642 F.2d 986 (5th Cir. 1981), 79-3703, Fenasci v. Travelers Ins. Co.

Docket Nº:79-3703
Citation:642 F.2d 986
Party Name:Mrs. Constance A. FENASCI et al., Plaintiffs-Appellees Cross Appellants, Employers National Insurance Co., Intervenor-Appellee Cross Appellant, v. TRAVELERS INSURANCE COMPANY, Defendant-Appellant Cross Appellee.
Case Date:April 17, 1981
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 986

642 F.2d 986 (5th Cir. 1981)

Mrs. Constance A. FENASCI et al., Plaintiffs-Appellees Cross

Appellants,

Employers National Insurance Co., Intervenor-Appellee Cross Appellant,

v.

TRAVELERS INSURANCE COMPANY, Defendant-Appellant Cross Appellee.

No. 79-3703

Unit A

United States Court of Appeals, Fifth Circuit

April 17, 1981

Page 987

[Copyrighted Material Omitted]

Page 988

Jones, Walker, Waechter, Poitevent, Carrere & Denegre, John C. Combe, Jr., New Orleans, La., for defendant-appellant cross-appellee.

John Paul Massicot, New Orleans, La., for Constance A. Fenasci, et al.

Young & Mars, W. W. Young, III, Theodore A. Mars, Jr., New Orleans, La., for Rita Breitling Cook, et al.

Monroe & Lemann, Steven O. Medo, Jr., New Orleans, La., for Marie T. Bannon, et al.

Lemle, Kelleher, Kohlmeyer & Matthews, Albert H. Hanemann, Jr., New Orleans, La., for Employers National Ins. Co.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before BROWN, POLITZ and TATE, Circuit Judges.

PER CURIAM:

This action arose out of an automobile accident in which three employees of Fischbach and Moore, Incorporated (F & M), Thomas J. Fenasci, John A. Bannon and Donald Eugene Cook, riding in a pick-up truck owned by F & M, were killed on their way to work in a collision between the truck and a vehicle operated by Preston A. Julien. Their survivors (Fenasci et al.) brought this diversity action in Federal District Court against Travelers Insurance Company (Travelers) which insured F & M. 1

The jury found that the sole and proximate cause of the accident was the negligence of Preston A. Julien, who had only $10,000 of public liability insurance. Because F & M had uninsured motorist coverage under its policy with Travelers, the insurance company was held liable for the entire verdict of $1,400,000.

This appeal presents multiple issues, all of which are carefully and exhaustively briefed by able counsel. We shall address each in turn.

I. Interest From Date of Judicial Demand

Included in its final judgment, the District Court awarded interest from the date of judicial demand, relying on LSA-R.S. 13:4203 which provides:

Interest on judgments from judicial demand in ex delicto cases

Legal interest shall attach from date of judicial demand, on all judgments, sounding in damages, "ex delicto", which may be rendered by any of the courts.

Travelers contend in their cross appeal that this was erroneous because its liability arose out of an insurance contract, not a tort, and § 4203 is inapplicable. The Fenascis argue that nevertheless, Travelers is bound to pay the damages of a tort-feasor and the liability is "ex delicto."

The District Court thought that Travelers' was the more logical position but nonetheless awarded interest, feeling bound by Louisiana cases in which interest was awarded against uninsured motorist carriers. Butler v. MFA Mutual Insurance Co., 356 So.2d 1129 (La.App. 2d Cir. 1978); Williams v. State Farm Mutual Automobile Insurance Co., 349 So.2d 1275 (La.App. 1st Cir. 1977); Bourgeois v. Government Employees Insurance Co., 316 So.2d 804 (La.App. 1st Cir. 1975); Shirley v. Aetna Casualty & Surety Co., 256 So.2d 462 (La.App. 2d Cir. 1972). In doing so, the District Court was correct. The Erie doctrine compels Federal Courts to follow state law. In re Hoover, 447 F.2d 195, 198 (5th Cir. 1971).

