EDWIN A. LOMBARD, Judge.
In this appeal, Plaintiff Jane Sumner and Office of Group Benefits, intervenor, contend that the trial court erred in granting the summary judgment filed by the Uninsured/Underinsured ("UM") insurers, Progressive Security Insurance Company and Vigilant Insurance Company, dismissing them from this action. For the reasons set forth below, we affirm the decision of the trial court.
On August 6, 2004, Jane Sumner was involved in an automobile accident on Poydras Street in New Orleans with a vehicle operated by Kimberly Mathes and owned by the City of New Orleans, Sanitation Department, Mrs. Mathes' employer. Mrs. Mathes was in the course and scope of her employment by the city at the time of the accident. Mrs. Sumner's vehicle liability coverage included an uninsured/ underinsured "UM" policy issued by Progressive Security Insurance Company to her husband, and with excess UM coverage provided by Vigilant Insurance Company under the same policy. At issue before this Court is the following relevant portion of Progressive's UM policy issued to the Sumners:
(Emphasis added). Mrs. Sumner filed suit against Mrs. Mathes and the City of New Orleans. Plaintiff also filed suit against Progressive as her UM carrier, and subsequently amended her petition to add Vigilant as a defendant.
Shortly after filing suit, plaintiff filed a motion for summary judgment, arguing that she is entitled as a matter of law to coverage for bodily injuries and property damage under the Progressive UM policy. Plaintiff argued that though the City of New Orleans is self-insured, it is insolvent and unable to pay its liabilities. Plaintiff argued that Progressive is therefore required to provide coverage under its UM policy language (above). Progressive opposed plaintiff's motion, arguing that there is at least a genuine issue of material fact as to the city's solvency. The trial court agreed with Progressive's position, and denied plaintiff's motion for summary judgment in a written judgment signed April 13, 2006 with written reasons provided April 17, 2006.
On June 26, 2007, Progressive and Vigilant filed a joint motion for summary judgment, seeking to dismiss plaintiff's UM coverage claims against them Progressive and Vigilant argued that due to the city's status as a self-insurer, it cannot be said that a city-owned vehicle constitutes an "uninsured vehicle" under the Progressive policy. The defendants maintained that the plaintiff has proffered no factual support to substantiate a finding that the City of New Orleans is insolvent, so as to warrant UM coverage under the Progressive policy.
Mrs. Sumner opposed the defendants' motion for summary judgment, arguing that the Progressive policy's failure to define "insolvency" requires that the policy be construed in favor of the insured. Plaintiff offered as expert opinion a report from a forensic accountant whose report states that the City of New Orleans is insolvent.
In the discovery phase of the lawsuit, the parties took the deposition of Mr. Derek Muse, the Deputy Director of Finance for the City of New Orleans. In support of summary judgment, the defendants introduced Mr. Muse's statements as well as expert opinion reports from a certified public accountant, allegedly showing that the City of New Orleans is not insolvent. At the August 21, 2009 hearing on the defendants' motion for summary judgment, both sides presented arguments to the court, and the trial court granted summary judgment, stating:
The trial court's written judgment granting the defendants' motion for summary judgment was signed on September 29, 2009. Plaintiff now appeals the trial court's decision to grant summary judgment to this Court.
Appellant Jane Sumner raises three arguments on appeal.
Appellate courts review motions for summary judgment de novo under the same criteria that govern the trial court's consideration of whether summary judgment is appropriate. Wood v. Del Giorno, WWL-AM, et al, 2006-1612, p. 3 (La.App. 4 Cir. 12/19/07), 974 So.2d 95, 98. Summary judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La.Code Civ. Proc. art. 966(B). The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. La.Code Civ. Proc. art. 966(C)(2).
Because the movant has the burden of establishing that no material factual issue exists, inferences to be drawn from the underlying facts contained in the materials before the court must be viewed in the light most favorable to the party opposing the motion. Istre v. Meche, 2005-2508, p. 6 (La.6/16/06), 931 So.2d 361, 364. Summary judgment is favored under our law and shall be construed to secure the just, speedy, and inexpensive determination of every action.
An insurance policy is a conventional obligation that constitutes the law between the insured and insurer, and the agreement governs the nature of their relationship. Rolston v. United Services Automobile Association, 2006-0978, p. 4 (La. App. 4 Cir. 12/13/06), 948 So.2d 1113, 1116. As such, courts are guided by certain principles of construction and should interpret insurance policies the same way they do other contracts by using the general rules of contract interpretation set forth in our Civil Code. Peterson v. Schimek, 98-1712, pp. 4-5 (La.3/2/99), 729 So.2d 1024, 1028-29. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. Civ.Code art. 2046.
