STATE OF LOUISIANA COURT OF APPEAL, THIRD CIRCUIT
14-934
NADDIA MELDER, ET UX.
VERSUS
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, ET AL.
**********
APPEAL FROM THE NINTH JUDICIAL DISTRICT COURT PARISH OF RAPIDES, NO. 234,239 HONORABLE MARY LAUVE DOGGETT, DISTRICT JUDGE
PHYLLIS M. KEATY JUDGE
Court composed of Sylvia R. Cooks, Billy Howard Ezell, and Phyllis M. Keaty, Judges.
Cooks, J., dissents and assigns written reasons.
AFFIRMED.
Roy S. Halcomb, Jr. Broussard, Halcomb & Vizzier Post Office Box 1311 Alexandria, Louisiana 71309-1311 (318) 487-4589 Counsel for Plaintiffs/Appellants: Naddia Melder Randel Melder Joseph P. Williams Williams Family Law Firm, L.L.C. Post Office Box 15 Natchitoches, Louisiana 71458-0015 (318) 352-6695 Counsel for Defendant: Louisiana Farm Bureau Casualty Insurance Company
Bonita K. Preuett-Armour Sheridan Hogue Armour Law Firm 1744 Jackson Street Alexandria, Louisiana 71301 (318) 442-6611 Counsel for Defendant/Appellee: State Farm Mutual Automobile Insurance Company KEATY, Judge.
Plaintiffs, Naddia and Randel Melder, appeal the trial court’s judgment in
favor of Defendant, State Farm Mutual Automobile Insurance Company. For the
following reasons, the trial court’s judgment is affirmed.
FACTS AND PROCEDURAL BACKGROUND
The issue in this case is whether the rejection of uninsured motorist and/or
underinsured (UM) insurance coverage was executed by a person with the
authority to waive coverage. In that regard, Mrs. Melder was injured in an
automobile collision occurring in Alexandria, Louisiana, on March 1, 2007, when
the vehicle she was driving, a 2006 Nissan truck, was struck by another vehicle
driven by Connie Turlington. Turlington ran a stop sign prior to striking
Mrs. Melder’s vehicle. Mrs. Melder was working in the course and scope of her
employment with Grimes Industrial Supply, L.L.C., at the time of the collision.
Mrs. Melder’s vehicle was provided to her by her employer although it was owned
by another company, Grimes True Value Hardware, L.L.C.
At the time of the collision, State Farm provided an automobile liability
insurance policy insuring the vehicle being driven by Mrs. Melder, which afforded
UM coverage to Plaintiffs as insureds. Plaintiffs also maintained a separate policy
with Louisiana Farm Bureau Casualty Insurance Company which provided
additional UM coverage to them as insureds. Since Turlington’s vehicle was
uninsured, Plaintiffs filed suit against State Farm and Farm Bureau for UM
coverage.
State Farm filed a motion for summary judgment seeking dismissal of
Plaintiffs’ claims against it. State Farm argued that Floyd Grimes (Floyd), the
owner of Grimes Industrial Supply, L.L.C., declined UM coverage under the State Farm policy which provided coverage for the vehicle driven by Mrs. Melder.
Attached to its motion for summary judgment was the following: Plaintiffs’
Petition for Damages; a certified copy of the State Farm policy issued to “GRIMES,
FLOYD & GRIME[S], FRANK DBA GRIMES TRUE VALUE HDW STORE
8322 HIGHWAY 71 N PINEVILLE LA 71360-2751[;]” Floyd’s affidavit; and
Vera Beckham’s affidavit. Plaintiffs filed an opposition and cross-motion for
summary judgment, seeking a judicial determination that State Farm provided UM
coverage. State Farm then filed a reply and a supplemental memorandum in
support of its motion for summary judgment and attached the following additional
exhibits, including but not limited to: Floyd’s supplemental affidavit; Floyd’s
deposition taken on July 10, 2013, on behalf of Grimes True Value Hardware,
L.L.C.; and Vera Beckham’s supplemental and amending affidavit. State Farm
also filed a second supplemental memorandum.
Following a hearing on the cross-motions for summary judgment which took
place on October 18, 2010, the trial court denied Plaintiffs’ motion and granted
State Farm’s motion for summary judgment, dismissing it as a defendant.
Plaintiffs appealed. On appeal, this court reversed and remanded the trial court’s
judgment, finding that genuine issues of material fact existed as to Floyd’s
authority to reject UM coverage on the subject vehicle. Melder v. State Farm Mut.
Auto. Ins. Co., 11-98 (La.App. 3 Cir. 6/1/11), 66 So.3d 603. Specifically, we held
that:
Simply stated, the policy purports to insure a vehicle belonging to Floyd and Frank Grimes, but Mr. Grimes[’] sworn affidavit states that the vehicle belongs to a limited liability company. Furthermore, the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the limited liability company or the apparently non-existent partnership between himself
2 and Frank Grimes. Given that unresolved material fact, the burden never shifted to the Melders in the summary judgment hearing.
Melder, 66 So.3d at 608. The genuine issue of material fact regarding Floyd’s
authority to execute the waiver stems from the fact that although the State Farm
policy covering the vehicle was issued to Floyd Grimes and Frank Grimes DBA
Grimes True Value Hardware Store, the vehicle was titled to Grimes True Value
Hardware, L.L.C., and used by Grimes Industrial Supply, L.L.C.
On remand, State Farm filed a second supplemental memorandum in support
of its motion for summary judgment. After a hearing which took place on June 23,
2014, the trial court granted State Farm’s renewed motion for summary judgment
and dismissed Plaintiffs’ claims against it with prejudice.
