Magnon v. Collins

• Decision Date: 07 July 1999
• Docket Number: No. 98-C-2822.,98-C-2822.
• Citation: 739 So.2d 191
• Parties: Rhett C. MAGNON v. Gwendolyn COLLINS, et al.
• Court: Louisiana Supreme Court

739 So.2d 191

Rhett C. MAGNON v. Gwendolyn COLLINS, et al.

No. 98-C-2822.

Supreme Court of Louisiana.

July 7, 1999.

Joseph Maselli, Jr., Plauche, Maselli, Landry & Parkerson, New Orleans, Diane Sandra Mitnik, New Orleans, Counsel for Applicant.

Paul C. Miniclier, William Ryan Acomb, J. Don Kelly, Porteous, Hainkel, Johnson & Sarpy, New Orleans, Stephen Robert Barry, Weiss & Eason, New Orleans, Counsel for Respondent.

CALOGERO, Chief Justice.¹

On June 15, 1992, a vehicle owned and operated by plaintiff, Rhett C. Magnon, was rear-ended by a vehicle owned and operated by Gwendolyn Collins. At the time of the accident, Magnon was acting within the course and scope of his employment with Phelps Dunbar, L.L.P., as a private investigator. More particularly, he was traveling to meet an investigator at the Jefferson Parish Detective Bureau in connection with a case being handled by Phelps Dunbar. Prior to departing to meet the investigator, Magnon had loaded his car with his camera, brief case, and similar items.

Magnon filed suit against Collins, the Louisiana Insurance Guarantee Association ("LIGA"),² and his personal uninsured/ underinsured motorist ("UM") carrier, State Farm Mutual Automobile Insurance Company. In turn, State Farm filed a third-party demand against Vigilant Insurance Company, alleging that Magnon was entitled to primary or co-primary UM coverage under a commercial general liability ("CGL") policy Vigilant had issued to Magnon's employer, Phelps Dunbar.³ Subsequently, Magnon amended his petition and made a similar assertion when he named Vigilant as a defendant and claimed that he was entitled to UM coverage under the policy issued by Vigilant to Phelps Dunbar.

State Farm and Vigilant filed motions for summary judgment on the issue of Vigilant's liability, State Farm contending there was $1,000,000.00 of UM coverage under Vigilant's policy and Vigilant contending there was no UM coverage. LIGA filed a motion for summary judgment as well, asserting that the policies issued by State Farm and Vigilant provided UM coverage in excess of the goodfaith amount in dispute, and thus it was entitled to dismissal pursuant to La.R.S. § 22:1386, which requires generally exhaustion of rights under other policies before recovering from LIGA. The trial court granted State Farm's motion, and denied Vigilant's, holding that Vigilant's policy did provide UM coverage to Magnon and such coverage should be applied on a co-primary basis with State Farm's coverage. The trial judge also granted LIGA's motion for summary judgment, holding that State Farm's and Vigilant's policies provided ample coverage for Magnon's damages. Vigilant suspensively appealed the trial court's judgment granting the motions of State Farm and LIGA, and denying Vigilant's own. The court of appeal affirmed the trial court's judgment. Upon the application of Vigilant, we granted certiorari to review the correctness of the lower courts' judgments.

Vigilant's policy is not an auto liability policy and no specific autos are identified therein. Rather, Vigilant's policy is a CGL policy which contained a separate section entitled Non-Owned and Hired Auto Liability Insurance. Under the terms of this section, the policy provides $1,000,000.00 of auto liability coverage, but does not expressly provide any UM coverage. Nonetheless, UM coverage was not validly rejected. Under the same auto liability section, the policy provides that "the words `you' or `your' refer to the Named Insured shown in the Declarations." That named insured is Phelps Dunbar. Moreover, the policy provides that "COVERED AUTO means an auto you do not own." Thus, it is undisputed that a covered auto is any auto not owned by Phelps Dunbar. The policy then discusses "insured" in the following manner:

WHO IS INSURED

Each of the following is an insured under this insurance to the extent set forth below:

1. you for any covered auto.

2. anyone else while using, with your permission, a covered auto except:

a. the owner or anyone else from whom you hire or borrow a covered auto.

b. your employee if the covered auto is owned by that employee or a member of his or her household.

c. someone using a covered auto while he or she is working in a business of selling, servicing, repairing or parking autos unless that business is yours.

d. anyone other than your employees, partners, a lessee or borrower or any of their employees, while moving property to or from a covered auto.

e. a partner of yours for a covered auto owned by him or her or a member of his or her household.

