Judgment rendered April 9, 2025. Application for rehearing may be filed within the delay allowed by Art. 2166, La. C.C.P.
No. 56,157-CA No. 56,158-CA (Consolidated Cases)
COURT OF APPEAL SECOND CIRCUIT STATE OF LOUISIANA
*****
No. 56,157-CA No. 56,158-CA
STATE FARM MUTUAL TILLMAN CARROLL AND AUTOMOBILE INSURANCE TWANA CARROLL, COMPANY AS PARTIAL INDIVIDUALLY, AND AS SUBROGEE OF TILLMAN HUSBAND AND WIFE CARROLL Plaintiffs-Appellees Plaintiff-Appellee versus versus ETHAN WILLIAMS ETHAN WILLIAMS CHUMLEY, CHUMLEY CHUMLEY AND PROPERTY MANAGEMENT, HOUSTON CASUALTY LLC, CHUMLEY COMPANY PROPERTIES, LLC, Defendants AQUATECH INDUSTRIES, LLC & HOUSTON SPECIALTY INSURANCE COMPANY Defendants
Appealed from the First Judicial District Court for the Parish of Caddo, Louisiana Trial Court Nos. 613,328 and 613,331
Honorable Christopher T. Victory, Judge
***** AUZENNE LAW FIRM, LLC Counsel for By: Stacy Christopher Auzenne Defendants-Appellants, Mary Elizabeth Chumley, Ethan Williams Chumley, Aquatech Industries, LLC, and Dr. Edward D. Chumley
JAMES EVERET BROUILLETTE Counsel for Plaintiff-Appellee, State Farm Mutual Automobile Insurance Company
ALL AMERICAN LAW FIRM OF LA Counsel for By: Wade Thomas Visconte Plaintiffs-Appellees, Tilman Carroll and Twana Carroll
CHARLES E. TABOR
PETTIETTE, ARMAND, Counsel for DUNKELMAN, WOODLEY Defendant-Appellee & CROMWELL, LLP By: Donald James Armand Jr. Meredith P. Bro
Before STONE, THOMPSON, and HUNTER, JJ. HUNTER, J.
Plaintiffs, Tillman Carroll and Twana Carroll, and defendants, Ethan
Williams Chumley, Mary Elizabeth Chumley, Dr. Edward G. Chumley,
Chumley Property Management, LLC, Chumley Properties, LLC, and
Aquatech Industries, LLC, appeal a district court’s ruling granting summary
judgment in favor of defendant, Houston Specialty Insurance Company. For
the following reasons, we affirm.
FACTS
On January 2, 2018, Tillman Carroll, who was driving a 2004 Toyota
Camry, was stopped at a stop sign at an intersection of Southern Loop and
Linwood Avenue in Shreveport, Louisiana. Defendant, Ethan Williams
Chumley (“Ethan”), who was driving a 2011 Ford F-350 pickup truck,
collided with the back of Carroll’s vehicle.1 The truck Ethan was driving
was owned by his employer, Aquatech Industries, LLC (“Aquatech”), and
covered by a general automobile liability insurance policy issued by
Houston Specialty Insurance Company (“HSIC”). Aquatech, a tilapia farm,
was one of the companies owned and operated by Ethan’s parents, Dr.
Edward Gary Chumley and Mary Elizabeth Chumley (“the Chumleys”), and
Ethan was employed as the manager.
Carroll sustained serious injuries as a result of the accident, and his
vehicle was rendered a total loss. HSIC refused to accept liability based on
its suspicion the Chumleys had committed material misrepresentations, with
1 Ethan, who did not have a valid driver’s license, failed a breathalyzer test and was charged with DWI, fourth offense, or subsequent offense. In addition to four prior DWI convictions, Ethan’s motor vehicle record revealed prior traffic violations for driving with a suspended license, reckless operation, careless operation, unauthorized use of a movable, and aggravated obstruction of a highway. intent to deceive, in the original application for insurance and in the renewal
application. Pursuant to an automobile insurance policy issued to Carroll,
State Farm Mutual Automobile Insurance Company (“State Farm”) paid the
actual cash value of Carroll’s totaled vehicle and other related expenses.
On December 14, 2018, Carroll and his wife, Twana Carroll, filed a
personal injury lawsuit, naming as defendants Ethan, Aquatech, Chumley
Property Management, LLC, and Chumley Properties, LLC (collectively
“Aquatech”), and HSIC. The Carrolls alleged Ethan had access to, and
frequently used, vehicles owned by Aquatech. The Carrolls later amended
their petition to add Dr. and Mrs. Chumley as defendants, asserting claims of
vicarious liability. The Carrolls alleged the Chumleys were aware of
Ethan’s multiple DWI and traffic-related offenses, but they allowed him to
operate vehicles without instituting safeguards. They also alleged the
Chumleys engaged in a pattern of behavior “that enabled their son to
continue drinking and driving,” by providing inaccurate and incomplete
information in the application for insurance for the HSIC policy.
On December 20, 2018, State Farm, as partial subrogee of Carroll,
filed a lawsuit against Ethan and HSIC, seeking reimbursement for sums it
paid to Carroll for the total loss of his vehicle. The district court
consolidated the lawsuit filed by the Carrolls with the lawsuit filed by State
Farm.
HSIC answered the petitions admitting it issued a policy covering the
F-350 pickup truck, and Ethan was driving the vehicle at the time of the
accident. HSIC also raised the following affirmative defenses:
(1) The policy was “annulled and voided as a result of material misrepresentations in the application for the policy, at other material times and/or in connection with claims arising from the 2 accident, which misrepresentations were made with the intent to deceive.”
(2) The named insureds *** by and through their authorized officers, agents and/or representatives, and Ethan Chumley, made material misrepresentations and/or fraudulent statements and representations, with the intent to deceive HSIC, in the application for the policy. Said misrepresentations were material to the underwriting decisions on the policy, and but for the misrepresentations, HSIC would not have issued the policy.