Plaintiffs appeal this new judgment and assign as error the following:
(1) Whether a material issue of fact exists as to the named insured’s identity under the State Farm policy such that the trial court legally erred by resolving this factual issue rather than holding that such factual issue precludes summary judgment;
(2) Whether a material issue of fact exists as to the capacity in which Floyd signed the UM rejection form such that the trial court legally erred by not holding that such factual issue precludes summary judgment;
(3) Whether Floyd, in his capacity as manager of Grimes True Value Hardware, L.L.C., and pursuant to its Operating Agreement, is contractually authorized to reject UM coverage on its behalf and, if so, does having such authority matter if he failed to sign the UM rejection form in a representative capacity on behalf of Grimes True Value Hardware, L.L.C.;
(4) Whether ambiguity and lack of clarity invalidates the UM rejection form because of the uncertain identity of the named insured and whether Floyd signed the UM rejection form individually and under the trade name Grimes True Value Hardware, as alleged by State Farm, or as a legal representative of Grimes True Value Hardware, L.L.C., as testified to by Floyd, and;
3 (5) Whether the trial court legally erred by deciding the validity of the UM rejection form based on the intentions of the parties.
DISCUSSION
When reviewing a trial court’s judgment on a motion for summary judgment,
an appellate court employs the de novo standard of review “using the same criteria
that govern the trial court’s consideration of whether summary judgment is
appropriate, i.e., whether there is a genuine issue of material fact and whether the
mover is entitled to judgment as a matter of law.” Supreme Servs. & Specialty Co.,
Inc. v. Greer, 06-1827, p. 4 (La. 5/22/07), 958 So.2d 634, 638. The burden of
proof remains with the movant. La.Code Civ.P. art. 966(C)(2). If the moving
party, however, will not bear the burden of proof at trial and shows that there lacks
“factual support for one or more elements essential to the adverse party’s claim,
action, or defense[,]” then the non-moving party must produce “factual support
sufficient to establish that he will be able to satisfy his evidentiary burden of proof
at trial[.]” Id. If the opponent of the motion fails to do so, there is no genuine
issue of material fact, and summary judgment will be granted. Id. The motion for
summary judgment is granted “if the pleadings, depositions, answers to
interrogatories, and admissions, together with the affidavits, if any, admitted for
purposes of the motion for summary judgment, show that there is no genuine issue
as to material fact, and that mover is entitled to judgment as a matter of law.”
La.Code Civ.P. art. 966(B)(2). Thus, we must analyze the substantive law
governing the instant matter to determine whether a material fact exists. Jagneaux
v. Lafayette City-Parish Consol. Gov’t Parks & Recreation, 13-768 (La.App. 3 Cir.
12/11/13), 128 So.3d 681.
4 “In Louisiana, UM coverage . . . embodies a strong public policy.” Roger v.
Estate of Moulton, 513 So.2d 1126, 1130 (La.1987). Determination of UM
coverage is by contractual provisions and applicable statutes, including La.R.S.
22:1295. Duncan v. U.S.A.A. Ins. Co., 06-363 (La. 11/29/06), 950 So.2d 544. The
UM coverage requirement is an implied amendment to any automobile liability
policy, and such coverage will be read into the policy unless validly rejected.
Duncan, 950 So.2d 544. This statute is liberally construed, and the statutory
exceptions to coverage are strictly interpreted. Id. “Any exclusion from coverage
in an insurance policy must be clear and unmistakable.” Id. at 547. The burden of
proof remains with the insurer who must prove that the “insured named in the
policy rejected in writing the coverage equal to bodily injury coverage or selected
lower limits.” Id. The law imposes UM coverage unless validly waived despite
the policy language, the parties’ intentions, or the presence or absence of payment
or a premium charge. Johnson v. Gov’t Emps. Ins. Co., 07-1391 (La.App. 3 Cir.
4/9/08), 980 So.2d 870, writ denied, 08-1031 (La. 8/29/08), 989 So.2d 105. A
waiver form failing to meet the formal requirements is not a valid rejection of UM
coverage. Id.
A valid UM waiver form, which must be complied with by the insurer,
requires the following six formalities as enunciated in Duncan, 950 So.2d 544:
(1) the insured must initial the selection or rejection chosen to indicate that the decision was made by the insured; (2) if lower limits are selected, then the lower limits are entered on the form to denote the exact limits; (3) the insured or legal representative must sign the form evidencing the intent to waive UM coverage; (4) the form must include his or her printed name to identify the signature; (5) the insured dates the form to determine the effective date of the UM waiver; and (6) the form must include the policy number to demonstrate which policy it refers to.
Johnson, 980 So.2d at 874.
5 I. First Assignment of Error
In their first assignment of error, Plaintiffs contend that the trial court legally
erred by finding that Floyd and Frank are the named insureds under the State Farm
policy. The declarations page states the insureds as: “GRIMES, FLOYD &
GRIME[S], FRANK DBA GRIMES TRUE VALUE HDW STORE 8322
HIGHWAY 71 N PINEVILLE LA 71360-2751[.]” Plaintiffs allege that the
named insured is Grimes True Value Hardware, L.L.C.
In opposition, State Farm contends that the named insureds are Floyd and
Frank. State Farm asserts that “DBA GRIMES TRUE VALUE HDW STORE” is
a designation rather than a legal entity separate and apart from the person(s)
operating the business, i.e., Floyd and Frank. In support, State Farm cites
Trombley v. Allstate Ins. Co., 93-1669, pp. 3-4 (La.App. 3 Cir. 6/1/94), 640 So.2d
815, 817 (quoting Krawfish Kitchen Rest., Inc. v. Ardoin, 396 So.2d 990, 993
(La.App. 3 Cir. 1981) (alteration in original)), wherein this court noted that:
The designation “d/b/a” means “doing business as” but is merely descriptive of the person or corporation who does business under some other name. Doing business under another name does not create an entity distinct from the person operating the business. The individual who does business as a sole proprietor under one or several names remains one person[.]
State Farm cites La.R.S. 22:1295(1)(a)(i) which provides that UM coverage
is inapplicable “when any insured named in the policy” rejects such coverage.
