962109 La.App. 1 Cir. 9/23/97, Carbon v. Allstate Ins. Co.

• Decision Date: 23 September 1997
• Citation: 701 So.2d 462
• Parties: Cir
• Court: Court of Appeal of Louisiana — District of US

Page 462

701 So.2d 462

962109 La.App. 1 Cir. 9/23/97

Robert J. CARBON, Individually and on Behalf of his minor daughter, Jennifer Carbon v. ALLSTATE INSURANCE COMPANY.

No. 96 CA 2109.

Court of Appeal of Louisiana First Circuit.

Sept. 23, 1997.

Rehearing Denied Nov. 12, 1997.

Daniel A. Cavell, Camille A. Morvant, II, Thibodaux, for plaintiffs/appellees Robert J. Carbon and Jennifer Carbon.

James F. Ryan, Christopher E. Lawler, Metairie, for defendant/appellant Allstate Insurance Company.

Before FOIL, WHIPPLE and KUHN, JJ.

[962109 La.App. 1 Cir. 2] WHIPPLE, Judge.

Defendant, Allstate Insurance Company ("Allstate"), appeals from a trial court judgment in favor of plaintiffs, Robert Carbon and Jennifer Carbon, awarding substantial damages as a result of injuries sustained by Jennifer in an automobile accident and penalties and attorney's fees based on Allstate arbitrary and capricious conduct in handling the claim. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

Robert Carbon, individually and on behalf of his minor daughter Jennifer, filed suit for damages against Allstate, seeking damages for personal injuries sustained by Jennifer in a single vehicle accident in which she was a guest passenger. The vehicle, a 1985 Plymouth Voyager van, was being operated by Kory Hudgins. The accident occurred in the early morning hours of March 20, 1992, on Interstate Highway 35 in New Braunfels, Texas. Hudgins apparently fell asleep at the wheel and drove off the roadway. The van collided with a cement pillar of an overpass, and Jennifer was ejected from the vehicle through the windshield. Following the accident, testing revealed that Hudgins' blood alcohol level was 211.5 milligrams per decaliter, or in excess of 0.2 percent. As a result of the accident, Jennifer sustained a severe closed head injury.

Jennifer's parents, Robert Carbon and Linda Franz, were divorced approximately three and a half years before the accident, in August of 1988. Pursuant to a consent judgment rendered at that time in the Seventeenth Judicial District Court, Parish of Lafourche, Carbon and Franz were awarded joint care, custody and control of Jennifer. At the time of the accident, Jennifer was living with her mother in Texas.

Allstate had issued to Robert Carbon an automobile liability policy, which [962109 La.App. 1 Cir. 3] provided uninsured/underinsured motorist (UM) coverage, and a one million dollar umbrella policy. Both policies were in effect at the time of the accident. The policies in question provided coverage for relatives of the named insured (Robert Carbon) who resided in the named insured's household.

Allstate denied coverage on the basis that Jennifer was not a resident of her father's household. Prior to trial, pursuant to a motion in limine filed by plaintiffs, the trial court ruled that the language of the policy defining "resident" to include unmarried dependent children while temporarily away from home "if they intend to continue to live in your [the named insured's] household" was ambiguous and against public policy and that as a matter of law, Jennifer's residence was that of both her mother and her father.

Following trial on the merits, the jury found that Hudgins was 80% at fault in causing the accident and that Jennifer was 20% comparatively negligent, presumably based on a finding that Jennifer knew or should have known of Hudgins' intoxication, but nevertheless rode with him. The jury awarded the following amounts in damages:

                     Past and future physical pain and suffering       $135,000.00
                     Past and future mental pain and suffering          235,000.00
                     Permanent disability and future medical expenses   750,000.00
                     Loss of enjoyment of life                           75,000.00
                     Loss of earnings and earning capacity              200,000.00
                     Past medical expenses                              282,927.00
                

The jury further found that Allstate had failed to make a reasonable and timely offer to plaintiff after receiving satisfactory proof of loss and awarded $150,000.00 to Robert Carbon as reasonable attorney's fees.