On July 21, 2023, HSIC filed a motion for summary judgment
alleging the Chumleys “and/or other representatives, made multiple, ongoing
false statements and concealed facts from [HSIC] that Ethan Chumley, who
had a long, extensive history of felony traffic offenses and had no valid
driver’s license, was regularly allowed to and did drive Aquatech vehicles.”
HSIC also asserted Aquatech “made multiple, material misstatements in
applications for and communications related to [HSIC] coverage, with the
intent to deceive [HSIC].” HSIC argued it was entitled to summary
judgment declaring the insurance policy void, ab initio, due to material
misrepresentations made by Aquatech and the Chumleys, with the intent to
deceive HSIC into providing coverage.
The Carrolls, Ethan, Aquatech, and the Chumleys filed oppositions to
the motion for summary judgment. They argued general issues of material
fact exist as to whether Aquatech’s insurance agent, Integra Insurance
Company, and its employee, Kellie Stein, functioned as the agent for HSIC
or for Aquatech, and whether Stein’s actions are attributable to HSIC. They
also argued Stein entered the information onto the applications and
submitted them to Mrs. Chumley for signature; therefore, there is no
evidence to establish the Chumleys knew the information in the applications
was inaccurate and that they intended to mislead HSIC. Further, they argued
3 HSIC was aware Ethan drove the vehicles and failed to cancel coverage or
issue an endorsement excluding him from the policy, and “[a]t a minimum,
HSIC would have known it needed to follow up on Ethan Chumley’s
driver’s license status.” Notwithstanding Mrs. Chumley’s signature on the
applications, the Carrolls, Ethan, Aquatech, and the Chumleys agued Stein
entered the information on the application and falsely informed HSIC’s
agent, Regional Insurance Services Company (“RISCOM”), Ethan no longer
worked for Aquatech.
Following a hearing, the district court granted HSIC’s motion for
summary judgment and dismissed the claims against HSIC.2 The court
stated:
*** The three elements recognized by Louisiana courts to void an insurance policy pursuant to La. R.S. 22:860 are: 1) the insureds made misrepresentations in the application for coverage, 2) the misrepresentations were material to issuing the coverage, and 3) the insureds made the misrepresentations with the intent to deceive.
The court reviewed [HSIC]’s Motion and Memorandum, and thoroughly reviewed the lengthy and thoughtful oppositions filed by Plaintiffs and Defendants. After said review, the court finds that none of the reasoning argued by Plaintiffs and Defendants creates a genuine issue of material fact as to the three elements that dictate rescission under La. R.S. 22:860. The Court finds that the three elements of rescission have been proven by [HSIC]. No genuine issue of material fact exists and [HSIC] is entitled to judgment as a matter of law, voiding the insurance policy it issued to Defendants in August 2017. *** [HSIC]’s policy *** is void ab initio due to the material misrepresentations made by Aquatech Industries, with the intent to deceive [HSIC] into providing coverage. ***
2 The district court declared the judgment an appealable partial final judgment, pursuant to La. C.C.P. art. 1915(A)(1), “because it dismisses the suit as to [HSIC] but not as to any other parties.”
4 The Carrolls, Ethan, Aquatech, and the Chumleys appeal.
DISCUSSION
The appellants contend the district court erred in granting summary
judgment and dismissing their claims against HSIC. They argue the trial
court improperly weighed conflicting evidence, assessed the credibility of
witnesses, and misapplied the law. The appellants also argue HSIC failed to
prove a false statement was made “by the insured” because a genuine issue
of material facts exists as to who committed the fraud/misrepresentation:
Stein or the Chumleys. They assert the misrepresentations contained in the
original application are immaterial because HSIC learned that Ethan was
driving the company vehicle but did not cancel the policy or exclude him
from the policy. Further, when the issue of the status of Ethan’s driver’s
license arose, Stein, not the Chumleys, misrepresented to HSIC that Ethan
was no longer driving the vehicles and was no longer employed by
Aquatech. Additionally, when the policy was up for renewal, HSIC’s
underwriting department waived the loss control inspection, which would
have revealed that Ethan was still driving the vehicles insured under the
policy.
Additionally, Aquatech and the Chumleys argue the district court
erred in granting the motion for summary judgment because it improperly
weighed conflicting evidence and made credibility determinations.
Aquatech and the Chumleys also argue genuine issues of material fact exist
with regard to whether Ethan was a covered driver under the policy, and
whether the actions taken by Stein in failing to follow up with Aquatech to
ascertain Ethan’s driving status are attributable to HSIC.
5 A de novo standard of review is required when an appellate court
considers rulings on motions for summary judgment, and the appellate court
uses the same criteria that governed the district court’s determination of
whether summary judgment was appropriate. Sepulvado v. Travelers Ins.-
Charter Oak Fire Ins. Co., 52,415 (La. App. 2 Cir. 11/8/18), 261 So. 3d 980.
A court must grant a motion for summary judgment if the motion,
memorandum, and supporting documents show that there is no genuine issue
as to a material fact and that the mover is entitled to judgment as a matter of
law. La. C.C.P. art. 966(A)(3).
A fact is material if it potentially ensures or precludes recovery,
affects a litigant’s ultimate success, or determines the outcome of the legal
dispute. A genuine issue of material fact is one as to which reasonable
persons could disagree; if reasonable persons could reach only one
conclusion, there is no need for trial on that issue and summary judgment is
appropriate. Jackson v. City of New Orleans, 12-2742 (La. 1/28/14), 144 So.
