Campbell v. Markel American Ins. Co.

• Citation: 822 So.2d 617
• Decision Date: 21 September 2001
• Docket Number: No. 2000 CA 1448.,2000 CA 1448.
• Parties: Billy CAMPBELL, Individually and as Representative of all Persons Similarly Situated v. MARKEL AMERICAN INSURANCE COMPANY.
• Court: Court of Appeal of Louisiana (US)

Page 617

822 So.2d 617

Billy CAMPBELL, Individually and as Representative of all Persons Similarly Situated v. MARKEL AMERICAN INSURANCE COMPANY.

No. 2000 CA 1448.

Court of Appeal of Louisiana, First Circuit.

September 21, 2001.

Jody E. Anderman, Jules B. LeBlanc, III, Baton Rouge, Vincent J. Sotile, Jr., Donaldsonville, Christopher A. Kesler, Bruce Kemp, Sylvia Davidow, Houston, TX, Counsel for Plaintiff/Appellee Billy Campbell.

Christine Lipsey, Michael P. Fruge', Baton Rouge, Counsel for Defendant/Appellant Markel American Insurance Company.

James L. Donovan, Jr., Metairie, Counsel—Amicus National Association of Independent Insurers.

Before: GONZALES, KUHN, and CIACCIO¹, JJ.

KUHN, J.

The issue presented in this appeal is: Does a motorcycle collision policy, which provides that the insurer agrees to repair or replace the damaged motorcycle, obligate the insurer to compensate the insured for any diminution in market value that might remain after the insurer has paid for a quality repair job that restores the motorcycle to its pre-accident physical, mechanical and cosmetic condition? The trial court found that the policy provides coverage for the motorcycle's diminished value. We disagree and reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

After Billy Campbell's motorcycle was damaged in an automobile accident, he filed a claim with his insurance company, Markel American Insurance Company (Markel). Pursuant to the provisions of a motorcycle insurance policy affording collision coverage, Campbell asked Markel to pay for the repairs to his motorcycle and to pay for its diminished value. Campbell sought to recover the difference between the pre-damage value of his motorcycle and its value after it had been fully and properly repaired. Markel paid for the repairs but denied Campbell's diminished value claim. As a result, Campbell filed this purported class action suit on behalf of himself and similarly-situated Markel insureds, who Campbell alleges did not receive compensation for their vehicles' diminished value after the vehicles were damaged in accidents. Campbell asserts that Markel's denial of the diminished value claims is a breach of its contract of insurance. Campbell does not claim that Markel failed to perform quality repair jobs on the vehicles in question. Rather, he contends that vehicles that have been damaged in an accident are, by the very nature of their damage and subsequent_ repair worth less than similar vehicles that have not been damaged.

Markel responded with a motion for summary judgment claiming that its policy unambiguously limited its liability to the lesser of "the actual cash value of the [motor]cycle at the time of loss" or the "amount required to repair or replace" it. Markel asserted that this language gave it the option of paying its insured the value of the motorcycle or repairing the motorcycle. Campbell opposed the motion and filed a cross-motion for partial summary judgment on the issue of coverage. Campbell urged that a review of the entire policy establishes Markel's liability for diminished value claims. Alternatively, Campbell maintained that the language of the policy is ambiguous and should be liberally interpreted in favor of finding coverage. After a hearing on the motions and before addressing any class certification issues, the trial court signed a judgment on February 25, 2000, denying Markel's motion for summary judgment and granting Campbell's motion for partial summary judgment.² In its reasons for judgment, the trial court concluded that Markers obligation to "repair" included the obligation to pay for the motorcycle's "diminished value." Stating that the word "repair" was drawn from La. C.C. art. 2315, the court found Markel was obligated to make the insured whole in the same manner that a tortfeasor would be obligated to make his victim whole in a tort context.

Pursuant to Markel's motion, the trial court signed an order that designated as final the judgment granting Campbell's cross-motion for partial summary judgment. The order also stated there was no just reason for delay. Thereafter, Markel suspensively appealed the trial court's February 25, 2000 judgment. Pursuant to La. C.C.P. art. 1915, the portion of the trial court's judgment that granted Campbell's cross motion for partial summary judgment is appealable. But because the denial of a motion for summary judgment is an interlocutory judgment, the portion of the judgment denying Markers motion for summary judgment is not appealable. La. C.C.P. art. 1841; Davis v. Specialty Dicing, Inc., 98-0458, p.5 (La.App. 1st Cir.4/1/99), 740 So.2d 666, 669, writ denied, 99-1852 (La.10/8/99), 750 So.2d 972. A court of appeal, however, has plenary power to exercise supervisory jurisdiction over trial courts and may do so al any time, according to the discretion of the court. Sec La. C.C.P. art. 2201. Supervisory jurisdiction may be exercised to reverse a trial court's denial of a motion for summary judgment, and to enter summary judgment in favor of the mover. Charlet v. Legislature of State of La., 97-0212, pp. 6-7 (La.App. 1st Cir.6/29/98), 713 So.2d 1199, 1202, writs denied, 98-2023, 98-2026 (La.11/13/98), 730 So.2d 934. Because our review of the trial court's grant of Campbell's motion will necessarily decide the coverage issue presented in Markel's motion, we reason that judicial efficiency and the interests of justice are best served by exercising our supervisory jurisdiction to review the denial of Markers motion. Thus, we treat Markers motion to appeal the court's denial of its motion for summary judgment as an application for supervisory writs.

