Esteve v. Allstate Ins. Co.

• Decision Date: 15 February 1977
• Docket Number: No. 7794,7794
• Citation: 343 So.2d 353
• Parties: Vickey Ann ESTEVE v. ALLSTATE INSURANCE COMPANY et al.
• Court: Court of Appeal of Louisiana — District of US

Page 353

343 So.2d 353

Vickey Ann ESTEVE v.ALLSTATE INSURANCE COMPANY et al.

No. 7794.

Court of Appeal of Louisiana, Fourth Circuit.

Feb. 15, 1977.

Writ Granted May 6, 1977.

Lazard Levy, Marrero, for plaintiff-appellant.

Francipane, Regan p St. Pee$ Chester Francipane, G. T. Breedlove, Metairie, for defendant-third partyplaintiff-appellant, Maryland Cas. Co.

Murphy & Simon, E. Kelleher Simon, New Orleans, for defendant-third party defendant-appellee, Allstate Ins. Co.

Before SAMUEL, LEMMON and GULOTTA, JJ.

GULOTTA, Judge.

We are confronted with the question whether LSA-R.S. 22:655, the 'direct action'statute, is applicable in a personal injury suit filed by a Louisiana resident in a Louisiana court against an insurer (Allstate Insurance Company) of a nonresident driver when the automobile accident giving rise to the damages occurred in Florida and the insurer issued the policy to the nonresident driver in that state.

The facts are that plaintiff sustained injuries as a result of a two-car collision in the State of Florida.Plaintiff was a guest passenger in a vehicle owned by a Louisiana resident.The host-driver was also a Louisiana resident.The other vehicle involved in the accident was owned and driven by a Florida resident.

Plaintiff filed suit in Jefferson Parish against the host-vehicle owner and her insurer, the host-driver and her insurer, and the insurer of the Florida resident-driver.Subsequently, Maryland Casualty (host-owner's insurer) filed a third party demand against Allstate (Florida resident's insurer) and State Farm (host driver's insurer).

The trial court maintained Allstate's exceptions of no right of action and dismissed plaintiff's demand and the third party demand against the nonresident's insurer on the ground that the direct action statute was not applicable.Plaintiff and Maryland Casualty appeal.We affirm.

LSA-R.S. 22:655, as amended, provides for a right of direct action against an insurer when the accident or injury occurred within the State of Louisiana, whether or not the insurance policy was written or delivered in this state.The Louisiana Supreme Court in Webb v. Zurich Insurance Company, 251 La. 558, 205 So.2d 398(1967) extended the application of this statute to suits filed in Louisiana arising out of accidents which occurred outside of the state, provided the insurance policy was issued in the State of Louisiana.In our case, plaintiff seeks to further extend the applicability of the statute to a suit arising out of an accident occurring outside of Louisiana, when the policy was issued outside of the state.

We have not found, nor have we been cited, any cases from this circuit on this question.However, in Morse v. Hartford Casualty Insurance Company, 301 So.2d 741(La.App.3d Cir.1974), the Third Circuit, citing the Webb case, stated that the 'direct action'statute was inapplicable when both: 1) the accident or injury had occurred outside of Louisiana and 2) the policy sued upon had been written or delivered outside Louisiana.The court in Morse concluded that the Louisiana resident-plaintiff had no right of action against the nonresident's insurer even though the insurer was doing business in Louisiana.See alsoKirchman v. Mikula, 258 So.2d 701(La.App.3d Cir.1972).We are in accord with the holding of the Third Circuit in Morse and conclude that the securing of the policy within Louisiana is a sine qua non of the right of direct action in those cases where the accident occurred outside of Louisiana.

