Ark-La-Tex Timber Co., Inc. v. Georgia Cas. & Sur. Co.
| Decision Date | 02 December 1987 |
| Docket Number | ARK-LA-TEX,No. 19145-CA,19145-CA |
| Citation | 516 So.2d 1217 |
| Parties | TIMBER CO., INC., Plaintiff-Appellee, v. GEORGIA CASUALTY & SURETY COMPANY et al, Defendant-Appellant. 516 So.2d 1217 |
| Court | Court of Appeal of Louisiana — District of US |
Hall, Lestage & Landreneau, by: H.O. Lestage, III, DeRidder, Dawkins, Coyle & Carter, by: Michael S. Coyle, Ruston, for defendant-appellant.
Blanchard, Walker, O'Quin & Roberts, by: L. David Cromwell, Shreveport, for plaintiff-appellee.
Before HALL, NORRIS and LINDSAY, JJ.
The defendant, Georgia Casualty & Surety Company (Georgia Casualty), has appealed a decision by the trial court granting a motion for partial summary judgment in favor of the plaintiff, Ark-La-Tex Timber Company, Inc., (Ark-La-Tex Timber), in which the trial court held that the defendant-insurer had a duty to defend the plaintiff in a Texas lawsuit. For the following reasons, we reverse the trial court judgment and remand for further proceedings.
The plaintiff is a Louisiana corporation domiciled in Bossier Parish and is engaged in the business of buying and cutting standing timber in Arkansas, Texas and Louisiana. The plaintiff purchased a liability insurance policy from Georgia Casualty through Craig Leach, an agent for Morris, Temple & Company. The local agency was domiciled in Louisiana and the policy was delivered in Louisiana. The effective date of the policy was December 14, 1981. The policy contemplated logging operations in Arkansas, Texas and Louisiana, and it contained certain coverage exclusions applicable to Arkansas and Texas.
On May 16, 1983, suit was filed in Harrison County, Texas by J. Lloyd Woods against the present plaintiff, Ark-La-Tex Timber, Inc., for wrongful removal of timber from his property. Woods alleged that Ark-La-Tex Timber came onto his property and wrongfully removed timber from his land.
Ark-La-Tex Timber called upon Georgia Casualty to defend the action, claiming that, under the terms of the policy, Georgia Casualty had a duty to defend all damage claims arising from its logging operations.
Georgia Casualty investigated the claim and found no duty existed to defend the Texas lawsuit. This finding was based upon two provisions of the policy.
First, the policy contained a coverage exclusion applicable in Texas whereby the plaintiff was not covered for property damage in Texas resulting from cutting timber while inadvertently crossing property lines.
Second, the policy defines an occurrence as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." Under Texas law, this clause is interpreted to mean that intentional actions are not "occurrences" under the policy definition and are excluded from policy coverage, even when the result of the action is unexpected or unintended. For these two reasons, Georgia Casualty refused to defend.
The plaintiff was required to employ its own counsel in Texas for the defense of the lawsuit. The plaintiff settled the Texas lawsuit for $15,000, but in the process, incurred expenses and attorney fees totalling $7,311.90.
The plaintiff filed suit in Louisiana against Georgia Casualty for $22,311.90 in damages, claiming reimbursement of the amounts paid in resolving the lawsuit, and for wrongful refusal to defend the lawsuit. The plaintiff also named as defendants, Craig Leach, his employers, Millard Morris and Audrey Temple and CMH, Inc., d/b/a Morris, Temple & Company.
Georgia Casualty answered the suit and contended that under the policy there was no duty to defend the Texas lawsuit. The plaintiff later filed a motion for partial summary judgment against Georgia Casualty, claiming there was no genuine issue of material fact regarding Georgia Casualty's duty to defend the Texas lawsuit and therefore, Georgia Casualty was liable for the $7,311.90 incurred by the plaintiff in defense of that suit. Other elements of damages claimed by the plaintiff against Georgia Casualty and against the other defendants were not included in this motion for partial summary judgment.
The trial court granted plaintiff's motion for partial summary judgment, ordering Georgia Casualty to pay to the plaintiffs $7,311.90, plus interest.
