Leon Williams v. Financial Indemnity Insurance Company

Judgment rendered April 13, 2022.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 54,324-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

LEON WILLIAMS Plaintiff-Appellant

versus

FINANCIAL INDEMNITY Defendants-Appellees
INSURANCE COMPANY,
ET AL

*****

Appealed from the
Monroe City Court for the
Parish of Ouachita, Louisiana
Trial Court No. 2020-CV-00334

Honorable Aisha S. Clark, Judge

*****

OFFICE OF ANTHONY J, BRUSCATO Counsel for Appellant
By: Anthony J. Bruscato

VOORHIES & LABBE' Counsel for Appellee,
By: Cyd Sheree Page Financial Indemnity
Insurance Company

LUNN IRION LAW FIRM Counsel for Appellee,
By: Gerald Martin Johnson, Jr. ABC Agency Network,
Inc.

DEMETRICK JONES In Proper Person, Appellee

CLAIRE JONES In Proper Person, Appellee

*****

Before MOORE, ROBINSON, and HUNTER, JJ.

ROBINSON, J.

Plaintiff, Leon Williams (“Williams”), sued Defendants, Financial

Indemnity Insurance Company (“Financial Indemnity”), Demetrick Jones

(“Mr. Jones”), Claire Jones (“Mrs. Jones”), and ABC Agency Network, Inc.

(“ABC Agency”), seeking damages for injuries suffered by Williams in an

automobile collision caused by the alleged negligence of Mr. Jones.

Financial Indemnity moved for summary judgment based on lack of

coverage of Mr. Jones since he was an excluded driver under the liability

policy, which Williams opposed. The trial court granted the motion, finding

no genuine issue of material fact since the insurance policy was clear that

Mr. Jones was not covered. Williams appeals that judgment.

For the following reasons, we AFFIRM.

FACTS AND PROCEDURAL HISTORY

Williams was in an automobile collision with Mr. Jones, the driver

and one of the registered owners of a 2005 Chevrolet Silverado 1500. The

liability insurance policy in place on the Silverado at the time of the accident

was purchased by Mrs. Jones, Mr. Jones’ wife, (and the vehicle’s other

registered owner), from Financial Indemnity, and was issued by ABC

Agency. Mr. Jones was listed as an "excluded driver," as clearly indicated

by the policy declarations page and endorsement, and as stipulated by the

parties. However, the insurance identification card issued by Financial

Indemnity did not specifically list any excluded drivers, particularly, Mr.

Jones. The card was produced by Mr. Jones to the investigating officer at

the scene of the collision, who treated it as valid proof of insurance and

recorded its information in the accident report. No penalties were imposed

as a result of a vehicle being operated without insurance.

Williams filed suit against Defendants, Financial Indemnity and Mr.

Jones, in January 2020, asserting that he was injured in the collision

allegedly caused by the negligence of Mr. Jones, and at the time of the

collision, Mr. Jones' vehicle was insured by Financial Indemnity. Williams

filed an amended petition in May 2020, joining Defendants, Mrs. Jones and

ABC Agency.

Mr. and Mrs. Jones filed an answer on January 27, 2021. Financial

Indemnity filed a motion for summary judgment shortly thereafter on

February 2, 2021, along with an original brief in support of said motion,

asserting that there was no coverage under its policy because Mr. Jones was

the driver of the vehicle involved in the accident, and the policy expressly

listed him as an excluded driver. Williams’ opposition was filed on March

1, 2021. A hearing on the motion was held March 15, 2021, and the motion

was granted. A written judgment was entered on April 8, 2021.

DISCUSSION

Williams argues that the trial court erred in granting Financial

Indemnity’s motion for summary judgment based on lack of coverage under

the liability policy. He claims that Financial Indemnity should be estopped

from denying coverage as a result of its issuance of a misleading insurance

identification card offered as proof of insurance by Mr. Jones, which omitted

Mr. Jones as an excluded driver. As a result of the omission, Mr. and Mrs.

Jones could use the card to circumvent the Louisiana Motor Vehicle Safety

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Responsibility Law by providing a “fake ID” to law enforcement officers

and escaping statutory penalties imposed on uninsured drivers.

Williams claims that if Financial Indemnity knew or should have

known that its identification card was likely to be used for the purpose of

deceiving a law enforcement officer, then it intentionally or negligently

assisted Mr. Jones in deceiving the officer. When a person who has a duty

to speak remains silent with the intent to deceive, this is fraud prohibited by

La. C.C. Art. 1953. When the person who has a duty to speak remains silent

negligently, this gives rise to a claim for negligent misrepresentation. Hardy

v. Easy T.V. & Appliances of La., Inc., 2001-0025 (La. App. 4 Cir.