However, we are presented with plaintiff's and Maryland Casualty's interesting argument based on Smith v. Globe Indemnity Co., 243 So.2d 882(La.App.1st Cir.1971), in which the First Circuit held that a Louisiana court had jurisdiction over a New York workmen's compensation insurer in a suit arising from a work-related injury in Tennessee to a Louisiana resident where the employment contract had been written in Tennessee.The Smith holding rests on the decision of the U.S. Supreme Court in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485(1952), which determined that no due process prohibition exists to a suit filed in the state of the plaintiff resident against a nonresident defendant if that nonresident is authorized to do and is doing business in the state where the suit is filed, although the cause of action arose outside of that state.Citing a Florida case, Shingleton v. Bussey, 223 So.2d 713(Fla.1969), third partyplaintiff, Maryland Casualty argues that the Florida case holds that a contract of liability insurance is a contract for the benefit of a third party and an injured plaintiff has a direct cause of action against the alleged tort feasor's insurer.Applying the holding of the First Circuit in the Smith case, which cited the holding of the U.S. Supreme Court in Perkins, and following the rationale of the Florida court in Shingleton, ¹plaintiff and Maryland Casualty contend that in addition to the rights conferred by the direct action statute against the insurer of the nonresident defendant, an additional right of action exists where a Louisiana resident files suit in Louisiana against a nonresident defendant when the accident occurred outside of the state if the nonresident defendant does business or is authorized to do business in Louisiana.We do not agree.

As pointed out by our brothers on the Third Circuit, the Smith court was confronted with a jurisdiction question.The direct action statute was not before the Smith court, and Morse distingushes the Smith case on the ground that the Morse court was confronted with a direct action statute and not merely a jurisdiction question.Our problem, as in Morse, is the application of the direct action statute.Absent the right conferred on the Louisiana resident-plaintiff by the direct action statue, no right of action exists in Louisiana against the insurer directly.It is important to realize, at this point, that the Florida resident-driver, Allstate's insured, is not a partydefendant.

If we were to adopt the argument conferring the right upon the Louisiana resident against the insurer of the nonresident defendant by virtue of the combined holdings in the Louisiana Smith case, the Florida Shingleton case and the U.S. Supreme Court Perkins case, no necessity would exist for the adoption of the direct action statute.If we follow plaintiff's and Maryland Casualty's logic, then in those cases where an insurer of a nonresident defendant does business in this state and the cause of action arises outside of Louisiana, any Louisiana resident can file a direct action suit (without the direct action statute) against the insurer without the necessity of joining the nonresident-tortfeasor-insured.We find no authority beyond plaintiff's and Maryland Casualty's argument based on Smith, Perkins and Shingleton.

The U.S. Supreme Court decision in Perkins might be applicable if suit were filed against the nonresident-tortfeasor-defendant who does business in Louisiana, but the direct action acquired against the insurer of the nonresident tortfeasor comes into existence by virtue of the insurance contract.Without the insurance contract, no cause of action exists against the insurer.The effect of the Louisiana Supreme Court decision in Webb is that if the contract were not written in Louisiana and the accident occurred outside of the state, the direct action statute does not apply.Under the circumstances of the instant case, since the accident occurred in Florida and the policy was secured in that state, we conclude, following the rationale of the Louisiana Supreme Court in Webb, plaintiff has no right of direct action against Allstate under LSA-R.S. 22:655.Accordingly, the judgments of the trial court, maintaining Allstate's exceptions of no right of action and dismissing plaintiff's, Vickey Ann Esteve's, and third partyplaintiff's, Maryland Casualty Company's, claims against Allstate Insurance Company, are affirmed.

AFFIRMED.

LEMMON, J., dissents with written reasons.

LEMMON, Judge, dissenting.

The issue in this case is not whether R.S. 22:655 applies here to permit plaintiff to bring a direct action, but whether under the facts of this caseplaintiff is prevented from bringing a direct action as a third party beneficiary under the insurance contract.

Tort victims are generally prevented from bringing a direct action because 'no action' clauses usually contained in liability insurance contracts prohibit the bringing of an action by a third party until certain conditions precedent have been satisfied.Louisiana, viewing contracts of liability insurance as more than a private contract between two parties and realizing that such contracts are issued for the protection of the public and the benefit of injured persons as well as for the protection of the insured, enacted the direct action statute specifically to overcome the prohibition contained in 'no action' clauses.SeeWebb v. Zurich Ins. Co., supra.

In the absence of a valid 'no action' clause in this case, there is nothing to prevent plaintiff from bringing a direct action against Allstate in Louisiana under general contract law, as a third party beneficiary under the insurance contract.¹ Because I conclude that any 'no action' clause in Allstate's policy is invalid, I deem it irrelevant whether R.S. 22:655 applies by its terms in this case.²

Determination of the validity of a 'no action' clause is usually a choice of laws problem.However, in the present case...