Norred v. Commercial Union Ins. Co.
| Decision Date | 04 May 1988 |
| Docket Number | No. 19538-CA,19538-CA |
| Citation | 526 So.2d 829 |
| Parties | James D. NORRED, Plaintiff/Appellant, v. COMMERCIAL UNION INSURANCE COMPANY, et al., Defendant/Appellee. 526 So.2d 829 |
| Court | Court of Appeal of Louisiana — District of US |
Culpepper, Teat, Caldwell & Avery by Bobby L. Culpepper, for plaintiff/appellant.
John C. Blake, for Hodge Ins. Co.
Steve H. Beadles, for Commercial Union.
Before HALL, SEXTON and NORRIS, JJ.
On March 30, 1986 plaintiff James D. Norred's house burned to the ground. The issue in this case is whether a homeowner's insurance binder issued to Mr. Norred by defendant Hodge Insurance Agency and underwritten by defendant Commercial Union Insurance Company was still in effect on the date of the fire. The trial court found that the plaintiff did not have insurance coverage on the date of the fire and that the lack of coverage was not the fault of either defendant. Judgment was entered in favor of defendants and plaintiff appealed. We affirm. 1
On January 24, 1986 Norred went to the Hodge Insurance Agency to discuss getting insurance coverage on his house which was located in Jackson Parish, Louisiana. DeLane Pullig, Hodge's office manager, handled Norred's application for insurance which reflected the following requested coverages:
$ 30,000.00 -- dwelling
$ 3,000.00 -- other structures
$ 15,000.00 -- contents
$ 6,000.00 -- loss of use
$100,000.00 -- personal liability
It was stipulated at trial that only the dwelling and contents coverage were at issue.
Pullig testified that she told Norred that his application would be submitted to Commercial Union but that a "binder" would go into effect that day. On the top of the application is the statement: "The following Company hereby binds insurance in favor of the insured named below from 12:01 STANDARD TIME of the "EFFECTIVE DATE" and terminating at 12:01 STANDARD TIME on the 30th day following such date for the coverages and limits of liability indicated below."
The application form, which does not require the signature of the applicant, was a carbon set with three copies--one for the customer, one for the agency, and one for the company. Pullig testified that she does not know if she gave Norred a copy of the application but that it was standard procedure to give a copy to the insured when, as in this case, there was no mortgagee involved. Norred testified that he understood that his insurance had to be approved by Commercial Union and that it was not a guaranteed thing but that Pullig did not tell him when the binder would expire and that he did not remember Pullig giving him a copy of the application. He stated, "Well, I'm not saying I got one and I'm not saying I didn't."
Pullig testified that a binder is "automatically" good for 30 days but that coverage continues until Commercial Union finishes processing the application which may take more than 30 days. Pullig testified that it was not standard procedure for Commercial Union to notify the agency when a binder was extended past 30 days.
The first communication that Pullig received from Commercial Union regarding Norred's application was by way of a memo dated March 12, 1986 from Derrick Davis, the Commercial Union underwriter who processed Norred's application. The memo indicated that Norred's application had been rejected because it did not meet the company's minimum coverage level of $40,000.00 on a dwelling. The memo directed the agency to terminate the binder by March 27, 1986 but also stated,
Pullig testified that there was a handwritten notation on the memo in her handwriting which indicated that a letter had been sent to Mr. Norred on March 18 1986. 2 Pullig testified that she had in fact mailed a letter to Norred on March 18, 1986 explaining Commercial Union's position and notifying him that unless further action was taken the binder would expire on March 27, 1986. Although she testified that normally she would keep a copy of such a letter, she was unable to produce a copy of the letter, which was sent by ordinary mail and was neither registered nor certified. Rex Johnson, the president of Hodge, testified that he spoke with Norred shortly after the fire and that Norred admitted to receiving the letter but stated that the letter had burned in the fire. At trial Norred denied receiving the letter and denied telling Johnson that the letter had burned in the fire. Johnson's version of the conversation was corroborated by the testimony of his brother, Frank Johnson, secretary-treasurer and an agent for the agency, who was present during the conversation.
