North American Fire & Casualty Co. v. State Farm Mutual Auto Ins. Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

03-300

NORTH AMERICAN FIRE & CASUALTY CO.

VERSUS

STATE FARM MUTUAL AUTO INS. CO., ET AL.

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APPEAL FROM THE
THIRTEENTH JUDICIAL DISTRICT COURT
PARISH OF EVANGELINE, NO. 64033-A
HONORABLE JOHN LARRY VIDRINE, DISTRICT COURT JUDGE

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ULYSSES GENE THIBODEAUX
JUDGE
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Court composed of Ulysses Gene Thibodeaux, Sylvia R. Cooks, and Billy Howard
Ezell, Judges.

AFFIRMED.

Jackson Burke Bolinger
Caffery Plaza, Suite 100
4023 Ambassador Caffery Parkway
Lafayette, LA 70503
Telephone: (337) 988-7240
COUNSEL FOR:
Defendant/Appellee - State Farm Mutual Auto Ins. Co.

Stephen Robert Barry
115 East Main Street
Lafayette, LA 70501
Telephone: (337) 237-2889
COUNSEL FOR:
Defendant/Appellee - Brittany Smith

James Paul Doherty
Andrus & Doherty
117 N. Market St.
Opelousas, LA 70570
Telephone: (337) 942-5645
COUNSEL FOR:
Plaintiff/Appellant - North American Fire & Casualty Co.

THIBODEAUX, Judge.

North American Fire and Casualty Insurance Company (North

American) appeals the judgment of the trial court granting summary judgment in

favor of State Farm Automobile Insurance Company (State Farm) and its insured,

Brittany M. Smith, who caused property damage as a result of an automobile

accident. North American insured the mortgage holder of the uninsured vehicle. The

mortgage holder, First Federal Savings & Loan (First Federal), had purchased a

policy to protect its interest in the property in the event of property damage. The trial

court found that La.R.S. 32:866, the “no pay, no play” statute precluded North

American from recovering when the owner/operator of the vehicle involved in the

accident did not maintain the minimum amount of automobile liability coverage. For

the following reasons, we affirm the judgment of the trial court.

I.

ISSUE

The issue in this case is whether North American, as the insurer of the

company that holds the mortgage on a vehicle, operated by Jason Peloquin and

damaged in an accident through the fault of Smith, is precluded from recovery

pursuant to La.R.S. 32:866, the “no pay, no play” statute, where Peloquin failed to

maintain the minimum amount of liability insurance.

II.

FACTS

There is no question that on December 24, 2001 Peloquin, the owner of

a 1995 Pontiac Firebird, collided with a vehicle operated by Smith. It is also admitted

that Peloquin did not have the required liability insurance or property damage

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insurance on his vehicle. Smith was covered by a policy of insurance issued by State

Farm. The Peloquin vehicle was damaged in the amount of $6,300.00. First Federal

financed the purchase of the Peloquin vehicle under a loan agreement in the amount

of $9,708.00. As part of the financing package, First Federal required a “Vendor’s

Single Interest Insurance Policy.” North American underwrote that policy. The

policy provided that Peloquin was the borrower of the funds and that First Federal

was Peloquin’s creditor and North American’s insured. It also provided for the

description of the vehicle, the amount financed as well as the amount of the premium.

After the accident, State Farm, Smith’s insurer, refused to pay Peloquin

any damage amount on behalf of Peloquin because he failed to maintain the

mandatory minimum liability coverage on his vehicle. Louisiana Revised Statutes

32:866 states that a person who does not maintain the mandatory liability coverage

could not recover the first $10,000.00 in damages. In the present case, the damages

were less than $10,000.00; thus, there was no recovery.

Because Peloquin could not recover damages from the tortfeasor, First

Federal made a claim against North American under its Vendor’s Single Interest

Insurance Policy for the damages of $6,300.00. In connection with First Federal’s

claim against it, North American paid the damages. Thereafter, North American filed

a suit against Smith and State Farm to recover the $6,300.00 it paid to First Federal.

Smith and State Farm denied North American’s entitlement to recover any sums it

paid to First Federal. Smith and State Farm filed a motion for summary judgment

alleging that North American stood in the shoes of Peloquin and is bound by the

provisions of La.R.S. 32:866 and therefore should not be allowed to recover the first

$10,000.00 in damages the Peloquin vehicle sustained from the accident caused by

Smith.

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Finding that North American was a subrogee of Peloquin, the trial court

granted State Farm and Smith’s motion for summary judgment and dismissed North

American’s claims because Peloquin had not complied with the provisions of La.R.S.

32:866.

III.

LAW AND DISCUSSION

Summary Judgment

A motion for summary judgment is a procedural device used to avoid a

full-scale trial when there is no genuine issue of material fact in dispute. Sanders v.

Ashland Oil, Inc., 96-1751 (La.App. 1 Cir. 6/20/97), 696 So.2d 1031, writ denied, 97-

1911 (La. 10/31/97), 703 So.2d 29. Summary judgment is properly granted if the

pleadings, depositions, answers to interrogatories, and admissions on file, together

with affidavits, if any, show that there is no genuine issue of material fact, and that

the mover is entitled to judgment as a matter of law. La.Code Civ.P. art. 966 B.

Summary judgment is favored and “is designed to secure the just, speedy, and

inexpensive determination of every action.” La.Code Civ.P. art. 966 C(2).

