Blackburn v. National Union Fire Ins. Co.

• Decision Date: 03 April 2001
• Docket Number: No. 2000-C-2668.,2000-C-2668.
• Parties: Steve BLACKBURN, et al., v. NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH. Steve and Wendi Royer v. Scafco, Ltd., et al.
• Court: Louisiana Supreme Court

784 So.2d 637

Steve BLACKBURN, et al., v. NATIONAL UNION FIRE INSURANCE CO. OF PITTSBURGH.

Steve and Wendi Royer v. Scafco, Ltd., et al.

No. 2000-C-2668.

Supreme Court of Louisiana.

April 3, 2001.

Judith R.E. Atkinson, Thomas E. Balhoff, Carlton Jones, III, Baton Rouge, Counsel for Applicant.

David O. Walker, Michael J. McNulty, III, Russell T. Tritico, Lake Charles, Counsel for Respondent.

KNOLL, J.

The issue before us concerns two-tier insurance coverage which provided reduced coverage of $10,000, the statutory minimum, under an endorsement. The lower courts determined that the endorsement did not apply, thus the face amount of the policy, $1,000,000, was applicable. For the following reasons we reverse, finding the provision in the endorsement reducing coverage to the statutory minimum for anyone using a covered auto outside of the course and scope of employment applicable.

FACTS

The insurance coverage issue was triggered by a rear-end collision which occurred on Christmas morning, December 25, 1997, at 1:40 a.m. near DeQuincy, Louisiana. On that date, the defendant, Charles Rials, Jr. ("Rials"), who was intoxicated, was operating a 1996 Ford pick-up truck owned by Wheels Incorporated and leased to Rials' employer, Scafco, Ltd. ("Scafco"). Scafco is a subsidiary of Turner Industries and is in the business of erecting scaffolding pursuant to contract throughout Louisiana. Scafco usually had approximately 10 to 15 trucks which were assigned to Scafco superintendents and other supervisory personnel as an employee perk. In addition to the assigned trucks, there is usually one truck assigned to each plant site. The trucks assigned to the plant sites are called "yard trucks" and are primarily used to run errands on the plant site and pick up and deliver materials to the plant site.

Steve Clark ("Clark"), an employee of Scafco, was acting as a temporary supervisor in the months prior to the accident. In his capacity as temporary supervisor, Clark was given permission by Jackie Stone, the manager of Scafco, to use the yard truck to drive to work in the mornings and home from work in the evenings. Because of his temporary status, Clark did not sign the list of guidelines which every employee who is assigned a vehicle is required to sign. Instead, Clark simply began using the truck as though it were permanently assigned to him, including the use of the truck for personal errands. Clark also permitted Rials to use the truck on weekends for Rials' personal use.

On the evening of the accident, Rials had the truck with Clark's permission since Rials had to work Christmas morning and Clark did not. Clark was aware that Rials had no transportation of his own¹ and that the truck would be needed in the yard. On the evening before the accident, Rials went a local bar where he consumed approximately 6 or 7 beers before attending a party which he had been invited to by Clark. The party was at the home of Clark's uncle and Clark was present when Rials arrived. Clark spoke to Rials at the party, but the two never discussed the use of the truck or that Rials was becoming intoxicated. At the party Rials consumed approximately two mixed drinks and two more beers.

Also in attendance at the party were the plaintiffs, the Blackburns and the Royers ("the plaintiffs"). At approximately 1:30 a.m. on December 25, 1997, Rials left the party shortly after the plaintiffs and began driving toward his home. Ten minutes later, Clark was informed that Rials had been in an accident in the Scafco truck. Clark immediately left the party and went to the scene of the accident and saw that Rials had rear-ended the truck being operated by Mr. Blackburn in which the Royers were passengers.

Clark was suspended from employment with Scafco due to the accident and Rials was fired. Rials testified that he had never discussed the parameters of his permission to use the truck with anyone, including Clark, and that he had never been warned of the consequences of driving the Scafco truck while intoxicated. The insurance policy limits that were in effect when Rials was operating the vehicle were never discussed with either Rials or Clark. It is not contested that Rials was acting outside of the course and scope of his employment, nor is it seriously contested that Rials had permission to use the truck.

PROCEDURAL HISTORY

The Blackburns and the Royers filed suit against Wheels Incorporated, Scafco, Rials, National Union Fire Insurance Company of Pittsburgh ("National Union"), and State Farm Mutual Automobile Insurance Company ("State Farm"). National Union insured the trucks which were leased by Scafco through a policy acquired by Turner Industries, Scafco's parent company. State Farm insured the Blackburns. The suits were consolidated and National Union filed a motion for summary judgment asserting that under Endorsement # 005 of the policy, the limit of liability coverage for the accident was the statutory minimum. The plaintiffs, along with State Farm, filed a cross-motion for summary judgment asserting that the policy limits for the accident were $1,000,000, the face amount of the policy.