3d 876, cert. denied, 574 U.S. 869, 135 S. Ct. 197, 190 L. Ed. 2d 130
(2014); Green v. Brookshire Grocery Co., 53,066 (La. App. 2 Cir. 9/25/19),
280 So. 3d 1256.
In determining whether an issue is genuine, a court should not
consider the merits, make credibility determinations, evaluate testimony, or
weigh evidence. Green, supra. Although summary judgment is rarely
appropriate for a determination based on subjective facts such as intent,
motive, malice, knowledge or good faith, a trial court may grant summary
judgment based on an intent issue when there is no genuine issue of material
fact concerning the pertinent intent. Cypress Heights Academy v. CHA
Investors, LLC, 21-0820 (La. App. 1 Cir. 6/7/22), 343 So. 3d 736, writs 6 denied, 22-01284 (La. 11/8/22), 349 So. 3d 574 and 22-01247 (La. 11/8/22),
349 So. 3d 576.
When a motion for summary judgment is made and supported, an
adverse party may not rest on the mere allegations or denials of his pleading,
but his response, by affidavits or otherwise, must set forth specific facts
showing that there is a genuine issue for trial. If he does not so respond,
summary judgment, if appropriate, shall be rendered against him. La. C.C.P.
art. 967(B).
La. R.S. 22:860(A) provides:
[N]o oral or written misrepresentation or warranty made in the negotiation of an insurance contract, by the insured or in his behalf, shall be deemed material or defeat or void the contract or prevent it attaching, unless the misrepresentation or warranty is made with the intent to deceive.
A prospective insured has a duty to inform the insurer of all facts
which might be used in determining whether the insurance policy will be
written. State Farm Mut. Auto. Ins. Co. v. Bridges, 45,162 (La. App. 2 Cir.
5/19/10), 36 So. 3d 1142; St. Paul Fire and Marine Ins. Co. v. St. Clair, 193
So. 2d 821 (La. App. 1 Cir. 1966), writ denied, 250 La. 375, 195 So. 2d 646
(1967). In interpreting La. R.S. 22:860, formerly R.S. 22:619, an insurer
must prove: (1) the insured made a false statement, (2) the false statement
was material, and (3) it was made with intent to deceive. Willis v. Safeway
Ins. Co. of La., 42,665 (La. App. 2 Cir. 10/24/07), 968 So. 2d 346; West v.
Safeway Ins. Co. of La., 42,028 (La. App. 2 Cir. 3/21/07), 954 So. 2d 286;
Dye v. Walker, 36,482 (La. App. 2 Cir. 10/23/02), 830 So. 2d 429, writ
denied, 02-2868 (La. 1/31/03), 836 So. 2d 72. Strict proof is not required to
show the applicant’s intent to deceive, because of the inherent difficulties of
proving one’s intent. Id. The intent to deceive must be determined from the 7 attending circumstances which indicate the insured’s knowledge of the
falsity of the representations made in the application and his recognition of
the materiality thereof, or from circumstances which create a reasonable
assumption that the insured recognized the materiality of the
misrepresentation. Id. If the surrounding circumstances, viewed
objectively, create a reasonable assumption that the insured probably
intended to deceive the insurer, the policy should be voided. Id.
In the instant case, HSIC, as the movant, bore the initial burden on
summary judgment. The record established the commercial automobile
policy in dispute was issued to Aquatech by HSIC for the period of August
1, 2016, to August 1, 2017. The policy contained the following provisions:
*** SECTION IV – BUSINESS AUTO CONDITIONS *** B. General Conditions *** 2. Concealment, Misrepresentation Or Fraud This Coverage Form is void in any case of fraud by you at any time as it relates to this Coverage Form. It is also void if you or any other “insured,” at any time, intentionally conceal or mispresent a material fact concerning:
a. This Coverage Form; b. The covered “auto”; c. Your interest in the covered “auto”; or c. A claim under this Coverage Form. *** LOUISIANA CHANGES This endorsement modifies insurance provided under the following: *** C. Changes In Conditions *** 6. The Concealment, Misrepresentation Or Fraud Condition is replaced by the following:
This Coverage Form is void in any case of fraud by you at any time as it relates to this Coverage Form. It is also void if you or
8 any other “insured” at any time, intentionally conceals or misrepresents a material fact concerning:
a. This Coverage Form; b. The covered “auto”; c. Your interest in the covered “auto”; or d. A claim under this Coverage Form. ***
In support of its motion, HSIC introduced into evidence a statement of
the following uncontested facts:
Steve Gore, the accountant employed by the Chumleys and their businesses, acted as the contact person for Aquatech in communications with its insurance agency, Integra;
Integra was responsible for representing Aquatech in applying for and maintaining insurance coverage; and
Kellie Stein was an account manager employed by Integra, and she was responsible for obtaining/handling coverage for Aquatech. Stein acted as agent for Aquatech in applying for coverage with HSIC and communicated with Aquatech to obtain the necessary information for the application. Stein sent the information RISCOM, the underwriting agent for HSIC.
More specifically, HSIC established on June 14, 2016, Stein emailed Gore,
requesting a “list of drivers, including name, DOB and driver’s license
number.” Gore responded by providing Stein with Edward G. Chumley’s
name, date of birth, and driver’s license number. On July 14, 2016, Stein
completed the application based upon the information provided by Gore.
The application provided, in part:
*** DRIVER INFORMATION (Include drivers who frequently use own vehicles)
DRIVER # NAME (Include address, if required) *** 001 Edward G Chumley
*** EXPLAIN ALL “YES” RESPONSES YES NO *** 9. ANY VEHICLES USED BY FAMILY
9 MEMBERS? IF SO, IDENTIFY IN REMARKS X *** 14. ANY DRIVERS WITH MOVING TRAFFIC VIOLATIONS? X ***
Additionally, the Driver’s License Report of Edward Gary Chumley was
attached to the application showing Dr. Chumley’s driver’s license was
valid, he had no traffic violations/convictions, and he had no suspensions or
revocations. The application was signed by Mary M. Chumley on July 26,
2016. The application for renewal of the policy was completed in July 2017,
and, again, Mrs. Chumley signed the renewal application, asserting Edward
G. Chumley was the sole driver, the vehicle was not used by any family
members, and the vehicle was not used by any driver with moving traffic
violations.
