Louviere v. Byers

• Court: Court of Appeal of Louisiana
• Writing for the Court: Before FORET and LABORDE, JJ., and REGGIE; LABORDE; FORET; FORET
• Citation: Louviere v. Byers, 526 So.2d 1253 (La. App. 1988)
• Decision Date: 06 April 1988
• Docket Number: No. W87-1266,W87-1266
• Parties: Randy LOUVIERE and Gale Louviere, Plaintiffs-Respondents, v. Nathan O. BYERS and State Farm Mutual Automobile Insurance Company, Defendants- Relators.

Page 1253

526 So.2d 1253

Randy LOUVIERE and Gale Louviere, Plaintiffs-Respondents, v. Nathan O. BYERS and State Farm Mutual Automobile Insurance Company, Defendants- Relators.

No. W87-1266.

Court of Appeal of Louisiana Third Circuit.

April 6, 1988.

Writ Denied June 2, 1988.

Bernard S. Smith, Lafayette, for defendants-relators.

Miller & Miller, Jack D. Miller, Crowley, Martin, Taulbee & Rowe, Terry Rowe, Lafayette, for plaintiffs-respondents.

Before FORET and LABORDE, JJ., and REGGIE, J. Pro Tem. ^*

LABORDE, Judge.

Defendant-relator, State Farm Mutual Automobile Insurance Company (State Farm), seeks supervisory relief from an order of the Sixteenth Judicial District Court, the Honorable Robert M. Fleming presiding, denying the relator's exceptions of no right/no cause of action and/or alternatively relator's motion for summary judgment. We granted writs and stayed the suit. Upon reflection, and much consternation, we conclude that the trial court acted correctly and remand the case for further proceedings consistent with this opinion.

FACTS

This case arises out of an automobile accident that occurred on November 4, 1986. The plaintiffs, Randy and Gale Louviere, sued Mr. Nathan Byers and his insurer, State Farm. Plaintiffs demand damages for medical expenses, mental and physical pain and suffering, economic losses such as wage losses and loss of earning capacity, and exemplary or punitive damages. The amount of compensatory damages sought, that being all items with the exception of the exemplary damages, is $50,000.00. The exemplary damages sought are $100,000.00.

The statutory basis for the exemplary damages sought is La.C.C. art. 2315.4, which allows exemplary damages for a defendant's wanton and reckless conduct whose intoxication, while operating an automobile, is a cause in fact of the injuries. It is alleged that Mr. Byers was intoxicated while driving, and that the intoxication was a cause in fact of the accident.

The relator filed exceptions of no cause and/or right of action and, alternatively, a motion for summary judgment on the ground that State Farm provided no coverage for a claim of exemplary damages. The trial court overruled the exceptions and denied the motion for summary judgment. From this judgment the relator seeks supervisory relief.

SUPERVISORY RELIEF

The denial of a motion for summary judgment is an interlocutory judgment which is not subject to appeal. La.C.C.P. art. 968. Thus, the only remedy is to request the appellate court to exercise its supervisory jurisdiction. Batson v. Time Inc., 298 So.2d 100 (La.App. 1st Cir.1974).

ON THE MERITS

La.C.C. art. 2315.4 was added by Act 511, Sec. 1 of the 1984 legislature. It reads:

"In addition to general and special damages, exemplary damages may be awarded upon proof that the injuries on which the action is based were caused by a wanton or reckless disregard for the rights and safety of others by a defendant whose intoxication while operating a motor vehicle was a cause in fact of the resulting injuries.

The applicable part of relator's insurance policy states:

"We will:

1. pay damages which an insured becomes legally liable to pay because of:

a. bodily injury to others...."

The policy of Louisiana, as a Civil Law jurisdiction, has been to reject punitive damages without specific authority. Now, however, there is a Codal exception making an intoxicated defendant liable for such damages. As the trial court noted, Louisiana courts have historically liberally construed coverage clauses in insurance contracts to uphold coverage of the policy. We must decide if this policy, which does not expressly exclude punitive or exemplary damages, covers those damages.

