Trobaugh v. Migliore

• Decision Date: 06 March 1992
• Docket Number: No. CA,CA
• Citation: 597 So.2d 494
• Parties: Nancy Robertson Trobaugh, Wife of/and Julius TROBAUGH and Edwina Robertson v. Windy (Wendy) R. MIGLIORE, Champion Insurance Company and Allstate Insurance Company. 90 2310.
• Court: Court of Appeal of Louisiana — District of US

Page 494

597 So.2d 494

Nancy Robertson Trobaugh, Wife of/and Julius TROBAUGH and Edwina Robertson v. Windy (Wendy) R. MIGLIORE, Champion Insurance Company and Allstate Insurance Company.

No. CA 90 2310.

Court of Appeal of Louisiana First Circuit.

March 6, 1992.

James S. Rees, III, Covington, for Allstate.

Paul E. Farmer, Covington, for Nancy Trobaugh.

Mark E. Seamster, New Orleans, for Enterprise & Travelers.

Charles M. Hughes, Jr., Bogalusa, for Migliores.

Before WATKINS, CARTER and FOIL, JJ.

FOIL, Judge.

Plaintiffs and their insurer appeal the trial court's summary judgment dismissing defendants Enterprise Leasing Company of New Orleans (Enterprise) and Travelers Insurance Company (Travelers) from this lawsuit. We affirm in part, reverse in part and remand the matter to the trial court.

FACTS

On March 11, 1988, plaintiff, Nancy Robertson Trobaugh, was driving a rented vehicle owned by Enterprise when she was hit from the rear by a car driven by defendant, Wendy R. Migliore. Mrs. Trobaugh filed suit to recover for the injuries she sustained in the accident. Her husband and daughter also filed suit for damages for loss of consortium.

Mrs. Trobaugh was driving the Enterprise vehicle as an authorized driver under a rental agreement executed by her husband, Julius Trobaugh. Enterprise is a qualified self-insured automobile leasing company under La.R.S. 32:1042. At the time of the accident, Enterprise was also the named insured in a Travelers self-insured automobile excess liability policy with a liability limit of $9,500,000 per accident, above a retained limit of $500,000 each accident.

Ms. Migliore was covered under a liability insurance policy issued by Champion Insurance Company (Champion) with $10,000/$20,000 limits. ¹ The Trobaughs had uninsured/underinsured motorist (UM) coverage through a policy issued by Allstate Insurance Company (Allstate) covering their three vehicles. The Allstate policy contained limits of $50,000/$100,000, as well as medical payments coverage in the amount of $5,000.

Suit was brought against Ms. Migliore, Champion, Allstate, Enterprise and Travelers. Plaintiffs claimed that Enterprise, although self-insured, also provided liability coverage on the rental vehicle and was therefore obligated to offer UM coverage pursuant to the requirements of La.R.S. 22:1406. Plaintiffs asserted that, because they were never offered such coverage and never rejected the coverage in writing, Enterprise owes UM coverage equal to the liability coverage on the vehicle. Plaintiffs further claimed that Travelers owed them coverage for liability in excess of Enterprise's self-insured amount.

Enterprise and Travelers filed a motion for summary judgment urging that plaintiffs' claims against them should be dismissed because: (1) self-insurance is not insurance, therefore La.R.S. 22:1406 does not apply to the Enterprise rental agreement; and (2) plaintiffs are not "insureds" under the Travelers policy because the sole named insured is Enterprise.

After a hearing, the trial court granted the motion for summary judgment, dismissing Enterprise and Travelers from the lawsuit. In written reasons for judgment, the court relied on the following authorities: Donnelly v. Greyhound Rent-A-Car, 490 So.2d 377 (La.App. 4th Cir.), writ denied, 493 So.2d 1220 (La.1986); and 15 La.Civil Law Treatise (McKenzie & Johnson).

