STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
08-168
FLOYD RIDEAU, ET UX.
VERSUS
WALTER J. EDWARDS, ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 99-378 HONORABLE DAVID ALEXANDER RITCHIE, DISTRICT JUDGE
********** ELIZABETH A. PICKETT JUDGE **********
Court composed of Ulysses Gene Thibodeaux, John D. Saunders, and Elizabeth A. Pickett, Judges.
REVERSED AND RENDERED.
Michael Edward Parker Allen & Gooch P. O. Drawer 3768 Lafayette, LA 70502-3768 (337) 291-1350 Counsel for Defendant-Appellee: Louisiana Insurance Guaranty Association
Jamie C. Gary David Paul Bruchhaus David P. Bruchhaus Mudd & Bruchhaus, LLC 410 E. College Street Lake Charles, LA 70605 (337) 562-2327 Counsel for Plaintiff-Appellant: Floyd Rideau, et al. 1 PICKETT, Judge.
2 The plaintiffs-appellants, Floyd Rideau, his wife, and his three children, appeal
3 the trial court’s ruling granting summary judgment in favor of the Louisiana
4 Insurance Guaranty Association (LIGA).
6 In October 1998, a tractor-trailer driven by Walter J. Edwards overturned and
7 collided with a pickup truck driven by Floyd Rideau. At the time of the accident,
8 Edwards was acting in the course and scope of his employment with CX-Trans/TIC
9 United Corporation (TIC United). TIC United owned the tractor-trailer, and Reliance
10 National Indemnity Corporation (Reliance) provided liability insurance coverage for
11 the vehicle.
12 Rideau sustained injuries in the collision. Rideau, his wife, and his children
13 sued Edwards and TIC United. TIC United filed for bankruptcy protection in late
14 2000. The Rideaus amended their petition to add Reliance as a defendant. When a
15 court in Pennsylvania liquidated Reliance, the Rideaus amended their petition to add
16 as a defendant LIGA, as guarantor of Reliance.
17 LIGA filed a motion for summary judgment. In its motion, it alleged three
18 grounds: “(1) the putative policy of insurance issued to TIC United Corporation by
19 Reliance Insurance Company is unaccompanied by a transfer of insurance risk, and
20 is therefore not an insurance policy for which LIGA is responsible; (2) coverage
21 provided by the Texas Property and Casualty Insurance Guaranty Association
22 (TPCGA) is primary to any coverage provided by LIGA; and (3) LIGA is entitled to
23 reduce any recovery for which it may be responsible by the deductible provided under
24 the Reliance policy[.]” Following a hearing, the trial court denied the motion for
1 1 summary judgment on the issues of transfer of risk and TPCGA’s coverage. But the
2 trial court granted LIGA’s motion for summary judgment on the third issue. The trial
3 court found that the Reliance policy did contain a one million dollar deductible, and
4 any recovery by the Rideaus from LIGA would be limited to any amount in judgment
5 above one million dollars. The trial court issued a judgment and certified it as
6 immediately appealable. The Rideaus have appealed the trial court’s grant of
7 summary judgment in favor of LIGA.
9 The Rideaus assert two assignments of error: 10 11 1. The trial Court erred in failing to recognize that an endorsement within 12 the Reliance policy required LIGA to pay the “first dollar” of coverage. 13 14 2. The trial Court erred in failing to apply the Louisiana Direct Action 15 Statute, which states that an insurer cannot escape the liability of a 16 bankrupt insured. 17
19 Standard of Review
20 The supreme court discussed the standard applicable to appellate review of
21 summary judgments involving insurance contracts in Robinson v. Heard, 01-1697,
22 pp. 3-4 (La. 2/26/02), 809 So.2d 943, 945:
23 A reviewing court examines summary judgments de novo under 24 the same criteria that govern the district court’s consideration of whether 25 summary judgment is appropriate. Smith v. Our Lady of the Lake 26 Hospital, Inc., 93-2512 (La.7/5/94), 639 So.2d 730, 750. A reviewing 27 court thus asks the same questions as does the trial court in determining 28 whether summary judgment is appropriate: whether there is any genuine 29 issue of material fact, and whether the mover is entitled to judgment as 30 a matter of law. Smith, 639 So.2d at 750. 31 32 Interpretation of an insurance contract is usually a legal question 33 that can be properly resolved in the framework of a motion for summary 34 judgment. Sanchez v. Callegan, 99-0137 (La.App. 1 Cir. 2/18/00), 753 35 So.2d 403, 405. When the language of an insurance policy is clear and
2 1 unambiguous, a reasonable interpretation consistent with the obvious 2 meaning and intent of the policy must be given. Sanchez, 753 So.2d at 3 405. 4 5 LIGA’s Obligations under the Reliance Policy
6 When the Commonwealth of Pennsylvania declared Reliance insolvent, the
7 Rideaus substituted LIGA as a defendant pursuant to the Insurance Guaranty
8 Association Act. La.R.S. 22:1375, et seq. LIGA’s liability as guarantor of the
9 Reliance policy is the same as Reliance’s liability would be had it had not been
10 declared insolvent. La.R.S. 22:1382(A)(1). Likewise, LIGA has all of the rights,
11 duties, and obligations of Reliance under the terms of the policy. La.R.S.