II. Testimony As To Gross Income Only

During trial, counsel for Travelers was ordered by District Court not to cross-examine Fenascis' economic experts, nor to obtain

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any direct testimony from its economic experts bearing on the issue of loss of economic support to the survivors on a net or after tax basis. Only gross income figures were allowed to reach the jury.

Travelers suggests District Court erred because the jury was prevented from making a decision as to whether it should consider gross wages or net wages in determining the award for economic loss. To support this position, Travelers cites Norfolk & Western R. R. Co. v. Liepelt, 444 U.S. 490, 100 S.Ct. 755, 62 L.Ed.2d 689 (1980), which held it was reversible error for the trial court to exclude evidence of income taxes payable on the decedent's parts and estimated future earnings. 444 U.S. at 493-99, 100 S.Ct. at 757-60, 62 L.Ed.2d at 693-97.

The Fenascis correctly point out, however, Liepelt was an action under the FELA and strictly limited in application to federal law, whereas, in this case we are dealing with state law and are bound under Erie to apply it. It is well settled in Louisiana the trial judge is to be granted wide discretion in determining the quantum of damages. See, e.g., Brummerloh v. Firemen's Insurance Co., 377 So.2d 1301 (La.App.1979); Clofort v. Matmoor, Inc., 370 So.2d 1305 (La.App.1979). When awarding the loss of future wages, the trial court has the option of using gross income, net income, or any figure in between that was reported on the victim's last tax return as a representation of his statement of wages. Morgan v. Liberty Mutual Insurance Co., 323 So.2d 855, 863 (La.App.1975). See also Roundtree v. Technical Welding & Fabrication Co., 364 So.2d 1325, 1335 (La.App.1978). "Because tax liability varies with the individual and is altered with changing circumstances, in some cases it is more appropriate to project lost earnings on a figure near the gross income." Morgan, 323 So.2d at 862. We therefore cannot conclude District Court abused its discretion in not allowing evidence of net income during trial of the damages issue in this case.

III. F & M's Choice of Limits

District Court concluded F & M had selected uninsured motorist protection in limits lower than the bodily injury liability protection afforded by the policy, and concluded this particular Travelers' policy provided $5,000/$10,000 uninsured motorist protection. In reaching this decision, District Court found Travelers was initially solicited by Alexander and Alexander, the national insurance brokerage firm acting as agent for F & M in procuring insurance coverage, to submit a bid to underwrite the same risks F & M's then existing manuscript with Hartford Insurance Company provided. After Travelers bound the coverage, Alexander and Alexander submitted to Travelers a copy of the standard form automobile liability policy issued by Royal Globe Insurance Company to Natkin and Company, a wholly owned subsidiary of F & M. Thereafter, Travelers issued a comprehensive automobile liability policy to F & M with an effective policy period of April 1, 1974, to April 1, 1977, which extended coverage limits "equal to minimum financial responsibility limits of the state in which the vehicle is principally garaged." Travelers subsequently renewed this policy which had an effective policy period from April 1, 1977, to April 1, 1978. It was this second policy which was in effect on July 29, 1977, the date of the accident.

At the time the April 1974 policy was written, the Louisiana Uninsured Motorist Statute, L.S.A.-R.S. 22:1406, as amended and re-enacted by Act 137 of 1972, required uninsured motorist coverage be provided "(i)n not less than the limits described in the Motor Vehicle Safety Responsibility Law of Louisiana ...." Id. The minimum financial responsibility limit of the State of Louisiana in April 1974 was (and still is to this day) $5,000 per person and $10,000 per accident. Louisiana Motor Vehicle Safety Responsibility Law, L.S.A.-R.S. 32:900. District Court consequently construed the language in F & M's policy to be a selection of $5,000 per person/$10,000 per occurrence of uninsured motorist coverage in Louisiana.

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