State Farm notes that La.R.S. 22:1295(1)(a)(ii) provides that the rejection form can
be “signed by the named insured or his legal representative.” State Farm refers to
Terrell v. Fontenot, 11-1472, p. 6 (La.App. 4 Cir. 6/27/12), 96 So.3d 658, 662, writ
denied, 12-2085 (La. 11/16/12), 102 So.3d 43, wherein the fourth circuit
6 understood “the words ‘legal representative’ in La.R.S. 22:1295(1)(a)(ii) to mean
an individual authorized on behalf of an entity.”
In agreeing with State Farm at the hearing, the trial court stated that Floyd is
a named insured since “he’s listed on the ‘dec’ page as the named insured.” We,
therefore, look to the evidence to determine whether Floyd is a named insured
under the policy. In that regard, the State Farm declarations page states that the
insured is “GRIMES, FLOYD & GRIME[S], FRANK DBA GRIMES TRUE
VALUE HDW STORE[.]” In Floyd’s initial affidavit, he attests that he owns and
is “involved with the management and day-to-day operations of Grimes True
Value Hardware, L.L.C. and Grimes Industrial Supply, L.L.C.” He attests that the
2006 Nissan truck “was titled to Grimes True Value Hardware, L.L.C. but used by
Grimes Industrial Supply, L.L.C.” Grimes attests that he purchased the State Farm
policy, and he is listed as “a named insured[.]” He attests that the policy was
issued to “Floyd Grimes and Frank Grimes d/b/a Grimes True Value Hardware
Store and provided liability insurance” for the Nissan truck. He attests that he
signed the “UM selection form and opted to reject UM coverage.”
Our review of the waiver shows that the initials “FG” were written next to
the sentence stating: “I do not want UMBI Coverage. I understand that I will
not be compensated through UMBI coverage for losses arising from an accident
caused by an uninsured/underinsured motorist.” (Emphasis in original.) The
waiver contains a line asking for the printed name of the “Named Insured or Legal
Representative[,]” and “Floyd Grimes” is printed on that line. Directly underneath
is another line containing Floyd Grimes’ signature representing the “Signature of a
Named Insured or Legal Representative[.]”
7 In Louisiana, a contract is interpreted within its four corners whenever the
words of a contract are clear, explicit, and lead to no absurd consequences.
Peterson v. Schimek, M.D., 98-1712 (La. 3/2/99), 729 So.2d 1024. Our review of
the evidence shows that Floyd is a named insured. Although the declarations page
contains the designation “DBA GRIMES TRUE VALUE HDW STORE[,]” Floyd
is still a named insured since “‘[d]oing business under another name does not
create an entity distinct from the person operating the business.’” Trombley, 640
So.2d at 817 (quoting Krawfish Kitchen Restaurant, Inc. v. Ardoin, 396 So.2d 990,
993 (La.App. 3 Cir. 1981)).
Accordingly, we agree with the trial court in this regard, and Plaintiffs’
argument is without merit.
II. Second Assignment of Error
In their second assignment of error, Plaintiffs contend that the trial court
legally erred by failing to find the existence of a material issue of fact regarding
Floyd’s signatory capacity. Plaintiffs allege that Floyd’s deposition testimony that
he signed the waiver as the legal representative of Grimes True Value Hardware,
L.L.C., contradicts State Farm’s allegation that he signed in his individual capacity
utilizing the trade name of a sole proprietorship.
In support, Plaintiffs point to State Farm’s second supplemental
memorandum wherein it allegedly asserts that Floyd signed the waiver in his
individual capacity utilizing the trade name Grimes True Value Hardware Store.
Plaintiffs are mistaken, however, as State Farm’s second supplemental
memorandum states that Floyd and Frank “had the authority, as the named
insured[], to execute the UM rejection; no separate authority was required to be
established in order to obtain insurance or execute a UM rejection under the trade
8 name ‘Grimes True Value Hardware Store.’” Plaintiffs are correct, however, in
that Floyd testified that he signed the waiver “on behalf of Grimes True Value
Hardware, L.L.C.”
The trial court’s transcript shows that Floyd’s signatory capacity was not an
issue since he had the capacity to sign the waiver both individually and
representatively. Specifically, the trial court stated that Floyd could sign the
waiver since he was a named insured on the declarations page. It further stated
that “[w]hether it’s the LLC, he’s a member. He’s the person who has authority on
behalf of the LLC. Whether it’s a sole proprietorship, DBA, whether he’s a named
insured himself; it all comes down to the same person[.]” Thus, we must
determine whether the evidence shows Floyd’s capacity to sign the waiver both
personally and representatively.
To determine personal signatory capacity, we must review Louisiana law
regarding insurable interests. In that regard, an insured must have an insurable
interest in the property in order to recover under the policy. Erikson v. Audubon
Ins. Co., 99-284 (La.App. 3 Cir. 10/13/99), 745 So.2d 727, writ denied, 753 So.2d
219 (La. 1/14/00). An insurable interest is “any lawful and substantial economic
interest in the safety or preservation of the subject of the insurance free from loss,
destruction, or pecuniary damage.” La.R.S. 22:853(B). “No contract of insurance
on property or of any interest therein or arising therefrom shall be enforceable
except for the benefit of persons having an insurable interest in the things insured.”
La.R.S. 22:853(B). The insurable interest must exist at the time the policy is
written and at the time of loss. Armenia Coffee Corp. v. Am. Nat’l Fire Ins. Co.,
06-409 (La.App. 4 Cir. 11/21/06), 946 So.2d 249.
9 State Farm contends that Floyd and Frank’s insurable interest arose by virtue
of their ownership of Grimes True Value Hardware, L.L.C., and cites Haddad v.