Stein testified she was employed by Integra as an account manager
from March 2015 until April 2019. Her job duties included issuing
certificates of insurance, obtaining renewal quotes, and communicating with
small businesses to obtain information for coverage. Stein also testified she
acted as the agent for Aquatech and/or the Chumley business entities to
procure insurance, while RISCOM acted as the agent for HSIC to bind
coverage for small businesses. Stein stated she entered the information into
the system, the forms were completed by the system, all of her
communications regarding the Aquatech policy were with Steve Gore, and
she prepared the application based on information provided to her by Gore.
Once she completed the application, she sent it to Gore via email, Gore
presented the application to Mrs. Chumley, and Mrs. Chumley signed it.
Stein testified she assumed the answers in the application were true and
accurate because she expected potential insureds to provide truthful and 10 accurate information. Thereafter, after she received the signed application,
she submitted it to RISCOM to consider binding coverage for the HSIC
Stein also testified she received notice from RISCOM that Ethan
needed to be added to the policy, and she emailed Gore to acquire Ethan’s
information to obtain his driving record.3 She also testified Gore informed
her Ethan’s Texas-issued driver’s license had expired, and he would inform
her when he renewed it. She admitted she did not know whether Gore
communicated with the Chumleys about the status of Ethan’s driver’s
license. She stated Gore subsequently canceled the request to add Ethan as a
driver. Stein testified when it was time to renew the policy in 2017, Gore
provided her the same information, i.e., Edward Chumley was the sole driver
of the Aquatech vehicles, no other family members were drivers, and no
driver had any moving violations; Mrs. Chumley signed the application.
Stein testified she did not receive any information from Aquatech to suggest
Ethan was driving the insured vehicles. Stein further stated Integra, as the
agent for Aquatech, was responsible for reporting the accident claim to
HSIC; Integra did not have any additional obligations regarding the claim.
Michael Dugan, the president of RISCOM, described RISCOM as “an
underwriting and claims management company,” which “provides claims
handling” for HSIC. He stated his duties include making underwriting
decisions in terms of issuing policies, i.e., deciding whether “something is an
underwriting risk that [RISCOM] don’t want to insure.” Dugan also
3 The record established that in 2016, a loss control representative for HSIC visited Aquatech and learned Ethan was employed by Aquatech and was a driver of the vehicles. The representative recommended that Ethan be identified as a potential driver on the policy, and an employee for RISCOM emailed Stein to confirm whether Ethan should be added as a driver of Aquatech’s vehicles. 11 testified Integra, the producing agent, was not involved in any decisions in
terms of pursuing denial of coverage. According to Dugan, Integra gathered
information as presented by the insured, completed the application, and
submitted it to underwriting at RISCOM. Thereafter, RISCOM prepared an
insurance quote based on the information presented in the application.
Gore provided a recorded sworn statement, during which he explained
he was asked to “check into an insurance policy” for Aquatech. He admitted
he was Stein’s contact in procuring insurance coverage for Aquatech, and he
received the application by email and forwarded it to the Chumleys.
According to Gore, Ethan was Aquatech’s sole “regular” employee, and he
denied having any knowledge of Ethan’s driving record or of his prior DWI
convictions during the process of procuring insurance. He stated he
obtained the information for the application regarding the driver(s) from Dr.
Chumley. He also stated he had a telephone conversation with Stein about
employees having access to Aquatech’s vehicles, but he was unable to recall
the specifics of the conversation. Gore stated he “would think” he would
have been referring to Ethan when he spoke to Stein about “other
employees.”
Gore admitted he told Stein that Ethan was “a driver, not a regular
driver.” He also admitted he informed Stein that Ethan “did not notice his
license had expired last month” and instructed her to cancel the request to
add Ethan as a driver on the policy. Gore stated someone at Aquatech –
either Ethan, Mrs. Chumley, or both – made the decision to cancel the
request to add Ethan as a driver. Gore stated he did not complete any
portion of the insurance applications, and he was not authorized to sign
applications or checks on behalf of the Chumleys. He also asserted he did 12 not know if Mrs. Chumley read the applications; however, he stated she
signed them because he recognized her signature.
Dr. Chumley provided a sworn statement, as stating as follows:
Q: Now, was anybody authorized to drive those two vehicles for Aquatech or for any purpose other than you?
A: Ethan was authorized to drive the truck to run errands like, you know, in a fish farm you have to use salt. You have to pick up feed, odds and ends like that. The truck was used, because we had to have a heavy duty and to transport fish, so I think that was the only three uses of that truck. *** Q: Was he – so did – how often did he drive it, I guess, then, any, during the time that Aquatech owned the truck up until the time of the accident, how often did Ethan drive the truck?
A: This is a guess, but, you know, the farm is run twenty-four hours a day, so I would assume, you know, every day, because there was always stuff – you know, there’s just so much maintenance on the farm, so a lot of times he would have to go to Minden to get, you know, as simple of stuff as PVC pipe, things of that nature. *** Q: And you were the only driver listed at the time and was that correct at the time, in other words, you were the only driver that was going to be driving a vehicle owned and used for the benefit of Aquatech; is that right?
A: The primary driver, yes.
Q: At the time this application was done, did you know or did Aquatech know that there was going to be other people that would drive a vehicle that was insured [under] your policy?
A: Yeah, it would be Ethan. *** Q: All right. On the opposite side of that block, there is a question, any vehicles used by family members, if so, identify in remarks, and the answer given is no. So that wasn’t correct at the time? *** A: Well, I mean I used it and Ethan used it, so I don’t know why it would be marked no. ***
13 Q: [A]t the time this application was filled out, the intent of Aquatech was still that Ethan would drive and use either of the trucks and the gooseneck trailer?
A: Well, yeah. Yeah.
When asked whether he knew Ethan had prior DWI convictions, Dr.
Chumley admitted he was aware of Ethan’s “misdemeanor” conviction for
DWI because he attended a hearing. However, he denied knowing Ethan’s
driver’s license was suspended.
During her statement, Mrs. Chumley specified the following:
*** A: [Reading from the application] Include drivers who frequently use own[ed] vehicles. Well, certainly he was. In [20]16, it’s – no, I would have to agree with Dr. Chumley on this, that Ethan would have driven it from time to time.