An insurance contract should not be interpreted in an unreasonable or strained manner under the guise of contractual interpretation to enlarge or to restrict its provisions beyond what is reasonably contemplated by unambiguous terms. Rolston, supra, p. 4, 948 So.2d at 1117. Ambiguous policy provisions are generally construed against the insurer and in favor
In the case at hand, plaintiff first argues summary judgment is inappropriate because of alleged ambiguity in the Progressive policy, and because there remains a genuine issue of fact as to the solvency of the City of New Orleans. Appellant's first argument regarding this assignment of error is that because the Progressive policy at issue does not define "solvency," summary judgment is inappropriate to dispose of plaintiff's claims given this alleged ambiguity in the insurance contract. She also argues that the Progressive policy's language, "except that a self-insurer is or becomes insolvent," is ambiguous. However, a term in an insurance contract is not automatically considered ambiguous merely because it is not defined in the contract.
Plaintiff's second argument that summary judgment is inappropriate is that there remains a genuine issue of fact as to the solvency of the City of New Orleans. Though there was substantial disagreement regarding the definition of "insolvency" at the trial court level, our legal heritage requires us to look no further than our Civil Code, which states that "[a]n obligor is insolvent when the total of his liabilities exceeds the total of his fairly appraised debts." La. Civ.Code art. 2037. Also, both parties also argue as to the timing of when to determine the solvency of a self-insurer under such policy language. Though as an appellate court we decline to determine a bright-line rule, we believe that if the insolvency of a self-insurer cannot be substantiated by the time adequate discovery has been conducted, then the inquiry should end. Words in an insurance contract are to be given their generally prevailing and ordinary meaning, unless they have acquired a technical meaning. La. Civ.Code art. 2047; McKittrick v. Louisiana Health Service and Indem. Co., 37,104, p. 5 (La.App. 2 Cir. 4/9/03), 843 So.2d 577, 580. The phrase "is or becomes insolvent" is not an open-ended invitation for a claimant to peruse the solvency of a self-insurer at any length of time. Such an interpretation is undoubtedly an "absurd" consequence not tolerated in our Civil Code. La. Civ.Code. art. 2046.
By the time arguments on the appellees' motion for summary judgment had been heard by the trial court, ample discovery had been conducted regarding the city's solvency. Such discovery included the deposing of Mr. Derek Muse, the Deputy Director of Finance for the City of New Orleans. Mr. Muse's testified that in the City of New Orleans financial statement of December 31, 2007, long after the subject accident, the city's assets exceeded its liabilities. Furthermore, the deposition exhibits confirmed the same, showing that from 2003 onwards, and certainly at the time of the August 6, 2004 accident, the City of New Orleans' asset figures were greater than their liabilities. The defendants also retained an expert certified public account whose expert witness report and sworn affidavit refuted the plaintiff's expert report and determined that the City of New Orleans was not insolvent on August 6, 2004, and that it has not become insolvent since.
Furthermore, this Court is not persuaded by plaintiff's reliance on newspaper accounts of the city's budget woes and statements from former Mayor C. Ray Nagin
Plaintiff's second assignment of error is that Progressive's UM policy excluding coverage to self-insured vehicles is contrary to Louisiana's public policy regarding UM coverage. Plaintiff asserts a recent Louisiana Fifth Circuit decision voiding an exclusionary clause denying UM coverage and reversing summary judgment in favor of the UM carrier. In Mednick v. State Farm Mut. Auto. Ins. Co., 09-183 (La.App. 5 Cir. 1/26/10), 31 So.3d 1133, the court held that exclusionary language in the policy, stating that an "uninsured vehicle" does not include a motor vehicle "owned by any government or any of its political subdivisions or agencies" is void as against Louisiana's public policy promoting UM coverage. Id., pp. 6-7, 31 So.3d at 1137.
While Mednick properly delineated the public policy rationale for uninsured motorist coverage, the policy language at issue in Mednick involved a much broader exclusion than the policy at issue in this matter (all vehicles owned by any governments or political subdivision), and is therefore distinguishable from the language in the Progressive policy merely excluding UM coverage for self-insured vehicles, except when the self-insurer is or becomes insolvent.
