Taylor v. Rowell

• Decision Date: 18 May 1999
• Docket Number: No. 98-CC-2865.,98-CC-2865.
• Citation: 736 So.2d 812
• Parties: William TAYLOR and Georgette Taylor v. W. David ROWELL, Bennie L. Matthews, State Farm Mutual Automobile Insurance Company and Audubon Insurance Group.
• Court: Louisiana Supreme Court

736 So.2d 812

William TAYLOR and Georgette Taylor v. W. David ROWELL, Bennie L. Matthews, State Farm Mutual Automobile Insurance Company and Audubon Insurance Group.

No. 98-CC-2865.

Supreme Court of Louisiana.

May 18, 1999.

Edwin L. Hightower, William Edward Willard, Powers & Willard, Counsel for Applicant.

Dean Michael Esposito, Anders Johan Paul Frederickson, Rufus Holt Craig, Jr., Henry Gerard Terhoeve, Guglielmo, Marks, Schutte, Terhoeve & Love, Christopher DuPont Matchett, Franklin Johnson Foil, Counsel for Respondent.

Claude Frederick Bosworth, Kristopher M. Redmann, Counsel for Amicus Curiae Budget Rent A Car System, Inc.

JOHNSON, Justice.¹

This is an action brought by guest passengers in a rental car to recover for injuries sustained when the rented vehicle in which they were riding was involved in an automobile accident with an uninsured/underinsured motorist. Defendants include the driver of the rented vehicle, his uninsured/underinsured motorist carrier, the uninsured/underinsured driver of the other vehicle, his liability insurer, the rental car agency, and its excess liability insurer. The case is before this Court to resolve a conflict between the circuits on whether a car rental policy provides uninsured/underinsured motorist coverage to guest passengers.

FACTS AND PROCEDURAL HISTORY

On August 11, 1993, Plaintiffs were guest passengers in a rented vehicle driven by Bennie Matthews. Mr. Matthews leased the vehicle from the Hertz Corporation ("Hertz"). While traveling on Coursey Boulevard in Baton Rouge, the Hertz vehicle was rear-ended by a vehicle driven and owned by W. David Rowell. The East Baton Rouge Parish Sheriffs Office found Mr. Rowell was at fault in the accident.

Plaintiffs sustained injuries in the accident which exceeded Mr. Rowell's liability coverage with Southern United Fire Insurance Company. Thereafter, plaintiffs filed suit against Mr. Rowell; Mr. Matthews and his uninsured/underinsured motorist ("UM") carrier, State Farm Mutual Automobile Insurance Company; and their UM carrier, New Hampshire Insurance Company, on August 11, 1994.² On May 30, 1997, Plaintiffs filed a supplemental and amended petition naming as additional defendants, Southern United Fire Insurance Company, Hertz, and its excess liability insurer, Reliance Insurance Company.

Hertz filed a motion for summary judgment claiming that the rental agreement signed by Bennie Matthews excluded UM coverage. Alternatively, Hertz argued that even if UM coverage was not properly rejected, the coverage only extended to persons designated in the rental contract as authorized operators of the vehicle and the Taylors were not authorized operators. The trial court denied Hertz's motion for summary judgment without assigning written reasons on December 1, 1997. Hertz then applied for supervisory writs to the First Circuit Court of Appeal. In a 3-2 decision, a five-judge panel of the First Circuit denied the writ without reasons. Hertz then applied for supervisory writs to this Court. We granted the writ application and remanded the matter to the court of appeal for briefing, argument and opinion. Taylor v. Rowell, 98-0896 (La.5/15/98), 719 So.2d 60.

On remand, the First Circuit denied the writ. Taylor v. Rowell, 97 2878 (La.App. 1st Cir. 11/6/98), 727 So.2d 502. The First Circuit recognized the conflicting results reached by the other courts of appeal in resolving the issue of UM coverage for guest passengers in rental vehicles. The Fourth Circuit has determined that the law does not mandate self-insured rental car agencies to include guest passengers among those it defines as liability insureds under its rental agreements. Johnson v. Davis, 96-2463, p. 5 (La.App. 4th Cir. 6/25/97), 697 So.2d 311, 315, writ denied, 97-2039 (La.11/21/97), 703 So.2d 1308. The Second Circuit has taken the opposite position in Tapia v. Ham, 480 So.2d 855 (La.App. 2nd Cir.1985), writ denied, 484 So.2d 138, and Puckett v. Hertz Corporation, 535 So.2d 511 (La.App. 2nd Cir.1988). In Tapia, the Court concluded that the automobile rental contract provided UM coverage to the lessee and also car passengers. The Puckett Court determined that based on La.Rev.Stat. Ann. 22:1406 D(2)(b), in the absence of a valid rejection, UM coverage is extended to both the named insured and passengers in the insured vehicle.

