Campbell v. Continental-Emsco Co.

• Decision Date: 16 January 1984
• Docket Number: CONTINENTAL-EMSCO,No. 15791-CW,15791-CW
• Citation: 445 So.2d 70
• Parties: Rebecca L. CAMPBELL, et al., Respondents, v.COMPANY, et al., Scott Insurance Agency, Inc., Relators.
• Court: Court of Appeal of Louisiana — District of US

Page 70

445 So.2d 70

Rebecca L. CAMPBELL, et al., Respondents, v. CONTINENTAL-EMSCO COMPANY, et al., Scott Insurance Agency Inc., Relators.

No. 15791-CW.

Court of Appeal of Louisiana Second Circuit.

Jan. 16, 1984.

Writ Denied March 16, 1984.

Lunn, Irion, Switzer, Johnson & Salley by Charles W. Salley, Michael S. Hubley, Shreveport, for relator Scott Ins. Agency, Inc.

Brumfield & Brumfield by William P. Brumfield, H. Alva Brumfield, III, Baton Rouge, for respondents Rebecca L. Campbell, et al.

John Hill, Jr., Lafayette, for defendant Continental-Emsco Co., et al.

Before PRICE, HALL and JASPER E. JONES, JJ.

PRICE, Judge.

This case arises in connection with the wrongful death and survival action brought by plaintiff as a consequence of her husband's death in an accident on an oil rig. Among the numerous defendants named by plaintiff are Ouachita Machine Works, Inc., Employers Fire and Marine Ins. Co., liability insurer of Ouachita, Scott Insurance Agency, and Scott's errors and omissions insurer. Employers and Scott were added by supplemental and amending petition. Employers denied coverage of the accident based on a policy exclusion and was dismissed as a defendant by the trial court. Scott filed an exception of no cause of action which was overruled by the trial court. This court granted Scott's application for a supervisory writ to consider the correctness of the trial court's ruling on the exception of no cause of action.

In order to determine whether the plaintiff has stated a cause of action against a particular defendant, the factual allegations of the petition must be accepted as true. La.C.C.P. Article 927(4); Ruffin v. Strange, 434 So.2d 1200 (La.App. 1st Cir.1983). The facts of this case as established by plaintiffs' allegations are as follows.

Plaintiffs' decedent was struck and killed by a pop-off relief valve and mud pump which suddenly shot from the landbased oil rig on which he was working. Ouachita Machine Works had installed, made up, welded and/or sweated the pump and relief valve to the rig and its negligence in performing this job was the cause of the accident.

Ouachita had engaged Scott Insurance Agency to procure liability insurance for the business. Scott placed this insurance with Employers which issued a liability policy containing an endorsement excluding coverage for completed operations and products hazards. There is thus no coverage under the policy for Ouachita's negligence in the installation of the relief valve and mud pump which struck and killed plaintiff's decedent.

Plaintiff contends defendant Scott was negligent in securing for Ouachita a liability policy which excluded coverage for completed operations and that she has been damaged by the failure to provide proper coverage. She further claims the right to proceed directly against Scott's errors and omissions insurer under the direct action statute. Thus the issue for our resolution is whether an injured tort victim has a cause of action against the insurance agent of the tortfeasor who injures him for the negligent failure to procure full liability insurance coverage.

It has long been the recognized public policy of this state that a policy of liability insurance is issued for the protection of the general public as well as for the security of the insured. Hughes v. Southeastern Fidelity Insurance Co., 340 So.2d 293 (La.1976); West v. Monroe Bakery, 46 So.2d 122 (La.1950). The Louisiana Civil Code provides in Article 1890 that a person may, in his own name, make some advantage for a third person the condition or consideration of a contract, and the contract cannot be revoked if the third person consents to avail himself of the advantage stipulated in his favor. A liability insurance contract is recognized as a stipulation by the insured in favor of a party injured due to the fault of the insured. Dixon v. Shockley, 356 So.2d 96 (La.App. 1st Cir.1978), writ ref. 358 So.2d 642 (La.1978).

Plaintiff cites numerous cases concerning agreements containing stipulations in favor of third parties, but none in which the relationships between the parties correlate to the instant situation. Substantial reliance is placed on the case of Sturcke v. Clark, 261 So.2d 717 (La.App. 4th Cir.1971). In Sturcke, the subrogee of a plaintiff in a tort action was allowed to recover from an insurance agent who had collected a premium for liability as well as collision insurance and had, through clerical error, failed to procure the liability coverage. The court there found the agent undertook an obligation for the benefit of third parties citing La.C.C. Art. 1890 and found plaintiff had a right of action. We are not in accord with the holding in Sturcke and do not feel it is controlling on the...