James Falgout v. Walter Jester

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

04-0434
CONSOLIDATED WITH
04-0435

JAMES FALGOUT

VERSUS

WALTER JESTER, HAMPTON INC.,
HAMPTON AUTOMOTIVE INC. D/B/A
HAMPTON TOYOTA AND CNA INSURANCE CO.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT,
PARISH OF LAFAYETTE, NO. 20023810,
HONORABLE BYRON HEBERT, DISTRICT JUDGE

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JIMMIE C. PETERS
JUDGE

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Court composed of Jimmie C. Peters, Glenn B. Gremillion, and Billy H. Ezell,
Judges.

AFFIRMED.

Victor J. Versaggi
Domengeaux, Wright, Roy & Edwards
556 Jefferson Street, Suite 500
Post Office Box 3668
Lafayette, LA 70502
(337) 233-3033
COUNSEL FOR PLAINTIFF/APPELLANT:
James Falgout

Robert L. Ellender
Attorney at Law
Post Office Box 3527
Lafayette, LA 70502

(337) 232-9700
COUNSEL FOR DEFENDANTS/APPELLEES:
Beau LeBlanc, Hampton Inc. And Hampton Automotive
d/b/a Hampton Toyota

Stephen J. Moore
Richard G. Duplantier, Jr.
Peter A. Bourgeois
Galloway, Johnson, Tompkins, Burr & Smith
One Shell Square
701 Poydras Street, 40th Floor
New Orleans, LA 70139
(504) 525-6802
COUNSEL FOR DEFENDANT/APPELLEE:
Columbia Casualty Insurance Company

PETERS, J.

James Falgout and Leon Touchet, the plaintiffs in these consolidated actions,

appeal the trial court’s grant of a partial summary judgment on the issue of insurance

coverage in favor of one of the defendants, Columbia Casualty Insurance Company.

For the following reasons, we affirm the trial court’s judgment in all respects.

DISCUSSION OF THE RECORDS

On September 14, 2001, James Falgout and Leon Touchet were both involved

in a motor vehicle accident while traveling on U.S. Highway 167 in Lafayette Parish,

Louisiana. They suffered personal injuries when their motorcycles1 were struck by

a vehicle owned by the Hampton Toyota dealership2 in Lafayette, Louisiana, and

being driven by Walter Jester. At the time of the accident, Jester was test driving the

vehicle in contemplation of purchasing it from Hampton Toyota. Falgout and

Touchet brought separate suits in an effort to recover the damages they sustained in

the accident.

Falgout filed suit on July 24, 2002, and Touchet filed suit on August 14, 2002.

Both men initially named Hampton Toyota, Jester, and Columbia Casualty Insurance

Company (Columbia Casualty) as defendants.3 Columbia Casualty is Hampton

Toyota’s general liability insurance carrier. In April of 2003, Falgout and Touchet

both added Beau LeBlanc, a Hampton Toyota salesman, as a party defendant. On

April 4, 2003, and before the amendments adding LeBlanc as a defendant, Hampton

1
It is unclear from the pleadings whether both men were on the same motorcycle or were each
operating separate motorcycles at the time of the accident. However, resolution of this factual issue
is not required to dispose of this appeal.
2
The Hampton Toyota dealership is referred to in the pleadings as Hampton, Inc., and
Hampton Automotive, Inc., d/b/a Hampton Toyota. For purposes of this opinion, these entities will
be referred to collectively as “Hampton Toyota.”
3
Columbia Casualty was erroneously identified in both petitions as CNA Insurance Company.
However, it is not now disputed that the appropriate defendant is Columbia Casualty.

Toyota filed a motion to consolidate the two actions. The trial court executed an

order to that effect on August 4, 2003.

In their original petitions, Falgout and Touchet asserted that they both had

settled their claims against Jester’s liability insurer, State Farm Mutual Automobile

Insurance Company, and that Jester remained in the litigation “as a nominal defendant

to the extent necessary to pursue the claim for excess damages.” They further

asserted that Columbia Casualty provided liability insurance coverage to Jester as an

insured or omnibus insured under its policy.