Q: [L]et me ask just a couple of questions about that. Number nine asks, any vehicles used by family members, if so, identify on remarks, and the answer on that is no. That answer is really not accurate at the time the application was made, true, because Ethan did use the vehicles –
A: Ethan did use the vehicles on occasion, he certainly did. *** Q: And the answer is no, so the answer is not correct?
A: Yes, it should have been, because he is a family member and I know that he drove the truck occasionally. ***
Q: In other words, you understood that this application was to be presented to an insurance company to ask whether they would insure you are not?
A: I’m sure, I mean, I would think that would be the normal process.
Q: And that information that’s contained in the application had to be accurate, right?
A: I would think so, yes. ***
14 Further, Dr. and Mrs. Chumley stated they were aware of one of
Ethan’s traffic offenses, which they both described as “a misdemeanor.”
Mrs. Chumley further stated Dr. Chumley was listed on the policy because
he was the owner of the vehicle, and she did not know why Ethan was not
listed as a driver. She affirmed Ethan “should have been” listed because “he
is a family member, and I know that he drove the truck occasionally. Mrs.
Chumley also verified she would have been the person Stein contacted about
Ethan’s driving record. She stated Stein likely informed RISCOM that
Ethan was no longer employed at Aquatech because “[h]e may not have
been working at the location at that time” because he was “in Florida for a
while.” Mrs. Chumley also affirmed she knew Ethan was a driver and he
had a “misdemeanor” moving violation when she signed the renewal
application in 2017.
Robin Widmer, the assistant underwriting manager of RISCOM,
attested as follows:
*** RISCOM would not have bound the original or renewal [HSIC] liability policies to Aquatech if, in the applications for those policies, Aquatech had: 1) identified Ethan Chumley as a proposed driver of vehicles insured under the policy, 2) identified Ethan Chumley as a family member who would be using vehicles insured under the policy; and/or 3) admitted Ethan Chumley, who had multiple “moving traffic violations” would be driving the vehicles.
Alternatively, if Aquatech had: 1) identified Ethan Chumley as a proposed driver of vehicles insured under the policy, 2) identified Ethan Chumley as a family member who would be using vehicles insured under the policy; and/or 3) admitted Ethan Chumley, who had multiple “moving traffic violations” would be driving the vehicles, RISCOM would only have bound the policies with an endorsement that excludes all coverage for any losses arising from Ethan Chumley’s use of insured vehicles.
15 If Aquatech had provided honest and accurate responses to RISCOM’s September 2016 requests for information concerning Ethan Chumley’s driver’s license, driving record and use of Aquatech vehicles, RISCOM/[HSIC] would have cancelled the original policy and would not have bound the renewal policy. Alternatively, RISCOM would have added an endorsement to both the original and renewal policies that excluded all coverage for any losses arising from Ethan Chumley’s use of insured vehicles.
In her deposition, Widmer testified RISCOM acts “as the
underwriting policy services and loss control for our program with [HSIC].”
She stated Aquatech applied for insurance coverage through its agent,
Integra.
In response to the motion for summary judgment, the appellants
argued there is a genuine issue of material fact as to whether Stein, who
completed the application, acted as an agent for HSIC. However, Stein
testified she was employed by Integra, and she was the agent for Aquatech,
while RISCOM was the agent for HSIC. Additionally, Widmer attested
RISCOM, not Stein, was the “managing general agent in Louisiana for
[HSIC]” and was responsible to underwriting, binding, issuing, and
servicing HSIC policies issued in Louisiana. Mere speculation is
insufficient to defeat a properly supported motion for summary judgment.
Lambert v. Zurich Am. Ins. Co., 55,064 (La. App. 2 Cir. 6/28/23), 366 So. 3d
1285; Wilson v. GEICO Cas. Co., 54,551 (La. App. 2 Cir. 6/29/22), 343 So.
3d 308.
Neither the Carrolls, Aquatech, nor the Chumleys presented any
evidence to support any claim that Stein was an agent or employee acting on
behalf of HSIC. Furthermore, there is no allegation or argument that Mrs.
Chumley was incapable of reading and understanding the insurance
application, and neither party has made any allegations of negligence, or any 16 other misconduct, against Stein or her employer, Integra.4 Thus, we find the
Carrolls, Aquatech, and the Chumleys have not produced factual support to
establish the existence of a genuine issue of material fact with regard to
whether the Chumleys intended to deceive the agent and/or insurer with
regard to Ethan’s status as a driver, his driving history, and his insurability.
We acknowledge summary judgment is rarely appropriate in cases
requiring a determination of intent. However, in this case, there is no
genuine issue of material fact regarding the Chumleys’ intent. The original
application and renewal application listed Edward Chumley as the sole
driver for the vehicles covered under the policy. The application also stated
no other family members drove the vehicles, and no driver had a history of
moving violations. Both the original and renewal applications bore the
signature of Mrs. Chumley. In their sworn statements, Dr. and Mrs.
Chumley admitted Ethan was a driver of the vehicles. Dr. Chumley
admitted at the time the application was submitted, he was aware Ethan
would drive the vehicles. Mrs. Chumley also admitted she understood the
application would be presented to the insurance company to procure
coverage, and she “would think” the information needed to be accurate. She
also admitted she signed both applications.5
4 In the absence of any allegations of fraud, duress, or misconduct of the insurance agent, a person who signs a written document is presumed to know and understand what she signs. Mixon v. Progressive Specialty Co., 29,698 (La. App. 2 Cir. 6/18/97), 697 So. 2d 662; Pine v. Doolittle, 28,141 (La. App. 2 Cir. 6/26/96), 677 So. 2d 686; Thomas v. Goodson, 26,356 (La. App. 2 Cir. 12/7/94), 647 So. 2d 192. 5 Our law is clear that one who signs a document is presumed to have done so with knowledge of its contents, regardless of whether he or she actually read it. Tillman v. USAgencies Cas. Ins. Co., 46,173 (La. App. 2 Cir. 3/2/11), 58 So. 3d 1009, writ denied, 2011-0665 (La. 5/6/11), 62 So. 3d 127; Harrell v. Currie, 43,001 (La. App. 2 Cir. 2/13/08) ), 975 So.2d 777, writ denied, 08-0574 (La.5/2/08), 979 So.2d 1286.
