Walker ex rel. Walker v. State Farm Mutual

• Decision Date: 04 April 2007
• Docket Number: No. 42,051-CA.,42,051-CA.
• Parties: Jerry WALKER on Behalf of His Minor Child, Brandon Thompson WALKER, Plaintiff-Appellee v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Louisiana — District of US

954 So.2d 847

Jerry WALKER on Behalf of His Minor Child, Brandon Thompson WALKER, Plaintiff-Appellee v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellant.

No. 42,051-CA.

Court of Appeal of Louisiana, Second Circuit.

April 4, 2007.

Casten & Pearce, by Marshall R. Pearce, Shreveport, for Appellant.

Wade Visconte, Shreveport, The Law Office of Kirby D. Kelly, by H. Dean Lucius, for Appellee.

Before WILLIAMS, DREW and MOORE, JJ.

MOORE, J.

State Farm, the UM carrier for plaintiff Jerry Walker, appeals a summary judgment finding that Louisiana law applied to the claim and that State Farm's UM policy provided coverage despite its "anti-stacking" provision. We reverse and render.

Procedural Background

The accident occurred on July 13, 2004. Eleven-year-old Brandon Walker was riding as a passenger in Charles Cleveland's 2003 Chevy Impala. Cleveland was driving north on Hwy. 71 in north Caddo Parish when Michelle Thomas, driving south in her 2001 Honda Civic, tried to pass an 18-wheeler. She failed to negotiate the pass and instead collided head-on with the Impala. Brandon was seriously injured.

Brandon, his father Jerry Walker, and Cleveland are all residents of Texarkana, Arkansas. Both the Walkers and Cleveland had auto insurance policies, with UM coverage, issued in Arkansas. The record does not disclose where Ms. Thomas lives.

Acting on behalf of his son, Jerry Walker settled with Cleveland's UM carrier, Progressive Insurance Co., for the policy limit of $100,000 plus $5,000 med-pay, and released those parties. He also settled with Ms. Thomas's liability carrier, Southern Farm Bureau, for $15,186.78 and released those parties.¹

He then filed the instant suit in the First Judicial District Court against his own UM carrier, State Farm, for UM benefits, penalties and attorney fees. State Farm's UM limit was $25,000.

State Farm moved for summary judgment, contending that under Arkansas law, an insurer may preclude stacking of UM policies and that the policy issued to Walker did so, specifically and unambiguously:

If There Is Other Underinsured Motor Vehicle Coverage

1. If underinsured motor vehicle coverage for bodily injury is available to an insured from more than one policy provided by us or by any other insurer, the total limit of liability available from all policies provided by all insurers shall not exceed the limit of liability of the single policy providing the highest limit of liability. This is the most that will be paid regardless of the number of policies involved, persons covered, claims made, vehicles insured, premiums paid or vehicles involved in the accident.

2. Subject to item 1 above, any coverage applicable under this policy shall apply:

a. on a primary basis if the insured sustains bodily injury while occupying your car, or while not occupying a motor vehicle or trailer.

b. on an excess basis if the insured sustains bodily injury while occupying a vehicle not owned by or leased to you, your spouse, or any relative. * * *

3. Subject to items 1 and 2 above, if this policy and one or more other policies provide coverage for bodily injury:

a. on a primary basis, * * *

b. on an excess basis, we are liable only for our share. Our share is that percent of the damages payable on an excess basis that the limit of liability of this policy bears to the total of all applicable underinsured motor vehicle coverage provided on an excess basis.

(Policy Pages 17-18; defined terms emphasized in the original). In support, it attached a certified copy of the policy.

Walker filed his own motion for summary judgment, contending that under the choice-of-law analysis of La. C.C. arts. 3515 and 3537, Louisiana law applied. He conceded that Louisiana law generally prohibits recovering damages from more than one UM policy, but the guest passenger exception of La. R.S. 22:680(1)(c)(i, ii) permitted it in this case. Alternatively, he contended that even under Arkansas law, State Farm's anti-stacking provision was unenforceable because it was ambiguous, conflicting and against public policy. In support, he attached certified copies of the release executed with Ms. Thomas and her insurer, as well as Brandon's medical records.

