Tugwell v. State Farm Ins. Co.

• Decision Date: 06 March 1992
• Docket Number: No. CA,CA
• Parties: Terrie TUGWELL v. STATE FARM INSURANCE COMPANY and Zurich Insurance Company. 91 0019. 597 So.2d 1039
• Court: Court of Appeal of Louisiana — District of US

Page 1039

597 So.2d 1039

Terrie TUGWELL v. STATE FARM INSURANCE COMPANY and Zurich Insurance Company.

No. CA 91 0019.

597 So.2d 1039

Court of Appeal of Louisiana, First Circuit.

March 6, 1992.

Writ Granted June 26, 1992.

Joseph L. Waitz, Houma, for plaintiff-appellant, Terrie Tugwell.

Richard Creed, Jr., Baton Rouge, for defendant-appellee State Farm Mut. Auto. Ins. Co.

O'Neal Walsh, Baton Rouge, for defendant-appellee Zurich Ins. Co.

Before SHORTESS, LANIER and CRAIN, JJ.

LANIER, Judge.

This action is a suit seeking uninsured motorist (UM) benefits under three policies of insurance. The plaintiff, Terrie Tugwell, was a guest passenger in an insured automobile that was in a collision with an automobile driven by an uninsured driver. The automobile in which Tugwell was a passenger had primary liability and UM coverage of $100,000 with State Farm Mutual Automobile Insurance Company (State Farm) and excess (umbrella) liability coverage of $1,000,000 with State Farm. Tugwell also had $300,000 UM coverage available to her through a policy of insurance issued to her mother by Zurich Insurance Company (Zurich). Tugwell filed this suit against State Farm and Zurich. A bifurcated trial on the issue of liability was held and the driver of the uninsured automobile was found to be totally at fault. No appeal was taken from this judgment. Tugwell and Zurich filed a joint motion for summary judgment requesting a ruling that "State Farm's umbrella policy provides the primary uninsured motorist coverage on the Thompson vehicle [the vehicle in which Tugwell was a passenger] for the benefit of plaintiff, Tugwell, in the amount of $1,000,000 and that Zurich's UM coverage is excess over the State Farm umbrella coverage." State Farm filed a cross motion for summary judgment asserting that UM coverage had been validly waived for the umbrella policy and requested that judgment be rendered "holding that State Farm only provided $100,000 in uninsured motorist coverage." The trial court denied the motion for summary judgment by Tugwell and Zurich and granted summary judgment in favor of State Farm stating that State Farm's "liability is limited to $100,000 in uninsured motorist coverage." The trial court's judgment did not (1) render a money judgment against State Farm, or (2) dismiss State Farm as a party defendant in these proceedings. Tugwell and Zurich took this devolutive appeal.

BASIC FACTS

On April 4, 1987, Sherri Thompson was driving a 1985 Toyota automobile owned by her father, Jimmy C. Thompson, at the intersection of Corporate Boulevard and Energy Drive, in the City of Baton Rouge, Louisiana. Terrie Tugwell was a guest passenger in the Thompson vehicle. At this same time and place Albert Hammond, Jr. was driving his 1976 Oldsmobile Cutlass, and there was a collision between the Thompson vehicle and the Hammond vehicle.

FACTS CONCERNING UM INSURANCE COVERAGE BY STATE FARM

On July 31, 1983, Jimmy Thompson applied to State Farm ¹ for a "personal liability umbrella" policy of insurance with a $1,000,000 limit of liability. In the underwriting section of the application, Thompson was asked to "LIST ALL MOTOR VEHICLES OWNED OR LEASED BY THE APPLICANT OR ANY HOUSEHOLD MEMBER OR FURNISHED FOR THE REGULAR USE OF THE APPLICANT BY EMPLOYER", and he listed a 1981 Datsun and a 1983 Lincoln. Thompson also was asked in the underwriting section to list all motorized vehicle operators, and he listed himself, his wife (Arlene C.) and his daughter (Sherri). Thompson also signed a portion of the application entitled "REJECTION OF UNINSURED MOTORISTS COVERAGE" which stated that "In keeping with the provisions of the laws of my state, I have been offered the opportunity to purchase Uninsured Motorists coverage, and I hereby reject Uninsured Motorist coverage as a part of this application." An underwriting information sheet accompanying the application shows (1) Thompson had 2 autos which were used by 3 drivers, (2) there was no uninsured motorist premium, (3) Thompson had 2 State Farm auto policies, 521-3358-18 and 521-3359-18, and (4) Thompson had a new "Fire: HO (H)" policy.

