Schroeder v. Board of Sup'rs of Louisiana State University

• Decision Date: 28 March 1991
• Docket Number: Nos. CA,s. CA
• Parties: Rolf R. SCHROEDER v. BOARD OF SUPERVISORS OF LOUISIANA STATE UNIVERSITY, et al. Consolidated With Rolf R. SCHROEDER, Individually and as Administrator of the Minor Andrew E. Schroeder, Andrew E. Schroeder, Continental Casualty Company, Safeco Insurance Company, v. The CONTINENTAL INSURANCE COMPANY, the Fidelity and Casualty Company of New York and Board of Supervisors of Louisiana State University. 89 2018, CA 89 2019. 577 So.2d 1074, 67 Ed. Law Rep. 376
• Court: Court of Appeal of Louisiana — District of US

Page 1074

577 So.2d 1074

Rolf R. SCHROEDER v. BOARD OF SUPERVISORS OF LOUISIANA STATE UNIVERSITY, et al.

Consolidated With

Rolf R. SCHROEDER, Individually and as Administrator of the

Minor Andrew E. Schroeder, Andrew E. Schroeder,

Continental Casualty Company, Safeco

Insurance Company, v. The CONTINENTAL INSURANCE COMPANY, the Fidelity and Casualty

Company of New York and Board of Supervisors of

Louisiana State University.

Nos. CA 89 2018, CA 89 2019.

577 So.2d 1074, 67 Ed. Law Rep. 376

Court of Appeal of Louisiana,

First Circuit.

March 28, 1991.

Writ Granted June 14, 1991.

Boris Navratil, Baton Rouge, for plaintiff-appellee Rolf Schroeder.

Frank Fertitta, Baton Rouge, for defendant-appellee Safeco Ins. Co.

Dermot McGlinchey, New Orleans, for defendant-appellant Board of Sup'rs, LSU Fidelity & Cas. Co. of New York Continental Ins.

Ramon G. Jones, New Orleans, for defendant-appellee Continental Cas. Co.

Before LOTTINGER, SHORTESS and CARTER, JJ.

LOTTINGER, Judge.

This is an appeal by defendants, the Board of Supervisors of Louisiana State University (LSU), Continental Insurance Company (Continental), and Fidelity and Casualty Company of New York (Fidelity), from the granting of summary judgment in favor of plaintiffs, Rolf and Andrew E. "Eric" Schroeder, and plaintiffs in intervention, Safeco Insurance Company (Safeco), and Continental Casualty Company (CNA). In granting summary judgment the trial court held that Andrew E. "Eric" Schroeder was an additional insured under the policies of insurance issued by the defendant insurers to LSU, and that those policies provided coverage to the Schroeders for any liability incurred by them as a result of the auto accident which is at the crux of these proceedings.

PROCEDURAL HISTORY

The instant consolidated proceedings are the offspring of litigation which arose out of an automobile accident in which a young woman was seriously injured. Following the accident the young woman, Ms. Lee, and her parents (the Lees) sued the driver of the other vehicle involved, Eric Schroeder, and his parents, ¹ together with the Schroeder's liability insurer and their own (the Lee's) underinsured motorist carriers, Safeco and CNA.

After a trial on the merits, a judgment in excess of one and a half million dollars was rendered in favor of the Lees and against the Schroeders and their liability insurer, and Safeco and CNA as the Lee's underinsured motorist carriers. Safeco and CNA ultimately paid the lion's share of this judgment and obtained a third party judgment against the Schroeders in that amount. We modified and affirmed these judgments on appeal. Lee v. USAA Casualty Insurance Company, 540 So.2d 1083 (La.App. 1st Cir.), writ denied, 542 So.2d 514, 515 (La.1989), reconsideration denied, 544 So.2d 384, 385 (La.1989). ²

The Schroeders then filed the first of the instant consolidated proceedings against LSU, Continental and Fidelity, alleging that LSU was vicariously liable through Eric Schroeder for Ms. Lee's injuries. Safeco and CNA intervened to recoup from LSU the amounts they paid to the Lees.

The Schroeders then brought a separate declaratory judgment action against Continental, Fidelity, and LSU seeking to have Eric Schroeder declared an additional insured under the business auto policies issued to LSU by Continental and Fidelity. Safeco and CNA again intervened asserting that if Eric Schroeder is covered under Continental's and Fidelity's policies for his liability to the Lees, then he is not underinsured, and therefore, since their (Safeco and CNA) liability is only as underinsured motorist carriers, they should not have been held liable to the Lees and are entitled to reimbursement from LSU's insurers. The vicarious liability and declaratory judgment actions were then consolidated.