17 We find HSIC met its burden of proving the Chumleys made material
misrepresentations in the application for insurance with the intent of
deceiving the insurer with regard to whether Ethan was a driver of
Aquatech’s vehicles and whether he had moving traffic violations. Despite
their efforts to downplay Ethan’s abhorrent driving history by characterizing
it as “a misdemeanor,” it is evident the Chumleys intentionally failed to
disclose Ethan’s status as a driver, whether frequent or occasional, and
directed Gore to cancel the request to add Ethan to the insurance policy. The
Chumleys admitted they intended to allow Ethan to drive the vehicle at the
time the applications for insurance were signed by Mrs. Chumley and
submitted to the agent. Yet, they failed to disclose this fact to the agent,
RISCOM, or HSIC. Widmer attested RISCOM would not have bound
coverage had Ethan been listed as a driver, and in the alternative, it would
have excluded Ethan from coverage under the policy. HSIC issued the
policy because it relied on the assertions set forth in the application, i.e., Dr.
Chumley was the sole driver, no other family members drove the vehicles,
and no drivers had moving violations. We find no genuine issues of material
fact exist, and HSIC was entitled to summary judgment as a matter of law.
The appellants also contend the district court erred in granting
summary judgment because a trier of fact is required to decide whether
HSIC is prohibited from asserting coverage defenses. They argue under the
doctrine of equitable estoppel, HSIC has waived its right to argue rescission
of the policy because it did not fully return the full amount of the premium,
i.e., it returned only the premium for the remaining policy period, i.e., March
29-August 1, 2018.
18 Waiver is the intentional relinquishment of a known right, power, or
privilege, which occurs when there is an existing right, a knowledge of its
existence, and an actual intention to relinquish it or conduct so inconsistent
with the intent to enforce the right as to induce a reasonable belief that it has
been relinquished. Tate v. Charles Aguillard Ins. & Real Estate, Inc., 508
So.2d 1371 (La. 1987); Green v. Brown, 51,152 (La. App. 2 Cir. 2/15/17),
212 So. 3d 718, writ denied, 17-0707 (La. 9/6/17), 224 So. 3d 985; Maddox
v. Keen, 33,072 (La. App. 2 Cir. 4/7/00), 756 So. 2d 1279. Reliable proof of
a waiver is required. Tate, supra.
Our review of the record reveals HSIC refused to accept liability, and
one week after the accident, it notified Aquatech and the Chumleys of its
investigation into potential material misrepresentations, and it reserved its
right to deny and/or limit coverage during the investigation. La. R.S. 22:879
provides:
None of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer:
(1) Acknowledgment of the receipt of notice of loss or claim under the policy.
(2) Providing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or incompleted.
(3) Investigating any loss or claim under any policy or engaging in negotiations considering a possible settlement of any such loss or claim.
Further, in this answer to the petition filed by the Carrolls and State
Farm, HSIC asserted the policy was “annulled and voided as a result of
material misrepresentations in the application … with the intent to deceive.”
Additionally, there is no indication HSIC handling of the return of the 19 premium constituted a waiver of its defense. Once the policy was cancelled,
the unearned premium was refunded, and the full amount was properly
refunded after the court declared the policy was void ab initio. Under the
facts of this case, we find the appellants failed to carry the burden of proving
HSIC waived the affirmative defense of material misrepresentation. This
argument lacks merit.
The Carrolls, Aquatech, and the Chumleys further contend the district
court erred in relying on “inadmissible evidence” offered by HSIC and
incorrectly excluded affidavits offered by the Carrolls and the Chumleys.
The Carrolls argue the trial court excluded the affidavits of Gore and the
Chumleys, but it accepted the affidavits of Lynda McCallon,6 the
underwriter’s vice president of claims and acting legal advisor, and Robin
Widmer, the assistant underwriting manager,7 as well as the deposition
testimony of Stein.8
6 They argue McCallon stated HSIC has “consistently reserved, maintained and advanced all” coverage defenses from the inception of the “investigation” and during this litigation. Such an assertion is a legal opinion, a conclusion of law, and a matter of dispute. McCallon also attested HSIC “did not intend nor did it waive any other rights under the policy[.]” This statement should be stricken because it is also an impermissible “interpretation of law.” McCallon’s assertions regarding the refund of the remaining balance paid for the premium goes to the issue of waiver or estoppel, and, therefore, should not have been considered for the purposes of summary judgment. 7 In her affidavit, Widmer attested HSIC relied on Aquatech’s representations that Edward Chumley was the only driver, and no proposed drivers had moving traffic violations. However, in her deposition, Widmer admitted she was not involved in the underwriting process, and she had no personal knowledge of who completed and/or provided answers to the questions on the application. Therefore, some of the statements made in Widmer’s affidavit should have been stricken. 8 More specifically, they argue Stein the Chumleys and Gore “lied” in an effort to defraud HSIC. This portion of Stein’s testimony constitutes an opinion, not a fact, and raises a credibility issue which should be determined by the trier of fact. Further, Stein should not have been allowed to testify regarding the emails between her and Gore because the content of the emails contain inadmissible hearsay, i.e., Ethan’s expired driver’s license information. 20 The trial court is granted broad discretion in its evidentiary rulings,
which will not be disturbed on appeal absent a clear abuse of discretion.
Rives Plantation, L.L.C. v. BPX Properties (N.A.) LP, 55,301 (La. App. 2
Cir. 12/20/23), 376 So. 3d 328, writ denied, 24-00109 (La. 3/12/24), 381 So.