The trial court granted the cross-motion for summary judgment filed by the plaintiffs and State Farm, setting the policy limits for the accident at $1,000,000, although it is unclear whether the trial court's reasons were based on Endorsement # 005 or the MCS-90 Endorsement. Specifically, the trial court found: (1) that Rials was not in the course and scope of his employment; (2) that the MCS-90 Endorsement was applicable to Scafco;² (3) that there was a conflict between the MCS-90 Endorsement and Endorsement # 005; and (4) that a provision in Endorsement # 005 allowed Scafco to give employees permission to use company vehicles outside of the course and scope of their employment. The trial court also found that Rials had permission to use the Scafco vehicle and that he was acting within the course and scope of that permission.

The court of appeal affirmed the trial court's ruling that there was $1,000,000 in coverage, holding that Endorsement # 005 allowed for the granting of permission to use a Scafco truck outside the course and scope of employment and that Rials was granted such permission. Blackburn v. National Union Fire Ins. Co. of Pittsburgh, 99-1872, p. 7 (La.App. 3rd Cir.8/23/00), 771 So.2d 175. The court further found that, under the facts of this case, Rials was acting within the scope of that permission.³ Accordingly, the trial court's ruling that defendant's policy limits were $1,000,000 was affirmed. We granted National Union's writ to review the decision of the court of appeal concerning the interpretation of Endorsement # 005. Blackburn v. National Union Fire Ins. Co. of Pittsburgh, 2000-2668 (La.11/27/00), 774 So.2d 986.

DISCUSSION

The sole issue in this writ is the interpretation of Endorsement # 005, which provides:

The most that we will pay on behalf of anyone using a coverage [sic] auto outside the scope of the permission of the Named Insured or on behalf of anyone using a covered auto outside of the course and scope of that person's employment with the Named Insured is the statutory minimum financial responsibility limit of the state having jurisdiction, but only if that person using a covered auto is an insured as defined herein, and only if coverage is provided.

The rules for the interpretation of an insurance contract are well established in our jurisprudence and our Civil Code.

An insurance policy is an aleatory contract subject to the same basic interpretive rules as any other contract. La. Civ.Code art.1912, cmt. e; Magnon v. Collins, 98-2822, p. 6 (La.7/7/99), 739 So.2d 191, 196; Peterson v. Schimek, 98-1712, p. 4 (La.3/2/99), 729 So.2d 1024, 1028; Smith v. Matthews, 611 So.2d 1377, 1379 (La. 1993). The policy is a contract between the parties and should be construed employing the general rules of interpretation of contracts set forth in the Louisiana Civil Code. Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180, 1183. The judicial responsibility in interpreting insurance contracts is to determine the parties' common intent. La. Civ.Code art. 2045; Magnon, 98-2822 at 6, 739 So.2d at 196; Ledbetter v. Concord Gen. Corp., 95-0809, p. 3 (La.1/6/96), 665 So.2d 1166, 1169. Obviously, the initial determination of the parties' intent is found in the insurance policy itself. La. Civ.Code art.2046. In analyzing a policy provision, the words, often being terms of art, must be given their technical meaning. La. Civ.Code art. 2047. When those technical words are unambiguous and the parties' intent is clear, the insurance contract will be enforced as written. La. Civ.Code art.2046; Magnon, 98-2822 at 7, 739 So.2d at 197. If, on the other hand, the contract cannot be construed simply, based on its language, because of an ambiguity, the court may look to extrinsic evidence to determine the parties' intent. Peterson, 98-1712 at 5, 729 So.2d at 1029.

The insurer bears the burden of proving the applicability of an exclusionary clause within a policy. Dubois v. Parish Gov't Risk Mgmt. Agency Group Health, 95-546, p. 5 (La.App. 3 Cir. 1/24/96), 670 So.2d 258, 260; Shaw v. Fidelity & Cas. Ins. Co., 582 So.2d 919, 925 (La.App. 2nd Cir.1991); Landry v. Louisiana Hosp. Serv., Inc., 449 So.2d 584, 586 (La.App. 1st Cir.1984); Barber v. Best, 394 So.2d 779, 781 (La.App. 4th Cir.1981).. Thus, it is National Union's burden to prove that the exclusion in Endorsement # 005 is applicable to this accident.

The court of appeal found that Endorsement # 005 specifically implied that an employee could be given permission to use a company vehicle outside the course and scope of employment. According to the court of appeal, when an employee is operating a vehicle with the permission of the insured, but outside the course and scope of his employment, liability coverage of $1,000,000 under the general policy would be in force.

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