The Schroeders, Safeco, and CNA then filed a joint motion for summary judgment, seeking to have Eric Schroeder declared an additional insured and covered for his liability stemming from the accident under the Continental and Fidelity policies issued to LSU. ³ LSU, Continental, and Fidelity responded with a cross motion for summary judgment, seeking a declaration that Eric Schroeder is not covered under their policies. These cross motions for summary judgment were decided in favor of the Schroeders, Safeco, and CNA and against Continental, Fidelity, and LSU, who then perfected the instant appeal.

FACTS

On Saturday, October 29, 1983, Eric Schroeder drove his father's car to "Sadie Hawkins Day" at the University Laboratory School (U. High) on the LSU campus in Baton Rouge. ⁴ On the way to the event he picked up Bradley Aucoin, a classmate. Eric then purchased a six pack of beer and two hamburgers before proceeding to school. When the boys, who were both seniors at U. High, arrived at the school at approximately 12:30 p.m., they remained in the parking lot while Eric drank several of the beers and ate the hamburgers. The boys then participated in the "Sadie Hawkins Day" events.

"Sadie Hawkins Day" is an annual fund raising event for the senior class at U. High. It is an official school sponsored event. U. High teachers supervise and act as chaperons, and all of the school's rules and regulations apply and are enforced by the teachers present. "Sadie Hawkins Day" consists of two separate events: a carnival from approximately 2:00 p.m. until 5:00 p.m., and a dance from 8:00 p.m. until 11:30 p.m. Students from grades 6 through 12 can participate in the carnival activities during the day, and students in grades 9 through 12 can participate in the dance.

Since the purpose of these events is to raise funds for the senior class, all of the senior class members are required to participate and are assessed a fine for not doing so. The senior class is responsible for most of the planning, setting up, decorating, and other "legwork" necessary for the event, but all plans and assignments are first approved by U. High faculty member "sponsors," of which there were four for this particular "Sadie Hawkins Day".

Near the end of the carnival part of the event, Ms. Gayle Ater, a teacher at U. High, senior class sponsor, and LSU employee, asked Bradley Aucoin if he knew which student was supposed to get the ice for the dance that evening. Bradley did not know, but volunteered to go and get it. Ms. Ater gave him money from the event funds to buy the ice and directed him to get the ice from an ice house several miles away. ⁵ Ms. Ater assumed that Bradley would use a vehicle to get the ice, but did not know what vehicle he would use.

Bradley then asked Eric to take him to get the ice. Ms. Ater did not know that Eric was going with Bradley to get the ice or that they were going in Eric's father's car. However, Ms. Ater stated that she would not have had any objection to Eric going with Bradley if she had known of it. Ms. Ater did not know that Eric drank beer prior to the day's events.

On the way back to school after picking up the ice, Eric and Bradley stopped and bought another six pack of beer. As they were returning to school with the ice, the accident which forms the basis of liability in this suit occurred.

THE INSURANCE POLICIES AT ISSUE

Continental's business auto policy issued to LSU and in effect at the time of the accident here at issue provides that Continental will pay all damages the insured is legally liable for arising from an accident resulting from the ownership, maintenance, or use of a covered auto. It provides coverage up to five hundred thousand dollars ($500,000.00) for liability purposes. Specifically this policy provides under "Part IV--Liability Insurance":

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.

For liability purposes this policy defines covered auto as "any auto." Therefore, the dispositive issue is whether Eric Schroeder is an insured within the meaning of the policy.

Part IV(D) of the policy defines an insured for liability purposes as follows: ⁶

D. WHO IS INSURED.

1. You are an insured for any covered auto.

2. Anyone else is an insured while using with your permission a covered auto you own, hire or borrow except:

a. The owner of a covered auto you hire or borrow from one of your employees or a member of his or her household b. 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.

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

3. Anyone liable for the conduct of an insured described above is an insured but only to the extent of that liability. However, the owner or anyone else from whom you hire or borrow a covered auto is an insured only if that auto is a trailer connected to a covered auto you own.

Under the terms of this policy, Eric Schroeder is an insured for liability purposes if he was driving an auto borrowed by LSU, and he had LSU's permission to do so.

The policy issued by Fidelity to LSU is a "form following" umbrella policy with limits of twenty million dollars ($20,000,000.00) over the limits of the underlying policies listed therein. Continental's policy is listed as an underlying policy in the Fidelity policy. Therefore, if Eric Schroeder is an insured under the Continental policy, then he is also insured under the Fidelity policy.

ISSUES ON APPEAL

The trial court granted summary judgment in favor of the Schroeders, Safeco and CNA, holding that Eric Schroeder was an insured under the Continental and Fidelity policies for his liability arising out of the accident at issue. The trial court denied appellants' cross motion for summary judgment on the same issue. LSU, Continental and Fidelity have appealed, arguing that the trial court erred in granting...