3d 50; Taylor v. Nexion Health at Pierremont, Inc., 54,802 (La. App. 2 Cir.
12/14/22), 353 So. 3d 403, writs denied, 23-00057 (La. 3/14/23), 357 So. 3d
823 and 23-00056 (La. 3/14/23), 357 So. 3d 830.
La. C.C.P. art. 966(D)(2) provides:
The court shall consider only those documents filed or referenced in support of or in opposition to the motion for summary judgment but shall not consider any document that is excluded pursuant to a timely filed objection. Any objection to a document shall be raised in a timely filed opposition or reply memorandum. The court shall consider all objections prior to rendering judgment. The court shall specifically state on the record or in writing whether the court sustains or overrules the objections raised.
When an objection to an affidavit in support of or in opposition to a
motion for summary judgment is made in accordance with La. C.C.P.
966(D)(2), the only issue to be determined is whether the affidavit is in
compliance with La. C.C.P. art. 967. Farrar v. Centerpoint Energy Res.
Corp., 52,557 (La. App. 2 Cir. 4/10/19), 269 So. 3d 1149; Mariakis v. N.
Oaks Health Sys., 18-0165 (La. App. 1 Cir. 9/21/18), 258 So. 3d 88.
Supporting and opposing affidavits shall be made on personal
knowledge, shall set forth such facts as would be admissible in evidence,
and shall show affirmatively that the affiant is competent to testify to the
matters stated therein. La. C.C.P. art. 967(A); Martin v. Thomas, 21-01490
(La. 6/29/22), 346 So. 3d 238; Roach v. Moffatt, 55,415 (La. App. 2 Cir.
1/10/24), 379 So. 3d 268. Affidavits with conclusory allegations of fact
which are devoid of specific facts are not sufficient to defeat summary 21 judgment. Roach v. Moffatt, supra; Cheramie Servs. Inc. v. Shell Deepwater
Prod. Inc., 09-1633 (La. 4/23/10), 35 So. 3d 1053; ACMG of La. Inc. v.
Jones, 35,102 (La. App. 2 Cir. 9/26/01), 796 So. 2d 704, writ denied, 01-
2869 (La. 1/11/02), 807 So. 2d 240. Affidavits which merely restate factual
allegations of the pleadings and assert legal conclusions are not deemed
personal knowledge. Roach v. Moffatt, supra; Pugh v. Beach, 31,361 (La.
App. 2 Cir. 12/11/98), 722 So. 2d 442; Mapp Const. LLC v. Southgate
Penthouses LLC, 09-0850 (La. App. 1 Cir. 10/23/09), 29 So. 3d 548, writ
denied, 09-2743 (La. 2/26/10), 28 So. 3d 275. Personal knowledge means
something which a witness actually saw or heard, as distinguished from
something a witness learned from some other person or source. Barnes v.
Sun Oil Co., 362 So. 2d 761 (La. 1978); Roach v. Moffatt, supra; Chanler v.
Jamestown Ins. Co., 51,320 (La. App. 2 Cir. 5/17/17), 223 So. 3d 614, writ
denied, 17-01251 (La. 10/27/17), 228 So. 3d 1230.
In opposition to the motion for summary judgment filed by HSIC,
Aquatech and the Chumleys, who had already introduced sworn statements
in which they admitted Ethan was a driver of the vehicles, sought to
introduce sworn affidavits. In her affidavit, Mrs. Chumley attested she did
not “conceal, defraud, or in any way prevent information related to [Ethan’s]
driving status *** from being provided to Integra[.]” Dr. Chumley attested
Mrs. Chumley did not “conceal, defraud, materially misstate facts, or in any
way fabricate or prevent information” regarding Ethan’s “driving status ***
from being provided[.]” Similarly, Gore attested he did not “intend to
conceal, defraud, make a material misstatement, convey any incorrect
information, or hide the name of any drivers on the application.” The
district sustained HSIC’s objection to the affidavits. 22 We first note that Dr. Chumley attested his wife did not “conceal,
defraud, materially misstate facts *** or fabricate or prevent information.”
The affidavit was not based on Dr. Chumley’s personal knowledge but was
with regard to what his wife stated to him. Additionally, the affidavit of
Mrs. Chumley, in which stated she did not “conceal, defraud, materially
misstate facts, or in any way fabricate or prevent information” contain legal
conclusions. Likewise, Gore’s affidavit, in which he attested he did not
“intend to conceal, defraud, make a material misstatement, convey any
incorrect information, or hide the name of any drivers on the application,”
also contains legal conclusion. Therefore, we find the district court did not
abuse its discretion in excluding the affidavits.
With regard to the affidavits of Widmer and McCallon, both attested
they were knowledgeable about the underwriting process, and they were
familiar with the policies in dispute and with the business records of the
underwriting company and HSIC. Contrary to appellants’ argument,
Widmer was not required to show she was “personally involved” with
Aquatech’s insurance policy. She attested she was familiar with the manner
and procedure by which Aquatech’s application, HSIC policies, the
underwriting correspondence, and the renewed policy were created and
maintained. Furthermore, the business records upon which Widmer relied
were admitted into evidence. Likewise, McCallon’s affidavit does not
contain legal conclusions. She attested she was the vice president of claims
and the acting legal advisor, and her affidavit demonstrated she had
knowledge regarding the coverage provisions of the policy at issue.
We find the affidavits of Widmer and McCallon met the requirements
for admission into evidence as required by La. C.C.P. art. 966(D)(2). 23 Consequently, we see no abuse of discretion in the district court’s ruling
with regard to the affidavits.
