Burns v. Fernandez

• Decision Date: 10 June 1981
• Docket Number: Nos. 11481,11482,s. 11481
• Citation: Burns v. Fernandez, 401 So.2d 1033 (La. App. 1981)
• Parties: Linda Gail BURNS, w/o and David Burns v. Edward FERNANDEZ, Toledo National Insurance Co. and Hartford Insurance Company and New Orleans Easter Seal Society, Inc. and Northwest Insurance Co.
• Court: Court of Appeal of Louisiana — District of US

Page 1033

401 So.2d 1033

25 A.L.R.4th 880

Linda Gail BURNS, w/o and David Burns v.Edward FERNANDEZ, Toledo National Insurance Co. and Hartford Insurance Company and New Orleans Easter Seal Society, Inc. and Northwest Insurance Co.

Nos. 11481, 11482.

Court of Appeal of Louisiana, Fourth Circuit.

June 10, 1981.

Rehearing Denied Aug. 17, 1981.

Stephen C. Kogos, New Orleans, for Linda Gail Burns, plaintiff, appellee and appellant.

Roger J. Larue, Jr., Metairie, for New Orleans Easter Seal Society, Northwest Insurance Co., defendants.

Nelson, Nelson & Lombard, Ltd., Irving H. Koch, New Orleans, for Edward Fernandez, defendant.

Paul P. Rutledge and David G. Fassnacht, Metairie, for Hartford Insurance Co., defendant-appellant.

Before SAMUEL, REDMANN and BOUTALL, JJ.

BOUTALL, Judge.

This appeal arises from a judgment of the trial court awarding damages to the plaintiffs for personal injuries sustained in an automobile accident.

On October 26, 1976, at about 7:30 in the morning, one of the plaintiffs, Linda Burns, was operating a motor vehicle on behalf of her employer the New Orleans Easter Seal Society (hereinafter referred to as NOESS) when her vehicle was struck from the rear by an automobile being driven by the defendantEdward Fernandez.Mrs. Burns sustained injuries to her neck and back.Shortly thereafter, Mrs. Burns and her husband David Burns filed suit to recover damages for the personal injuries sustained by the former against Fernandez for his alleged negligence in causing the accident and injuries, Toledo National Insurance Co. and All-Star Ins. Corp.(hereinafter referred to as Toledo and All-Star respectively) as insurers of Fernandez, and Hartford Insurance Co.(hereinafter referred to as Hartford) as uninsured motorist insurer of NOESS.Fernandez answered and filed a third party demand against Toledo and All-Star as his insurers requesting that they indemnify him for any sums for which he may be liable unto plaintiff.Toledo, by a petition of concursus, deposited $5,000 into the registry of the trial court which figure represented the maximum limits of its coverage.Hartford filed a third party demand against Fernandez, Toledo and All-Star for indemnification in the event Hartford was held liable unto the plaintiffs.

A second suit was filed by Mrs. Burns individually and against NOESS, as her employer, and its insurer Northwest Insurance Co.(hereinafter referred to as Northwest) for the recovery of workman's compensation benefits.NOESS and Northwest filed a third party demand against Fernandez, Toledo, and Hartford to recover any sums which they may be liable for unto the plaintiffs.These two suits were consolidated for trial.

Upon trial on the merits of this matter, the lower court entered judgment as follows: 1) in favor of the plaintiffs and against Fernandez and Toledo in the amount of $5,000, which figure represents the maximum amount of coverage under the insurance policy; 2) in favor of the plaintiffs and against Hartford in the amount of $31,960.35, which figure represents recovery under the uninsured motorist provision in the policy of NOESS; 3) in favor of the plaintiffs and against Edward Fernandez and Hartford in solido, in the amount of $10,000; 4) in favor of Northwest and against the plaintiffs and Hartford in the amount of $10,270.52; and 5) dismissal of the workman's compensation demands made by Mrs. Burns.

On appeal, a multitude of issues have been raised for our consideration.For the sake of clarity and understanding, each issue will be set apart and considered individually.

UNINSURED MOTORIST COVERAGE

At the time of the accident on October 26, 1976 Fernandez was covered under two different policies of insurance; one with Toledo wherein coverage was provided in the amount of $5,000 per person and the other with All-Star wherein coverage amounted to $95,000 per person.Also, at this time, NOESS was insured by Hartford under a comprehensive liability policy which provided coverage for its fleet of vans as well as an uninsured motorist provision.All three of these insurers were named as defendants in this matter as per their respective policies of insurance.Subsequently, on March 1, 1977, by order of the Circuit Court of Milwaukee County, Wisconsin, All-Star was ordered liquidated because of its condition of insolvency.This court further ordered that all pending actions and proceedings against All-Star were thereby abated.A similar ruling was entered on April 22, 1977 by the District Court for the Parish of East Baton Rouge.Shortly before trial, Toledo filed a petition for concursus and deposited $5,000 into the registry of the court, which figure represented the maximum limits of its coverage.