Elkhateeb, 10-214, 10-308 (La.App. 4 Cir. 8/11/10), 46 So.3d 244, writ denied, 10-
2076 (La. 11/12/10), in support. In Haddad, this court affirmed the trial court’s
granting of summary judgment in favor of the defendants, American Tri-State
Underwriters, Inc. (American Tri-State) and Certain Underwriters at Lloyds,
London (Lloyds), dismissing all of the plaintiffs’ claims against them. The
plaintiffs, Issa Haddad (Haddad) and Safari, Inc. of New Orleans (SINO), owned
commercial property including a building and business personal property that were
used to operate a convenience store called Safari Supermarket. In December 2004,
the defendant, Ali Elkhateeb (Elkhateeb), leased the premises and the business
personal property. He also purchased the store merchandise from the plaintiffs in
order to take over the running of the store. After the lease and sale, the plaintiffs
retained no further business interest in the store other than collecting monthly rent.
Elkhateeb operated Safari Supermarket as the sole proprietor, and, when he applied
for a commercial business insurance policy, Elkhateeb utilized the fictitious
business name Safari Supermarket, Inc. The insurance application listed “Tarek or
Ali” as the contact persons, and only Elkhateeb signed the policy application.
On appeal, Haddad and SINO argued that since they retained ownership of
the equipment and other movables used by Elkhateeb in the daily operations of the
store, they, rather than Elkhateeb, maintained an insurable interest in the business
personal property. We disagreed and held that ownership of the property in
question is not a pre-requisite for the existence of an insurable interest. We held:
Although Elkhateeb did not own the premises or business personal property, other than the inventory or stock, at the time he procured the insurance, he was a lessee and in possession of the property. No
10 dispute exists that Elkhateeb used and depended upon each and every item of lost and/or damaged business personal property located in the store in the daily operation of the supermarket. Accordingly, we find that Elkhateeb, who had the right to possess the premises and to use the business personal property, had a significant and substantial economic interest in preserving the damaged and/or stolen business personal property and that he was subject to pecuniary loss due to his inability to operate his grocery without the property, sufficient to constitute an insurable interest. We further find that this insurable interest existed both at the time Elkhateeb procured the insurance covering the business personal property and at the time of loss.
Haddad, 46 So.3d at 252 (citations omitted).
The evidence in the instant case shows that Floyd and Frank are listed as the
named insureds on the declarations page. Floyd’s deposition testimony states that
he and Frank own Grimes True Value Hardware, L.L.C, and that Grimes True
Value Hardware, L.L.C. owned the truck in question on the date of the accident.
Floyd attested in his initial affidavit that the truck was titled to Grimes True Value
Hardware, L.L.C. although it was used by Grimes Industrial Supply, L.L.C. The
invoice of the vehicle’s purchase shows Grimes True Value Hardware, L.L.C. as
the purchaser. The Certificate of Title, which is dated August 21, 2006, lists
Grimes True Value Hardware, L.L.C. as owner. The waiver was executed by
Floyd on August 21, 2006.
Unlike Haddad wherein the parties involved landlords, a commercial tenant,
and the commercial property insurer, the parties in this case involve Grimes, a
corporation, and the automobile insurer. Haddad also differs from this case in that
in Haddad the issue related to the identity of which party, the landlords or tenant,
was entitled to recover the insurance proceeds provided by the coverage whereas
an issue in this case is whether UM coverage was applicable. Nevertheless, the
main issue in Haddad, just as in this case, is whether ownership of the property in
question is a pre-requisite for the existence of an insurable interest. We, therefore,
11 find the analysis in Haddad applicable to the instant case with respect to
determining whether Floyd had an insurable interest in the truck.
In that regard, Floyd did not own the truck, but rather, he was the owner of
Grimes True Value Hardware, L.L.C., which owned the truck at the time he
procured the insurance and at the time of the accident. No dispute exists that Floyd
used and depended upon the truck in the daily operation of the business. We,
therefore, find that Floyd, who had the right to possess and use the truck as part of
his business, had a significant and substantial economic interest in the truck and
that he was subject to pecuniary loss due to his inability to operate his business
without the truck, sufficient to constitute an insurable interest. As an insured under
the State Farm policy, Floyd had the authority to execute the UM form and exclude
UM coverage pursuant to La.R.S. 22:1295(1)(a)(1) which allows “any insured
named in the policy” to reject UM coverage. Floyd, therefore, had the personal
capacity to sign the waiver.
As to his authority to sign the waiver in a legal capacity on behalf of Grimes
True Value Hardware, L.L.C., Floyd’s second supplemental affidavit states that he
is the “registered agent, the manager, and a member of Grimes True Value
Hardware, L.L.C.[,]” and that he maintained the same status on August 21, 2006,
when he signed the waiver. Grimes attested that as a manager, he is in charge of
“all business affairs and full management authority” and that he has the “authority
to obtain insurance on vehicles titled in the name of Grimes True Value Hardware,
L.L.C., including the authority to execute UM forms in connection therewith.” He
attested that he had the authority to obtain insurance coverage on the truck in
question as well as the authority to execute the waiver pursuant to his managerial
authority. In his initial affidavit, he attested that the truck was a business vehicle.
12 The Articles of Organization, which is discussed in more detail below, further give
Floyd power to contractually bind the company. Thus, the foregoing evidence
shows that Floyd had the legal capacity to sign on behalf of Grimes True Value
Hardware, L.L.C.
Nevertheless, Duncan provides that the trial court in the instant matter was
not required to determine Floyd’s signatory capacity as long as he executed the
waiver in accordance with the law. Specifically, this court in Duncan, 950 So.2d
at 552 (citations omitted), stated:
The statute dictates that a “properly completed and signed form,” is now presumed to constitute a knowing waiver of UM coverage. This presumption exists because the prescribed form, if properly completed, clearly evidences the insured’s intent to waive UM coverage. The legislature, therefore, shifts the analysis away from the muddied question of whether the insured made an informed decision to knowingly waive coverage. Instead, the legislature states if the insurer uses the form prescribed by the commissioner of insurance and makes certain that it is properly completed and signed, then the insurer receives a presumption that the insured’s waiver of coverage was knowing.