State Farm issued to Thompson personal liability umbrella policy # 18-58-4959-9 effective August 1, 1983, for a policy period of 12 months. The declarations page of this policy provided for automatic renewal by stating that "If the policy period is shown as 12 months, this policy will be renewed automatically subject to the premiums, rules, and forms in effect for each succeeding policy period. If the policy is terminated, we will give written notice in compliance with the policy provision or as required by law." The declarations page of this policy also showed that Thompson was required to carry minimum underlying (primary) insurance coverage for (1) automobile liability, (2) recreational vehicle liability, (3) comprehensive personal liability, (4) farmers comprehensive liability, and (5) watercraft liability.

On February 4, 1985, Thompson applied to State Farm for automobile insurance on a 1984 Lincoln with primary limits of $500,000 for liability and UM coverage. This application indicated that this vehicle would be driven by Thompson, Tom Nolan and Richard Walsh, and that Nolan and Walsh were Thompson's partners. This policy was assigned policy # 526-3314-018-18A.

State Farm issued policy # 521-3358-18B to Thompson for the 1985 Toyota automobile which was involved in the accident herein. This policy had primary insurance limits of $100,000 per person and $300,000 per accident for liability and UM coverages. This policy replaced policy 521-3358-18A. The declarations page of this policy states that "A PERSONAL LIABILITY UMBRELLA POLICY EXISTS POLICY NUMBER 185849599."

Thompson did not timely pay the $155 annual premium due on the umbrella policy on August 1, 1986. On August 19, 1986, a policy renewal questionnaire was filled out for this policy. This questionnaire sought information on Thompson's underlying (primary) policies for (1) automobile liability, (2) homeowners liability, (3) rental property liability, (4) watercraft liability, and (5) office liability. Under the automobile liability section, Thompson indicated that he had 5 autos and no farm or recreational vehicles. He listed the number of drivers as 4, with 2 under the age of 25 years. In the remarks section, the following were listed: "Sherry DOB: 10-7-66" and "Julie DOB: 11-1-68". He listed State Farm as his automobile liability insurance carrier and gave 5 policy numbers: 521-3358; 521-3359; illegible; 538-3661; and 538-3662. In response to the question "Is any change desired in Uninsured/Underinsured Motorist coverage under the Personal Liability Umbrella Policy?", the questionnaire shows a response of "No". Under the homeowners liability section Thompson indicated that his current insurance carrier was State Farm under policy # 18-25-2000-5-F.

On August 26, 1986, State Farm wrote to Thompson and advised as follows:

As of the "Date Processed" shown above [August 26, 1986], we have not received the premium required to keep this policy in force. Therefore, this policy is canceled effective the "Date Canceled" date shown hereon [October 5, 1986]. ... If full premium payment has been made and/or is received and accepted prior to or on the date of cancellation, you will receive a Notice of Reinstatement, verify[ing] continuous and uninterrupted coverage under this policy.

This communication references policy number 18-58-4959-9.

On or before August 29, 1986, Thompson paid the overdue premium. On August 29, 1986, State Farm sent Thompson a "Notice of Reinstatement" stating "We are pleased to acknowledge receipt of the premium due on this policy. This policy will be continued in force subject to its printed terms and conditions payment check clearing through your bank." This communication references policy number 18-58-4959-9. The "reinstatement" date is listed as August 1, 1986.

The personal liability umbrella policy issued by State Farm to Thompson was renewed effective August 1, 1986, for a period of 12 months, is filed as an exhibit with State Farm's motion for summary judgment, and has policy number 18-58-4959-9. The declarations page of the policy shows that Thompson was given personal liability coverage with a limit of liability of $1,000,000 and was given no UM coverage. He was required as part of the insuring agreement to maintain underlying (primary) insurance coverage in various minimum limits for (1) automobile liability, (2) recreational vehicle liability, (3) comprehensive personal liability, (4) watercraft liability, (5) rental property liability, (6) business premises liability, and (7) professional liability. The coverage provided by this policy is set forth as follows:

Personal Liability: If you are legally obligated to pay damages for a loss, we will pay your net loss minus the retained limit. Our payment will not exceed the amount shown on the Declarations Page as Policy Limits--Coverage L--Personal Liability.

(Bolding in original)

The extent of this coverage is shown by the definitions set forth in the policy as follows:

1. Automobile: A land motor vehicle, trailer or semi-trailer. This does not include recreational motor vehicles, farm tractors, trailers and implements.

2. Business: A trade, profession or occupation, other than farming.

3. Business Property: Property on which a business is conducted, or; property rented or held for rental in whole or in part to others.

4. Insured:

a. the named insured and:

b. the following residents of the named insured's household:

(1) the named insured's relatives,

(2) anyone under the age of 21 under the care of a person named above.

c. any person or organization while using or holding an automobile, recreational motor vehicle, or watercraft owned, rented by, or loaned to the named insured, provided that the named insured gave permission for the type of use. A person or organization is not an insured if the use or...