The parties submitted the matter on briefs. The court stated on the record that Walker "obtained payment from the alleged tortfeasor and a partial payment from an uninsured motorist or underinsured motorist and seeks in effect to stack uninsured motorist coverage."² Further, "Louisiana law applies to this particular controversy and * * * as State Farm provides uninsured or underinsured protection[,] the plaintiff's motion for summary judgment is granted." Finally, "The defendant's motion for summary judgment is denied for the same reason; that is, that Louisiana applies, the Louisiana law provides for stacking under these circumstances of underinsured or uninsured motorist coverage." Despite State Farm's request pursuant to La. C.C.P. art. 1917, the court declined to give reasons for these conclusions. The court rendered judgment granting Walker's motion and denying State Farm's, and certified it as immediately appealable.

State Farm has appealed, urging by two assignments of error that the district court erred in applying Louisiana law; alternatively, it argues that even if Louisiana law applies, it does not require stacking.

Standard of Review

Appellate courts review summary judgments de novo, using the same criteria that govern the district court's consideration of whether summary judgment is appropriate. Hill v. Shelter Mutual Ins. Co., 2005-1783 (La.7/10/06), 935 So.2d 691. Summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966 B. The interpretation of an insurance contract is usually a legal question that can be properly resolved by motion for summary judgment. Robinson v. Heard, 2001-1697 (La.2/26/02), 809 So.2d 943.

Discussion: Comparison of UM Laws

By its first assignment of error, State Farm urges the district court erred in applying Louisiana law to an Arkansas automobile insurance policy providing uninsured and underinsured motorist coverage to an Arkansas resident involved in an accident in Louisiana. It contends that there is a genuine difference between the UM laws of Louisiana and Arkansas, and that under the factors of La. C.C. arts. 3515 and 3537, Arkansas's interests would be more seriously impaired should its laws not be applied. It cites numerous cases in which out-of-state plaintiffs, with insurance policies issued in their home states, were injured in auto accidents in Louisiana and made claims on their UM provisions; most often, the courts have applied the other state's law to the claim. See, e.g., Champagne v. Ward, 2003-3211 (La.1/19/05), 893 So.2d 773. Finally, it submits that Louisiana's policy interests have been mitigated since Walker recovered and settled with the tortfeasor and collected UM policy limits from his host driver.

Walker responds that Louisiana has a strong public policy to promote full recovery for innocent victims of auto accidents on its highways by mandating liability coverage and making UM coverage available. Martin v. Champion Ins. Co., 95-0030 (La.6/30/95), 656 So.2d 991. He contends that with this strong public policy and numerous factual connections between the accident and the state, Louisiana's interests would be most seriously impaired were its law not applied.

In Champagne v. Ward, supra, the supreme court held that the starting point in a multistate case was first to determine whether there was a difference between Louisiana's UM law and that of the other state and then to determine which state's law applied by employing the choice-of-law methodology codified in C.C. arts. 3515 and 3537.

The Arkansas statute regulating the provision of underinsured motorist coverage, A.C.A. § 23-89-209, is silent on the issue of stacking. Ross v. United Services Auto. Ass'n, 320 Ark. 604, 899 S.W.2d 53 (1995). Although stacking of UM coverages is not prohibited by statute, it may be precluded by an applicable anti-stacking clause in the policy. Kanning v. Allstate Ins. Cos., 67 Ark.App. 135, 992 S.W.2d 831 (1999); Whitney v. Shelter Mutual Ins., 383 F.Supp.2d 1112 (W.D.Ark.2004). Arkansas public policy does not favor stacking. Chamberlin v. State Farm Mut. Auto. Ins. Co., 343 Ark. 392, 36 S.W.3d 281 (2001). The availability of stacking is purely a matter of reading the contract to determine its contents. Whitney v. Shelter Mutual Ins., supra. The policy provision quoted above would appear to prohibit stacking in this case.

The Louisiana statute mandating uninsured motorist coverage, La. R.S. 22:680, specifically addresses stacking:

(1)(c)(i) If the insured has any limits of uninsured motorist coverage in a policy of automobile liability insurance, in accordance with the terms of Subparagraph (1)(a) of this Section, then such limits of liability shall not be increased because of multiple motor vehicles covered under said policy of insurance, and such limits of uninsured motorist coverage shall not be increased when the insured has insurance available to him under more than one uninsured motorist coverage provision or policy; however, with respect to other insurance available, the policy of insurance or endorsement shall provide the following:

(ii) With respect to bodily injury to an injured party while occupying an automobile not owned by said injured party, resident spouse, or resident relative, the following priorities under uninsured motorist coverage shall apply:

(aa) The uninsured motorist coverage on the vehicle in which the injured party was an occupant is primary;

(bb) Should that primary uninsured motorist coverage be exhausted due to the extent of damages, then the injured...