In the instant case, the waiver contains Floyd’s initials, name, and signature,
thus satisfying the third Duncan requirement, i.e., the insured or legal
representative must sign the form evidencing the intent to waive UM coverage. As
such, any further inquiry into Floyd’s signatory intent is not required under
Duncan. Accordingly, this assignment of error is without merit.
III. Third Assignment of Error
In their third assignment of error, Plaintiffs contend that a genuine issue of
material fact exists as to whether Floyd, in his capacity as manager of Grimes True
Value Hardware, L.L.C., and pursuant to its Operating Agreement, is authorized to
contractually reject UM coverage on its behalf. If so, Plaintiffs contend that a
genuine issue of material fact exists as to whether having such authority matters if
13 Floyd failed to sign the UM rejection form in a representative capacity on behalf of
Grimes True Value Hardware, L.L.C.
Section 13.3 of Grimes True Value Hardware, L.L.C.’s Operating
Agreement provides:
No Manager shall have the power to sign for or enter into contracts on behalf of the Company, said power being reserved to the Members, unless authorized by the Members.
In Louisiana, “[a]n operating agreement is contractual in nature; thus, it
binds the members of the LLC as written and is interpreted pursuant to contract
law.” Kinkle v. R.D.C., L.L.C., 04-1092, p. 7 (La.App. 3 Cir. 12/8/04), 889 So.2d
405, 409. “Interpretation of a contract is the determination of the common intent
of the parties.” La.Civ.Code art. 2045. “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. However, “[w]ords
susceptible of different meanings must be interpreted as having the meaning that
best conforms to the object of the contract.” La.Civ.Code art. 2048. Any doubtful
provision should be interpreted “in light of the nature of the contract, equity,
usages, the conduct of the parties before and after the formation of the contract,
and of other contracts of a like nature between the same parties.” La.Civ.Code art.
2053. Where doubt arises from a provision in the contract that cannot be removed,
that must be interpreted against the party who furnished it. La.Civ.Code art. 2056.
“The determination of whether the words of a contract are clear and explicit or
ambiguous is a question of law[]” such that “an appellate court’s determination on
review is whether the trial court interpreted the contract correctly or incorrectly.”
Kinkle, 889 So.2d at 409.
14 The Operating Agreement shows that Frank and Floyd signed the last page
as “MEMBERS/APPEARERS” on August 25, 1999. Section 1 states that these
two individuals are “APPEARERS” who “shall become and remain members of
Grimes True Value Hardware, L.L.C.” (Emphasis added.) The preamble states
that it was formed “in furtherance of the purposes and provisions of the Articles of
Organization[.]” Article IV of the Articles of Organization provide that “[t]here
are no limitations on the authority of members to bind the limited liability
company.” (Emphasis added.) In his second supplemental affidavit, Grimes
attested that pursuant to the Articles of Organization and the Initial Report, he is
the “registered agent, the manager, and a member of Grimes True Value
Hardware, L.L.C.,” and that he held the same positions on August 21, 2006.
(Emphasis added.)
The foregoing shows that Floyd was both a manager and a member.
Although he may not have had the authority as a manager to bind the business
pursuant to the terms of the Operating Agreement, he had such authority as a
member pursuant to the terms of the Articles of Organization and the Operating
Agreement. Floyd would retain this authority even if he was only a manager since
the Operating Agreement allows members to authorize the manager to
contractually bind the company, and he attested that he was authorized to execute
UM forms on behalf of the company in a managerial capacity.
At trial, the trial court discussed Floyd’s authority as a member to bind
Grimes True Value Hardware, L.L.C., when it stated: “[W]hether it’s the LLC,
he’s a member. He’s the person who has authority on behalf of the LLC.” Based
on the above reasoning, we find that the trial court correctly interpreted the
15 contract. Thus, Plaintiffs’ argument regarding his managerial authority to bind the
company is without merit.
Plaintiffs further contend that Floyd’s failure to sign the waiver in a
representative capacity creates a genuine issue of material fact. This argument is
without merit pursuant to the reasons discussed above in addition to National
Interstate Insurance Co. v. Collins, 08-693 (La.App. 1 Cir. 2/13/09), 9 So.3d 881,
a case cited by State Farm. In National Interstate, the issue was whether the trial
court legally erred in finding that a UM waiver form was valid, notwithstanding
the fact that the insured company’s name failed to appear on the form and the
insured company’s legal representative failed to state that he was signing the
waiver in his representative capacity. The appellate court reviewed the Duncan
factors and found that the UM waiver was not valid and reversed the trial court’s
judgment granting of National Interstate’s motion to dismiss. The appellate court
reasoned that the signatory’s capacity on the face of the form was uncertain. The
decision was subsequently reversed by the supreme court in National Interstate,
09-1214, p. 1 (La. 11/6/09), 21 So.3d 316, 316, “because there was no question as
to which policy was involved and the legal representative’s name was printed on
the waiver form[.]”
In the present case, there is no question as to which policy was involved.
Floyd’s name was initialed, signed, and printed on the waiver form. Pursuant to
the supreme court’s holding in National Insurance, Floyd’s failure to state that he
was signing the waiver in a representative capacity does not invalidate the waiver.
Thus, Plaintiffs’ argument is without merit.
16 IV. Fourth Assignment of Error
In their fourth assignment of error, Plaintiffs allege that a genuine issue of
material fact exists as to whether the waiver is invalidated by ambiguity and a lack
of clarity arising from the uncertain identity of the named insured along with the
unknown signatory capacity.
We have already addressed these issues above. Thus, this assignment of
error is without merit.
V. Fifth Assignment of Error
In their fifth assignment of error, Plaintiffs contend that the trial court legally
erred by deciding the validity of the waiver based on the intentions of the parties.
Plaintiffs cite Duncan, 950 So.2d at 553, as authority wherein the court held that
“[t]he insurer cannot rely on the insured’s intent to waive UM coverage to cure a
defect in the form of the waiver.”
