Sharp v. Daigre

• Decision Date: 16 May 1989
• Docket Number: No. 87,87
• Citation: 545 So.2d 1063
• Parties: Harvey SHARP, Jr., Husband of/and Sheila S. Sharp v. Richard C. DAIGRE, Jr., United Service Automobile Association, Acceptance Insurance Company, and Aetna Life and Casualty Insurance Company. CA 1266. 545 So.2d 1063
• Court: Court of Appeal of Louisiana — District of US

Page 1063

545 So.2d 1063

Harvey SHARP, Jr., Husband of/and Sheila S. Sharp v. Richard C. DAIGRE, Jr., United Service Automobile

Association, Acceptance Insurance Company, and

Aetna Life and Casualty Insurance

Company.

No. 87 CA 1266.

545 So.2d 1063

Court of Appeal of Louisiana,

First Circuit.

May 16, 1989.

Rehearing Denied June 23, 1989.

Joseph J. Weigand, Jr., Houma, for plaintiffs and appellants-Harvey and Sheila Sharp.

Richard L. Edrington, LaPlace, for defendant and appellee-Aetna Life and Cas. Ins. Co.

James M. Funderburk, Houma, for defendant and appellee-Acceptance Ins. Co.

Wade D. Rankin, New Orleans, for defendant and appellee-Richard G. Daigre, Jr. and United Service Auto Assn.

Before COVINGTON, C.J., and LOTTINGER, EDWARDS, WATKINS, SHORTESS, CARTER, SAVOIE, LANIER, ALFORD, LeBLANC and FOIL, JJ.

CARTER, Judge.

This is an appeal from a trial court judgment denying recovery of exemplary (punitive) damages from an uninsured motorist insurer.

FACTS

On May 16, 1986, Harvey Sharp, Jr. was operating his personally owned vehicle on Hollywood Road in Houma, Terrebonne Parish, Louisiana, when he was rear-ended by a vehicle owned and operated by Richard G. Daigre, Jr. At the time of the accident, Daigre was insured by United Service Automobile Accident Insurance Company (United) in the amount of $100,000.00. Sharp settled with Daigre and United for $100,000.00 prior to trial. The settlement gave Daigre and his insurance company a complete and final release. Sharp specifically reserved all rights against all remaining parties. The Sharp vehicle was insured by Aetna Life and Casualty Company (Aetna) with liability and uninsured motorist coverage of $100,000.00. Additionally, Acceptance Insurance Company (Acceptance) had in effect a policy of garage insurance issued to Canal Auto Sales (an unincorporated company owned by Harvey Sharp, Jr.) with uninsured motorist insurance limits of $25,000.00.

On the morning of trial, Aetna and Acceptance dismissed their third party demands against Daigre. At trial, Aetna and Acceptance stipulated that, in the event judgment was rendered against the uninsured motorist policies, Aetna and Acceptance would pro-rate the judgment according to the amount of coverage each provided, viz., Aetna to pay 80% of any judgment and Acceptance to pay 20% of any judgment.

After trial, the jury awarded Sharp $94,200.00 in general and special damages and awarded Sharp an additional $28,000.00 for exemplary damages. ¹ The trial judge struck the award of exemplary damages against the uninsured motorist carriers, Aetna and Acceptance, on the grounds that the uninsured motorist policies did not cover exemplary damages. Since Sharp had already settled with Daigre and United for more than the amount awarded by the jury, no judgment was ultimately rendered against the uninsured motorist carrier.

From this adverse judgment, Sharp appeals. The only issue for review is whether or not an uninsured motorist insurer is liable for exemplary damages.

EXEMPLARY DAMAGES

To properly evaluate the issue in the instant case, we must first examine the distinctions between compensatory and exemplary damages.

Black's Law Dictionary, 5th Edition, page 352, defines "compensatory damages" as follows:

Compensatory damages are such as will compensate the injured party for the injury sustained, and nothing more; such as will simply make good or replace the loss caused by the wrong or injury.

Generally, compensatory damages are awarded on the basis of the loss suffered and are designed to replace the loss caused by the wrong or injury. Compensatory damages are divided into general and special damages. Black's Law Dictionary, pp. 351-352 (5th ed. 1979). Stated another way, the purpose of a compensatory damage award is to restore the injured party, as closely as possible, to the position in which he would have been had the accident or incident never occurred. Great American Surplus Lines Insurance Co. v. Bass, 486 So.2d 789 (La.App. 1st Cir.1986), writ denied, 489 So.2d 245 (La.1986).