12 22:1382(A)(2).
13 The liability policy issued by Reliance covers up to $1 million in damages,
14 with a $1 million deductible. LIGA successfully argued in the trial court that the $1
15 million deductible is applicable to the damages suffered by the Rideaus. The Rideaus
16 argue that the trial court incorrectly interpreted an endorsement to the policy. They
17 claim that the “Endorsement for Motor Carrier Policies of Insurance for Public
18 Liability under Sections 29 and 30 of the Motor Carrier Act of 1980” requires LIGA
19 to pay the Rideaus claims subject to reimbursement from the insured, TIC United.
20 The parties refer to this endorsement as the MCS-90. It states, in relevant part:
21 : This insurance is primary and the company shall not be liable for 22 amounts in excess of $1,000,000 for each accident. 23 24 .... 25 26 The insurance policy to which this endorsement is attached 27 provides automobile liability insurance and is amended to assure 28 compliance by the insured, within the limits stated herein, as a motor 29 carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 30 1980, and the rules and regulations of the Federal Highway 31 Administration (FHWA) and the Interstate Commerce Commission 32 (ICC).
3 1 In consideration of the premium stated in the policy to which this 2 endorsement is attached, the insurer (the company) agrees to pay, within 3 the limits of liability described herein, any final judgment recovered 4 against the insured for public liability resulting from negligence in the 5 operation, maintenance or use of motor vehicles subject to the financial 6 responsibility requirements of Sections 29 and 30 of the Motor Carrier 7 Act of 1980 regardless of whether or not each motor vehicle is 8 specifically described in the policy and whether or not such negligence 9 occurs on any route or in any territory authorized to be served by the 10 insured or elsewhere. Such insurance as is afforded, for public liability, 11 does not apply to injury to or death of the insured’s employees while 12 engaged in the course of their employment, or property transported by 13 the insured, designated as cargo.
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STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
08-168
FLOYD RIDEAU, ET UX.
VERSUS
WALTER J. EDWARDS, ET AL.
**********
APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 99-378 HONORABLE DAVID ALEXANDER RITCHIE, DISTRICT JUDGE
********** ELIZABETH A. PICKETT JUDGE **********
Court composed of Ulysses Gene Thibodeaux, John D. Saunders, and Elizabeth A. Pickett, Judges.
REVERSED AND RENDERED.
Michael Edward Parker Allen & Gooch P. O. Drawer 3768 Lafayette, LA 70502-3768 (337) 291-1350 Counsel for Defendant-Appellee: Louisiana Insurance Guaranty Association
Jamie C. Gary David Paul Bruchhaus David P. Bruchhaus Mudd & Bruchhaus, LLC 410 E. College Street Lake Charles, LA 70605 (337) 562-2327 Counsel for Plaintiff-Appellant: Floyd Rideau, et al. 1 PICKETT, Judge.
2 The plaintiffs-appellants, Floyd Rideau, his wife, and his three children, appeal
3 the trial court’s ruling granting summary judgment in favor of the Louisiana
4 Insurance Guaranty Association (LIGA).
6 In October 1998, a tractor-trailer driven by Walter J. Edwards overturned and
7 collided with a pickup truck driven by Floyd Rideau. At the time of the accident,
8 Edwards was acting in the course and scope of his employment with CX-Trans/TIC
9 United Corporation (TIC United). TIC United owned the tractor-trailer, and Reliance
10 National Indemnity Corporation (Reliance) provided liability insurance coverage for
11 the vehicle.