12/12/01), 804 So. 2d 777, 781 (cause of action for negligent

misrepresentation may arise where defendant has “a legal duty to supply

correct information” and breaches that duty).

Williams refers to the specific language in La. Rev. Stat. § 32:863.1

and La. Admin. Code tit. 55, Pt 111, § 1760, which both require that an

insurance identification card must include the identity of any excluded

driver. La. Rev. Stat. § 32:861 requires all vehicle owners and operators to

carry proof of liability coverage in the vehicle in the form of an insurance

declarations page, a complete insurance policy, or an insurance identification

card compliant with La. Rev. Stat. § 32:863.1(A). La. Rev. Stat. § 32:868

authorizes creation of a database which will permit investigating officers to

check in real time to determine whether a vehicle is being operated in

violation of the Act. Stringent penalties are imposed on owners and

operators when a vehicle is operated without liability coverage, listed in La.

Rev. Stat. § 32:862(G), La. Rev. Stat. § 32:863, La. Rev. Stat. § 863.1. The

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penalties include: immediate impoundment and towing of any vehicle found

to be operating without liability coverage; cancellation of the vehicle's

registration and seizure of the license plate; revocation of the driver's

licenses of the owner and/or operator; and fines and fees imposed on the

owner and operator.

Williams argues that Financial Indemnity should be estopped from

denying coverage based on public policy because it is a “scofflaw” insurance

company seeking to profit by deliberately issuing inaccurate insurance

identification cards in violation of the law. He claims that vehicle

owners/drivers and insurers have a financial incentive to obtain/issue “fake

IDs”. A vehicle owner will have to pay a higher insurance premium if high-

risk drivers are covered under their liability policy. Therefore, they exclude

the high-risk drivers in order to pay a lower premium. If the ID card does

not list the excluded driver, an investigating officer viewing the card will

have no reason to believe the driver is uninsured and the owner/driver is then

able to avoid penalties. A “scofflaw” insurance company is willing to issue

“fake ID’s” to gain a competitive edge in the insurance market, compared to

law abiding companies, because they attract the business of vehicle owners

who want to circumvent the Louisiana Safety Responsibility Law.

Williams also argues that it is reasonable to allow him to conduct

additional discovery to determine whether Financial Indemnity is, in fact, a

“scofflaw” insurer since Financial Indemnity’s motion for summary

judgment was brought on for hearing prior to any discovery taking place and

without an explanation as to why a deficient identification card was issued.

It simply claimed that any reasons were irrelevant. He reasons that the trial

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court could have reasonably reached the conclusion that either: (1) Fidelity

Indemnity merely made an inadvertent error when issuing the ID card

without listing Mr. Jones as the excluded driver, or (2) Fidelity Indemnity is

a “scofflaw” insurance company profiting from a practice of issuing

misleading ID cards that allow owners to avoid penalties resulting from

uninsured drivers.

In response, Financial Indemnity points out that there is no statute that

mandates an insurer issue an ID card listing excluded drivers, or that

requires coverage to be extended if an excluded driver is not listed.

Although a listing of excluded drivers is a requirement for the ID card under

La. Rev. Stat. § 32:863.1, the obligation owed with regard to the referenced

statute, and the penalties for failure to comply, are for the owner/operator,

not the insurer. Rather, the only statutory obligation of an insurance carrier

would be in relation to the insurer being a “security provider.” La. R.S.

32:863.2 requires insurance carriers to provide information to the secretary

which includes effective dates of coverage and notification when any policy

has lapsed or been cancelled. A carrier may also be required to submit the

owner’s driver’s license, the named insureds, VIN, and description of the

vehicle; however, there is no requirement that the carrier issue an ID card

listing the excluded driver(s). Even if the statute could somehow be

interpreted as imposing an obligation on the carrier to issue an ID card

listing excluded drivers, the failure to do so would merely warrant the

referenced penalty, payment of a fee or fees. It would not afford coverage

where there is none under the terms of the policy.

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In addition, Financial Indemnity argues that the trial court correctly

granted its motion for summary judgment, finding no coverage was owed

since Mr. Jones was properly listed as an excluded driver on the policy’s

declarations page and excluded driver endorsement, and the policy language,

not the insurance identification card or accident report, was determinative of

coverage. It is clear from the “four corners” of Mrs. Jones’ policy that the

parties to the policy intended for Mr. Jones to be an excluded driver. The

excluded driver endorsement listing Mr. Jones was signed by Mrs. Jones, the

policyholder, and Mr. Jones was specifically referenced as an excluded

driver in the policy’s declaration page. It is undisputed that no coverage

would be extended in favor of the excluded driver, Mr. Jones, under the

terms of the policy itself.

In support of its position, Financial Indemnity cites Peterson v.

