U.S. Fire Ins. Co. v. West Monroe Charter Service, Inc.

• Decision Date: 25 February 1987
• Docket Number: No. 18,416-CA,18,416-CA
• Parties: UNITED STATES FIRE INSURANCE COMPANY, Plaintiff-Appellant, v. WEST MONROE CHARTER SERVICE, INC., et al., Defendants-Appellees.
• Court: Court of Appeal of Louisiana — District of US

Page 93

504 So.2d 93

UNITED STATES FIRE INSURANCE COMPANY, Plaintiff-Appellant, v. WEST MONROE CHARTER SERVICE, INC., et al., Defendants-Appellees.

No. 18,416-CA.

Court of Appeal of Louisiana,

Second Circuit.

Feb. 25, 1987.

Writ Denied May 8, 1987.

Davenport, Files & Kelly by William G. Kelly, Jr., Monroe, for plaintiff-appellant United States Fire Insurance Company.

Robert S. Cooper and Terry B. Loup, Baton Rouge, for defendants-appellees Billie Nell Bowen, Deborah Denise Bowen, and Cheryl Ann Bowen Smith.

John T. Seale, Monroe, for defendants-appellees Bonnie W. Wells, Larry Wells, Donna Wells, Kenneth Wells and Connie Wells.

Before HALL, FRED W. JONES, Jr. and SEXTON, JJ.

HALL, Chief Judge.

Appellant, United States Fire Insurance Company, filed this suit for declaratory judgment seeking a ruling that it provided no liability coverage under an aircraft insurance policy issued to appellee, West Monroe Charter Service, Inc., for the death of passengers killed in a crash of an airplane owned by the corporation. The trial court rendered judgment declaring that the policy provided liability coverage. For the reasons set forth herein, we reverse the judgment of the trial court.

On July 1, 1981, a 1977 Piper aircraft, piloted in a severe rain and thunderstorm by Albert B. "Jack" Little, crashed near Vicksburg, Mississippi. The aircraft was occupied by Mr. Little, John Caldwell Durham, Jimmy Dale Bowen, and Milner Wells. All of the occupants were killed in the crash.

The Bowen and Wells survivors filed wrongful death suits naming as defendants the Succession of Albert B. Little through the provisional administrator Henry Little, Mid-South Tank & Utilities Company, Inc., West Monroe Charter Service, Inc., and United States Fire Insurance Company. Both families settled their claims with all parties to the suit except U.S. Fire. At the time the instant suit was brought, no Durham survivors had filed suit against any of the parties involved herein.

By virtue of this suit for declaratory judgment, appellant sought a ruling that the pilot's lack of a current medical certificate and the rental aircraft status of the plane excluded liability coverage under the policy. Named as defendants to this suit were West Monroe Charter Service, Inc., Mid-South Tank & Utilities Company, Inc., the Succession of Albert B. Little through the provisional administrator Henry Little, the Bowen survivors, the Wells survivors, and Mrs. Durham. West Monroe Charter Service, Inc. is a Louisiana corporation whose corporate stock at the time of the accident was owned one-half by Albert B. Little and one-half by attorney Sam O. Henry, III, both residents of West Monroe, Louisiana. West Monroe Charter was the owner of the aircraft involved in the crash and the named insured on the insurance policy in question. Mid-South Tank & Utilities Company, Inc. is a Louisiana corporation whose stock at the time of the crash was owned entirely by Albert B. Little.

At trial on the merits, the court found that appellant failed to establish that the pilot had no current medical certificate or that the aircraft had been leased or rented to Mr. Little or Mid-South and rejected appellant's claim that coverage under the policy was excluded.

This appeal presents the following issues:

1. Did appellant establish that the pilot did not have a medical certificate?

2. If the pilot did not have a medical certificate, is the policy language requiring the medical certificate a warranty or misrepresentation which must be made with the intent to deceive in order to exclude coverage under LSA-R.S. 22:619?

3. If the medical certificate requirement is not a warranty or misrepresentation, must there be a causal connection between this requirement and the accident in order to exclude coverage under the policy?

4. Did appellant establish that the aircraft was leased or rented to Mr. Little or Mid-South Tank and Utilities, Inc. thereby excluding coverage under the terms of the policy?

ISSUE NUMBER 1

Appellant argues that the trial court erred in finding that it failed to prove that the pilot had no current medical certificate as required by the policy. We find merit to this argument.

The insurer has the burden of proving the applicability of a coverage exclusion. Hampton v. Lincoln National Life Ins. Co., 445 So.2d 110 (La.App. 2d Cir.1984). In civil cases based purely on circumstantial evidence, every other reasonable hypothesis must be excluded in order to satisfy the burden of proof by a preponderance of the evidence. Childs v. Zurich American Insurance Co., 476 So.2d 403 (La.App. 2d Cir.1985), writ denied, 479 So.2d 920 (La.1985).