II. ANALYSIS

A. Summary Judgment Law and Standard of Review

Summary judgment procedure is favored in Louisiana. La. art. 966(A)(2). A motion for summary judgment shall be granted when the mover can show "that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law." La. C.C.P. art. 966(B). When a contract is not ambiguous or does not lead to absurd consequences, it will be enforced as written and its interpretation is a question of law for a court to decide. Sanders v. Ashland Oil, Inc., 96-1751, pp. 6, 9-10 (La.App. 1st Cir.6/20/97), 696 So.2d 1031, 1035, 1037, writ denied, 97-1911 (La.10/31/97), 703 So.2d 29. Thus, when the parties agree that a valid contract binds them and that the material facts involved in the dispute are not contested, the contract's application to a case is a matter of law and summary judgment is appropriate. American Deposit Ins. Co. v. Myles, 2000-2457, p. 5 (La.4/25/2001), 783 So.2d 1282, 1286. In the present ease, there are no material issues of fact that are disputed pertaining to the issue of coverage. We address only legal issues. When addressing legal issues, a reviewing court gives no special weight to the findings of the trial court. It conducts a de novo review of questions of law and renders a judgment on the record. Gaylord Container Corp. v. CNA Ins. Companies, 1999-1795, p. 9 (La.App. 1st Cir.4/02/2001), 807 So.2d 864, 870.

B. Policy Language

The Markel policy provides in pertinent part:

V. DAMAGE TO YOUR MOTORCYCLE

Collision Coverage

We will pay for direct and accidental loss to any Insured Motorcycle ... caused by Collision.

Limit of Liability

We agree to pay the lesser of:

A. The actual cash value of the cycle at the time of loss, or if the loss is part of the cycle, the actual cash value of the part; or

B. The amount required to repair or replace the property at the time of loss with deduction for depreciation where it applies. C. Contentions of the Parties

Markel alleges that the trial court erred by treating this case as one sounding in tort. Markel maintains that the resolution of this case hinges on principles of contractual interpretation and that the terms of the policy clearly and expressly limit its obligation to pay only the costs incurred to physically repair the cycle. Markel does not dispute that diminished value is a "direct and accidental loss" under the terms of its policy. Markel asserts, however, that the terms of the policy dictate that its liability is expressly limited to the lesser of the actual cash value of the cycle at the time of loss" or the amount required to "repair or replace" the cycle. Markel contends that this language provides it with the option of paying the pre-accident value of the motorcycle or the amount necessary to repair it; Markel maintains it does not have the dual obligation of paying for repairs and diminished value. Markel urges that the trial court has, in essence, rewritten the policy by finding coverage for the diminished value claim.

Campbell responded that the trial court construed the entire policy rather than focusing on a single provision of the policy and properly concluded that the policy included coverage for diminished value claims. Campbell asserts that the policy's coverage for "direct and accidental loss" encompasses the diminished value of his cycle and that nowhere in the policy does Markel expressly exclude coverage for diminished value claims. Campbell urges that the limitation of liability language cannot operate to limit the scope of coverage and to exclude diminished value as a covered loss.

D. Distinction between First-Party and Third-Party Claims

Our state's appellate courts have recognized that insurers may be held liable for the diminished value of automobiles in suits involving third-party claims—claims brought against a tortfeasor's insurer by plaintiffs who sustained property damages. See Orillac v. Solomon, 33,701, pp. 5-6 (La.App.2d Cir.8/23/2000), 765 So.2d 1185, 1188-89; Smith v. Midland Risk Ins. Co., 29,793, pp. 5-6 (La.App.2d Cir.9/24/97), 699 So.2d 1192, 1196; Davies v. Automotive Casualty Ins., 26,112, pp. 5-6 (La.App.2d Cir.12/7/94), 647 So.2d 419, 422; Romco, Joe, e. Broussard, 528 So.2d 231, 234 (La. App. 3d Cir.), writ denied, 533 So.2d 356 (La.1988). The liability...