The appellants also argue the trial court erred failing to strike the
portions of Stein’s deposition in which she testified Aquatech, the
Chumleys, and/or Gore “lied” regarding Ethan. Our review of the record
reveals that during her deposition, Stein was questioned with regard to
whether she/Integra, as the agent, advocated for Ethan, Aquatech, and the
Chumleys after the accident. She testified she did not advocate for the
insureds because “it was our position that they lied to us” when they asserted
Ethan was not a driver. Stein later explained the “they” to which she
referred included Ethan, his parents, and Gore. She stated:
It’s not specifically pointing a finger at who within the organization lied. The named insured, Aquatech, LLC, misrepresented the facts. *** [T]he application and the information on the application was submitted to me and signed fraudulently. It was signed by Mary Chumley and forwarded to me and the information was sent to me by Steve Gore. I have no knowledge of where Steve got the information, but that information was sent to me fraudulently.
As a general rule, a lay witness is permitted to draw reasonable
inferences from his or her personal observations. If the testimony constitutes
a natural inference from what was observed, no prohibition against it as the
opinion of a non-expert exists as long as the lay witness states the observed
facts as well. Farrar, supra; State v. Davis, 44,656 (La. App. 2 Cir.
11/18/09), 26 So. 3d 802, writ denied, 09-2768 (La. 6/25/10), 38 So. 3d 355.
The trial court is vested with much discretion in determining whether to
allow lay witness testimony as to an opinion or inference, in accordance with
La. C.E. art. 701, including the admissibility of evidence. Its decision to
admit or exclude evidence will not be reversed on appeal in the absence of a
24 clear abuse of discretion. Farrar, supra.
Our review of Stein’s deposition reveals she was not testifying as an
expert witness. Based on her perceptions and understanding of the
transpiring events, Stein opined that either the Chumleys or Gore “lied”
and/or committed “fraud” when they indicated Dr. Chumley was the only
driver of the vehicles. Her conclusions were based on her review of the file
and her recollection of her interactions with Gore. Accordingly, we find no
error in the trial court’s acceptance of Stein’s lay opinion. Furthermore, the
accuracy of Stein’s testimony in deposition was an appropriate matter for
cross-examination and goes to weight, rather than admissibility.
Accordingly, we find the district court did not abuse its discretion in
overruling the objection to the introduction of Stein’s deposition.
Moreover, the appellants assert the district court erred in granting the
motion for summary judgment because there is conflicting language in
HSIC’s policy regarding the timing of when an insurer can deny coverage
based on fraud, and the conflicting language must be construed against
HSIC. The policy provides, in pertinent part:
This Coverage Form is void in any case of fraud by you at any time as it relates to this Coverage Form. It is also void if you or any other “insured,” at any time, intentionally conceal or mispresent a material fact concerning:
a. This Coverage Form; b. The covered “auto”; c. Your interest in the covered “auto”; or d. A claim under this Coverage Form.
However, such voidance of coverage applies only to the extent that such acts or omissions are made with the intent to deceive at the time of application under this Coverage Form.
(Emphasis added).
25 The parties argue that under the policy, the ability to void coverage
only applies to acts/omissions “made with intent to deceive at the time of
application,” while, simultaneously, granting HSIC the right to void
coverage due to “fraud . . . at any time as it relates to this Coverage Form.”
They maintain the conflicting language must be strictly construed against
HSIC, and, therefore, this Court should deny HSIC’s “material
misrepresentations” defense and reverse the district court’s ruling granting
summary judgment.
The interpretation of an insurance contract is usually a legal question
that can be properly resolved by means of a motion for summary judgment.
Bernard v. Ellis, 11-2377 (La. 7/2/12), 111 So.3d 995; Chreene v. Prince,
52,351 (La. App. 2 Cir. 9/26/18), 256 So. 3d 501; Schelmety v. Yamaha
Motor Corp., USA, 50,586 (La. App. 2 Cir. 4/13/16), 193 So. 3d 194, writ
denied, 16-0903 (La. 9/6/16), 205 So. 3d 919. An insurance policy is a
contract between the parties and should be construed using the general rules
of interpretation of contracts set forth in the Louisiana Civil Code. Green ex
rel. Peterson v. Johnson, 14-0292 (La. 10/15/14), 149 So.3d 766; Chreene,
supra; Schelmety, supra. An insurance contract must be “construed
according to the entirety of its terms and conditions as set forth in the policy,
and as amplified, extended, or modified by any rider, endorsement, or
application attached to or made a part of the policy.” La. R.S. 22:881;
Chreene, supra; Schelmety, supra. 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. C.C. art. 2046. In such
cases, the insurance contract must be enforced as written. Chreene, supra;
Schelmety, supra. However, exclusionary provisions in insurance contracts 26 are strictly construed against the insurer, and any ambiguity is construed in
favor of the insured. Id. The burden is on the insurer to prove that a loss
comes within a policy exclusion. Rodgers v. State Farm Mut. Auto. Ins.,
2015-0868 (La. 6/30/15), 168 So. 3d 375; Chreene, supra; Schelmety,
supra.
While we recognize exclusionary provisions are to be strictly
construed against the insurer, HSIC, there is simply no ambiguity present in
this provision in the policy that would allow it to be construed in favor of the
appellants. Likewise, the enforcement of the provision as written would not
lead to any absurd consequences. The policy provides the coverage under
the policy is void if the insured makes a misrepresentation or conceals facts
at any time. It also provides coverage is void if insured engages in “acts or
omissions” with the intent to deceive at the time of application. In this case,
both provisions, which are neither ambiguous nor contradictory, apply
because misrepresentations were made in the original application, during
communications between Gore and Stein about the policy, and in the
renewal application. Further, Aquatech and the Chumleys engaged in acts
and omissions by providing false statements with the intent to deceive at the
time of the application. This assignment without merit.
CONCLUSION
For the reasons set forth herein, the district court’s ruling granting
summary judgment in favor of Houston Specialty Insurance Company and
declaring the policy void ab initio is hereby affirmed. Costs of this appeal
are assessed to appellants/plaintiffs, Tillman Carroll and Twana Carroll, and
appellants/defendants, Ethan Williams Chumley, Mary Elizabeth Chumley,
27 Dr. Edward G. Chumley, Chumley Property Management, LLC, Chumley
Properties, LLC, and Aquatech Industries, LLC.
AFFIRMED.