Cadwallader v. Allstate Ins. Co.

• Citation: 848 So.2d 577
• Decision Date: 27 June 2003
• Docket Number: No. 2002-C-1637.,2002-C-1637.
• Parties: Brian CADWALLADER, et al. v. ALLSTATE INSURANCE COMPANY, et al.
• Court: Louisiana Supreme Court

848 So.2d 577

Brian CADWALLADER, et al. v. ALLSTATE INSURANCE COMPANY, et al.

No. 2002-C-1637.

Supreme Court of Louisiana.

June 27, 2003.

James L. Donovan, Jr., Metairie, Counsel for Applicant.

Brian A. Cadwallader, New Orleans, Counsel for Respondent.

KNOLL, Justice.

In this writ, the sole issue to be determined is whether foster children of the insured qualified as "relatives" under the uninsured motorist policy, which limited coverage to the insured and "resident relatives." The court of appeal reversed the trial court and held that the inclusion of the term "resident relative" was ambiguous as applied to the insured's foster children and, thus, had to be construed as including foster children. We granted Allstate's writ application to determine the correctness of that decision. Cadwallader v. Allstate, 02-1637 (La. 10/25/02), 827 So.2d 1156. For the following reasons we reverse the court of appeal, finding that the term "relative" is not an ambiguous term and where the policy definition of "relative" does not specifically include foster children, the term "relative" does not include a foster child of the insured.

FACTS AND PROCEDURAL HISTORY

Plaintiffs, M.S., N.A., and O.P.,¹ foster children of Dinnah Ruffin, were involved in a motor vehicle accident while guest passengers in a vehicle owned by Marietta Beraud and driven by Natalie Beraud. Plaintiffs filed suit against Natalie Beraud and Allstate as the liability insurer of Natalie Beraud and as the uninsured/underinsured motorist (UM) insurer of Dinnah Ruffin.² The plaintiffs' claims against Allstate in its capacity as the liability insurer of Beraud were settled. The plaintiffs and Allstate filed cross motions for summary judgment on the issue of whether or not the foster children were covered under Ms. Ruffin's UM policy with Allstate. Coverage for the plaintiffs under the UM policy is dependent upon whether they are "resident relatives" under the policy. The district court granted Allstate's motion for summary judgment, and denied plaintiffs' motion for summary judgment. The court of appeal reversed because it found the term "resident relative" to be vague and ambiguous without an accompanying definition of the term "relative."

DISCUSSION

Policy of Insurance

We granted this writ solely to address the issue of whether the term "relative" is ambiguous and thus construed against the insurer. The policy issued by Allstate to Ms. Ruffin provides in "Part III Uninsured Motorist Coverage SS" the following pertinent provision:

We will pay those damages which an insured person is legally entitled to recover from the owner or operator of an uninsured auto because of bodily injury or property damage sustained by an insured person.... Injury must be caused by accident and arise out of the ownership, maintenance or use of an uninsured auto. * * *

INSURED PERSONS

1. You and any resident relative.

2. Any person while in, on, getting into or out of your insured auto with your permission.

3. Any other person who is legally entitled to recover because of bodily injury to you, a resident relative, or an occupant of your insured auto with your permission.

* * *

DEFINITIONS

* * *

4. "Resident"-means a person who physically resides in your household with the intention of continuing residence there. Your unmarried dependent children while temporarily away from home will be considered residents if they intend to resume residing in your household.

5. "You" or "Your"-means the policyholder named on the declarations page and that policyholder's resident spouse. (Emphasis in original).

An insurance policy is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code. Carbon v. Allstate Ins. Co., 97-3085, p. 4 (La.10/20/98), 719 So.2d 437, 439; Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 93-0911, p. 5 (La.1/14/94), 630 So.2d 759, 763. The judiciary's role in interpreting insurance contracts is to ascertain the common intent of the parties to the contract. See La. Civ. Code art. 2045; Carbon, 719 So.2d at 439; Louisiana Ins., 630 So.2d at 763.

Words and phrases used in an insurance policy are to be construed using their plain, ordinary and generally prevailing meaning, unless the words have acquired a technical meaning. See La. Civ Code art. 2047; Peterson v. Schimek, 98-1712, p. 5 (La.3/2/99), 729 So.2d 1024, 1028-29; Carbon, 719 So.2d at 440-441; Reynolds, 634 So.2d at 1183. An insurance contract, however, should not be interpreted in an unreasonable or strained manner under the guise of contractual interpretation to enlarge or to restrict its provisions beyond what is reasonably contemplated by unambiguous terms or achieve an absurd conclusion. Carrier v. Reliance Ins. Co., 99-2573, p. 11 (La.4/11/00), 759 So.2d 37, 43; Peterson, 729 So.2d at 1029. The rules of construction do not authorize a perversion of the words or the exercise of inventive powers to create an ambiguity where none exists or the making of a new contract when the terms express with sufficient clearness the parties' intent. Succession of Fannaly v. Lafayette Ins. Co., 01-1355, p. 4 (La.1/15/02), 805 So.2d 1134, 1138; Peterson, 729 So.2d at 1029.