In Plumb v. City of New Orleans, et al, 2003-0269 (La.App. 4 Cir. 8/6/03), 854 So.2d 426, this Court affirmed a granting of summary judgment in favor of a UM insurer in a similar situation to the matter at hand. The plaintiff-appellant in Plumb was allegedly injured in a collision with a New Orleans Police Department patrol car while the officer was in the course and scope of his employment with the city. This Court upheld policy language excluding self-insured vehicles from the definition of a covered "uninsured motor vehicle." Id., p. 4, 854 So.2d at 429.
Furthermore, this Court considered the recent legislative amendments in Louisiana's motor vehicle safety laws and determined that the City of New Orleans, the owner of the vehicle in question, is self-insured. Id., pp. 4-5, 854 So.2d at 428-429. This Court sees no flaw in our holding in Plumb, and therefore find that there is no violation of Louisiana's public policy regarding UM coverage in enforcing the Progressive policy's language excluding self-insured vehicles from UM coverage. "[T]he City's self-insured status is not equivalent to being uninsured." Id., p. 5, 854 So.2d at 429.
Finally, this Court is not persuaded by appellant's arguments challenging the City of New Orleans' self-insured status. As explained by this Court in Plumb, pp. 4-5, 854 So.2d at 428-429, La.Rev.Stat. § 32:1041 clearly and unequivocally exempts the state and any municipality therein from the certificate of self-insurance requirements set forth in § 32:1042, et seq. Again, we stand by our prior decision in Plumb, supra, p. 3, 854 So.2d at 428, holding that the City of New Orleans is self-insured.
Because there is no genuine issue of material fact as to the City's solvency, and because Progressive's provision excluding self-insured vehicles from UM coverage is not contrary to public policy, we find no error in the trial court's granting of summary judgment dismissing appellant's claims against Progressive Security Insurance
The decision of the trial court in granting summary judgment and dismissing all claims against defendants Progressive Security Insurance Company and Vigilant Insurance Company is affirmed, and the matter is remanded to the trial court for further proceedings consistent with this opinion.
BONIN, J., Dissents and Assigns Reasons.
BONIN, J., Dissents and Assigns Reasons.
I respectfully dissent.
The majority's result in this case is premised on our holding in Plumb v. City of New Orleans, 03-0269 (La.App. 4 Cir. 8/6/03), 854 So.2d 426. But Plumb was wrongly decided. The fact that the City of New Orleans is uninsured is not changed by a court's calling the City self-insured. The decision today deprives Jane Sumner of obtaining the uninsured motorist benefits for which she contracted with her own insurance companies.
In Part I below I discuss the proper interpretation of the insurance policy provisions, especially with respect to the exclusion upon which the insurers rely. I consider in Part II the provisions of the Motor Vehicle Safety Responsibility Law which do not apply to the City of New Orleans, a political subdivision of the state, but which both the Plumb decision and today's decision misapply to the City. Well-established principles of statutory construction demand that Plumb be overruled; the Plumb court engaged in lawmaking, not law application or interpretation. Finally, I explain in Part III that there is no good reason to distort the UM law by labeling the City a self-insured, but there are several bad reasons. I conclude in Part IV that granting the summary judgment is legal error.
I begin with the well-recognized precepts for interpretation of insurance policies. An insurance policy is an aleatory contract. See Succession of Fannaly v. Lafayette Ins. Co., 01-1355, p. 3 (La.2/25/03), 805 So.2d 1134, 1137. La. Civil Code art. 1912 provides:
Comment (f) of the Revision Comments-1984 makes plain the import of an aleatory contract:
The significance of this legal concept in our law is that the insurer's obligation to pay is contingent upon the occurrence of an event which may never happen. In ordinary language, both parties are gambling; both are taking a chance.
