Champagne ex rel. Champagne v. Travelers Insurance

348 F. Supp. 482, 1972 U.S. Dist. LEXIS 12019
CourtDistrict Court, W.D. Louisiana
DecidedSeptember 12, 1972
DocketCiv. A. No. 14930
StatusPublished
Cited by1 cases

This text of 348 F. Supp. 482 (Champagne ex rel. Champagne v. Travelers Insurance) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Champagne ex rel. Champagne v. Travelers Insurance, 348 F. Supp. 482, 1972 U.S. Dist. LEXIS 12019 (W.D. La. 1972).

Opinion

JUDGMENT

PUTNAM, District Judge.

This case is before us on defendant’s motion for summary judgment. Plaintiff, a Louisiana citizen, sues The Travelers Indemnity Company, a foreign corporation doing business in this state, which issued a liability policy covering the operations of plaintiff’s employer, Cargill, Inc., also a foreign corporation, at its salt mine at Belle Isle, Louisiana. Suit is brought against Travelers under the Louisiana Direct Action Statute, LSA-R.S. 22:655. The policy includes coverage of executive officers, directors and stockholders of the insured.

Our jurisdiction attaches pursuant to Title 28 U.S.C.A. § 1332(a), the amount in dispute being in excess of $10,000.00.

The uncontradicted facts reveal that on or about November 12, 1968, Keith James Champagne, son of the plaintiff and a minor at the time of filing of this suit, was working as a screen house operator in the Belle Isle salt mine. During the course of his employment his right arm was severed at the shoulder when he attempted to apply wax dressing in stick form to prevent slippage of one of the conveyor belts he controlled as screen house operator.

[483]*483The policy issued to Cargill by Travelers contained a provision providing liability coverage for the executive officers, directors and stockholders of the insured. Plaintiff maintains that the application of wax dressing to belts such as this by hand, using stick wax, is outmoded and obsolete and no longer employed in such operations because of the danger involved in its use; that a liquid spray is used to eliminate the necessity of workmen placing their hands and arms in close proximity to the machinery, and that a safety director should, in the exercise of ordinary care, know these facts and institute a program for employees to avoid the hazard inherent in applying dressing by hand. This is supported by the affidavit of Mr. Jacob Long, a safety consultant, who expressed the further opinion that plaintiff should have had on the job training in this work before being permitted to operate the machinery in question.

While the suit originally named some thirty-one (31) directors, stockholders and alleged executive officers as being responsible for plaintiff’s injuries, the only individuals against whom any possible liability might attach are (1) Mr. C. R. Burge, engineering manager of Cargill’s salt division; (2) Mr. F. Clayton Tonnemaker, assistant vice president and manager of salt operations, and (3) Mr. Leroy H. Gretzer, safety director for seven divisions of Cargill, Inc. None of these men were at the mine when the accident happened. All reside out of Louisiana and work out of the home office of Cargill in Minnesota. They knew nothing of the accident or of plaintiff’s employment in the mine until sometime after the occurrence. Mr. Tonnemaker, as manager of salt operations, had employed an experienced mining engineer, Mr. Nick Nicola, a Louisiana citizen, who was in charge of the Belle Isle salt mine.

Mr. Gretzer, in his deposition, stated that as safety director he formulated safety programs for Cargill operations, including the safety program at Belle Isle. However, the direct responsibility for safety at the mine was delegated to Mr. Nicola, who reported to Gretzer from time to time. Mr. Gretzer visited the Belle Isle mine on an average of once every two or three months during the year.

Mr. Gretzer also testified that because of the type of lagging on the head pulleys and belt tighteners employed on the conveyor belt system, the belts would not ordinarily require dressing. He had no personal knowledge that the belts would be dressed, or that stick dressing was being used at the mine. (See deposition, pp. 15, 39). Additionally, he stated that the safety rules promulgated for the mine operation required the equipment to be shut down prior to any adjustments or alterations being made on any of the machinery. This requirement was thought to be sufficient to cover the situation in this case. (Deposition, p. 15).

Mr. Burge, as engineering manager of salt operations, had nothing whatsoever to do with the safety programs at the mine.

These facts are established without contradiction by the depositions of those three Cargill officers, filed in evidence by defendant in support of the motion for summary judgment.

The deposition of Keith Champagne establishes that he was instructed in the use of wax dressing by another mine employee, Mike Dartez, his immediate supervisor, who is in no sense of the word an executive officer of Cargill. Mr. Champagne also testified that he was shown how to start and stop the conveyor assembly and the machinery which controls the belt and screening mechanism by another employee, who then moved on to another job. He had only been at work for two or three weeks when the accident occurred. He saw the belt beginning to slip, and when it slowed to the point of stopping, he left the controls in operating position and proceeded up to the belt near the head roller, which powers the belt, and began to apply the wax by hand. He had completed the application on one [484]*484side, crossed over to the other side of the belt and was in the process of reaching under it to apply wax to the other half of the bearing surface when it began moving, drawing his arm into the head pulley and literally ripping it off at the shoulder.

It is plaintiff’s contention that the executive officers of Cargill, covered under the Travelers policy, are liable to him individually for damages resulting from these injuries under the doctrine of Adams v. Fidelity and Casualty Company of New York, La.App. 1 Cir. 1958, 107 So.2d 496, writ denied.

In such cases, the plaintiff is precluded from suing his corporate employer by the Louisiana Workmen’s Compensation Act, LSA-R.S. 23:1032 et seq., but is free, under the provisions of LSA:R.S. 23:1101, to sue third parties, including co-employees, who, under the circumstances and without reference to the Compensation Act, are legally responsible for the damages resulting from his injury. Thus, suits against executive officers and directors of corporations, such as we have here, would defeat the purpose of the compensation laws, and, moreover, emasculate completely the corporate shield against individual liability for acts done by directors and officers in the performance of corporate duties, unless kept within the bounds clearly defined by state law.

The Adams rule has been the subject of considerable discussion of late. Divergent views have been expressed by the Louisiana appellate courts. In Daigle v. Cobb, La.App. 4 Cir. 1965, 175 So.2d 392 (writs refused 248 La. 363, 178 So.2d 655 (1965) with the comment “There is no error of law in the ruling complained of.”), and Johnson v. Continental Insurance Company, La.App. 4 Cir. 1968, 216 So.2d 336, the Fourth Circuit after carefully analyzing the development of the rule, reached the conclusion that the law of this State was then and continues to be as expressed by the Louisiana Supreme Court in Wirth v. Albert, 1932, 174 La. 373, 141 So. 1:

“Officers and directors are merely agents of the corporation, and, except for acts of malfeasance, are answerable to it alone. A creditor of a corporation has no right of action against the corporation’s agents for gross negligence or maladministration of corporate affairs or omission of duty.” (141 So. 4. Emphasis by the Court; citations omitted.)

Another circuit in several more recent decisions, has come to grips with the problem. See: Lejeune v.

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Related

Champagne v. Travelers Insurance Company
477 F.2d 594 (Fifth Circuit, 1973)

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Bluebook (online)
348 F. Supp. 482, 1972 U.S. Dist. LEXIS 12019, Counsel Stack Legal Research, https://law.counselstack.com/opinion/champagne-ex-rel-champagne-v-travelers-insurance-lawd-1972.