In their brief, Plaintiffs cite approximately one page of the colloquy between
the trial court and Plaintiffs’ counsel, Mr. Roy S. Halcomb, Jr., contained in the
trial court transcript. We only list those parts wherein the trial court mentioned
intent:
BY THE COURT:
But this is a case [where] the insured is arguing, I intended to waive UM coverage. The insured is arguing that. The, the person who (interrupted)
BY MR. HALCOMB:
It doesn’t matter what (interrupted)
. . . . [I]t all comes down to the same person and he is, he is testifying through numerous affidavits that his intent was to not have coverage and to not pay premiums for this coverage and I think we’re just
17 stretching this so far by finding, trying to split hairs here to, to get a policy that clearly wasn’t intended by these people and I mean, both parties to the contract are saying we clearly did not intend for this policy to, to be in effect and as, as bad as the result is for the injured, it’s, it’s just not good law, to go split these hairs and, and try to (interrupted)
In opposition, State Farm contends that the foregoing colloquy occurred
after Mr. Halcomb stated the following:
[I]f he had authority - even if you concede he had authority, which we don’t, but if you concede he had authority, State Farm alleges he did not exercise that authority. They allege that he did not sign it as a representative of the LLC. They can’t have it both ways. They come in here and they say, He didn’t sign it as a representative of the LLC and so we don’t ever get to the question of, Did he have authority to do it? State Farm has alleged he didn’t.
State Farm contends that the trial court was referring to signatory capacity intent in
direct response to Plaintiffs’ counsel’s argument,.
After our reading of the entire transcript, we agree with State Farm in that
Plaintiffs exceeded the authority issue by questioning Floyd’s signatory capacity.
It was only at this point wherein the trial court discussed his intent, which was in
direct response to Plaintiffs’ argument. The trial court, therefore, did not decide
the validity of the waiver issue based upon Floyd’s intent. Rather, and as
previously discussed, it decided the validity of the waiver based upon the law and
the evidence. Further, and as discussed above, the trial court correctly found that
Floyd had the authority to sign in both an individual and representative capacity
utilizing the law and the evidence. Thus, Plaintiffs’ assignment of error is without
merit.
DECREE
The trial court’s judgment is affirmed. All costs of this appeal are assessed
to Plaintiffs, Naddia and Randel Melder.
18 AFFIRMED.
19 COURT OF APPEAL
THIRD CIRCUIT
STATE OF LOUISIANA
Cooks, J., Dissent.
Plaintiff Naddia Melder (Melder)was injured in an auto accident when her
vehicle was struck by a vehicle driven by Connie Turlington. Melder was working
as an employee of Grimes Industrial Supply, L.L.C. The vehicle driven by Melder
was titled to and owned by a different L.L.C., namely Grimes True Value
Hardware, L.L.C. Both L.L.C.’s are owned by Frank Grimes and Floyd Grimes.
The Grimes’ vehicle was insured under a policy with State Farm Insurance which
was obtained to cover the vehicle on the day it was purchased by Grimes True
Value Hardware, L.L.C. The bank financing the purchase was named as an
additional insured as the lienholder. On the declarations page of the policy the
policy purports to be issued to: “Grimes, Floyd & Grime[s], Frank DBA Grimes
True Value HDW Store, 8322 Highway 71 N Pineville, LA 71360-275.” The UM
Selection Form for this policy indicates on two lines that Floyd Grimes signed that
form rejecting UM coverage identifying him as the “Named Insured or Legal
Representative” and that Floyd’s signature is the signature representing the
“Signature of a Named Insured or Legal Representative[.]” State Farm paid the
claim for the total loss of the Grimes’ vehicle by making a payment to the
1 bank/lienholder for the balance on the loan, and paying the remaining amount to
Grimes True Value Hardware, L.L.C. State Farm maintains there is no UM
coverage on the policy insuring the Grimes’ vehicle as coverage was waived in
writing.
This appeal was taken from the second ruling on State Farms Re-Fixed
Motion for Summary Judgment. Previously, this court reversed the trial court’s
granting of summary judgment in favor of State Farm and remanded the case
finding there were unresolved genuine issues of material fact. This court held:
Simply stated, the policy purports to insure a vehicle belonging to Floyd and Frank Grimes, but Mr. Grimes[’] sworn affidavit states that the vehicle belongs to a limited liability company. Furthermore, the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the limited liability company or the apparently non-existent partnership between himself and Frank Grimes. Given that unresolved material fact, the burden never shifted to the Melders in the summary judgment hearing.
The case was remanded to the trial court. No writ was filed with the State
Supreme Court.
State Farm filed a second supplemental memorandum in support of its
Motion for Summary Judgment which it asked to be re-fixed for hearing.
Following a hearing on the re-fixed Motion for Summary Judgment, the trial court
again granted summary judgment in favor of State Farm finding there is no UM
coverage under the policy insuring the Grimes’ vehicle. The trial court dismissed
Plaintiff’s claims against State Farm with prejudice. Plaintiffs appeal.
The majority affirms the trial court’s ruling applying the de novo standard of
review. I disagree with the majority decision reversing the ruling of the previous
panel of this court. The majority recognizes that Louisiana law favors UM
coverage and that any exception to coverage must be strictly construed. It also
2 acknowledges that the law requires adherence to strict formalities for rejecting UM
coverage. The majority recites six requirements of form which must be met for a
valid UM waiver: (1) the insured must initial the selection or rejection (2) if lower
limits are selected the lower limit must be entered on the form denoting the exact
limit (3) the insured or legal representative must sign the form evidencing the
intent to waive UM coverage (4) the from must include his or her printed name to
identify the signature (5) the insured dates the form to determine the effective
date of the UM waiver and (6) the form must include the policy number to
demonstrate which policy it refers to. Because Floyd Grimes is the only person
who signed the waiver form the majority sets out to determine if his signature
meets the above criteria. The majority finds there is no genuine issue of material
fact that Floyd Grimes is an insured under the policy and as such signed a valid
waiver of UM coverage on this policy for the subject vehicle.
