Whitten v. Empire Fire & Marine Ins. Co.

• Decision Date: 05 December 1977
• Docket Number: No. 13394,13394
• Citation: 353 So.2d 1071
• Parties: Gregory T. WHITTEN, Plaintiff-Appellee, v. EMPIRE FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant.
• Court: Court of Appeal of Louisiana — District of US

Page 1071

353 So.2d 1071

Gregory T. WHITTEN, Plaintiff-Appellee, v. EMPIRE FIRE AND MARINE INSURANCE COMPANY, Defendant-Appellant.

No. 13394.

Court of Appeal of Louisiana, Second Circuit.

Dec. 5, 1977.

Hayes, Harkey, Smith & Cascio by Thomas M. Hayes, Jr., Monroe, for defendant-appellant.

Whitten & Blake by Leon H. Whitten, Jonesboro, for plaintiff-appellee.

Before BOLIN, MARVIN and JONES, JJ.

BOLIN, Judge.

The sole issue on appeal is whether the trial court correctly decided that uninsured motorist coverage, after the 1974 amendment to the Uninsured Motorist Statute, is tantamount to excess coverage over the tortfeasor's liability policy limits. We agree with the trial court and affirm its judgment.

The district judge wrote a comprehensive and scholarly opinion. Since the opinion adequately and correctly sets forth the law and the facts, we adopt that portion pertinent to the issue on appeal:

"On November 24, 1975, Gregory T. Whitten, while operating a motorcycle on a public highway in Lincoln Parish, Louisiana, was involved in a head-on collision with a vehicle driven by Ronnie Cravens and sustained serious injuries. At the time the Cravens automobile was covered by a liability insurance policy issued by Commercial Union Insurance Company with limits of $5,000.00 for injury to one person. Whitten had been issued a contract of insurance by Empire Fire and Marine Insurance Company (hereinafter referred to sometimes simply as 'Empire') which provided 'uninsured motorist' coverage with limits of $5,000.00 for injury to one person.

"In consideration of the payment of $5,000.00 to him under the above described liability policy, Whitten granted a full release to Cravens and his liability carrier and demanded from Empire the sum of $5,000.00 under the 'uninsured motorist' section of his policy. When the claim was rejected by Empire upon the advice of counsel, Whitten filed this suit against Empire for 'uninsured motorist' benefits, . . . . The defendant answered, admitting the 'uninsured motorist' coverage, but averred that it was entitled to recover from plaintiff the amount of his settlement with Cravens and Commercial Union and specially pled the defense of set-off. Urged as a second special defense was the plea of estoppel based upon the assertion that by his settlement with the tortfeasor and his liability carrier the plaintiff had denied defendant's right of subrogation. Defendant also filed a reconventional demand predicated basically upon the same rationale as the plea of set-off.

"The parties waived a trial on the merits in this matter and submitted their dispute upon a written stipulation reciting essentially the facts set forth above, with the added agreement that the accident was due solely to the negligence of Cravens and that plaintiff's injuries were such that he would have been entitled to recover damages in excess of $10,000.00.

"The legal question posed by this litigation is whether the defendant is entitled to recover from plaintiff, or receive credit for, the $5,000.00 paid to plaintiff by Commercial Union on behalf of Cravens in settlement of plaintiff's claims against them. If this question is answered in the affirmative, defendant owes plaintiff nothing since its policy limit was $5,000.00. Resolution of that issue mandates a review of the history of Louisiana's statutory provisions dealing with 'uninsured motorist' coverage.

"Act 187 of 1962 (La.R.S. 1406 D) inaugurated 'uninsured motorist' (referred to hereinafter simply as 'UM') protection in Louisiana with the requirement that automobile liability insurers issue a minimum UM coverage of '5/10' unless the insured rejected the coverage. In general an 'uninsured motor vehicle' was defined as one which was not covered by liability insurance. Section D(4) of the statute contained the following language:

In the event of payment to any person under the coverage required by this Section and subject to the terms and conditions of such coverage, the insurer making such payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of such person against any person or organization legally responsible for the bodily injury for which such payment is made, including the proceeds recoverable from the assets of the insolvent insurer.

"The UM statute was amended by Act 137 of 1972 to expand the definition of 'uninsured motor vehicle' to include a vehicle with liability coverage less than the UM coverage carried by the insured, thus allowing the insured to recover the difference between the underinsured tortfeasor's liability limits and his own damages up to his UM limits.

"The definition of 'uninsured motor vehicle' was again changed, by Act 154 of 1974, to include an insured motor vehicle with liability coverage less than the amount of the damage which the injured insured or his passengers were entitled to recover. The effect of this change was discussed as follows in 35 La.L.Rev. 618:

The change in the definition of uninsured motor vehicle is important because all the insured must now establish is that the damages he has suffered are greater than the liability limits of the tortfeasor. In effect, UM coverage is now excess coverage over the tortfeasor's BI liability limits and no longer operates as an absolute limit of recovery. For example, if a plaintiff proved damages of $8,000 and had $5,000 UM coverage and his tortfeasor had BI limits of $5,000, there could be no recovery under either the 1962 statute or the 1972 statute. Assuming the tortfeasor's insurer was solvent, the plaintiff would be denied recovery under Act 187 of 1972 (1962) merely because the tortfeasor was in fact insured. Recovery would also be denied under the 1972 amendment because the tortfeasor's BI liability coverage was not less than the plaintiff's UM coverage. However, recovery of $3,000 will be allowed the insured under the 1974 amendment because this amount is the difference between the insured's damages and the BI limits of the tortfeasor. Added to the $5,000 BI coverage received from the tortfeasor's insurer, the UM recovery will thus fully compensate the plaintiff.

"In order to conform to and implement the 1974 amendment to the UM statute the following endorsement was added to plaintiff's contract of insurance:

It is agreed that:

1. (a) The definition of 'uninsured highway vehicle' shall also include a highway vehicle for which the owner or operator has a bodily injury liability bond or insurance policy applicable at the time of the accident but the limits of such bond or policy are insufficient to pay the full amount the insured is legally entitled to recover for damages because of bodily injury caused by the accident;

(b) in the event the owner or operator has such a bodily injury liability bond or insurance policy applicable to the accident, this insurance shall apply as excess insurance over such liability bond or insurance policy, up to the amount the insured is legally entitled to recover for damages because of bodily injury caused by the accident subject to the limits specified for this insurance.

2. (a) Any amount payable under the terms of this insurance because of bodily injury sustained in an accident by a person who is an insured under this insurance shall not be reduced by any sums paid on account of such bodily injury by or on behalf of

(i) the owner or operator of the uninsured highway vehicle and

(ii) any other person or organization jointly or severally liable together with such owner or operator for such bodily injury including all sums paid under liability coverage;

(b) that part of the 'Limits of Liability' provision pertaining to such a reduction is amended accordingly.

3. The company shall not be obligated to make any payment because of bodily injury to which this insurance applies and which arises out of the ownership, maintenance or use of an uninsured highway vehicle until after the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident have been exhausted by payment of judgments or settlements.

"Examination of Louisiana jurisprudence fails to reveal any reported case dealing with the precise...