Two arguments are advanced by the relator to defeat punitive damages liability. The first argument is that the policy does not encompass punitive damages, but only compensatory damages. The second argument assumes, arguendo, that the policy language covers punitive damages, but that that part of the policy is void as it is against public policy for one to be insured against punitive damages. Other issues that arise because of punitive damages include whether the insurer has a duty to defend the insured above and beyond the compensatory damages, and whether the insured should be advised to retain separate counsel with respect to the punitive damage claim.

Relator's arguments are identical to the ones rejected in Creech v. Aetna Casualty & Surety Company, 516 So.2d 1168 (La.App. 2d Cir.1987). There, liability and excess (umbrella) insurance clauses were examined. The language in the liability policy provided in pertinent part:

"A. WE WILL PAY.

1. We will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." (emphasis added)

The excess indemnity policy provided in pertinent part:

"Section 2. INSURING AGREEMENTS

2.1 COVERAGE. The Company will indemnify the insured for ultimate net loss in excess of the applicable underlying limit which the insured shall become legally obligated to pay as damages because of

A. Personal injury,

B. Property Damage, or

C. Advertising Offense

to which this policy applies, caused by an occurrence anywhere in the world, provided that: ...." (Emphasis added)

We detect no meaningful distinction between the phraseology of the Creech policies and the policy in the case sub judice. The policies provide that the insurer will pay "sums" or "damages" which the insured becomes legally liable to pay because of bodily injury. As explained in Creech, "injuries" (along with intoxication) is a condition predicate for exemplary damages under La.C.C. art. 2315.4. There is nothing in the policy excluding exemplary damages--the policy states "We will: 1. pay damages...." Applying the well settled jurisprudential rule that policy language be read broadly in favor of coverage, Craft v. Trahan, 351 So.2d 277 (La.App. 3d Cir.1977) we find the policy language "broad enough to include exemplary damages." Creech, 516 So.2d at 1171-72. State Farm drafted the terms of the insurance contract; so it is bound to the provisions unless public policy is offended. ¹

At the outset, we must recognize that federal courts sitting in Louisiana provide authority for relator's position as to public policy, but only persuasive authority. The lion's share of Louisiana federal court cases hold that liability insurance policies do not cover exemplary damage awards as they are contra bonos mores. The influence of Judge Minor Wisdom's opinion pervades recent federal cases ² which cite the bellwether case of Northwestern National Casualty Company v. McNulty, 307 F.2d 432 (5th Cir.1962). Judge Wisdom reasoned that the public policy of "personal punishment" against the drunk driver overrides the policy of the plaintiff collecting the punitive damages from the insurer, which would presumably be much easier than collection against the insured. Id. at 441. Moreover, the insurer had done nothing wrong to be taxed with punitive damages, and if that were done, the various insurers of the country would have to pass along that cost to the public. The public would thus be punishing itself for the wrong of the drunk driver. Id. at 442. Finally, Judge Wisdom noted that the plaintiff is not being severely harmed since he has already been made whole with compensatory damages. Id. at 440. However, we, like our Brethern in the Second Circuit, reach a contrary result. See Creech, 516 So.2d at 1170.

One of the leading cases finding no public policy prohibition to insuring against exemplary damages is Lazenby v. Universal Underwriters Insurance Co., 214 Tenn. 639, 383 S.W.2d 1 (1964):

"Public policy is the present concept of public welfare or general good. State ex rel. Loser v. National Optical Stores, 189 Tenn. 433, 225 S.W.2d 263 (1949), Ford Motor Company v. Pace, 206 Tenn. 559, 335 S.W.2d 360 (1960). Public policy is practically synonymous with public good and unless the private contract is in terms of such a character as to tend to harm or injure the public good, public interest on public welfare or to violate the Constitution, laws, common or statutory, or judicial decisions of the State, it is not violative of public policy nor void on that account. Home Beneficial Association v. White, 180 Tenn. 585, 177 S.W.2d 545 (1944).

The insurance contract in the case at bar is a private contract between defendant and their assured, Norman Frank Crutchfield, which when construed as written would be held to protect him against claims for both compensatory and punitive damages. Then to hold assured, as a matter of...