Beyond being an aleatory contract, an insurance policy or contract is also a nominate contract. La. Civil Code art. 1914. Thus, an insurance policy is subject to the general principles concerning contracts set
An insurance policy is a conventional obligation that constitutes the law between the insured and the insurer, and the agreement governs the nature of their relationship. La. Civil Code art. 1983. The extent of coverage is determined from the intent of the parties as reflected by the words of the insurance policy. Peterson v. Schimek, 98-1712, p. 4 (La.3/2/99), 729 So.2d 1024, 1028. An insurance policy, as a contract between the parties, should be construed employing the general rules of interpretation of contracts set forth in the Louisiana Civil Code. Cadwallader v. Allstate Ins. Co., 02-1637, p. 3 (La.6/27/03), 848 So.2d 577, 580. The contractual nature of the insurance policy underlies La. R.S. 22:881:
Absent a conflict with statutory provisions or public policy, insurers are entitled to limit their liability and to impose and enforce reasonable conditions upon the policy obligations they contractually assume. Louisiana Ins. Guar. Ass'n. v. Interstate Fire & Casualty, 93-0911 (La. 1/13/94), 630 So.2d 759, 563. When the language of a policy is unambiguous and clear, the insurance contract must be enforced as written. When the wording is clear, the court lacks authority to alter or change the terms of the policy under the guise of interpretation. See Sher v. Lafayette Ins. Co., 07-2441, p. 5 (La.4/8/08), 988 So.2d 186, 192-93; Louisiana Ins. Guar. Ass'n, supra, 93-0911 at p. 5, 630 So.2d at 763.
Our civilian code further addresses contract interpretation. La. Civil Code art. 2051 states: "Although a contract is worded in general terms, it must be interpreted to cover only those things it appears the parties intended to include." We are guided by La. Civil Code art. 2046, which states:
See also Crabtree v. State Farm Ins. Co., 93-0509 (La.2/28/94), 632 So.2d 736, 741 (stating: "An insurance policy should not be interpreted in an unreasonable or strained manner so as to enlarge or restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion.").
Ms. Sumner's policy with Progressive
From these principles of insurance policy interpretation, unless the exclusion conflicts with statutory provisions or public policy, Progressive must pay for damages which Ms. Sumner is entitled to recover from an owner or operator of an uninsured vehicle unless the vehicle is "owned or operated by a self-insurer under any applicable vehicle law". Under the facts of this case, in order to avoid payment to Ms. Sumner, Progressive must establish that the City under an applicable vehicle law is a "self-insurer."
At one time a UM policy provision which excluded self-insured vehicles from coverage would have been inoperative. See Jones v. Henry, 542 So.2d 507 (La.1989). The Lawmaker, however, abrogated that holding and La. R.S. 22:1295, which governs uninsured motorist coverage in insurance policies, now provides in pertinent part:
Simple interpretation of the insurance policy contract requires, then, that Progressive must establish that the City of New Orleans is a "self-insurer" under the foregoing controlling and applicable UM law. But that law incorporates a provision of the Louisiana Motor Vehicle Safety Responsibility Law in order to make the determination. We turn then to the provisions of that law to see if the City is a self-insurer "under any applicable vehicle law".
Because the Louisiana Motor Vehicle Safety Responsibility Law does not apply to a political subdivision such as the City, the City cannot qualify as a "self-insurer" under that law.
The MVSRL is directed to third-party protection.
As part of the overall MVSRL, La. R.S. 32:1042 specially provides for self-insurance:
§ 32:1042 by its plain terms applies only to persons who must comply with the financial responsibility requirements of the Motor Vehicle Safety Responsibility Law. Part A of § 32:1042 allows eligible and qualified persons to comply with the law
Importantly for our purposes, the critical difference between an "uninsured" person and a "self-insured" person is the certificate of self-insurance. A certificate of self-insurance satisfies the requirement to obtain the compulsory minimum liability insurance. See La. R.S. 32:861 A(1) and 32:872 C(4). A certificate of self-insurance also satisfies the requirement for proof of compliance that the driver or owner is financially responsible to third parties. See La. R.S. 32:863.1(A)(4) and G(2), and 32:897(4).
The only reasonable interpretation of the incorporation of the self-insurer provisions of the MVSRL into the UM law is that a party without liability insurance and without a certificate of self-insurance is uninsured.
The Motor Vehicle Safety Responsibility Law is Chapter 5 of Title 32, and La. R.S. 32:1041 A clearly provides:
§ 32:1041 A could hardly be plainer: its words simply mean that none of the provisions of the Motor Vehicle Safety Responsibility Law, including the provisions of § 32:1042, applies to a political subdivision such as the City of New Orleans.
"Legislation is the solemn expression of legislative will." La. Civil Code art. 2. The Lawmaker has given us specific instructions on applying its will as expressed in these statutes. La. R.S. 1:3 provides:
Directly to the point, La. R.S. 1:4 provides that "[w]hen the wording of a Section is clear and free of ambiguity, the letter of it shall not be disregarded under the pretext of pursuing its spirit."
Progressive cannot as a matter of law establish that § 32:1042 is a vehicle law which is "applicable" to the City of New Orleans.