Schimek, 98-1712 (La. 3/2/99), 729 So. 2d 1024, rehearing denied 4/9/99, in

which the Louisiana Supreme Court stated, “When the words of an

insurance contract are clear and explicit and lead to no absurd consequences,

courts must enforce the contract as written …, and it should not be

interpreted in an unreasonable or strained manner under the guise of

contractual interpretation to enlarge or to restrict its provisions beyond what

is reasonably contemplated by unambiguous terms or achieve an absurd

conclusion. … That is, the rules of construction do not authorize a

perversion of the words or the exercise of inventive powers to create an

ambiguity where none exists or the making of a new contract when the terms

express with sufficient clearness the parties' intent.”

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Further, an insurance identification card is not one of the documents

referenced in La. Rev. Stat. § 22:654 that can amplify, extend or modify an

insurance policy. Financial Indemnity argues that to hold otherwise would

allow for the "perversion of the words or the exercise of inventive powers to

create an ambiguity where none exists" as noted by the court in Peterson.

Financial Indemnity also cites cases that recognize that the policy, not

the information contained on an insurance identification card, controls

coverage. In both Jacobs v. Louisiana Indemnity Insurance Company, 96-

1203 (La. App. 3 Cir. 3/12/97), 692 So. 2d 1182, writ denied, 693 So. 2d

802 (La. 1997), and Adamson v. State Farm Mutual Automobile Insurance

Company, 95-2450 (La. App 1 Cir. 6/28/96), 676 So. 2d 227, the contention

was that the issuance of an insurance identification card showing effective

dates of coverage, which included the accident date, served to provide

coverage for the loss even though the policies themselves were not in effect

at the time of loss. Both appellate courts ruled that even though the

information on the insurance ID card differed from the policy, the insurance

cards did not serve to extend coverage beyond the terms of the policy.

Financial Indemnity also notes that, unlike the Jacobs and Adamson

cases, the identification card does not contain any conflicting information on

its face. Mrs. Jones is listed as the insured and there is no reference of

coverage at all for Mr. Jones. Therefore, if an ID card cannot serve to

expand coverage under a policy when there is conflicting information, it

should not serve to expand coverage when there is not conflicting

information.

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In summary, Financial Indemnity asserts that only the “four corners”

of policy itself serves as proof of coverage and the identification card cannot

expand coverage; therefore, there is no need for additional time for

discovery. We agree.

Although it appears from the record that both Mr. and Mrs. Jones are

registered owners of the vehicle, it is undisputed that Mrs. Jones is the sole

named insured of the Financial Indemnity policy and that under the terms of

the policy itself, Mr. Jones is specifically excluded, as indicated in the

excluded driver endorsement signed by Mrs. Jones and the policy

declarations page.

Williams faults the insurance company based on the reasoning that the

insurer purposely issues incomplete identification cards in order to gain a

competitive advantage by attracting vehicle owners not wanting to pay a

higher premium for high-risk drivers who supposedly intend to use such

“fake ID” to avoid the penalties associated with driving uninsured. This

argument that Financial Indemnity is a “scofflaw” insurer seeking to profit

by deliberately issuing misleading insurance identification cards is wholly

without merit.

La. Rev. Stat. § 32:900(L)(1) expressly provides that a policy may

exclude from coverage any named person who is a resident of the same

household as the named insured. In fact, the very purpose of the exclusion is

the reduction of premiums, as an excluded driver endorsement naming the

spouse with a bad driving record could result in a premium reduction that

would enable the insured to obtain the required coverage at an affordable

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price. Medina v. Woods, 2005-1303 (La. App. 4 Cir. 10/31/06), 944 So. 2d

697.

Financial Indemnity is correct in its analysis of the requirements of

La. Rev. Stat. § 32:863.1, in that the underlying obligation of the statute is

that of the owner/operator of the vehicle. It is correct that the identification

should list the excluded driver under the policy, but it is the duty of the

insured to comply with such requirement as part of showing valid proof of

insurance. The fact that the penalties associated with failure to comply with

said statute are imposed on the owner/operator of the vehicle is evidence that

the underlying obligation is that of the insured, not the insurance company.

In no way should the statutes regarding the requirement for an

owner/operator to possess valid proof of insurance and accompanying

penalties for failure to do so, be interpreted in such a way as to impute

coverage on an insurer where it is clear and unambiguous from the language

of the policy that a certain named driver is excluded from liability coverage.

CONCLUSION

For the foregoing reasons, this Court finds that there is no genuine

issue of material fact as to the issue of coverage. It is clear that Mr. Jones is

an excluded driver under the Financial Indemnity liability policy and no

coverage exists. The trial court’s granting of Financial Indemnity’s motion

for summary judgment is hereby affirmed.

AFFIRMED.

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