Fay v. Willis

• Decision Date: 28 March 1991
• Docket Number: No. CA,CA
• Citation: Fay v. Willis, 577 So.2d 1147 (La. App. 1991)
• Parties: Cindy FAY, Individually and on Behalf of her Minor Children, Shannon Fay, Sheridan Fay and Shane Fay, and as Representative of the Estate of Gary Fay v. Dalton WILLIS, Donald P. Trosclair, the Greater New Orleans Expressway Commission, Liberty Mutual Insurance Company, and State Farm Automobile Insurance Company. 901864. 577 So.2d 1147
• Court: Court of Appeal of Louisiana

Page 1147

577 So.2d 1147

Cindy FAY, Individually and on Behalf of her Minor Children Shannon Fay, Sheridan Fay and Shane Fay, and as Representative of the Estate of Gary Fay v. Dalton WILLIS, Donald P. Trosclair, the Greater New Orleans Expressway Commission, Liberty Mutual Insurance Company, and State Farm Automobile Insurance Company.

No. CA 901864.

577 So.2d 1147

Court of Appeal of Louisiana First Circuit.

March 28, 1991.

Rehearing Denied May 2, 1991.

C. Gordon Johnson, Jr., New Orleans, for defendant-appellant State Farm Auto. Ins. Co.

Thomas E. Loehn, New Orleans, for plaintiff-appellee Cindy Fay.

Before SAVOIE, CRAIN and FOIL, JJ.

FOIL, Judge.

At issue in this case is whether plaintiffs are precluded from recovering under an uninsured motorist policy issued on a vehicle owned and operated by the insured at the time of the fatal accident, where plaintiffs accepted the uninsured motorist limits on a second policy covering the involved vehicle. We hold that the anti-stacking prohibition does not apply so as to bar recovery under the UM policy at issue in this case and affirm the trial court's resolution of the liability issue, but reverse its award of penalties and attorney's fees.

FACTS

Plaintiffs are the wife and children of Gary Fay, who was killed in an automobile accident by an uninsured motorist on February 13, 1987. At the time of the fatal accident, Fay, a Vice President of First National Bank of Covington, was travelling along the Greater New Orleans Expressway (Causeway) in a vehicle he owned, during the course and scope of his employment with the bank. Fay passed a vehicle being driven in a reckless manner by Dalton Willis and attempted to gain the attention of a Causeway policeman to inform him of the reckless motorist. Fay and a police officer pulled their vehicles into the right lane of the Causeway, exited, and stood between them as they awaited the approaching motorist. As Willis neared, he lost control of his vehicle, slammed into the police car, which overturned and struck Fay's car, which in turn knocked Fay into Lake Pontchartrain, where he drowned. Willis, who was uninsured, had a blood alcohol level of .23.

Plaintiffs made a demand against State Farm Mutual Automobile Insurance Company, which issued an automobile insurance policy to the Fays, providing bodily injury and UM coverage on the vehicle Fay owned and was operating at the time of the fatal accident, with UM limits of $100,000.00. This suit followed State Farm's refusal to tender the UM limits. Plaintiffs also sued Federal Insurance Company (Federal) which issued a business automobile liability policy to Fay's employer, with bodily injury and UM limits in the amount of one million dollars. Federal filed a motion for summary judgment claiming that neither Fay nor the involved vehicle were covered under the policy. The trial court granted the motion, and this court reversed. Fay v. Willis, 545 So.2d 1296 (La.App. 1st Cir.), writ denied, 550 So.2d 636 (La.1989).

This court specifically held that the vehicle driven by Fay was covered under the bodily injury portion of the Federal policy, and ruled that the insurance company's attempt to restrict UM coverage to only those vehicles owned by the bank was impermissible. Finding no valid waiver of mandatory UM coverage, this court concluded that UM coverage existed on the Fay vehicle up to the bodily injury limits.

Thereafter, Federal tendered its one million dollar limits to plaintiffs. Plaintiffs then filed a motion for partial summary judgment against State Farm on the issues of coverage, penalties and attorney's fees. State Farm argued that since plaintiffs accepted the limits on the Federal policy, their demand to recover the UM limits under a second policy of insurance constituted an impermissible "stacking" of UM coverages, in contravention of La.R.S. 22:1406(D)(1)(c), known as the "anti-stacking" statute.

The trial court granted the motion in plaintiffs' favor, ruling that the State Farm policy provided primary coverage on the involved vehicle. The court found that the case did not present a "stacking" problem which would preclude recovery under both UM policies. The court also found State Farm's refusal to tender its limits to be arbitrary and capricious and awarded penalties and attorney's fees. State Farm appealed, challenging the liability ruling and the award of penalties and attorney's fees.