The trial court rendered judgment, in accordance with the jury's verdict, in favor of Robert Carbon in the amount of $282,927.00 for past medical expenses, and in favor of Jennifer Carbon in the amount of $1,395,000.00, with these awards [962109 La.App. 1 Cir. 4] being subject to a twenty percent reduction for Jennifer's fault. Allstate's liability for these sums was limited to the applicable limits of insurance coverage, that being $105,000.00 under the automobile liability policy and $1,000,000.00 under the umbrella policy. The court further awarded plaintiffs $134,234.16, representing a penalty of 10% of the jury's award on plaintiffs' claim for arbitrary and capricious failure to pay, and $150,000.00 for reasonable attorney's fees.

From this judgment, Allstate appeals, averring that the trial court erred: (1) when it found Allstate's policy to be vague, ambiguous and against public policy; (2) in finding Jennifer only 20% at fault in this accident; and (3) in finding that Allstate was arbitrary and capricious in its handling of Carbon's claim.

Plaintiffs answered the appeal, listing the following assignments of error: (1) The trial court erred in allowing the introduction of evidence of Kory Hudgins' degree of intoxication; (2) the jury erred in assigning a percentage of fault to Jennifer Carbon because Allstate failed to provide sufficient proof for assessing a guest passenger any negligence; (3) the jury erred in failing to award a sufficient amount of damages to Jennifer Carbon for loss of enjoyment of life; (4) alternatively, and only in the event this court should find that the residence of Jennifer is a question of fact as opposed to a question of law, this court should remand the case to the trial court for a determination of that question; and (5) the penalty and attorney's fee award against Allstate should be increased on appeal.

INSURANCE COVERAGE

(Allstate's Assignment of Error No. 1; Plaintiffs'

Assignment of Error No. 4)

Because the issue of insurance coverage could be dispositive of the entire case, we first address Allstate's contention that the trial court erred in its construction of the policy provision defining "resident." In this assignment of error, Allstate contends that the language of this provision of its policy is clear and [962109 La.App. 1 Cir. 5] unambiguous and that in considering the facts of this case, it is clear that Jennifer was not a resident of her father's household. Thus, Allstate argues that the trial court erred in ruling that, as a matter of law, Jennifer is a resident of both her mother's and her father's households.

The policies in question provide coverage for relatives of the named insured (Robert Carbon) who resided in the named insured's household. Specifically, Part V of the automobile policy, which addresses uninsured motorist (UM) insurance, and the personal umbrella policy provide that "insured persons" include "any resident relative." Additionally, the UM provisions of the automobile policy and the definitions section of the personal umbrella policy contain the following definition of "resident":

(3) "Resident"--means the physical presence in your household with the intention to continue living there. Unmarried dependent children, while temporarily away from home will be considered residents if they intend to continue to live in your household.

Allstate denied coverage on the basis that Jennifer was not a resident of her father's household. Prior to trial, plaintiffs filed a motion in limine, seeking to exclude certain evidence which Allstate planned to introduce in an attempt to establish that Jennifer did not intend to be a resident of her father's household at the time of the accident. Following a hearing on the motion, the trial court concluded that the language of the policy defining "resident" to include unmarried dependent children while temporarily away from home "if they intend to continue to live in [the named insured's] household" was ambiguous, pointing to the fact that Allstate's own adjuster and attorney gave differing opinions as to who "they" referred to in the above quoted provision (the adjuster thought "they" would refer to Dr. Carbon and the attorney contended it referred to unmarried dependent children) and because a minor is legally unable to designate his or her residence. The court further found [962109 La.App. 1 Cir. 6] that to implement the policy provision as written, that is, to allow a fifteen year old child to decide where she wanted to reside, would be against public policy.

Thus, the court concluded that the intent of the parties who control where the child is to reside would be determinative, not the intent of the child herself. The court noted that the parents, as natural tutors, had the right to designate where the child would reside. However, the court concluded that in a situation where there exists a judgment of joint custody, as in the instant case, the parties involved had abdicated their right to establish the child's residency to the court. The court, therefore, held that the residence of the child was fixed by law, in this case a judgment of joint custody; that in joint custody arrangements, the residence of the minor child is that of both the mother and the father as a matter of law; and that evidence of the intent of the parties was thus irrelevant. For these reasons, the court granted plaintiffs' motion in limine.

Turning first to the trial court's conclusions that the policy provision was ambiguous and against public policy, we do not agree that this policy language is ambiguous. When the terms of a contract are susceptible of more than one interpretation, it is ambiguous. Osborne v. Ladner, 96-0863, p. 11 (La.App. 1st Cir. 2/14/97); 691 So.2d 1245, 1254. If there is an ambiguity in a policy, then that ambiguity should be construed in favor of...