The uninsured motorist provision of the Hartford policy with NOESS provided coverage in the amount of $5,000 per person per vehicle or $10,000 per accident.This provision listed NOESS as the named insured and described those individuals who would be regarded as "persons insured" as follows:

"II.PERSONS INSURED

"Each of the following is an insured under this insurance to the extent set forth below:

"(a) The named insured and any designated insured and, while residents of the same household, the spouse and relatives of either;

"(b) any other person while occupying an insured highway vehicle ; and

"(c) any person, with respect to damages he is entitled to recover because of bodily injury to which this insurance applies sustained by an insured under (a) or (b)."

The basic issue here is whether the plaintiffs will be permitted to "stack" the coverage for all 26 vans insured under the uninsured motorist provision or will their recovery be limited to the uninsured motorist benefits for the particular vehicle which Mrs. Burns occupied at the time of the accident.¹

Mrs. Burns contends that she is a named insured under the uninsured motorist provision and she should be permitted to stack the coverage of all 26 vehicles covered under the policy, thereby exposing Hartford to a possible liability of $260,000.The trial court adopted this contention reasoning that since separate premiums were paid for the benefit of the employees of NOESS, Mrs. Burns would be permitted to stack the uninsured motorist coverage.

In Briley v. Falati, 367 So.2d 1227(4th Cir.1979) Writ denied, 369 So.2d 1379(La.1979)we were faced with a similar issue of whether to permit stacking under an uninsured motorist provision of an insurance policy.In that casewe distinguish between the named insured and the permissive user in determining whether stacking would be allowed.The named insured was regarded as the party so named in the policy of insurance and the permissive user being the party insured merely by virtue of his presence in an insured vehicle.Stacking was permitted for the named insured based on the theory that premiums were paid for this particular type of coverage; it was not allowed for the permissive user as no additional premiums were paid for by him or on his behalf.Nevertheless, the permissive user would be allowed uninsured motorist benefits but only insofar as the vehicle in which he was present at the time of the accident.Furthermore, we noted that the permissive user would not be precluded from such coverage as R.S. 22:1406D(1)(b) permits such additional coverage for the permissive user provided he contracted for and paid for additional coverage.We stated therein:

"....Though a permissive user is clearly entitled to be considered an omnibus insured as to the uninsured motorist coverage provided that vehicle, he has no other implicit or actual right.Louisiana drivers who, perceiving the need for uninsured motorist coverage in greater than the basic amounts, have the opportunity to purchase same and, in so doing, are entitled, under certain circumstances, to 'stack' that coverage with the uninsured motorist coverage existent on an individually borrowed or leased vehicle, but that is only because the concerned individual anticipated his needs and, thereupon, contracted for and paid for additional coverage.

The so-called "premium payment" rationale adopted by this court is not an original one.It has been adopted in several jurisdictions.SeeLambert v. Liberty Mutual Insurance Co., 295 Ala. 414, 331 So.2d 260(1976);Cunningham v. Ins. Co. of North America, 213 Va. 72, 189 S.E.2d 832(1972);Sturdy v. Allied Mutual Ins. Co., 203 Kan. 783, 790, 457 P.2d 34, 40(1969).

In applying the above rationale to the case before uswe find that the terms of the policy list NOESS as the named insured.The policy further indicates that Mrs. Burns in her capacity as an employee of NOESS is a permissive user insofar as the uninsured motorist provision is concerned as she was insured merely by virtue of her presence in the insured motor van owned by NOESS.These findings are consistent with the premiums paid by NOESS for uninsured motorist coverage.The policy indicates that NOESS paid a separate.$9.00 premium for each of their 26 vehicles for uninsured motorist coverage in the amount of $5,000 per person per vehicle or $10,000 per accident per vehicle.The total premium that was paid was $234.It can't be seriously contended that the $234 premium paid by NOESS would permit stacking by both the named insured NOESS and the permissive user Mrs. Burns.The premium payment rationale supports a finding that the premium paid was only sufficient to permit stacking by NOESS and certainly not by Mrs. Burns.Stacking by the permissive user would be permitted had the appropriate premium been paid, but there is no record of any such payment by Mrs. Burns or on her behalf by NOESS.Therefore, we reverse the finding of the trial court permitting stacking by Mrs. Burns and hold that her recovery under the uninsured motorist provision of the Hartford policy is limited to the benefits as per the particular vehicle occupied by her at the time of the accident.

The trial court as well as the...