DISCUSSION

State Farm does not dispute that its policy provides UM coverage on the vehicle owned and operated by Fay at the time of the fatal accident. Rather, State Farm bases its denial of liability on La.R.S. 22:1406(D)(1)(c), which at the time of the fatal accident in this case, provided as follows:

(c) If the insured has any limits of uninsured motorist coverage in a policy of automobile liability insurance, in accordance with the terms of Subsection D(1), then such limits of liability shall not be increased because of multiple motor vehicles covered under said policy of insurance and such limits of uninsured motorist coverage shall not be increased when the insured has insurance available to him under more than one uninsured motorist coverage provision or policy; provided, however, that with respect to other insurance available, the policy of insurance or endorsement shall provide the following:

With respect to bodily injury to an injured party while occupying an automobile not owned by said injured party, the following priorities of recovery under uninsured motorist coverage shall apply:

(i) The uninsured motorist coverage on the vehicle in which the injured party was an occupant is primary;

(ii) Should that primary uninsured motorist coverage be exhausted due to the extent of damages, then the injured occupant may recover as excess from other uninsured motorist coverage available to him. In no instance shall more than one coverage from more than one uninsured motorist policy be available as excess over and above the primary coverage available to the injured occupant.

State Farm focuses on the language quoted in La.R.S. 22:1406(D)(1)(c) which states that "[i]f the insured has any limits of uninsured motorist coverage in a policy of automobile liability insurance ... such limits of uninsured motorist coverage shall not be increased when the insured has insurance available to him under more than one uninsured motorist coverage provision or policy ..." as establishing a legislative prohibition against recovery under more than one UM policy where the insured is injured while operating an owned automobile. State Farm also focuses on the jurisprudence construing La.R.S. 22:1406(D)(1)(c), the "anti-stacking" provision.

The Supreme Court first construed the anti-stacking provision in Courville v. State Farm Mutual Automobile Insurance Company, 393 So.2d 703 (La.1981), as establishing the general rule that an insured who has insurance available under more than one UM policy may not cumulate, or stack the policies or coverages. The provision also contains a limited exception to the general prohibition against stacking, which permits a person who is injured while occupying a non-owned automobile to recover under the UM policy on the vehicle in which he was injured and an additional UM coverage available to him. The Supreme Court has stated that "[o]nly under this exception may the 'limits of uninsured motorist coverage' be increased on account of the availability of more than one uninsured motorist coverage provision or policy." Taylor v. Tanner, 442 So.2d 435, 437 (La.1983).

Because Fay was operating an owned automobile at the time of the accident, State Farm contends the anti-stacking prohibition applies, thereby limiting Fay's beneficiaries to recovery under one available UM policy. State Farm also relies on Wyatt v. Robin, 518 So.2d 494 (La.1988), in support of its contention that plaintiffs may not recover under its policy because they had already selected from available UM coverage. In Wyatt, the insured was injured while driving an owned automobile, which was insured by a policy containing UM limits. The plaintiff in that case was also an omnibus insured under three other automobile policies, all of which had UM coverage available. After accepting the limits of the policy covering the involved vehicle, the plaintiff sought to recover the higher UM limits of one of the other available policies. At issue was whether the plaintiff could only recover under the policy on the vehicle he owned and was operating at the time of the accident. The Supreme Court held that although the anti-stacking provision limits the amount one can recover where several UM policies are available, it does not limit one's access to available coverage. The Court ruled that the insured was entitled to select among all available UM coverages the one he would prefer to recover under, and was not limited in this selection to the policy on the involved vehicle. State Farm contends that Wyatt establishes the rule that even though an insured occupying an owned automobile may select from all available UM coverages, he must select only one UM policy under which to recover. ¹ Because plaintiffs have made that selection by accepting the one million dollar limits of the Federal policy, State Farm argues they are barred from recovering under an additional UM policy.

While State Farm's argument may be supported by a literal reading of the anti-stacking provision, we agree with plaintiffs' position that they are entitled to recover under both UM policies issued on the involved vehicle. In Pardue v. Dean, 515 So.2d 543 (La.App. 1st Cir.1987), this court concluded that where a plaintiff is injured while occupying an owned automobile, the anti-stacking statute does not prohibit recovery under more than one policy covering the involved vehicle. In Pardue, the plaintiff was injured while occupying an owned automobile upon which there was a policy of insurance providing UM coverage. The plaintiff...