INSURANCE-RELATED COURT CASES
Digested from case reports published online
COURT DECISIONS
No good deed goes unpunished
Calvin Landry and Mary B. Landry filed a petition for damages alleging that they suffered injuries arising out of an automobile collision that occurred on or about July 10, 2019. The Landrys brought the action against Riyad Shaibi, his insurer Financial Indemnity Company, and Progressive Security Insurance Company as the insurer of the 2008 Toyota Sienna that Shaibi was driving at the time of the collision.
Shaibi was taking the 2008 Toyota Sienna to a tire shop to repair a flat tire as a favor to its owner, Aziz Ali.
On January 6, 2020, Financial filed a motion for summary judgment because the undisputed facts established that the Louisiana private passenger auto policy issued by Financial to Shaibi at the time of the collision excluded coverage for liability related to the Landrys’ alleged damages.
With respect to its liability coverage, the Financial policy provided:
We will pay damages, except for punitive damages, for “bodily injury” or “property damage” for which any “insured” becomes legally responsible because of an auto accident arising out of the:
1. Ownership;
2. Maintenance or use; or
3. Loading or unloading of “your covered auto.”
The policy defined “your covered auto” to mean:
The vehicle(s) described in the declarations
Any “newly acquired auto”
Any owned “trailer” while attached to a vehicle insured under this policy; or
A “non-owned auto.”
The parties disputed the application of subsection (d), a “non-owned auto,” which is defined by a Louisiana addendum to the policy as:
“Non-owned auto” refers to any “private passenger auto” you do not own while:
A.
Used as a temporary substitute for “your covered auto” which is out of normal use because of its:
1. Breakdown;
2. Repair;
3. Servicing;
4. “Loss”; or
5. Destruction.
B. Rented by an “insured”; or
C. Used by you or a family member for demonstration or test drive purposes.
Financial contended that the fore-going documents, together with the Landrys’ petition, established the following undisputed facts: (1) the underlying accident involved a 2008 Toyota Sienna operated by Shaibi; (2) the Financial policy did not list the 2008 Toyota Sienna on its declarations page; (3) at the time of the accident, both listed autos under the Financial policy were not broken down, were in good working order, and were not in need of service or repair; and (4) at the time of the accident, Shaibi had volunteered to change a tire on the 2008 Toyota Sienna, owned by Ali, and was driving the vehicle to a tire shop.
Financial asserted that these undisputed facts supported the conclusion that the 2008 Toyota Sienna involved in the accident was neither a covered auto pursuant to the listed vehicles in the declarations page nor a “non-owned auto” under the Financial policy such that the Financial policy did not provide coverage for damages alleged by the Landrys as a result of the accident.
The Landrys opposed the motion for summary judgment, asserting that Financial’s argument conflicted with a state statute, violated public policy, and would lead to absurd conclusions if upheld.
The district court held a hearing on Financial’s motion and on March 23, 2020, granted summary judgment in favor of Financial and dismissed all claims of the Landrys against it with prejudice.
On April 7, 2021, the court of appeal reversed. The court found no statutory authority for the Landrys’ claims against Financial, noting that the Landrys abandoned their temporary substitute vehicle argument under a state statute and that a statute that requires coverage of the named insured while using a non-owned vehicle was inapplicable because the policy at issue was not a motor vehicle liability policy.
Nevertheless, the court held that “public policy requires coverage for the named insured while operating a non-owned vehicle with permission in the fulfillment of a good deed for a friend.”
Because Financial’s definition of “non-owned vehicle” conflicted with public policy, the court remanded for further proceedings in accordance therewith.
Financial subsequently filed a writ application with the Louisiana Supreme Court, which it granted on October 5, 2021.
On appeal, the issue was whether Louisiana law requires an insurer to provide coverage for its named insured while operating a non-owned vehicle in the fulfillment of a good deed. Because the court found the application of the exclusions in the Financial policy did not violate Louisiana law or public policy in their application to the facts at hand, it reversed.
Because it was undisputed that the Financial policy was not obtained as proof of financial responsibility, the court considered the policy at issue to be an “automobile liability policy” subject to the requirements of a state statute and not a “motor vehicle liability policy” subject to the requirements of another state statute. The Landrys’ contention that the state statute requires Financial to provide coverage for Shaibi’s use of the 2008 Toyota Sienna, whether through purported incorporation of another state statute or otherwise, was without merit.
The state supreme court reversed the court of appeal and reinstated the ruling of the district court that granted summary judgment in favor of Financial.
Landry v. Progressive Security Insurance Company et al.—Supreme Court of Louisiana—January 28, 2022—No. 2021-C-00621.