12 Rideau sustained injuries in the collision. Rideau, his wife, and his children
13 sued Edwards and TIC United. TIC United filed for bankruptcy protection in late
14 2000. The Rideaus amended their petition to add Reliance as a defendant. When a
15 court in Pennsylvania liquidated Reliance, the Rideaus amended their petition to add
16 as a defendant LIGA, as guarantor of Reliance.
17 LIGA filed a motion for summary judgment. In its motion, it alleged three
18 grounds: “(1) the putative policy of insurance issued to TIC United Corporation by
19 Reliance Insurance Company is unaccompanied by a transfer of insurance risk, and
20 is therefore not an insurance policy for which LIGA is responsible; (2) coverage
21 provided by the Texas Property and Casualty Insurance Guaranty Association
22 (TPCGA) is primary to any coverage provided by LIGA; and (3) LIGA is entitled to
23 reduce any recovery for which it may be responsible by the deductible provided under
24 the Reliance policy[.]” Following a hearing, the trial court denied the motion for
1 1 summary judgment on the issues of transfer of risk and TPCGA’s coverage. But the
2 trial court granted LIGA’s motion for summary judgment on the third issue. The trial
3 court found that the Reliance policy did contain a one million dollar deductible, and
4 any recovery by the Rideaus from LIGA would be limited to any amount in judgment
5 above one million dollars. The trial court issued a judgment and certified it as
6 immediately appealable. The Rideaus have appealed the trial court’s grant of
7 summary judgment in favor of LIGA.
9 The Rideaus assert two assignments of error: 10 11 1. The trial Court erred in failing to recognize that an endorsement within 12 the Reliance policy required LIGA to pay the “first dollar” of coverage. 13 14 2. The trial Court erred in failing to apply the Louisiana Direct Action 15 Statute, which states that an insurer cannot escape the liability of a 16 bankrupt insured. 17
19 Standard of Review
20 The supreme court discussed the standard applicable to appellate review of
21 summary judgments involving insurance contracts in Robinson v. Heard, 01-1697,
22 pp. 3-4 (La. 2/26/02), 809 So.2d 943, 945:
23 A reviewing court examines summary judgments de novo under 24 the same criteria that govern the district court’s consideration of whether 25 summary judgment is appropriate. Smith v. Our Lady of the Lake 26 Hospital, Inc., 93-2512 (La.7/5/94), 639 So.2d 730, 750. A reviewing 27 court thus asks the same questions as does the trial court in determining 28 whether summary judgment is appropriate: whether there is any genuine 29 issue of material fact, and whether the mover is entitled to judgment as 30 a matter of law. Smith, 639 So.2d at 750. 31 32 Interpretation of an insurance contract is usually a legal question 33 that can be properly resolved in the framework of a motion for summary 34 judgment. Sanchez v. Callegan, 99-0137 (La.App. 1 Cir. 2/18/00), 753 35 So.2d 403, 405. When the language of an insurance policy is clear and
2 1 unambiguous, a reasonable interpretation consistent with the obvious 2 meaning and intent of the policy must be given. Sanchez, 753 So.2d at 3 405. 4 5 LIGA’s Obligations under the Reliance Policy
6 When the Commonwealth of Pennsylvania declared Reliance insolvent, the
7 Rideaus substituted LIGA as a defendant pursuant to the Insurance Guaranty
8 Association Act. La.R.S. 22:1375, et seq. LIGA’s liability as guarantor of the
9 Reliance policy is the same as Reliance’s liability would be had it had not been
10 declared insolvent. La.R.S. 22:1382(A)(1). Likewise, LIGA has all of the rights,
11 duties, and obligations of Reliance under the terms of the policy. La.R.S.
12 22:1382(A)(2).
13 The liability policy issued by Reliance covers up to $1 million in damages,
14 with a $1 million deductible. LIGA successfully argued in the trial court that the $1
15 million deductible is applicable to the damages suffered by the Rideaus. The Rideaus
16 argue that the trial court incorrectly interpreted an endorsement to the policy. They
17 claim that the “Endorsement for Motor Carrier Policies of Insurance for Public
18 Liability under Sections 29 and 30 of the Motor Carrier Act of 1980” requires LIGA
19 to pay the Rideaus claims subject to reimbursement from the insured, TIC United.