On July 16, 2003, and before the trial court executed the consolidation order,

Columbia Casualty filed separate motions for partial summary judgment in each of

the pending actions. In both motions, Columbia Casualty asserted that its policy

precluded liability coverage to Jester for his negligence in causing the accident. After

a November 10, 2003 hearing, the trial court granted the motions and rendered

judgment to the effect that the Columbia Casualty policy provided no liability

coverage for Jester. In response to this ruling, Falgout and Touchet filed separate

appeals. These appeals have been consolidated and are now before us. Both Falgout

and Touchet have filed the same four assignments of error. The first three address the

correctness of the trial court’s interpretation of the policy language and the last asserts

that the trial court decision is premature.

OPINION

Appellate courts review summary judgments de novo under the same criteria

that govern the trial court’s consideration of whether or not a summary judgment is

appropriate in any given case. Cormier v. Albear, 99-1206 (La.App. 3 Cir. 2/2/00),

758 So.2d 250. “The summary judgment procedure is designed to secure the just,

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speedy, and inexpensive determination of every action, except those disallowed by

Article 969. The procedure is favored and shall be construed to accomplish these

ends.” La.Code Civ.P. art. 966(A)(2). If there is no genuine issue as to material fact

and the mover is entitled to judgment as a matter of law, the motion for summary

judgment “shall be granted.” La.Code Civ.P. art. 966(C)(1) (emphasis added).

The Columbia Casualty policy is described as both a garage coverage policy

and an automobile dealer’s policy. The initial declarations page identifies the policy

as a “GARAGE COVERAGE” policy and describes Hampton Toyota as a

corporation. A second declarations page located toward the end of the policy is

entitled “Auto Dealer’s General Declarations” and identifies Hampton Toyota’s

business as that of a “Franchised Auto Dealer.” These two portions of the policy lists

the various coverages provided by Columbia Casualty. The only coverage at issue

in this litigation is that which might be afforded to one who has an accident while test

driving a Hampton Toyota vehicle in contemplation of purchasing the vehicle.

The pages following the initial declarations page set forth the specific

provisions of the policy, including the following language which appears under

“SECTION II - LIABILITY COVERAGE:”

“GARAGE OPERATIONS” - COVERED “AUTOS”

We will pay all sums an “insured” legally must pay as damages because
of “bodily injury” or “property damage” to which this insurance applies,
caused by an “accident” and resulting from “garage operations”
involving the ownership maintenance or use of covered “autos”.

Garage operations is defined in the policy as follows:

“Garage operations” means the ownership, maintenance or use of
locations for garage business and that portion of the roads or other
accesses that adjoin these locations. “Garage operations” includes the
ownership, maintenance or use of the “autos” indicated in SECTION I

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of this Coverage Form as covered “autos”. “Garage operations” also
include all operations necessary or incidental to a garage business.

In that same section of the policy, the definition of an “insured” appears. That

definition reads in pertinent part:

1. Who is An Insured

a. The following are “insureds” for covered “autos”.

(1) You for any covered “auto”.

(2) Anyone else while using with your permission a
covered “auto” you own, hire or borrow except:
....
(d) Your customers, if your business is shown in the
Declarations as an “auto” dealership. However, if a
customer of yours:

(i) Has no other available insurance (whether
primary, excess or contingent), they are an
“insured” but only up to the compulsory or
financial responsibility law limits where the
covered “auto” is principally garaged.

(ii) Has other available insurance (whether
primary excess or contingent) less than the
compulsory financial responsibility law limits
where the covered “auto” is principally
garaged, they are an “insured” only for the
amount by which the compulsory or financial
responsibility law limits excess the limit of
their other insurance.

Columbia Casualty relies on the policy definition of an insured to deny

coverage to Jester because he was a customer of the automobile dealership side of the

business and he had liability coverage that exceeded the minimum limits required by

state law. See La.R.S. 32:900.

It is not disputed that, at the time of the accident:

1. Hampton Toyota is in the business of commercially selling
vehicles.

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2. Jester, in contemplation of purchasing a vehicle, was test driving
one of Hampton Toyota’s vehicles.