The fact that the MVSRL does not apply at all to the City is no reason to distort the UM law and try to stuff a governmental entity into the policy's exclusion for self-insurers.
Only Ms. Sumner's first-party insurers obtain an advantage by such action. By labeling the City a self-insured, the UM insurers in this case obtain a result that they could not obtain by attempting to exclude government vehicles from UM coverage. In Mednick v. State Farm Mutual Automobile Ins. Co., 09-183 (La.App. 5 Cir. 1/26/10), 31 So.3d 1133, the fifth circuit recently considered a policy that excluded from UM coverage damages caused by the operation of a government-owned vehicle. The Mednick court stated
Mednick, p. 6-7, 31 So.3d 1137.
Surely the City obtains no advantage by being labeled self-insured rather than uninsured, which it is. The City does not on that account escape liability or responsibility. If Progressive were to fulfill its contractual obligation and were to pay Ms. Sumner, by law it has a right of subrogation against the City. See La. R.S. 22:1295(4); see also Jones v. Henry, 542 So.2d at 509, n. 3, and Bosch v. Cummings, 520 So.2d 721, 723 (La.1988) (holding, "The uninsured motorist who pays all of its insured's damages is completely subrogated to his claim against the uninsured or underinsured tortfeasor.")
Of course, the City may delay (or avoid) payment to Progressive just as it will do to Ms. Sumner (which is a practical reason why her UM insurer should be held to its contractual obligation). If Ms. Sumner prevails against the City of New Orleans in her claim for damages, payment is never due or never overdue because no court can command payment of its judgment by the City. La. Const. art. XII, § 10(C) provides in pertinent part:
La. R.S. 13:5109 B(2) also provides:
"Louisiana courts have repeatedly held that judgment creditors cannot mandamus political subdivisions to appropriate funds for payment of a judgment rendered against the respective political subdivisions." Hoag v. State, 04-0857, pp. 6-7 (La.12/1/04), 889 So.2d 1019, 1023, citing, inter alia, Jones v. Traylor, 94-2520 (La. App. 4 Cir. 8/23/95), 660 So.2d 933. Whether to pay a judgment against a political subdivision is discretionary with the political subdivision. Hoag, 04-0857 at pp. 7-8, 889 So.2d at 1024. Therefore, the City of New Orleans cannot be compelled by a court to pay any judgment whatsoever in favor of Ms. Sumner.
The inquiry then, factually or legally, into a political subdivision's "solvency" is fruitless. Whether the City is solvent or insolvent, the decision whether and when to pay a judgment, or settle a pending case, is wholly within the discretion of the City of New Orleans.
The parties agree that the Progressive policy itself supplies no definition either of "solvency" or of "insolvency." In order to define "insolvency," the majority opinion states that "our legal heritage requires us to look no further than our Civil Code, which states that `[a]n obligor is insolvent when the total of his debts exceeds the total of his fairly appraised assets.' La. Civ.Code. Art. 2037." Ante, p. 6. The City of New Orleans can pass this test. The City's assets include an international airport, a railroad, large public parks, roads, highways, bridges, and courthouses, to name just a few of them. The Article 2037 test allows a factfinder to employ Coleridge's "willing suspension of disbelief"
A certificate holder's mere failure to pay a judgment within sixty days of the finality of the judgment might ipso facto satisfy a test for insolvency. But of course a political subdivision such as the City of New Orleans, according to Plumb, is exempt from the requirements of obtaining or providing a certificate of self-insurance. See Plumb, 03-0269, p. 4, 854 So.3d at 429. Thus, when the tortfeasor is a governmental entity such as the City, Progressive's policy's stipulation that it would pay if the self-insurer is or becomes insolvent is meaningless. In effect, the majority construes the policy to exclude governmental vehicles, which is contrary to the holding in Mednick, supra. Because the policy's other provision respecting a self-insurer ("except a self-insurer that is or becomes insolvent") is meaningless when applied to a political subdivision such as the City, one might argue that such is further support that the absurd result is the one construing the City as a self-insurer.
The City does not possess liability insurance and it is uninsured. An uninsured political subdivision is not self-insured under § 32:1042 because these laws do not apply to it. A rose by any other name is still a rose. I conclude that the only proper finding, both legally and factually, is that the City of New Orleans is uninsured for the purposes of applying the UM law. See La. R.S. 22:1295. The motion for summary judgment in favor of Progressive should have been denied as a matter of law. I, therefore, dissent.