20 The parties refer to this endorsement as the MCS-90. It states, in relevant part:
21 : This insurance is primary and the company shall not be liable for 22 amounts in excess of $1,000,000 for each accident. 23 24 .... 25 26 The insurance policy to which this endorsement is attached 27 provides automobile liability insurance and is amended to assure 28 compliance by the insured, within the limits stated herein, as a motor 29 carrier of property, with Sections 29 and 30 of the Motor Carrier Act of 30 1980, and the rules and regulations of the Federal Highway 31 Administration (FHWA) and the Interstate Commerce Commission 32 (ICC).
3 1 In consideration of the premium stated in the policy to which this 2 endorsement is attached, the insurer (the company) agrees to pay, within 3 the limits of liability described herein, any final judgment recovered 4 against the insured for public liability resulting from negligence in the 5 operation, maintenance or use of motor vehicles subject to the financial 6 responsibility requirements of Sections 29 and 30 of the Motor Carrier 7 Act of 1980 regardless of whether or not each motor vehicle is 8 specifically described in the policy and whether or not such negligence 9 occurs on any route or in any territory authorized to be served by the 10 insured or elsewhere. Such insurance as is afforded, for public liability, 11 does not apply to injury to or death of the insured’s employees while 12 engaged in the course of their employment, or property transported by 13 the insured, designated as cargo. It is understood and agreed that no 14 condition, provision, stipulation, or limitation contained in the policy, 15 this endorsement, or any other endorsement thereon, or violation 16 thereof, shall relieve the company from liability or from the payment of 17 any final judgment within the limits of liability herein described, 18 irrespective of the financial insolvency or bankruptcy of the insured. 19 However, all terms, conditions, and limitations in the policy to which 20 the endorsement is attached shall remain in full force and effect as 21 binding between the insured and the company. The insured agrees to 22 reimburse the company for any payment made by the company on 23 account of any accident, claim, or suit involving a breach of the terms 24 of the policy, and for any payment that the company would not have 25 been obligated to make under the provisions of the policy except for the 26 agreement contained in this endorsement. 27 28 It is further understood and agreed that, upon failure of the 29 company to pay any final judgment recovered against the insured as 30 provided herein, the judgment creditor may maintain an action in any 31 court of competent jurisdiction against the company to compel such 32 payment. 33 34 The limits of the company’s liability for the amounts prescribed 35 in this endorsement apply separately, to each accident, and any payment 36 under the policy because of any one accident shall not operate to reduce 37 the liability of the company for the payment of final judgments resulting 38 from any other accident. 39 40 The language used in the MCS-90 endorsement comes directly from federal
41 regulations. See 49 C.F.R. §§ 387.7, 387.15 (2008). The MCS-90 endorsement
42 creates a suretyship obligation on the part of the insurer. Travelers Indem. Co. of
43 Illinois v. W. Am. Specialized Transp. Serv., Inc., 409 F.3d 256 (5th Cir. 2005). “The
44 MCS-90 endorsement is ‘in effect, suretyship by the insurance carrier to protect the
4 1 public – a safety net,’ and not an ordinary insurance provision to protect the insured.”
2 Id. at 260 (footnote omitted). The insurer can later recover any payments the insured
3 would not have been liable for under policy. Id. The obligation of the insurer
4 extends even to amounts that are deductibles under the terms of the policy. Am. Inter-
5 Fidelity Exch. v. Am. Re-Insurance Co., 17 F.3d 1018 (7th Cir. 1994).
6 We find that the MCS-90 endorsement requires LIGA to cover any loss under
7 the Reliance policy, irrespective of the amount of the deductible. Having found that
8 the MCS-90 endorsement allows the Rideaus to recover from LIGA, we also find that
9 the Louisiana Direct Action Statute allows the Rideaus to substitute LIGA as a party
10 as a result of TIC United’s bankruptcy.
11 The Direct Action Statute affords a victim the right to sue the 12 insurer directly when the liability policy covers a certain risk. The 13 statute does not, however, extend the protection of the liability policy to 14 risks that were not covered by the policy or were excluded thereby (at 15 least in the absence of some mandatory coverage provisions in other 16 statutes).
17 Anderson v. Ichinose, 98-2157, p. 9 (La. 9/8/99), 760 So.2d 302, 307. After Reliance
18 was declared insolvent, LIGA became the statutory successor to Reliance. Thus,
19 LIGA is the proper party defendant in this suit.
20 Conclusion
21 The judgment of the trial court granting the motion for summary judgment in
22 favor of LIGA is reversed and the case is remanded. We order that LIGA pay the
23 costs of this appeal.