I do not believe this matter is ripe for summary judgment. The majority, like
the trial court, errs in making determinations of credibility, considering the merits
of the case, evaluating deposition testimony and testimony by affidavit, and
engaging in the weighing of evidence, all of which are not appropriate on summary
judgment. As this court stated in Fusilier v. Dautrive, 99-692 (La.App. 3 Cir.
12/22/99), 759 So.2d 821, 831, reversed on other grounds by 2000-151
(La.7/14/00), 764 So.2d 74 (emphasis added):
The first issue that must be addressed in reviewing a trial court's grant of summary judgment is whether any genuine issues of material fact exist. Smith v. Our Lady of the Lake Hosp. Inc., 93-2512 (La.7/5/94); 639 So.2d 730, appeal after remand, 96-1837 (La.9/27/96); 680 So.2d 1163. The reviewing court must next address whether reasonable minds could conclude, based on the facts presented, the mover is entitled to judgment. Id. In other words, summary judgment is appropriate when all relevant facts are brought before the court, the relevant facts are undisputed, and the sole
3 issue remaining is the conclusion to be drawn from the relevant facts. Id In this case, the relevant facts are seriously disputed and Plaintiffs have put
forth more than sufficient evidence to create factual disputes which cannot be
resolved on summary judgment. As we have often stated: “Issues of credibility
have no place in summary judgment procedure.” Hinds v. Clean Land Air Water
Corp., 96–1058 (La.App. 3 Cir. 4/30/97); 693 So.2d 321. Any of the State's
conclusions, which are contained within the records, cannot be substituted for the
fact-finding process provided by a trial.” Carriere v. State, 708 So.2d 822, 824
(La. 3 Cir. 1998) (emphasis added). The Plaintiffs have shown that they can put
forth substantial evidence which calls into question many genuine issues of
material fact necessary to a fair and full resolution of this matter. Summary
judgment is not a substitute for a trial on the merits.
“It is not the court's function on a motion for summary judgment to determine or even inquire into the merits of the issues presented. While deposition testimony may be used to support or oppose a motion for summary judgment, it may not be weighed.” Lexington House v. Gleason, 98-1818, p. 6 (La.App. 3 Cir. 3/31/99); 733 So.2d 123, 126 (citations omitted).
Mouton v. Sears Roebuck, 99-669 (La.App. 3 Cir. 11/31/99), 748 So.2d 61,67, writ
denied, 99-3386 (La.2/4/00), 754 So.2d 232 (emphasis added).
The majority bases its reasoning on its finding that Floyd Grimes is an
insured under the policy because he had an insurable interest in the vehicle. It
finds the affidavit presented in supplemental support of the re-fixed Motion for
Summary Judgment shows that Floyd Grimes is a member of both the True Value
LLC and the Industrial Supply LLC and is involved in the daily operations of both
LLCs, and further finds these affidavits show that the truck was used by both
LLCs. The majority states “Grimes’ attests that he purchased the State Farm
4 policy, and he is listed as a ‘named insured[.]’” It further states “[Floyd] attests
that the policy was issued to ‘Floyd Grimes and Frank Grimes d/b/a Grimes True
Value Hardware Store and provided liability insurance’ for the Nissan truck. He
attests that he signed the ‘UM selection form and opted to reject UM coverage.’”
After Defendants filed the Motion to Re-fix the Motion for Summary
Judgment and the attendant affidavits in support thereof, Plaintiffs took the
deposition of Grimes True Value Hardware, LLC. Floyd Grimes appeared at the
deposition as the designated representative of Grimes True Value Hardware, LLC.
Plaintiffs also obtained the Allstate Insurance Company (the insurer of the
Turlington vehicle) claim file regarding this accident. They assert that the
documents obtained from Allstate, along with the deposition testimony of Floyd
Grimes, demonstrate there are unresolved genuine issues of material fact which
can only be resolved by a trial on the merits. Plaintiffs assert, as they previously
asserted in the prior case before this court, that many material issues of fact remain
unresolved including but not limited to the question regarding what person and/or
entity constitutes the “named insured” on the policy; in what capacity did Floyd
Grimes sign the UM rejection form; if Floyd Grimes signed the rejection form on
behalf of the LLC did he have authority to do so. Plaintiffs aver that the evidence
submitted at the hearing on the Re-fixed Motion for Summary Judgment shows
that the vehicle was purchased by Grimes True Value Hardware, LLC with a loan
from Union Bank, secured by the vehicle. The vehicle was titled in the name of
the LLC and the bank was listed as a mortgage holder. The bank required the LLC
to insure the vehicle and name Union Bank as an additional insured. Grimes True
Value Hardware, LLC purchased the insurance policy via telephone conversation
between Floyd Grimes and State Farm’s agent on August 21, 2006, the same day
5 the vehicle was purchased by the LLC. The LLC paid all premiums for the policy
and paid all payments on the loan from Union Bank. At this point in the litigation
there has been no testimony from the other member of the two LLCs. Plaintiff
further asserts that the evidence shows that Floyd Grimes testified in deposition
that he has never operated any business or sole proprietorship known as “Grimes
True Value Hardware” or “Grimes True Value Hardware Store,” and the only
entity which has ever operated at the address listed in the insurance policy is
“Grimes True Value Hardware, LLC.” Plaintiff also maintains the evidence thus
far shows that the rejection form was filled in by an employee of State Farm, Ms.
Anderson. Anderson does not know on what date Floyd Grimes signed the
rejection form and does not recall if she was even present when Floyd signed the
form. Our court previously found that Floyd does not recall on what date he went
to the insurance agency to sign the UM rejection form. No new light is shed on
this question in the Re-fixed Motion for Summary Judgment hearing. State Farm
asserts Floyd signed the rejection form in his personal capacity as “Floyd Grimes”
d/b/a “Grimes True Value Hardware Store.” State Farm also asserts that the LLC
is not insured for its vehicle under this policy and alternatively asserts Floyd signed
for the LLC in his capacity as Manager and/or Member of the LLC with authority
to bind the LLC. The facts remain genuinely disputed.