An appellate court cannot disturb the factual finding of the trial court absent a showing that the finding was clearly wrong. Watson v. State Farm Fire & Cas. Ins. Co., 469 So.2d 967 (La.1985); Arceneaux v. Domingue, 365 So.2d 1330 (La.1978).

The aircraft liability policy issued by appellant to West Monroe Charter provided that "[t]he aircraft must be operated in flight only by a person shown below who must have a current and proper (1) medical certificate and (2) pilot certificate with necessary ratings, as required by the FAA for each flight. There is no coverage under the policy if the pilot does not meet these requirements." Albert B. Little was listed as a pilot on the policy, and it is undisputed that he possessed a current and proper pilot certificate with necessary ratings. Appellant sought to prove that Little did not have a current FAA medical certificate.

The medical standards for issuing medical certificates for airmen are prescribed by Code of Federal Regulations Part 67 which has been interpreted by the Federal Air Surgeon in the "Guide for Aviation Medical Examiners." According to the Guide, a private pilot, such as Mr. Little, must have at least a Third-Class medical certificate. A Third-Class medical certificate is valid for the remainder of the month of issue plus twenty-four calendar months.

Medical certificates are issued by an Aviation Medical Examiner (AME) after an examination of the applicant in accordance with the Guide. The Administrator of the FAA designates qualified private physicians as AMEs. Each AME designation is effective for one year but may be renewed each year. The Guide provides for continual evaluation of the designee's performance. An AME is required to mail reports of medical examinations, whether the certificate is issued or denied, to the Aeromedical Certification Branch in Oklahoma City, Oklahoma. Preaddressed mailing envelopes are provided for this purpose.

The National Transportation and Safety Board accident report concerning the crash indicates that the FAA has no record of any medical certificate issued to Albert B. Little since May 26, 1976. Appellant's request to the FAA for Mr. Little's medical records also produced only the 1976 certificate. A statement was sent by appellant to each physician in Monroe and West Monroe who was listed in the Directory of Aviation Medical Examiners, an FAA publication, for the period between February, 1979 and July, 1981. Each physician, except Dr. C.B. Flinn, responded that he had not examined Albert B. Little at any time between January 1, 1979 and July 1, 1981 for the purpose of a pilot's medical certificate. It was stipulated at trial that if Dr. Flinn were present, he would testify that he had been a qualified AME in Monroe until 1979 but is now retired, he could not remember whether he ever examined Mr. Little for a pilot's medical certificate, he did not keep his medical records after retiring, and if he had examined Mr. Little, he would have mailed the results of the examination to the FAA office as required.

In his deposition which was admitted into evidence in lieu of his testimony, Dr. James W. Wade, a Monroe internist specializing in cardiology, stated he first examined Mr. Little in May, 1979 at Glenwood Hospital at the request of Mr. Little's physician, Dr. Fred Bennett. Dr. Wade diagnosed Mr. Little, who had a blood pressure reading of 190/100 in both arms, as having mild essential hypertension. Mr. Little was discharged from the hospital on a mild tranquilizer and blood pressure medication. Dr. Wade continued to see Mr. Little on a regular basis until his last visit just prior to the accident on June 22, 1981. Although Mr. Little only remained on the tranquilizer for approximately five months, he was still taking the blood pressure medication at the time of his last visit to Dr. Wade. A letter to this effect from Dr. Wade is attached to his deposition. Dr. Wade emphasized that Mr. Little's hypertension problem was mild, was under control, and there were no restrictions on his activities. Dr. Wade is not and never has been a medical examiner for the FAA.

Dr. N.R. Spencer, a designated Senior AME in Monroe, was qualified as an expert in the field of aviation medicine, and testified that although he is unfamiliar with the Code of Federal Regulations, he follows the "Guide for Aviation Medical Examiners" when issuing medical certificates. Dr. Spencer stated that AMEs are currently required to attend a seminar every five years. At these seminars, the AMEs are instructed in the proper manner to fill out and forward to the FAA medical certificate forms. At one of these seminars, Dr. Spencer learned of a doctor who filled out his forms but failed to forward them to the FAA. Although Dr. Spencer had never examined Mr. Little, he testified that he had read the depositions of Barbara Little and Dr. Wade, the letter from Dr. Wade concerning Mr. Little, and another AME's findings on Mr. Little made prior to Dr. Wade's letter.

14 C.F.R. § 67.17 sets forth the eligibility requirements for a Third-Class medical certificate and gives the Federal Air Surgeon the authority to determine any limitation which would make an applicant unable to safely perform the duties or exercise the privileges of the airman certificate for which he is applying....