Gray v. American Nat. Property & Cas. Co.

• Decision Date: 26 February 2008
• Docket Number: No. 2007-CC-1670.,2007-CC-1670.
• Citation: 977 So.2d 839
• Parties: William GRAY, et ux. v. AMERICAN NATIONAL PROPERTY & CASUALTY CO., et al.
• Court: Louisiana Supreme Court

977 So.2d 839

William GRAY, et ux. v. AMERICAN NATIONAL PROPERTY & CASUALTY CO., et al.

No. 2007-CC-1670.

Supreme Court of Louisiana.

February 26, 2008.

Allen & Gooch, Brent Nicolas Carriere, Lafayette, for applicant.

Provosty, Sadler, Delaunay, Fiorenza & Sobel, H. Bradford Calvit, Alexandria; Hall, Lestage & Landreneau, Brian Steele Lestage, De Ridder; Plauche, Smith & Nieset, H. David Vaughn II, Lake Charles; Neblett, Beard & Arsenault, David O'Shee Walker, Alexandria; Charles A. "Sam" Jones, III; for respondent.

Bruce Campbell Dean, Metairie, and Marc Lloyd Frischhertz, New Orleans, for amicus curiae, Louisiana Association for Justice.

CALOGERO, Chief Justice.

The primary issue in this case is the validity of an "Uninsured/Underinsured Motorist Bodily Injury Coverage Form" (hereinafter "UM selection form") that was initialed and signed in blank by a representative of the insured, and subsequently completed and backdated by an insurance agency employee who then sent the form to the insurer. The district court found that the form was invalid and therefore granted summary judgment in favor of the plaintiff in this case ruling that the UM coverage provided by the policy was $1 million, the same amount as the liability coverage, rather than the $100,000 stated on the invalid UM selection form. Finding no error in the district court judgment, the court of appeal denied writs.

Because we agree with the district court that the UM selection form is invalid, we affirm the district court judgment. In order to be valid, a UM selection form must be completed before it is signed by the insured. Allowing a person other than the insured to complete the form after it has been initialed and signed by the insured or insured's representative would not only provide potential for abuse, confusion, and uncertainty, but would also violate the well-settled principles governing the proper completion of UM selection forms.

FACTS AND PROCEDURAL HISTORY

Plaintiff, William Gray, a school bus driver for the Beauregard Parish School Board, allegedly sustained mental and physical injuries resulting from an April 28, 2003, accident that occurred while he was driving his school bus in the course of his employment. The accident allegedly occurred when the driver of the other vehicle ran a stop sign at the intersection of Louisiana highways 113 and 1147 and struck Mr. Gray's 1993 International school bus. The other vehicle was a 1995 Ford truck that was owned by defendant, Greg Nothnagel, and was being driven by Mr. Nothnagel's minor child, Brock Nothnagel. Mr. Gray and his wife, Brenda, filed suit for damages, naming Mr. Nothnagel and his insurer, American National Property & Casualty Co. Alleging that the Nothnagel vehicle was uninsured or underinsured, the Grays also added as a defendant Coregis Insurance Co., which had issued an automobile liability policy to the school board that covered Mr. Gray and other employees.

The record indicates that the school board first contracted with Coregis to provide automobile liability insurance in 2002. By contract dated February 1, 2002, the school board engaged Norris Insurance Consultants, Inc., to serve as "insurance advisor." Norris Insurance Consultants then sought quotes on behalf of the school board for various types of property and liability insurance, including automobile liability insurance. A document listing the "2002 Competitive Quotes" for the various types of insurance sought by the school board indicates that the school board sought $1 million in automobile liability insurance, but only $100,000 in UM coverage for bodily injury ("BI") and $10,000 in UM coverage for property damages ("PD").

The minutes from the March 14, 2002, school board meeting indicate that the school board members voted to purchase insurance from Coregis through Glenn Dean Insurance Agency, Inc. The amounts of coverage were not mentioned in the official minutes. An April 5, 2002, letter from Norris Insurance Consultants to Glenn Dean Insurance Agency provided written confirmation of the coverage awarded by the school board on March 14, 2002. That letter states as follows regarding automobile liability insurance:

Automobile Liability with Coregis Ins Co for a BI-PD combined single limit of $1,000,000 and subject to no deductible. Coverage applies on a comprehensive or Symbol 1 basis. Endorsement CA9933 Ed 02-99, "Employees as Insured's" will be added. Medical Payments for $1,000 per person and Uninsured Motorist BI for $100,000 and UM-PD for $10,000 are additional coverages provided. The liability premium is $129,311 and includes experience rating. Comprehensive and Collision coverage applies to specified vehicles subject to deductibles of $500 and $500 has a premium of $13,655, the grand total of both, $144,908.

