs. Jeane was driving his city marshal vehicle. The plaintiffs sued a number of entities, including the Louisiana Municipal Risk Management Agency Group Self-Insured Fund (LMRMA), the City of Pineville, Jeane’s estate, and Republic Fire & Casualty, which issued a primary personal auto policy and an umbrella liability policy to Jeane. On summary judgment motion, the trial court found that the personal auto policy did not provide coverage, but that the umbrella policy did. Reversing summary judgment to the plaintiffs, the Louisiana Third Circuit Court of Appeal found that the umbrella liability policy did not provide coverage for the accident.
First, the court rejected Republic’s argument that the umbrella policy did not provide coverage because it was a follow-form policy, incorporating the regular use exclusion in the primary policy. Although the umbrella policy included an endorsement with the title “following form,” the court found that the endorsement and wording did not state that the umbrella policy was adopting the same coverages and exclusions in the primary policy. The court stated:
In fact, it does just the opposite, in that it excludes coverage for use of an automobile unless there is “underlying insurance.” The definition of “underlying insurance” in this policy is broader than just those policies listed in the declarations, as it includes “primary liability insurance covering one or more of the types of liability listed in the Declarations and it limits no less than the retained policy limits shown for those types of liability listed in the Declarations.”
The issue then became whether indemnity provided by the Louisiana Municipal Risk Management Agency Group Self Insured Fund would constitute underlying insurance, triggering coverage under the umbrella policy. The umbrella policy defined the term “underlying insurance” to mean “any policy providing the ‘insured’ of primary liability insurance covering one or more of the types of liability listed in the Declarations and had limits no less than the retained policy limits shown for those types of liability listed in the Declarations.” However, the court found that the LMRMA indemnity contract was not an insurance policy and did not meet the requirements of underlying insurance for purposes of the umbrella liability policy.
UM Waivers—Electronic Selection
Plaintiff completed a UM waiver form electronically. Electronic documents had selections of coverage pre-made based on a quote plaintiff had received by telephone. Plaintiff contended that the UM rejection was invalid because the coverage on the form was pre-selected and could not be changed electronically. Affirming the trial court’s summary judgment to the insurer, the Louisiana Fourth Circuit Court of Appeal finds that the waiver was valid. Addison v. Affirmative Insurance Company, 2014-04168 (11/15/17).
UM—Waiver of Defenses by Insurer
In 2013, plaintiff was involved in an accident driving a vehicle that he owned and was insured by State Farm. Under plaintiff’s policy, State Farm paid UM benefits. However, plaintiff at the time of the accident was living with his mother, who had her own policy with State Farm. Plaintiff was not listed as an insured, and his vehicle was not listed as an insured vehicle on the mother’s State Farm policy. Plaintiff made a claim for UM benefits under the mother’s policy, which State Farm declined. But plaintiff argued that he had been involved in a car accident in 2007, when he was allowed to recover UM under both his own policy and his mother’s policy.
The Louisiana Fifth Circuit Court of Appeal affirms summary judgment to the plaintiff, finding that State Farm by erroneously making payment under the mother’s policy after the 2007 accident waived defenses that insurer that the plaintiff was not an insured under the mother’s policy, that his vehicle was not an insured vehicle under the mother’s policy, and that the stacking of the two policies was contrary to the anti‑stacking provisions in La. R.S. 22:1295(1)(c). Forvendel v. State Farm Mutual Automobile Insurance Company, 17-77 (11/15/17).
Insurance Broker—Duty to Procure Insurance
A car crashed into the plaintiff’s warehouse, resulting in a fire. Plaintiff’s fire insurer failed to pay the claim. Plaintiff sued the property insurer as well as its insurance broker. In a short decision, the Louisiana Third Circuit Court of Appeal affirms a peremptory exception of no cause of action granted to the broker. The court noted that an agent who undertakes to procure insurance for a client owes only an obligation to use reasonable diligence in attempting to place the insurance requested and to notify the client promptly if the requested insurance has not been obtained. Here, the court found that the broker’s “reasonable diligence” duty was fulfilled when the policy was obtained. The court added that Louisiana does not impose a duty on an insurance agent or broker to identify the type and amount of insurance coverage the client needs. Advanced Radiographics, Inc. v. Colony Insurance Company, 17-144.
Policy Application – Material Misrepresentation
Plaintiff sustained a fire loss to his house and made a claim under his homeowners’ policy. The application question of whether the insured was conducting business on the premises was answered “no,” but in the sworn statement taken after the fire, plaintiff admitted he was operating a classic-car business out of his house. The insurer moved for summary judgment based on a material misrepresentation in the application, and the trial court granted summary judgment.
Reviewing the summary judgment granted to the insurer, the Louisiana First Circuit Court of Appeal noted that to void the policy for a material misrepresentation in the application, the insurer had to show the intent to defraud. Here, the court found that the insurer had not introduced any evidence regarding the completion of the application, and whether the plaintiff or the agent provided the false answer. The application did contain a section at the end stating that the applicant had reviewed the application information and that it was correct. But the court also noted that the agent had sent by fax transmittal the application, asking that plaintiff “sign and initial where requested” and “fax back” the application “as soon as possible.” Given the surprising lack of evidence offered by the insurer on how the application was confected, the court relied on the rule quoted often by courts reluctant to grant summary judgment that summary judgment is reasonably inappropriate where subjective issues like intent and motive must be decided. Sims v. Maison Insurance Company, 2016-1661 (9/15/17).
Policy Cancellation – Nonpayment
Sometimes good facts make good law. On October 15, a car owned by defendant Firmin was involved in an accident. On October 16 Firmin paid his auto insurance premium. However, on September 15, Allstate had cancelled this policy for nonpayment of the premium. Two months before the accident, on August 25, Firmin’s automatic payment was not honored because of insufficient funds in Firmin’s checking account. Six days after the payment was not honored, on August 26, Allstate sent a notice of cancellation, advising that the policy would be cancelled on September 15 without payment, offering a number of payment options. Finding that the cancellation notice did not strictly comply with the requirements in La. R.S. 22:1266(D), the trial court granted plaintiff’s motion for summary judgment that the policy had not been cancelled before the accident.
Granting the insurer’s writ application, the Louisiana Third Circuit Court of Appeal reversed the summary judgment. The court found that the cancellation notice did not have to quote the cancellation statute and was not invalid because it offered plaintiff more payment options than set forth in the statute. Chenevert v. Allstate Property and Casualty Insurance Company, 27-561.