In the present matter, the First Circuit chose to follow the reasoning of the Puckett Court and adhere to "the spirit of LSA-R.S. 22:1406 to protect innocent accident victims by extending recovery under the UM policy to passengers in the insured rental vehicle where the insurer/rental agency has failed to obtain a valid rejection of UM coverage." Taylor v. Rowell, 727 So.2d 502, 506. The Court also distinguished its holding from the jurisprudence holding that a person who does not qualify as an "insured" under an insurance policy is not provided UM coverage under the policy. Hearty v. Harris, 574 So.2d 1234 (La.1991); Seaton v. Kelly, 339 So.2d 731 (La.1976); Guedry v. Fromenthal, 633 So.2d 287, 289 (La.App. 1st Cir.1993); Barnes v. Thames, 578 So.2d 1155, 1162 (La.App. 1st Cir.), writs denied, 577 So.2d 1009 (La.1991). According to the Court, that line of jurisprudence involved passengers who were not named insured and would have only been entitled to coverage under the UM policy while occupying an insured vehicle, and the vehicle in which they were traveling was not named as an insured vehicle under the UM policy. The Court concluded that since none of the those cases presented the factual circumstance addressed in this case; i.e., no valid UM rejection was obtained, there was no conflict in the holding of those cases and the holding in this case. Taylor v. Rowell, 727 So.2d 502, 506. We granted Hertz's writ application to resolve the conflict in the circuits on this issue. Taylor v. Rowell, 98-2865 (La.1/15/99), 736 So.2d 214.

DISCUSSION

Summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action, except those disallowed by La.Code Civ. Proc. art. 969. La.Code Civ. Proc. art. 966(A)(2). Summary judgment procedure is favored in Louisiana. Spicer v. Louisiana Power & Light Co., 97-2406 (La.App. 4th Cir. 4/8/98), 712 So.2d 226. Appellate courts review summary judgments de novo, under the same criteria which governs the district court's consideration of the appropriateness of summary judgment. Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d 342 (La. 1991). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show there is no genuine issue of material fact and the mover is entitled to judgment as a matter of law. La.Code Civ. Proc. art. 966(B); Potter v. First Federal S & L, 615 So.2d 318 (La.1993); Penalber v. Blount, 550 So.2d 577 (La.1989). The facts of this case are not in dispute. At the time of this accident, Hertz was a self-insurer pursuant to La.Rev.Stat. Ann. 32:1042 and was documented by the State of Louisiana, Department of Public Safety and Corrections, effective from July 1, 1993 to July 1, 1994.³ Prior to renting the Hertz vehicle, Bennie Matthews had the opportunity to review the rental agreement and he was offered the option of purchasing additional insurance coverage, which was referred to as Liability Insurance Supplement. Mr. Matthews signed the rental agreement and waived the Liability Insurance Supplement. Absent any factual disputes, the only issue before this Court is one of law, whether the Hertz rental agreement extended UM coverage to guest passengers in the automobile. Therefore, we turn to the language of the rental agreement between Hertz and Bennie Matthews, which in pertinent part provides:

Within the limits stated in this paragraph, Hertz will indemnify, hold harmless, and defend You and any Authorized Operators FROM AND AGAINST LIABILITY TO THIRD PARTIES, EXCLUDING ANY OF YOUR OR ANY AUTHORIZED OPERATOR'S FAMILY MEMBERS RELATED BY BLOOD, MARRIAGE OR ADOPTION RESIDING WITH YOU OR THEM, FOR BODILY INJURY, INCLUDING DEATH AND PROPERTY DAMAGE. THE LIMITS OF THIS PROTECTION, INCLUDING OWNER'S LIABILITY, ARE THE SAME AS THE MINIMUM LIMITS REQUIRED BY THE AUTOMOBILE FINANCIAL RESPONSIBILITY LAW OF THE JURISDICTION IN WHICH THE ACCIDENT OCCURS, UNLESS HIGHER LIMITS APPLY FOR THE CDPID NUMBER RATE PLAN SHOWN ON THE RENTAL RECORD, IF THE ACCIDENT RESULTS FROM THE USE OF THE CAR AS PERMITTED BY THIS AGREEMENT. (THE HERTZ OPTIONAL SERVICES BROCHURE, AVAILABLE AT ANY RENTAL LOCATION, SHOWS EACH STATE'S LIMIT.) This will conform to the basic requirements of any applicable "No Fault" law BUT DOES NOT INCLUDE "UNINSURED MOTORIST," "UNDERINSURED MOTORIST," "SUPPLEMENTARY NO FAULT" OR ANY OTHER OPTIONAL COVERAGE. TO THE EXTENT PERMITTED BY LAW, HERTZ AND YOU HEREBY REJECT THE INCLUSION OF ANY SUCH COVERAGE. If such coverage is imposed by operation of law, then the limits of such coverage will be the minimum required by the law of the jurisdiction in which the accident occurs. Hertz warrants that the protection described in this paragraph is primary with respect to any insurance coverage You or an Authorized Operator may have.

In Louisiana, the issuance of UM insurance is governed by La.Rev.Stat. Ann. 22:1406, which in pertinent part provides:

D. The following provisions shall govern the issuance of uninsured motorist coverage in this state:

(1)(a)(i) No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle designed for use on public highways and required to be registered in this state or as provided in this Subsection unless coverage is provided therein or supplemental thereto, in not less than the limits of bodily injury liability provided by the policy, under provisions filed with and

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