In written reasons for judgment, the trial court found that, under LSA-C.C. Art. 10, and because the insurance contract was executed in Louisiana, the law of Louisiana governed the issue of whether the defendant owed a duty to defend the Texas lawsuit. The court then reasoned that, under Louisiana law, the obligation to defend is generally to be broadly construed and the existence of the duty to defend is be determined by the allegations in the petition. If, under the allegations of the petition, coverage is not unambiguously excluded, then the duty to defend exists.
The trial court then analyzed the Texas petition and found that it was ambiguous as to whether the actions complained of were intentional or negligent and, since the petition did not unambiguously exclude coverage under the terms of the insurance policy, Georgia Casualty had a duty to defend. On that basis, the motion for partial summary judgment was granted.
Georgia Casualty filed a motion for new trial which was denied by the trial court. Georgia Casualty then suspensively appealed the trial court judgment.
In its appeal, Georgia Casualty claims that the contract of insurance was intended to have effect not only in Louisiana, but also in Arkansas and Texas, and since the situs of the facts giving rise to the Texas lawsuit occurred in Texas, the duty to defend the lawsuit in Texas must be determined according to Texas law. Therefore, Georgia Casualty argues that the trial court was not correct in applying Louisiana law to determine the duty to defend the lawsuit in Texas and that the granting of the motion for partial summary judgment constituted error.
Finding that there are disputed issues of material fact and that the plaintiff was not entitled to judgment as a matter of law, the judgment of the trial court granting plaintiff's motion for partial summary judgment must be reversed and set aside.
Motions for summary judgment are regulated by LSA-C.C.P. Art. 966, which provides that the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law.
The heavy burden of proof in a motion for summary judgment is on the mover to establish that there are no genuine issues of material fact. Only when reasonable minds must inevitably concur is a summary judgment warranted and any doubt should be resolved in favor of a trial on the merits. Swindle v. Haughton Wood Company, Inc., 458 So.2d 992 (La.App. 2d Cir.1984) and cases cited therein.
As stated in Swindle v. Haughton Wood Company, Inc., supra,
A fact is material if its existence or nonexistence may be essential to plaintiff's cause of action under the applicable theory of recovery. Facts are "material" if they essentially insure or preclude recovery, affect the litigants ultimate success or determine the outcome of a legal dispute.
As we will demonstrate hereafter, the question of which state's law is applicable to the case constitutes a genuine issue of material fact. Hobbs v. Fireman's Fund American Insurance Companies, 293 So.2d 608 (La.App. 3rd Cir.1974), writ denied 296 So.2d 832 (La.1974).
The contract of insurance between the plaintiff and defendant contained an exclusion of coverage for certain hazards. Under the terms of the exclusion clause, coverage was not intended to apply to damage due to the cutting of timber while inadvertently crossing property lines in the states of Arkansas and Texas. However, there is coverage in the state of Louisiana when property damage allegedly occurs due to cutting timber while inadvertently crossing property lines (although there is a $1,000 deductible per claim).
In the present case, the trial court concluded that, under Louisiana law, there was no question but that the defendant insurance company owed a duty to defend the Texas lawsuit. The court also determined that Louisiana law was applicable by virtue of the provisions of LSA-C.C. Art. 10. The trial court cited LSA-C.C. Art. 10 for the proposition that, in a Texas lawsuit involving conduct in Texas between a Texas resident and a Louisiana corporation with a contract of insurance containing specific provisions regarding coverage in Texas, Louisiana law was applicable to determine the defendant's duty to defend.
In resolving the issue of the duty to defend, we do not find that the choice of Louisiana law is as clear cut as the trial court found it to be. The question of choice of laws to be applied involves, among other tests, a determination of the intent of the parties when forming the contract of insurance, as to which state's law is applicable in the interpretation of the policy. This question involves factual issues and determinations to be made by the trial court that cannot be resolved on a motion for summary judgment. These issues create genuine issues of material fact and make it difficult to demonstrate that the plaintiff is entitled to judgment as a matter of law.
The basic issue in this case is the correct interpretation of LSA-C.C. Art. 10 to resolve conflicts of law involving contracts. More specifically, resolution of the case centers on the correct interpretation of the words in the Article, "where such acts are to have effect."
LSA-CC. Art. 10 provides in pertinent part:
The form and effect of public and private written instruments are governed by the laws and usages of the places where they are passed or executed.
But the effect of acts passed in one...
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