Plaintiff also asserts that the Operating Agreement governing the LLC
provides: “No manager shall have the power to sign for or enter into contracts on
behalf of the company, said power being reserved to the members, unless
authorized by the members.” Plaintiff points out the trial court “made a factual
finding that Floyd Grimes is the named insured under the policy and, regardless,
the intent of the parties was to reject UM coverage.” Plaintiff correctly maintains
6 that “In determining whether an issue is ‘genuine’, Courts cannot consider the
merits, make credibility determinations, evaluate testimony or weigh evidence,”
and cites numerous cases in support of their position. I agree with Plaintiff’s cited
line of cases for this proposition.
The majority further states that “the trial court stated that Floyd is a named
insured since ‘he’s listed in the “dec” page as the named insured.’ We, therefore
look to the evidence to determine whether Floyd is a named insured under the
policy.” The majority then “reviews” the factual evidence and finds that Floyd
Grimes had an insurable interest in the vehicle, and, as he is named on the policy
as “Floyd Grimes DBA Grimes True Value HDW Store,” is an insured who may
properly reject UM coverage. The majority again engages in inappropriate fact
finding and determinations of credibility. It then proceeds to reason that the DBA
designation “does not create an entity distinct from the person operating the
business,” citing Trombley v. Allstate Ins. Co., 93-1669 (La.App. 3 Cir. 6/1/94),
640 So.2d 815 and Krawfish Kitchen Rest., Inc. v. Ardoin, 396 So.2d 990 (La.App.
3 Cir. 1981). Thus, says the majority, the trial court correctly found that Floyd is a
named insured on the policy who could reject UM coverage in his individual
capacity.
Having engaged in making this determination, the majority next finds that
the question of “in what capacity did Floyd sign the rejection form” is not an issue
because the trial court found Floyd could sign in both his individual capacity as
Floyd Grimes, and in a representative capacity for the LLC. This finding is made
despite this issue being genuinely disputed by the parties and no court having yet
heard from the other member of the LLCs who is also listed on the insurance
policy. Nevertheless, the majority proceeds to “determine whether the evidence
7 shows Floyd’s capacity to sign the waiver both personally and representatively.”
The majority also determines that Floyd has a personal insurable interest in
the vehicle under the jurisprudence defining an insurable interest as “any lawful
and substantial economic interest in the safety or preservation of the subject of the
insurance free from loss, destruction, or pecuniary damage.” The majority finds
that ownership of the property is not a prerequisite for the existence of an insurable
interest and then finds that Floyd is a member of both the LLC that owned the
truck and the LLC that most often used the truck. It also finds that as there is no
factual dispute Floyd used and depended on the truck in the daily operations of the
LLC that he “had the right to possess and use the truck as part of his business, had
a significant and substantial economic interest in the truck and that he was subject
to pecuniary loss due to his inability to operate his business without the truck,
sufficient to constitute an insurable interest.” Thus, the majority concludes, Floyd
had the authority as one with an insurable interest to obtain coverage on the vehicle
and reject UM coverage. The majority reasons that since Floyd is listed on the
policy as “Floyd Grimes DBA” he personally/individually was a named insured
who is now determined to have had an insurable interest and could therefore
validly reject UM coverage. This determination ignores substantial facts presented
by Plaintiffs regarding the owner/purchaser/insurer of the vehicle owned by the
LLC which disputes Defendant’s claims and the majority’s findings.
The majority also addresses the factual issue of whether Floyd could sign the
rejection on behalf of the LLC if it would be determined that the policy insured the
LLC, the only record title owner of the vehicle. It concludes that the evidence
shows he had such capacity as a member and/or manager of the LLC, and, finds
8 that Floyd’s “failure to state that he was signing the waiver in a representative
capacity does not invalidate the waiver.”
The majority rejects Plaintiff’s assertion that there is a genuine issue of
material fact as to whether the waiver should be invalidated because it is
ambiguous and unclear as to the identity of the named insured and/or the unknown
signatory capacity of Floyd. Plaintiff asserts:
[T]here is no way to determine if the UM rejection form was signed by the named insured or its legal representative simply by looking at the UM rejection form as prepared by State Farm and signed by Floyd Grimes. In fact, the parties themselves cannot agree on who the named insured is under the policy and whether Floyd Grimes signed the UM rejection form in his individual capacity or in a representative capacity. Adding to this ambiguity is the fact that the name Grimes True Value Hardware, LLC appears nowhere on the UM rejection form, and Floyd Grimes purchased all of his automobile insurance, personal and business, through the same State Farm agency, this ambiguity and lack of clarity invalidates the UM rejection form.
An unresolved ambiguity and/or lack of clarity on the UM rejection form would
invalidate rejection of UM coverage. The majority acknowledges this is so.
Additionally, the majority acknowledges that there must be strict
adherence to the formalities of what constitutes a valid waiver and lists among
those formalities the specific requirement that the “insured” must date “the form
to determine the effective date of the UM waiver.” Clearly this requirement
remains completely unresolved in this case. At this stage the evidence presented
by both parties shows that no one can say if or when Floyd Grimes dated his
purported rejection of UM coverage. Thus, at present, there is not strict adherence
to the requirements of a valid waiver. In order to reach the conclusions reached by
the trial court and the majority one must engage in some serious fact finding,
credibility determinations, and the weighing of evidence and deposition testimony
9 presented in support of and in opposition to the Motion for Summary Judgment,
and, one must overlook the fact that the date criteria listed by the majority as a
strict requirement of formality is not met. I agree with the original panel’s finding
that there are unresolved genuine issues of material fact. Plaintiffs have now
introduced more than enough evidence to demonstrate that multiple issues
necessary to the disposition of this case remain in serious dispute. With all due
respect, I do not agree with the majority opinion because I believe it goes beyond
what either the trial court or this court may do on a motion for summary judgment.
For the reasons stated I respectfully dissent.