Meche v. Thibodeaux

• Citation: 550 So.2d 346
• Decision Date: 04 October 1989
• Docket Number: No. 88-459,88-459
• Parties: Linda MECHE and Fred Meche, Plaintiffs-Appellees, v. Janet A. THIBODEAUX, et al., State Farm Mutual Automobile Insurance Company, Defendant-Appellant.
• Court: Court of Appeal of Louisiana (US)

Page 346

550 So.2d 346

Linda MECHE and Fred Meche, Plaintiffs-Appellees, v. Janet A. THIBODEAUX, et al., State Farm Mutual Automobile

Insurance Company, Defendant-Appellant.

No. 88-459.

Court of Appeal of Louisiana,

Third Circuit.

Oct. 4, 1989.

Rehearing Denied Nov. 7, 1989.

Voorhies & Labbe, Amos H. Davis, Lafayette, for plaintiffs-appellees.

Roy, Forrest & Lopresto, Stephen H. Myers, Lafayette, for defendant-appellant.

Before GUIDRY, LABORDE and KNOLL, JJ.

GUIDRY, Judge.

Fred and Linda Meche were injured in a two vehicle accident which occurred on March 15, 1985 in Lafayette Parish, Louisiana. At the time of the accident, Fred Meche was one-half owner of a corporation known as Computer World, Incorporated and was driving a 1984 Ford van registered to, and owned by, Computer World. The van was insured by State Farm Mutual Automobile Insurance Company (hereafter State Farm) under policy number 432-8826-FO6-18 which was issued to Computer World, named Computer World as the "named insured" and which provided $100,000/$300,000 UM coverage in addition to the $5,000.00 per person per accident medical payments coverage.

The other vehicle involved in the accident, a 1984 Toyota Corolla, was owned and was being operated by Janet A. Thibodeaux. The Thibodeaux vehicle was insured by Travelers Insurance Company (hereafter Travelers) under a policy of automobile liability insurance with bodily injury limits of $10,000.00 each person and $20,000.00 each accident. The Meches instituted suit against Thibodeaux, Travelers and their UM carrier, State Farm.

Before the case went to trial, Travelers tendered and paid its policy limits and both Travelers and its insured (Thibodeaux) were released from the suit.

Prior to trial, State Farm paid Fred Meche a total of $105,000.00 and paid Linda Meche $23,000.00.

The matter was tried to a jury however, the parties agreed that the issues of coverage, stacking and penalties and attorney's fees would be decided by the trial judge. The jury fixed Fred Meche's damages at $182,000.00 and Linda Meche's damages at $32,000.00. The trial judge determined that a policy of insurance issued by State Farm to another corporation partly owned by Fred Meche, Business and Office Systems, Inc. (hereafter Business Systems), provided excess UM coverage to the plaintiffs and rendered judgment accordingly. Plaintiffs' demands for penalties and attorney's fees were rejected.

Defendant, State Farm, appealed urging error in the trial court's determination that, under the circumstances, the State Farm policy of insurance issued to Business Systems provided excess UM coverage to the Meches. Plaintiffs answered the appeal urging (1) error in the trial court's failure to award penalties and attorney's fees; (2) that the damage awards are inadequate; and, (3) error in the trial court's casting plaintiff, Linda Meche, with a portion of the costs.

INSURANCE COVERAGE--STACKING

At the time of the accident, six policies of insurance issued by State Farm to Computer World and/or Business Systems (Computer World's predecessor corporation) were in effect covering six different vehicles. The insured under two of the policies was Computer World while the insured under the other four policies was Business Systems. A natural person was not named as an insured under any of the six policies.

At trial, plaintiffs argued that they should be allowed to avail themselves of the UM coverage under two of the six State Farm policies under the provisions of La.R.S. 22:1406 D(1)(c)(i) and (ii):

"c. If the insured has any limits of uninsured motorist coverage in a policy of automobile liability insurance, in accordance with the terms of Sub-Section (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 insured party while occupying an automobile not owned by said insured party, the following priorities of recovery under uninsured 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 for more than one uninsured motorist policy be available as excess over and above the primary coverage available to the injured occupant."