3. anyone liable for the conduct of an insured described above but only to the extent of that liability.

Vigilant asserts that Magnon is not an insured under the clear and unambiguous language of the policy, which, according to Vigilant, dispenses with any need to discuss whether Magnon is entitled to UM coverage. Specifically, Vigilant contends that Magnon is excluded from the definition of insured by section 2(b) of the policy because he was an employee of Phelps Dunbar driving a car he owned, which automobile qualifies as a "covered auto," i.e., a car not owned by Phelps Dunbar. Vigilant's assertion that Magnon was driving a covered auto owned by him is not disputed by any of the parties. Vigilant avers that section 2(d) of the policy's definition of insured does not apply to Magnon because it merely excludes non-employees from coverage while moving property to or from a covered auto. Vigilant's interpretation of section 2(d) is best demonstrated in the bracketed, italicized text below:

Each of the following is an insured ... to the extent set forth below:

2. anyone else [anyone other than Phelps Dunbar] while using, with your [Phelps Dunbar's] permission, a covered auto [a car not owned by Phelps Dunbar] except:

d. anyone other than your employees [or, in other words, non-employees]... while moving property to or from a covered auto [a car not owned by Phelps Dunbar].

State Farm and LIGA (which adopted the arguments and briefs submitted by State Farm) agree with Vigilant that if Magnon is not an insured for auto liability purposes under the policy language, then he is not entitled to UM coverage. They do, however, dispute Vigilant's conclusion that Magnon is not an insured under the policy's definition. State Farm and LIGA assert that the policy contains conflicting definitions of insured. According to State Farm and LIGA, sections 2(a) through 2(e) are not exclusions, but are mutually exclusive definitions of insured. Although Magnon does not fit within the definition of insured in section 2(b) because he was driving a "covered auto" which he owned, they assert that Magnon is an insured under section 2(d). They argue that section 2(d) contains a double negative, viz., "anyone else ... except anyone other than employees." Accordingly, section 2(d) should be interpreted to read: "The following is an insured: your employees ... while moving property to or from a covered auto." Citing Howell v. Balboa Insurance Co., 564 So.2d 298 (La.1990), State Farm and LIGA further contend that at the instant Magnon became an insured by moving property to a covered auto, Magnon became entitled to UM coverage while later driving the car because UM coverage attaches to the person.

Magnon's briefs to this Court contain substantially broader arguments in favor of coverage than those averred by State Farm and LIGA. Magnon first asserts that he was an insured under the definition in the general liability portion of the policy, which provided liability coverage for Phelps Dunbar's employees "for acts within the scope of their employment by [Phelps Dunbar]." Because Magnon's injury occurred within the scope of his employment and because Louisiana's UM statute does not require that an insurance policy in question be an auto liability "policy," Magnon asserts that he is entitled to UM coverage. Magnon next asserts that he is an insured under section 2(d) of the auto liability portion of the policy. As does State Farm and LIGA, Magnon interprets section 2(d) to define "insured" as "employees while moving property to or from a covered auto."

Alternatively, Magnon asserts that if section 2(d) does not clearly define "insured" as employees while moving property to or from a covered auto, then sections 2(b) and 2(d) are at the very least ambiguous and therefore must be read in a way to provide UM coverage. Magnon contends the definition of insured "is ambiguous on who is provided coverage once an insured appears to move between different definitions of `insured,'" because section 2(b) appears to limit coverage if the covered auto is owned by the employee and section 2(d) provides coverage for employees while moving property to or from a covered auto. According to Magnon, these sections provide coverage to an employee in one instance but not another in contravention of the rule that UM coverage, when applicable, attaches to the person. Magnon further asserts that sections 2(a) through 2(e) are ambiguous because it is unclear whether they act as exclusions or alternative definitions of insured. Finally, Magnon asserts that the definition of insured under the auto liability portion of the policy is ambiguous in light of the fact that the general liability portion of the policy provides coverage for employees within the scope of their employment.

The court of appeal treated section 2(b) as an exclusion from the definition of insured. Citing Hobbs v. Rhodes, 95-1937 (La.App. 4th Cir.1995), 667 So.2d 1112, writ denied, relator may reraise on appeal, 96-0733 (La.5/3/96), 672 So.2d 691, the court of appeal then concluded that section "2(d) is an exception to the exclusion of the employee when the employee is driving his own auto." According to the court of appeal, because UM coverage attaches to the person, once Magnon moved the property to or from his auto, the provision was triggered and he was covered by UM.⁴

Summary judgments are reviewed on...