Every minute counts in cancellation dispute
On July 27, 2010, a vehicle operated by Darlene Shelmire collided with a vehicle operated by Beverly Smith when Shelmire proceeded through an intersection without yielding the right of way. Smith filed a petition for damages, naming Shelmire and her insurer, Gramercy Insurance Company, as defendants and asserting that she sustained injury as a result of the accident.
Gramercy generally denied the allegations. Gramercy filed a motion for summary judgment, asserting that there was no coverage for Shelmire or her vehicle because her policy had been cancelled as of 12:01 a.m. on July 20, 2010, for failure to pay premiums. The court found in favor of Smith and denied Gramercy’s motion.
Citadel Insurance Company, d/b/a GoAuto, as the legal successor to Gramercy, filed a motion to re-urge the motion for summary judgment, asserting as Gramercy that no coverage was afforded under the policy at the time of the accident because the policy was cancelled prior to the date of the accident for the insured’s failure to pay premiums. The court denied the motion.
After a bench trial, GoAuto moved for involuntary dismissal, asserting that Smith had failed to prove coverage; the court denied the motion.
At the conclusion of trial, the court took the matter under advisement and accepted post-trial memoranda. The court ruled in favor of Smith, finding that there was a valid policy in place at the time of the accident because GoAuto never cancelled the policy. The court relied on the facts that Shelmire paid the premium in the afternoon on the date of the accident, that a few hours later she reported the accident to GoAuto as having occurred earlier that morning, and despite knowing that Shelmire was making a claim for an accident that occurred during a time when it asserted she did not have coverage, the very next day GoAuto paid Shelmire’s claim for property damage. The court ordered GoAuto to pay Smith $15,000, representing its policy limits. GoAuto appealed.
On appeal, the court upheld the trial court’s denial of GoAuto’s motion for involuntary dismissal, saying that because the court had discretion to render or decline to render judgment, there was nothing to review on appeal.
GoAuto next contended that the trial court erred in determining that Shelmire’s policy was in effect at the time of the accident. Specifically, GoAuto argued that the premium finance company that financed Shelmire’s premiums followed the law in instructing GoAuto to cancel her policy for nonpayment of premium and that GoAuto properly complied with its legal responsibility.
The court noted that the burden of proving that a policy has been cancelled for nonpayment of premium before the date of the accident that gave rise to a claim is on the insurer. The court cited the law that states that, although a premium finance company may follow all of the requirements to effectuate the cancellation of a policy for nonpayment of premium, the insurer still has to act on the request for cancellation for the cancellation to be effective.
At trial, an employee of GoAuto testified that it cancelled the policy for nonpayment of premium pursuant to the request of the premium finance company and reinstated the policy on July 27, 2010, at 2:17 p.m.; the accident occurred at 7:32 a.m. on the morning of that day. The employee said that Shelmire’s property damage claim had been made in error and would not have been paid if GoAuto had known that the accident occurred at 7:32 a.m.
The court found no error in the trial court’s factual determination that, although Shelmire had failed to timely pay her premium, GoAuto never cancelled her policy.
The judgment of the trial court was affirmed.
Smith vs. Gramercy Insurance Company-Court of Appeal of Louisiana, First Circuit-March 10, 2016- Nos. 2015 CA 0845, 2015 CA 0846.
