Montrell v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 21 November 2006
• Docket Number: No. 2006-CA-0054.,2006-CA-0054.
• Citation: 946 So.2d 230
• Parties: Maxwell MONTRELL v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Paula Engnath.
• Court: Court of Appeal of Louisiana — District of US

946 So.2d 230

Maxwell MONTRELL v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Paula Engnath.

No. 2006-CA-0054.

Court of Appeal of Louisiana, Fourth Circuit.

November 21, 2006.

Melvin N. Cade, Louis A. Gerdes, Jr., New Orleans, LA, for Plaintiff/Appellee.

Lindsay A. Larson III, David A. Strauss, Christian A. Garbett, King, Leblanc and Bland, P.L.L.C., New Orleans, LA, for Defendant/Appellant.

(Court composed of Judge MICHAEL E. KIRBY, Judge TERRI F. LOVE, Judge DAVID S. GORBATY).

MICHAEL E. KIRBY, Judge.

State Farm Mutual Automobile Insurance Company("State Farm"), seeks reversal of the trial court's judgment that awarded the plaintiff $1,915.00 in special damages and $5.000.00 in general damages.It is appealing on two bases.First, State Farm contends it should have been dismissed because it is not subject to a direct action under Louisiana's Direct Action Statute.Second, it contends that the trial court erred in awarding damages to the plaintiff for his pain and suffering.

FACTS

The plaintiff brought suit following an automobile collision on September 24, 2002 between himself and State Farm's insured, Paula Engnath.Following the accident, plaintiff claimed damages to both his body and vehicle; he was treated for these injuries for five months.A few months after the accident plaintiff was also treated for heroin addiction at Charity Hospital.During his rehabilitation and treatment plaintiff made no complaints about the injuries he sustained in the accident.

When the accident occurred Ms. Engnath gave her address and policy information to the plaintiff.The plaintiff requested that Ms. Engnath be served at this address.However, service attempted at this location was unsuccessful.The return indicated that Ms. Engnath was no longer residing there and that she had moved to LaPlace; no additional service information was provided.Following the unsuccessful attempt to serve Ms. Engnath, State Farm moved to dismiss her and itself.The trial court granted the motion as to Ms. Engnath but denied it as to State Farm finding it was amenable to suit under Louisiana's Direct Action Statute, La.R.S. 22:655.¹

DISCUSSION

In its first assignment of error, State Farm contends that the trial court erred in applying the Louisiana's Direct Action Statute to it in this case.Insofar as is here relevant, the statute provides that a plaintiff may sue an insurer directly if service of citation or other process cannot be made on the insured.La.R.S. § 22:655(B)(1)(c).State Farm asserts that plaintiff's single attempt to perfect service of process at the beginning of the litigation was insufficient to authorize plaintiff's direct action herein.

State Farm asserts that the standard for service of process is one of reasonable diligence.Harrison v. Lenoir,745 So.2d 1191(La.App. 1st Cir.1999).In Harrison, the First Circuit examined the standards for service of process on a defendant for a tax sale affecting his property.Id.The court ruled that the sheriff had served insufficient notice of the sale when he simply attempted to serve and service failed.Id.However, as the court specifically noted, a sale of one's property for nonpayment of taxes is something that affects the a property owner's rights under the Fourteenth Amendment's Due Process Clause.Id. at 1192.Therefore, the state must provide "notice reasonably calculated, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."Id.While standards presented by Lenoir are legitimate, they are put in place to preserve the rights of property owner.The facts of that case are distinguished from the present matter.This is not a case regarding a potential loss of property for nonpayment of taxes.Unlike the circumstance in Lenoir, neither Ms. Engnath's property rights nor Constitutional issues were threatened by the inability to serve her.

Insurance is a contract that benefits a third party, and the Civil Code calls such a contract a stipulation pour autrui, or for a third party.La.C.C. art. 1978.The Civil Code also recognizes that the stipulation gives the third party beneficiary the right to demand performance from the promisor.La.C.C. art. 1981.These are the underpinnings for the Louisiana Direct Action Statute.

The Louisiana Direct Action Statute, supra, has been held to create substantive rights and has a long history of interpretation.H. Alston Johnson, The Louisiana Direct Action Statute, 43 La.L.R. 1455, 1486(1983);See also, Edwards v. Fidelity Casualty Co.,11 La.App. 176, 123 So. 162(Orl.1929)andHidalgo v. Fidelity Cas. Co. of N. Y.,(W.D.La.1952), 104 F.Supp. 230, affirmed205 F.2d 834.

More recently the Louisiana Supreme Court clarified that the direct action statute does not create an independent cause of action against an insurer, but merely grants a procedural right of action against an insurer where plaintiff has a substantive cause of action against insured.Descant v. Administrators of Tulane Educational Fund, Sup.1994, 1993-3098(La.7/5/94)639 So.2d 246.

Historically, the direct action statute made insurers imperfectly solidarily bound with the insured.H. Alston Johnson, supra,43 La.L.R.at 1507.The obligation was considered imperfect because it arose when two or more persons are bound for the same debt, but from different sources.Since the obligation of the tortfeasor and insured here, to the victim (plaintiff) is delictual and that of the insurer is conventional, they can only be imperfectly bound.It is under the direct action statute that the insurer is liable to the claimantin solido with its insured.Rodriguez v. Louisiana Tank, Inc., 94-200(La.App. 1 Cir.6/23/95), 657 So.2d 1363.We recognize that it has been held that the release of the insured does not release the insurer, so long as rights are retained against the latter.SeeCunningham v. Hardware Mutual Cas. Co.,228 So.2d 700(La.App. 1st Cir.1969).

Allowing the injured party to maintain an action against the tort-feasor's insurer without first obtaining a judgment against the tort-feasor affects procedure, not substantive rights, and the application of the direct action statute does not impair obligation of contracts, violate full faith and credit clause nor deny insurer due process or equal protection.Bouis v. Aetna Cas. Sur. Co.,91 F.Supp. 954(W.D.La.1950).

Holding the insurer liable to the plaintiff does not contradict the direct action statute.Defendant's assertion that plaintiff did not make a sufficient effort to serve the insured is simply not a duty imposed by the direct action statute.²The insurer's right to notice was not violated by the lack of service on the insured and its conventional obligation is still in effect.Therefore this assignment has no merit.

State Farm's second assignment of error claims that the trial court inappropriately awarded damages to plaintiff for his medical bills and pain and suffering.

A trial court's determination as to whether testimony is credible or the plaintiff has met his/her burden of proof is a factual determination, and not to be disturbed unless clearly wrong or there is a showing of manifest error.Fluitt v. Christus Health Center Louisiana,935 So.2d 369(La.App. 3rd Cir.2006).

Defendant contends that the trial court committed manifest error in awarding these damages to plaintiff because there is clear evidence that plaintiff did not experience any pain and suffering as a result of the accident.Defendant asserts that plaintiff is an unreliable witness regarding the extent of his pain and suffering due to his arrest record and his varying testimony regarding the facts of the accident.Appellee underwent...