Ambiguous policy provisions are generally construed against the insurer and in favor of coverage. La. Civ.Code art. 2056; Carrier, 759 So.2d at 43; Louisiana Ins., 630 So.2d at 764. Under this rule of strict construction, equivocal provisions seeking to narrow an insurer's obligation are strictly construed against the insurer. Carrier, 759 So.2d at 43. That strict construction principle applies only if the ambiguous policy provision is susceptible to two or more reasonable interpretations; for the rule of strict construction to apply, the insurance policy must be not only susceptible to two or more interpretations, but each of the alternative interpretations must be reasonable. Carrier, 759 So.2d at 43-44, (emphasis in original); Louisiana Ins., 630 So.2d at 770.

If the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written. Fannaly, 805 So.2d at 1137; Louisiana Ins., 630 So.2d at 764. Courts lack the authority to alter the terms of insurance contracts under the guise of contractual interpretation when the policy's provisions are couched in unambiguous terms. Peterson, 729 So.2d at 1029; Louisiana Ins., 630 So.2d at 764. The determination of whether a contract is clear or ambiguous is a question of law. Louisiana Ins., 630 So.2d at 764.

The Term "Relative"

With these settled principles of construction in mind, we now turn to the policy at issue before us and whether the term "relative" was ambiguous. As a general rule, when the word "relative" is used in insurance contracts it is intended to include persons related by marriage as well as blood. Zeringue v. Zeringue, 94-1411, p. 2 (La. Ct.App. 1 Cir. 4/7/95), 654 So.2d 721, 722,writ denied,95-1660 (La.10/6/95), 661 So.2d 471 (citing Hernandez v. Comco Ins. Co., 357 So.2d 1368, 1370 (La. Ct.App. 4 Cir.1978), writ denied,359 So.2d 1305 (La.1978)). Our appellate courts have consistently held that the term "relative" includes relatives by blood or marriage. 15 William McKenzie & H. Alston Johnson, III, Louisiana Civil Law Treatise—Insurance Law and Practice § 43, p. 128 (2d ed.1996). The First Circuit found no merit to the argument that the insurance policy was ambiguous because it did not define the term "relative." Zeringue, 654 So.2d at 722. As that court correctly noted, the jurisprudence clearly indicates that the term "relative" includes persons related by blood as well as marriage. Zeringue, 654 So.2d at 723; see also Hernandez, supra; Robertson v. Aetna Casualty & Surety Ins. Co., 629 So.2d 445, 446 (La. Ct.App. 3 Cir.1993); Liprie v. Michigan Millers Mut. Ins. Co., 143 So.2d 597, 601 (La. Ct.App.3 Cir.1962).

Webster's Universal Unabridged Dictionary (1989) defines "relative" as "one who is connected with another or others by blood or marriage." In the Oxford English Dictionary (1989) and in Black's Law Dictionary, 6th ed., the word "relative" is defined as "a kinsman; a person connected with another by blood or affinity." The Third Circuit stated in Liprie, supra, that a review of the many definitions of the word "relative" contained in Words and Phrases indicates that when the word relative is used in insurance contracts and where no other specific definition is given, it is generally interpreted as including persons who are related by affinity or marriage as well as by blood or consanguinity. Liprie, 143 So.2d at 601. A review of Words and Phrases, Vol. 60, p. 221, reveals that the term "relative" indicates persons related by blood as well as marriage. In our review of Louisiana's jurisprudence, we find no case which includes a foster child within the definition of "relative."

In further study of this issue, we have looked at authorities and courts outside of Louisiana for a comparison and find these other sources are of the same view that we express in this opinion. Specifically, one authority states that in the absence of policy definitions to the contrary, the term "relative" of the insured has been held not to include a former or current foster child of the insured. 8 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d, § 114:19, p. 114-32 (1997). Addressing the issue of whether a foster child could be considered a "relative" of the policyholder so as to be entitled to liability coverage under the terms of the policy, the Georgia appellate court found that pursuant to the common understanding of the word "relative," the existence of the foster parent-child relationship did not operate to make them relatives within the contemplation of the policy. Ledford v. State Farm Mutual Auto. Ins. Co., 189 Ga.App. 866, 867, 377 S.E.2d 693, 695 (1989), aff'd, 259 Ga. 560, 386 S.E.2d 662 (1989). Unless expressly...