Breaux v. Government Emp. Ins. Co.

• Decision Date: 09 April 1979
• Docket Number: No. 63383,63383
• Citation: 369 So.2d 1335
• Parties: Donald A. BREAUX and Julia A. Breaux v. GOVERNMENT EMPLOYEES INSURANCE COMPANY and Traders and General Insurance Company.
• Court: Louisiana Supreme Court

Page 1335

369 So.2d 1335

Donald A. BREAUX and Julia A. Breaux v. GOVERNMENT EMPLOYEES INSURANCE COMPANY and Traders and General Insurance Company.

No. 63383.

Supreme Court of Louisiana.

April 9, 1979.

Michael J. Samanie, Robert L. Barrios, Law Offices of Michael J. Samanie, Houma, for plaintiff-applicants.

Watson, Blanche, Wilson & Posner, Baton Rouge, for Government Emp. Ins. Co.

E. Ross Buckley, Jr., Hebert, Abbott & Horack, New Orleans, for Traders and General Ins. Co.

MARCUS, Justice.

Donald A. Breaux and Julia A. Breaux instituted this action against Government Employees Insurance Company (GEICO) to recover damages for the death of their daughter, Mary Ann Breaux, resulting from an automobile accident.

It is alleged that Mary Ann Breaux was a guest passenger in an automobile operated by Gayle M. Ayo and insured under a policy issued by GEICO to Samuel L. Ayo at the time of the accident. Liability limits of the GEICO policy were $50,000 per person and $100,000 per accident; the policy also contained uninsured motorist coverage in the same amounts.

By supplemental and amended petition, plaintiffs named Traders and General Insurance Company (Traders) as a defendant, alleging that, at the time of the accident, Traders had a policy in effect covering motor vehicles owned by plaintiffs which provided uninsured motorist coverage in the amount of $20,000 per person and $40,000 per accident. Plaintiffs alleged that, because their damages might exceed the limits of liability coverage under the GEICO policy, they were entitled to recover pursuant to the uninsured motorist coverage under the policy issued by Traders to them. Plaintiffs also named Gayle M. Ayo (host driver) as a defendant.

Prior to trial, plaintiffs settled their claims against GEICO for $39,700 and released GEICO from all claims arising out of the accident. The release expressly relinquished all of plaintiffs' claims against GEICO under both the liability and uninsured motorist provisions of its policy. The payment received by plaintiffs from GEICO was a portion of the liability coverage of GEICO's policy, the remainder of the $100,000 liability limit having been depleted through settlement with other parties injured in the accident. Plaintiffs proceeded with their claim against Traders and Gayle M. Ayo.

Traders answered generally denying the allegations in plaintiffs' petition and further answered alleging that the GEICO policy (issued with respect to the Ayo vehicle) afforded uninsured motorist protection to Mary Ann Breaux, a guest passenger in the Ayo vehicle and deceased daughter of plaintiffs. Traders contended that the uninsured motorist coverage under the GEICO policy was primary and that any uninsured motorist coverage under the Traders policy was excess, becoming effective only after the primary uninsured motorist coverage provided by the GEICO policy had been exhausted. Because plaintiffs released GEICO from all liability under the uninsured motorist coverage of GEICO's policy, Traders argued that it must be given credit for the amount of GEICO's uninsured motorist coverage which was not pursued by plaintiffs. ¹ In addition, Traders third partied Gayle M. Ayo, alleging that, because her negligence was the sole cause of the accident, it should be allowed recovery against her for any sums recovered by plaintiffs against Traders.

The trial was limited to the issues of quantum and coverage by Traders as Gayle M. Ayo's negligence had been stipulated prior to trial. The trial court rendered judgment in favor of plaintiffs and against Traders in the sum of $76,904.65 pursuant to the uninsured motorist coverage under the policy issued by Traders to plaintiffs. The judgment, however, credited Traders for the amount received by plaintiffs in settlement with GEICO, thus resulting in an award against Traders in the sum of $37,204.65. Judgment was granted in favor of Traders and against the third party defendant, Gayle M. Ayo, in the full sum of $37,204.65.

The court of appeal reversed the judgment of the trial court. Although the terms of the GEICO policy expressly excluded uninsured motorist coverage to plaintiffs under the facts of this case, the court noted that La.R.S. 22:1406D(2)(b) includes within the definition of an uninsured motor vehicle "an insured motor vehicle when the automobile liability insurance coverage on such automobile is less than the amount of damages suffered by an insured and/or the passengers in the insured's vehicle at the time of (the) accident . . . ." Therefore, since the collective damages sustained by the passengers in the Ayo vehicle exceeded GEICO's liability coverage, the Ayo vehicle was statutorily defined as an uninsured vehicle. Accordingly, plaintiffs could recover under both the liability and uninsured motorist coverage of the GEICO policy, making the uninsured motorist coverage under the Traders policy excess to these coverages. Finally, since the limits of GEICO's primary uninsured motorist coverage were $50,000 per person and $100,000 per accident, by analogous consideration of the settlement effected by plaintiffs and GEICO under GEICO's identical liability coverage, plaintiffs' share under the primary uninsured motorist coverage would have been at least $39,700. Therefore, Traders, as excess insurer, was entitled to a credit of said amount against the judgment in favor of plaintiffs. Since the judgment in favor of plaintiffs was in the amount of $37,204.65, the court concluded that the judgment of the trial court had to be reversed. ² On application of plaintiffs, we granted certiorari to review the correctness of this decision. ³

The sole issue presented for our consideration is whether the GEICO policy (issued with respect to the Ayo vehicle) affords uninsured motorist coverage to plaintiffs' daughter (a guest passenger in the Ayo vehicle) when the sole cause of the accident was the negligence of the host driver of that vehicle. If we find that our uninsured motorist statute (La.R.S. 22:1406) mandates such coverage, then Traders would be entitled to the credit allowed by the court of appeal.

It is conceded by the parties before us that the terms of the GEICO policy exclude uninsured motorist protection under the facts presented here. ⁴ However, it is well settled that our uninsured motorist statute embodies public policy and, thus, any clause in a policy in derogation of the mandatory requirements set forth in the statute is invalid insofar as it conflicts with the statute. See Seaton v. Kelly, 339 So.2d 731 (La.1976); Deane v. McGee, 261 La. 686, 260 So.2d 669 (1972); Graham v. American Casualty Co. of Reading, Pa., 261 La. 85, 259 So.2d 22 (1972). Hence, we must determine whether the clause in the GEICO policy which denied uninsured motorist coverage to plaintiffs in the instant case is invalid as being in derogation of the mandatory requirements set...