"Exemplary damages" are defined as:

Exemplary damages are damages on an increased scale, awarded to the plaintiff over and above what will barely compensate him for his property loss, where the wrong done to him was aggravated by circumstances of violence, oppression, malice, fraud, or wanton and wicked conduct on the part of the defendant, and are intended to solace the plaintiff for mental anguish, laceration of his feelings, shame, degradation, or other aggravations of the original wrong, or else to punish the defendant for his evil behavior, or to make an example of him, for which reason they are called "punitive" or "punitory" damages or "vindictive" damages. Black's Law Dictionary, 5th Edition, page 352.

LSA-C.C. art. 2315.4 was enacted by Act 511 of 1984 as article 2315.1, redesignated as article 2315.2, and again redesignated in 1986 as article 2315.4, provides:

In addition to general and special damages, exemplary damages may be awarded upon proof that the injuries on which the action is based were caused by a wanton or reckless disregard for the rights and safety of others by a defendant whose intoxication while operating a motor vehicle was a cause in fact of the resulting injuries.

LSA-C.C. art. 2315.4 has a dual purpose, to penalize (and therefore deter) the drunk driver, as well as to provide damages for the victim of such driver. Elery Morvant v. United States Fidelity & Guaranty Company, et al, 538 So.2d 1107 (La.App. 5th Cir.1989). Although the purpose of punitive damages is to punish and deter, the injured party receives the benefit of such payment and, from the plaintiff's standpoint, punitive damages are additional compensation for the egregious conduct inflicted upon him. Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra; Creech v. Aetna Casualty & Surety Company, 516 So.2d 1168 (La.App. 2nd Cir.1987), writ denied, 519 So.2d 128 (La.1988).

In the instant case, LSA-C.C. art. 2315.4 clearly applies to the defendant, Daigre. Daigre rear-ended the Sharp vehicle, which was stopped for a traffic light. Daigre registered a .17 on an intoxilyzer test within an hour of the accident. The jury determined that Daigre was intoxicated at the time of the accident and that his intoxication was a cause of the accident.

Having determined that LSA-C.C. art. 2315.4 applies to the instant case, we must determine whether exemplary damages are covered by uninsured motorist protection.

The trend in the jurisprudence has been to find that uninsured motorist policies provide protection for exemplary damages. Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra; Bauer v. White, 532 So.2d 506 (La.App. 1st Cir.1988). See Johnson v. Fireman's Fund Insurance Co., 425 So.2d 224 (La.1982). ²

In Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra, our Brethren of the Fifth Circuit held that exemplary damages are recoverable from the insured victim's uninsured motorist insurer, up to the policy limits of the uninsured motorist coverage, unless such damages are specifically excluded by clear and unqualified language in the policy. ³ The court in Morvant stated:

We find that compensation for the victim plaintiff is an aspect of LSA-C.C. art. 2315.4, which is just as important as is deterrence. Moreover, in cases such as the one at bar, deterrence is a moot issue to a deceased drunk driver. In effect, were we to deny exemplary damages to the plaintiff because the deterrent effect is seemingly absent, as the defendant insurer urges, we would defeat one of the purposes of the statute and the purpose of obtaining UM coverage. This would also penalize the victim plaintiff who paid the stipulated UM premium to the defendant insurer who agreed that "we will pay all sums the insured is legally entitled to recover as damages from the owner or driver of an uninsured motor vehicle." The very purpose of obtaining and paying an extra premium for UM coverage is to protect oneself from the failure of the other motorist to adequately insure himself. The appellee insurer also argues, in effect, that it is not fair or logical for it to have to pay exemplary damages under UM coverage because it has no chance to review the record of or assess the insurability of the uninsured motorist, whereas it does have such opportunity under liability coverage. We disagree. The insurer never knows who it is insuring against under UM coverage. This is a calculated risk, in any event, so this argument must fall. Defendant's reasoning would defeat the ultimate purpose of UM coverage.

This court recently held in Bauer v. White, supra, that exemplary damages may be awarded to an insured under an uninsured motorist provision where the insurer of the policy promises to pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle and caused by an accident. In resolving the issue in this manner, the court stated:

The Louisiana Uninsured Motorist Statute, La.R.S. 22:1406(D), requires that each insurance policy written in Louisiana provide the statutorily set minimum coverage to drivers injured by uninsured motor vehicles, absent a written choice by the insured not to elect such coverage, " * * * for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom * * *." The object of the statute is to promote full recovery for damages by innocent automobile accident victims by making uninsured motorist coverage available for their benefit as primary protection when the tortfeasor is without insurance and as additional or excess coverage when he is inadequately insured. Roger v. Estate of Moulton, 513 So.2d 1126 (La.1987); Block v. Reliance Insurance Company, 433 So.2d...