The trial judge agreed with plaintiffs on this point and, in his reasons for judgment, stated:

"Clearly the Computer policy on the subject vehicle was primary. The only question is whether another policy provided excess coverage. Clearly the other Computer policy did not. However, equally clearly, the Business policies did. These policies under Section III--Uninsured Motorist Vehicle--Coverage U stated that an insured is:

4. any other person (other than the named insured, here: Business) while occupying

b. a vehicle not owned by the insured, while being driven by the insured (a corporation can only drive through its agents, employees, officers, etc.) with the owner's consent.

Here the corporation, through its employee, plaintiff-husband, was operating a vehicle not owned by Business within the scope of the owner's (Computer) consent."

On appeal, State Farm argues that the Meches do not qualify as insureds for UM purposes under the Business Systems policies and the trial court erred in deciding otherwise. We agree and reverse.

The UM portion of the State Farm policies in question each defines insured ¹ as:

"1. the first person named in the declarations;

2. his or her spouse;

3. their relatives; and

4. any other person while occupying:

a. your car, a temporary substitute car, a newly acquired car or a trailer attached to such car. Such vehicle has to be used within the scope of the consent of you or your spouse; or

b. a car not owned by you, your spouse or any relative, or a trailer attached to such a car. It has to be driven by the first person named or that person's spouse and within the scope of the owner's consent.

Such other person occupying a vehicle used to carry persons for a charge is not an insured.

5. any person entitled to recover damages because of bodily injury to an insured under 1 through 4 above."

There is no "person" (human being) designated as the named insured in either of the four policies in question. Business and Office Systems, Inc., is a corporation and has an identity, conferred by law, separate and apart from its stockholders and officers. Therefore, since the named insured is a corporation, the Meches were not insureds under numbers 1, 2 or 3 above. They would have been insureds under 4 above, as they were in a "non-owned" car at the time of the accident, except that the non-owned vehicle in which they were riding was not being "... driven by the first person named (human being) or that person's spouse ..." (see 4(b) above). Just because Mr. Meche (the driver) was a stockholder and executive officer of the named insured (the corporation), it did not make him a named insured as all natural and/or juridical persons have distinct, separate legal personalities and patrimonies.

Reading the policy as a whole, since Business Systems is the only named insured, UM coverage was provided only to any person while occupying the vehicle described on the declarations page. Since the Meches were not in any vehicle described in a policy issued to Business Systems, they had no UM coverage under any of those policies. As they were not an insured under any Business policy, none of the policies were available for stacking purposes. We reject the trial court's strained interpretation of Section III Uninsured Motorist Vehicle--Coverage U 4.b. That coverage is simply not applicable where the named insured is not a natural person.

Our brethren of the First Circuit reached the same conclusion in Pierron v. Lirette, 468 So.2d 1305, 1307-1308 (La.App. 1st Cir.1985). In addressing an almost identical fact situation, the Pierron court stated:

"In this assignment of error, plaintiffs contend that Roy J. Pierron, as vice-president and executive officer of Hy Fashions, Inc., was covered under the uninsured motorist provision of the policy of insurance in the amount of $25,000.00 issued by State Farm to Hy Fashions, Inc.

The Louisiana Uninsured Motorist Statute LSA-R.S. 22:1406, in effect at the time of the accident, required that insurance policies provide uninsured motorist coverage for a person who qualifies as an "insured" under the policy. However, a person who does not qualify as an "insured" under the policy of insurance is not entitled to uninsured motorist coverage. Seaton v. Kelly, 339 So.2d 731 (La.1976); Malbrough v. Wheat, 428 So.2d 1110 (La.App. 1st Cir.1983); Schmidt v. Estate of Choron, 376 So.2d 579 (La.App. 4th Cir.1979).

In the instant case, the uninsured motorist insurance portion of the State Farm policy defines insured as:

(a) the named insured and any designated insured and, while residents of the same household, the spouse and relatives of either;

(b) any other person while occupying an insured highway vehicle; and

(c) any person, with respect to damages he is entitled to recover because of bodily injury to which this insurance applies sustained by an insured under (a) or (b) above.

Designated insured is defined as "an individual named in the declarations under Designated Insured." The uninsured motorist portion of the policy also indicates that the definitions of insured and named insured applicable to Part 1 (basic automobile...