Both plaintiffs and Allstate appeal the trial court's judgment. The issues on appeal are as follows: (1) whether a self-insured automobile leasing company is required by La.R.S. 22:1406(D), the UM statute, to offer UM coverage to its lessees; and (2) whether the lessor's excess insurer provided UM coverage to plaintiffs and, if so, for what amount. We will address the dismissal of each defendant separately.

ENTERPRISE LEASING COMPANY

In Louisiana, becoming self-insured under the terms of La.R.S. 32:1042 is merely one of four ways that owners and operators of motor vehicles can provide proof of financial responsibility as required by the Louisiana Motor Vehicle Safety Responsibility Law (LMVSR), La.R.S. 32:851-1043. La.R.S. 32:861. The self-insurance certificate indicates that the self-insurer has the ability to pay damages if found legally liable. La.R.S. 32:1042. This certificate is not a "policy" for purposes of the UM coverage requirements of La.R.S. 22:1406(D). ² Jones v. Henry, 542 So.2d 507 (La.1989); Jordan v. Honea, 407 So.2d 503 (La.App. 1st Cir.1981), writs denied, 409 So.2d 654, 660 (La.1982). Thus, those who satisfy the LMVSR through self-insurance certificates do not have to provide UM coverage. However, a different situation is involved when a self-insured automobile leasing company provides liability coverage to its lessees by virtue of its rental agreement. In that instance, separate and distinct from a certificate of self-insurance, there is a contract, which may by its terms, be considered a "policy" in which UM coverage must be provided in an amount equal to the liability coverage provided therein. See, Jones v. King, 549 So.2d 350 (La.App. 5th Cir.), writ denied, 552 So.2d 401 (La.1989); Pollard v. Champion Insurance Company, 532 So.2d 838 (La.App. 4th Cir.), writ denied, 533 So.2d 374 (La.1988); Ashline v. Simon, 466 So.2d 622 (La.App. 5th Cir.), writ denied, 472 So.2d 28 (La.1985). Essentially, these cases hold that when a self-insured car rental company offers liability insurance on the rented vehicle, the company places itself in the position of a vehicle liability insurer and must give the renter an opportunity to accept or reject UM coverage in accordance with La.R.S. 22:1406(D). If it fails to do so, UM benefits are deemed included in the contract.

The Donnelly case, relied upon by the trial court, did not involve a self-insured rental agency. There, the Fourth Circuit held that an automobile leasing agency did not have to provide lessees an opportunity to accept or reject UM coverage, but could reject UM coverage in its insurance contract with a third party and impose that rejection on its lessees. The court noted, however, that the rental company did not by its contract language agree or purport to insure the liability of its lessee.

One year after the trial court's ruling in the case before us, the Fourth Circuit reversed its decision in Donnelly. In Quittem v. National Car Rental Systems, Inc., 582 So.2d 1337 (La.App. 4th Cir.1991), the court held that an automobile lessor, which is not self-insured, is required to offer UM coverage to its lessees, even though the lessor's employee had declined UM coverage under the liability policy insuring the rental fleet. In reaching this decision, the court reviewed the jurisprudence of the other circuit courts of appeal, as well as its own line of cases. Several of the cases reviewed, including Donnelly, involved automobile agencies which purchased insurance from third parties and rejected UM coverage in those policies. Others involved rental companies which were self-insured. After considering all of those cases, the court in Quittem stated:

[W]e have concluded that self-insured automobile rental agencies should not be subject to a different rule than that applied to agencies which contract with third parties to provide insurance for their rental cars.... The reality is that all automobile rental agencies place themselves in the same position as liability insurers because they effectively "sell" insurance to their lessees. If the agency contracts with a third party to provide the insurance coverage, the agency then effectively "sells" a portion of that policy to each of its lessees. The vast weight of the jurisprudence, including the most recent case in this circuit, holds that rental agencies are thus required to offer their lessees an opportunity to accept or reject UM coverage, just as any other automobile liability insurer; we believe that is the better rule, the one most consistent with the legislative intent of the UM statute.

Quittem v. National Car Rental Systems, Inc., 582 So.2d at 1339-1340.

An examination of the...