Pullig testified that a day or two after she wrote the letter to Norred she saw him in the bank where the agency office was located and asked him if he had gotten the letter. She stated that he said no but that he had not been to the post office to check his mail. Pullig stated that she then explained Commercial Union's position and told Mr. Norred that his coverage would expire on March 27 unless he gave further instructions. She said that he replied that he would get back in touch with her prior to March 27th.
Norred's testimony regarding this conversation was that he went to the agency on March 24 with a friend, Hansford Maxwell, and that while Maxwell was applying for insurance on his truck, he asked Pullig about his house insurance. He testified that she said that the $32,000 (sic) policy had been cancelled but that Commercial Union would insure his home for $40,000 less some of the contents. He testified that he replied "You're gonna have to give me a while to discuss it with my wife, because we may want everything in it covered." Norred testified that Pullig did not tell him that the insurance coverage was going to run out at any particular time or give him a deadline. He testified that she was working with Maxwell on his truck insurance and that she said she was busy and could not tell him the dates but would send him a letter. He later stated that she said she had already sent the letter.
Mrs. Norred testified that no letter was received from Hodge. She stated that her husband told her he had talked to "the lady", that she did not have time to explain it all to him, but that the company would cover it for more than he had applied for and that she would send them a letter about what coverage they could get. Mrs. Norred said that she and Mr. Norred intended to increase the insurance because they needed insurance on the house but that they did not take any action because they were waiting for the letter. She testified that her husband did not tell her that the insurance was going to run out by a particular date.
Norred testified that if he had known that the binder was going to run out, he would have renewed it right then. On cross-exam Norred admitted, however, that he knew the insurance would expire soon and that Pullig had told him that he did not have long. He also admitted that he did not tell Pullig to put the policy in force on the day he spoke with her. He also stated that he was "about sure" that he spoke with his wife on the same day he spoke with Pullig but that he did not call the agency and say he wanted the coverage. When asked why he did not call the agency he responded:
A. Well, I thought I was covered all the time with the binder. I thought I was covered, and I was waiting 'til my social security check come in where I'd have the money to take it.
Q. I see. In other words, it was your understanding once you decided to take the coverage, you were going to have to pay a premium.
A. Well, that is what I understood.
Q. Okay. When do you get your social security check? A. April the 3rd.
Q. So then, you would have gotten your social security checks four days after the fire?
A. That's right.
Q. And some 8 days after the binder expired?
A. That's right.
Q. Were you willing to run a little risk there? About 7 days worth of risk to get your social security check.
A. Well, it was either that or borrow the money.
Maxwell testified that he and Norred went to the Hodge Agency on March 24 and that while there he overheard a conversation between Norred and Pullig. He testified that Pullig told Norred that she needed to see him in a few days about his insurance and that she would send him a letter in a few days. Maxwell testified that Pullig did not tell Norred that he had to do something immediately about his insurance.
Pullig testified that she wrote the auto policy for Maxwell after the date she had the conversation with Norred and that she did not recall Norred being present when she spoke with Maxwell about his auto insurance. Maxwell's auto insurance application was dated March 21, 1986, not March 24, 1986, and Rex Johnson testified that he spoke with Maxwell on March 21, 1986 and that Maxwell was there to get auto insurance on his truck. Defendants point out that Norred and Maxwell have been friends for years and are related by marriage.
Norred did not contact Pullig prior to March 27, 1986 nor did she contact him prior to that date and on March 30, 1986 Norred's house burned down. Norred testified that he found out that he did not have insurance the morning he reported his loss to Hodge.
In written reasons for judgment, the trial court found that Norred had sufficient notice that the coverage afforded him by the binder lapsed on March 27, 1986; that plaintiff did not have coverage on the date of the fire; and that plaintiff's failure to have coverage was not the fault of either defendant. The trial court rejected plaintiff's attempt to hold the defendants liable on the theory that no notice of "cancellation" of the binder was given to plaintiff. The court found that the binder "expired" rather than being "cancelled"...
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