Treadway v. Vaughn

• Decision Date: 29 December 1993
• Docket Number: Nos. 92,s. 92
• Citation: 633 So.2d 626
• Court: Court of Appeal of Louisiana — District of US
• Parties: Stanley M. TREADWAY, et al. v. David M. VAUGHN, et al. David M. VAUGHN and Powers, Vaughn & Clegg v. CONTINENTAL CASUALTY COMPANY and The Home Insurance Company. CA 2226, 92 CA 2227.

Page 626

633 So.2d 626

Stanley M. TREADWAY, et al. v. David M. VAUGHN, et al.

David M. VAUGHN and Powers, Vaughn & Clegg v. CONTINENTAL CASUALTY COMPANY and The Home Insurance Company.

Nos. 92 CA 2226, 92 CA 2227.

Court of Appeal of Louisiana,

First Circuit.

Dec. 29, 1993.

Writ Denied March 25, 1994.

Daniel L. Avant, John L. Avant, and Troy J. Charpentier, Baton Rouge, for plaintiffs-appellees David M. Vaughn, Powers, Vaughn and Clegg.

Evan Scobee, Baton Rouge, for appellee State Farm Ins. Co.

John P. Wolff, Baton Rouge, for defendant-appellant Continental Cas. Co. # 376,966.

Jody E. Anderman, Lafayette, for defendant-appellee The Home Ins. Co.

Before WATKINS, SHORTESS and FOGG, JJ.

FOGG, Judge.

This appeal arises from a declaratory judgment action by the plaintiff insureds against the defendant insurers. On appeal, Continental Casualty Company (Continental) contends that the trial court erred in granting the plaintiffs' motion for summary judgment and finding that the insurers owed the plaintiffs a duty to defend. We affirm.

The plaintiffs, David M. Vaughn, John Dale Powers, Michael V. Clegg, and their law firm, Powers, Vaughn and Clegg (PVC), a partnership, filed a declaratory judgment action against Continental and The Home Insurance Company (Home). ¹ The plaintiffs sought a determination that Continental, the law firm's commercial general liability carrier, and Home, its professional liability carrier, must defend and indemnify them for any damages imposed under the allegations of a lawsuit filed against them by Stanley M. and Barbara Gayle Treadway. ² The declaratory judgment action and the Treadway suit were consolidated in the trial court.

The plaintiffs filed a motion for summary judgment in the action for declaratory judgment contending that the allegations of the Treadway petition did not unambiguously exclude coverage, and therefore, they were entitled to a judgment ordering the defendants to defend them, to reimburse them all sums expended in defense of the matter, and to pay penalties and attorney's fees. The trial court granted the motion for summary judgment, finding that the defendants owed a duty to defend the plaintiffs against all allegations in the Treadway suit. In oral reasons for judgment, the judge stated that while parts of the petition excluded coverage, other allegations in the petition did not; the judge pretermitted the other issues. From this judgment, Continental appeals.

Continental initially contends that the granting of a summary judgment on the duty to defend is an improper partial summary judgment because it does not grant all or part of the relief the plaintiffs prayed for. La.C.C.P. art. 1915(A)(3) states,

A final judgment may be rendered and signed by the court, even though it may not grant the successful party all of the relief prayed for, or may not adjudicate all of the issues in the case, when the court:

....

(3) Grants a motion for summary judgment, as provided for by Articles 966 through 969, except a summary judgment rendered pursuant to Article 966(D).

According to La.C.C.P. art. 966(A), "The plaintiff or defendant in the principal or any incidental action, with or without supporting affidavits, may move for a summary judgment in his favor for all or part of the relief for which he has prayed." The trial court granted part of the relief sought in the declaratory judgment action because in that action the plaintiffs prayed that there be judgment recognizing that the defendants must defend and indemnify them for any damages due to the Treadway suit; the summary judgment recognizes that the defendants have a duty to defend the plaintiffs. Continental also apparently contends that the trial court could not grant a partial summary judgment on the issue of the duty to defend without reaching the coverage issue based on La.C.C.P. arts. 966(D) and 1915(A)(3).

La.C.C.P. arts. 966(D) and 1915(A)(3), which provide that a summary judgment determining a collateral insurance coverage issue in a damages suit is not a final judgment, and thus not appealable, are not applicable. ³ Because this is a declaratory judgment action in which the plaintiffs not only seek a determination that the insurers provide coverage, but also that they must defend, the trial court's granting of a summary judgment finding that the insurers must defend was not procedurally improper.

Continental further contends that the judgment was improper because the relief the plaintiffs prayed for was a judgment finding them not liable for the actions claimed in the Treadways' petition. While the plaintiffs in their answer to the Treadway lawsuit do pray for such a judgment, the prayer in the answer is not the basis for the summary judgment granted by the court.

The insurer's obligation to defend suits against its insured is broader than its liability for damage claims. The insurer's duty to defend suits brought against its insured is determined by the allegations of the plaintiffs' petition; the insurer is obligated to furnish a defense unless the petition unambiguously excludes coverage. Additionally the allegations of the petition are liberally interpreted in determining whether they set forth grounds which bring the claims within the scope of the insurer's duty to defend the suit brought against its insured. American Home Assurance Co. v. Czarniecki, 255 La. 251, 230 So.2d 253 (La.1969); St. Amant v. Mack, 590 So.2d 1283 (La.App. 1st Cir.1991), writ denied, 594 So.2d 897 (La.1992).

Once a complaint states one claim within the policy's coverage, the insurer has a duty to accept defense of the entire lawsuit, even though other claims in the complaint fall outside the policy's coverage. Alert Centre, Inc. v. Alarm Protection Services, Inc., 967 F.2d 161 (5th Cir.1992); Ellis v. Transcontinental Insurance Co., 619 So.2d 1130 (La.App. 4th Cir.1993), writ denied, 625 So.2d 1043 (La.1993); Duhon v. Nitrogen Pumping and Coiled Tubing Specialists, Inc., 611 So.2d 158 (La.App. 3d Cir.1992). See also Cute'-Togs of New Orleans, Inc. v. Louisiana Health Service & Indemnity Co., 376 So.2d 999 (La.App. 1st Cir.1979), reversed on other grounds, 386 So.2d 87 (La.1980). ⁴

In their lawsuit, the Treadways alleged that Mr. Treadway was the supervisor in the Baton Rouge Claims Office of State Farm Fire and Casualty Company (State Farm) and that Mr. Vaughn and PVC were approved as State Farm's legal representatives. Mr. Vaughn was Mr. Treadway's "contact person." The Treadways further allege that PVC fell into disfavor with the regional and home offices of State Farm; that Mr. Treadway had to convey this dissatisfaction to PVC; that the relationship between State Farm and the law firm deteriorated; and that a directive issued to terminate the relationship and not assign any files to PVC in the future. According to the Treadways, the attorneys of PVC met with State Farm's officers, and, at the meeting, the transcript of a secretly recorded telephone conversation between Mr. Treadway and Mr. Vaughn was produced. The conversation allegedly concerned a discrimination charge filed with the Equal Employment Opportunity Commission (EEOC) against State Farm wherein Mr. Treadway was named as a defendant. The Treadways allege that the tape was produced to pressure State Farm to reinstate PVC for its legal representation. The Treadways also allege that at that meeting, for the same purpose, Mr. Vaughn made defamatory remarks about Mr. Treadway to his superiors. The Treadways list these remarks: "accused petitioner [Mr. Treadway] of using improper pressure to extort them into participating in a State Farm golf tournament; of...