The burden of proof on a motion for summary judgment is set forth in

La.Code Civ.P. art. 966 C(2):

The burden of proof remains with the movant.
However, if the movant will not bear the burden of proof
at trial on the matter that is before the court on the motion
for summary judgment, the movant’s burden on the motion
does not require him to negate all essential elements of the
adverse party’s claim, action, or defense, but rather to point
out to the court that there is an absence of factual support
for one or more elements essential to the adverse party’s
claim, action, or defense. Thereafter, if the adverse party
fails to produce factual support sufficient to establish that
he will be able to satisfy his evidentiary burden of proof at
trial, there is no genuine issue of material fact.

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Initially, the burden of going forward remains with the moving party and

is not shifted to the non-moving party until the moving party has properly supported

the motion. Only then must the non-moving party “submit evidence showing the

existence of specific facts establishing a genuine issue of material fact.” See Scott v.

McDaniel, 96-1509, p. 5 (La.App. 1 Cir. 5/9/97), 694 So.2d 1189, 1191-92, writ

denied, 97-1551 (La. 9/26/97), 701 So.2d 991. Failure by the non-moving party to

submit such evidence negates the existence of material facts at issue and summary

judgment should be granted. La.Code Civ.P. arts 966 and 967.

In determining whether summary judgment is appropriate in a case on

appeal, appellate courts review evidence de novo under the same criteria that govern

the trial court’s determination of whether summary judgment is appropriate.

Succession of Granger v. Worthington, 02-433 (La.App. 3 Cir. 10/30/03), 829 So.2d

1108. It is the applicable substantive law that determines materiality of a fact; thus,

whether a particular fact in dispute is material can be seen only in light of the

substantive law applicable to the case. Rener v. State Farm Mut. Auto Ins. Co.,

99-1703, (La.App. 3 Cir. 4/5/00), 759 So.2d 214.

Louisiana Revised Statutes 32:866 (“No pay, no play”)/La.Civ.Code art. 2315:

Throughout this litigation, State Farm has maintained that pursuant to

La.R.S. 32:866, plaintiff, North American, as insurer of First Federal, the company

that held the mortgage on Peloquin’s car, is not entitled to recovery because Peloquin

failed to maintain the minimum amount of insurance. State Farm and Smith contend

that the only cause of action North American has against them are the rights that

Peloquin has against them. Louisiana Revised Statutes 32:866 provides in pertinent

part:

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A. (1) There shall be no recovery for the first ten
thousand dollars of bodily injury and no recovery for the
first ten thousand dollars of property damage based on any
cause or right of action arising out of a motor vehicle
accident, for such injury or damages occasioned by an
owner or operator of a motor vehicle involved in such
accident who fails to own or maintain compulsory motor
vehicle liability security.

(Emphasis added).

Peloquin has no cause of action against State Farm and Smith because

he failed to maintain the proper insurance coverage on his vehicle. Thus, North

American has no cause of action against Smith and State Farm.

North American, on the other hand, argues that it is not asserting

Peloquin’s rights against State Farm and Smith, but the rights that First Federal had

against Smith as the tortfeasor and State Farm as her insurer. It is clear that North

American maintains that First Federal has a separate and distinct cause of action

against Smith and her insurer, State Farm, from the cause of action that Peloquin may

have had against Smith, who caused the damages in this action. North American

asserts two bases of its subrogation to First Federal’s rights against State Farm and

Smith. First, it maintains that its cause of action against State Farm and Smith results

from its policy of insurance with First Federal by conventional subrogation. Second,

North American contends that its claims of subrogation to the rights of First Federal

are also based on La.Civ.Code art. 2315, the Civil Code Article that obliges every

man whose fault causes damage to another to repair that damage. We disagree with

North American’s contentions.

There is no dispute in this case with respect to the facts of this case and

the fault of the respective parties involved in the accident. North American’s claim

that it is subrogated to First Federal’s rights because it issued a policy of insurance

to First Federal and paid First Federal’s claim does not abrogate North American’s

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need to prove the rights that First Federal had against State Farm and the tortfeasor.

There is no question that First Federal was damaged in that it lost the value of the

collateral that supported the loan it made to Peloquin to purchase the car. However,

there is no evidence that there was a contract between State Farm, Smith or Peloquin,

giving First Federal any rights to recover from a tortfeasor who damaged the vehicle

if Peloquin was not at fault and failed to maintain the compulsory liability insurance.

In fact, that is the reason First Federal sought its own protection from such a case by

procuring insurance from North American.

North American relies on La.Civ.Code art. 2315 to argue that the Article

somehow gives First Federal a right to make a claim against State Farm and Smith

because Smith’s fault caused damage to its property. This reliance is misplaced. To

recover against a defendant in a negligence action under La.Civ.Code art. 2315, the

duty/risk analysis compels the plaintiff to prove (1) duty; (2) breach of duty; (3)

cause-in-fact; (4) scope of liability or scope of protection; and, (5) damages. Bullara

v. Checker's Drive-In Restaurant, Inc., 98-1331 (La.App. 3 Cir. 3/3/99), 736 So.2d

936. From our reading of the record, we are unable to discern any evidence or policy

considerations put forth by North American that show State Farm or Smith had a duty

to protect First Federal from the possibility that the person to whom it lent money to

purchase a vehicle, would fail to maintain the proper liability insurance on that

vehicle, thereby precluding the recovery of the first $10,000.00 in property damage.

Therefore, even if we were to conclude that North American is subrogated to the

rights of First Federal, we find that First Federal had no rights against State Farm and

Smith to which North American could be subrogated.

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IV.

CONCLUSION

For the above reasons, the judgment of the trial court is affirmed. Costs

of this appeal are assessed against the plaintiff-appellant, North American Fire and

Casualty Insurance Company.

AFFIRMED.

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