According to the minutes from the April 11, 2002, school board meeting, School Board President Jim Rudd was authorized to sign the UM selection form.¹ On March 24, 2003, prior to Mr. Gray's April 28, 2003, accident, the school board agreed to renew the Coregis policy for the policy period April 1, 2003, to April 1, 2004, with the same coverages.

Following discovery in this case, the Grays filed a motion for summary judgment, seeking a ruling from the district court that the UM limits on the Coregis policy were equal to the $1 million liability limits because the UM selection form by which the school board allegedly selected the lower limit of $100,000 was invalid. Among the documents attached to the Grays' motion for summary judgment was "School Board Exhibit 2B," a UM selection form that was accompanied by a letter dated May 28, 2002, on Glenn Dean Insurance Agency letterhead from Sherrie Johnson, CISR, Commercial Underwriter, to the school board. The letter stated as follows:

Please find enclosed the above captioned form. Our records indicate that you have chosen Uninsured Motorist limits of $100,000.

If you would like to change your selection at this time, please mark the form accordingly.

Please be advised that Uninsured Motorist Property Damage is not included under the Uninsured Motorist Coverage.

Even if no change in limits are requested, please sign, date and return the form with the proper selection marked within 10 days. To complete this form, a corporate resolution authorizing an official to make the selection must be attached to the form.

The UM selection form included in "School Board Exhibit No. 2B" contained the signature of School Board President Rudd on the line at the bottom of the form for "Signature-of a Named Insured or Legal Representative" and Dr. Rudd's initials on the line preceding the following statement: "I select UMBI Coverage which will compensate me for my economic and noneconomic losses with limits lower than my Bodily Injury Liability Coverage limits: $ ________ each person $________ each accident." (Emphasis in original.) The spaces for the amount of UM coverage for each person and each accident were blank, as were the spaces for the printed "Name of Insured or Legal Representative," the "Policy Number," and the "Date."

Also included among the documents attached to the Gray's motion for summary judgment was "School Board Exhibit No. 7," which appears to be the same UM selection form described above, except that the blank spaces have been filled in by someone whose handwriting is different from Dr. Rudd's. Specifically, the form has been completed to indicate that the lower limits selected are $100,000 per accident, that the "Named Insured or Legal Representative" is "Beauregard Parish School Board," that the Policy Number is 651-011691, and that the Date the form was completed was April 1, 2002. The same cover letter quoted above is part of "School Board Exhibit No. 7."

On the basis of "School Board Exhibit No. 2B" and "School Board Exhibit No. 7," the Grays argued in their motion for summary judgment that the UM selection form was completed by a "mystery person" at some time after Dr. Rudd initialed and signed the form, and that completion of the form by a person other than the insured, particularly after the form has left the hands of the insured, renders the UM selection form invalid.

In response to the Grays' motion for summary judgment, Coregis filed a cross motion for summary judgment, seeking a ruling that the UM limits on the policy were $100,000 at the time of the accident. In its memorandum in support of its cross motion for summary judgment, Coregis listed the following pertinent "undisputed material facts":

9. By July 10, 2002, the UM rejection form was signed and initialed by Dr. Rudd, on behalf of the School Board, selecting lower UM limits.

10. Upon receipt of the UM rejection form signed and initial [sic] by Dr. Rudd, the UM rejection form was further completed by Glenn Dean's employee, Sherrie Johnson, on or by July 11, 2002, documenting the policy number, date of the policy, and the UM limits of $100,000.

11. Johnson's completion of the form documented the School Board's agreement to set UM limits at $100,000.

(Citations to attachments omitted.) Coregis referred to Ms. Johnson's deposition testimony, which was attached to its cross motion for summary judgment as "Exhibit C," in support of items 10 and 11 quoted above. Coregis argued that Ms. Johnson had authority to complete the UM selection form on behalf of the school board, and that Ms. Johnson's actions had validly "reformed" the policy to reflect the intent of the parties.

Following a hearing in the matter, the district court granted the motion for summary judgment filed by the Grays, and denied the cross motion for summary judgment filed by Coregis. In oral reasons for judgment, the district court found that the UM selection form "was not properly filled out by the required party" because "parts were left blank and later filled in by an insurance company employee, who had no authority to act on behalf of the party who must reject." The district court further found...