3. Columbia Casualty had in full force and effect an insurance
policy issued to Hampton Toyota which included various types of
insurance coverage the application of which is governed by the
terms and conditions of the policy.

4. Jester was insured for liability insurance purposes with State
Farm Mutual Automobile Insurance Company with policy limits
of $50,000.00 per person and $100,000.00 per accident.

5. Falgout and Touchet had settled their claim against Jester’s
liability insurer.

In their first three assignments of error, Falgout and Touchet assert that the trial

court erred in concluding that the language excluding Jester from coverage did not

violate Louisiana law, that the exclusionary language was applicable to Jester, and

that the language was not ambiguous. We will consider them together.

In support of their assertions, Falgout and Touchet refer this court to the

decision in Savana v. Certain Interested Underwriters at Lloyds London, 01-2450

(La.App. 1 Cir. 7/2/02), 825 So.2d 1242. However, we find that Savana supports

Columbia Casualty’s position and answers every issue raised in the first three

assignments of error.

At the time of the accident sued upon in Savana, Cynthia Forrester was

operating a “loaner” vehicle supplied to her by Auto Depot, Inc., the garage where her

vehicle was being repaired. Ms. Forrester struck a vehicle driven by Julie B. Savana

who filed suit against Ms. Forrester; her liability insurer, U. S. Agencies; Auto Depot,

Inc.; its insurer, Certain Interested Underwriters at Lloyds London (Lloyd’s); and her

own uninsured motorist carrier, Farm Bureau Mutual Insurance Company. The

Lloyd’s policy contained the same exclusionary language found in the Columbia

Casualty policy. The trial court rejected Lloyd’s request for relief from any liability

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associated with Ms. Forrester’s negligence. In reversing the trial court, the first

circuit stated the following:

In Marcus v. Hanover Insurance Co., 98-2040 (La.6/4/99), 740
So.2d 603, the Supreme Court interpreted a business use exclusion in an
insurance policy and stated that an insurance policy is a contract that
constitutes the law between the parties. If the wording of the insurance
policy is clear and expresses the intent of the parties, the policy must be
enforced as written. Absent a conflict with statutory provisions or
public policy, insurers are entitled to limit their liability and to impose
reasonable conditions upon the obligations they contractually assume.
740 So.2d at 606.
Lloyd’s insurance policy unambiguously indicates that coverage
to a customer of Auto Depot, Inc., which is listed as having coverage
under “Garage Liability—Dealers” on the declarations page of the
policy, is provided only when the customer either lacks automobile
insurance or has insurance which fails to meet the minimum amount
required by the Louisiana Motor Vehicle Responsibility Law, La. R.S.
32:900. Because Forrester was insured by U.S. Agencies in an amount
which satisfies the statutory minimum, the exclusion in Lloyd’s policy
excepts Forrester from coverage under the policy.
With all due respect to the majority in Stanfield v. Hartford Acc.
and Indem. Co., 89-1249 (La.App. 3 Cir. 5/22/91), 581 So.2d 340, this
Court finds the distinction made between the auto dealership customers
and the garage customers to be an artificial one, and we agree with
Judge Guidry’s dissent, which found no ambiguity or conflict in the
provisions of the policy. Further, the facts of Hargrove v. Missouri
Pacific Railroad Company, 2000-0228 (La.App. 3 Cir. 1/10/01), 780
So.2d 454, writ granted, 2001-1228 (La.6/29/01), 794 So.2d 804, are
distinguishable from the case at bar in that the vehicle in Hargrove was
a rental vehicle provided to the customer and was co-leased by the
dealership, the result of which was that sections of the insurance policy
at issue in that case applied to create issues of liability that are not
present in this case before the Court. Therefore, we find the Hargrove
case is not dispositive of the facts in the case at bar.
Instead, we prefer to follow the opinions of the Fourth Circuit in
the cases of Gambino v. Lamulle, 97-2798 (La.App. 4 Cir. 6/10/98), 715
So.2d 574, and Baker v. Kenny, 99-2950 (La.App. 4 Cir. 5/3/00), 767
So.2d 711, writ denied, 2000-2153 (La.10/13/00), 771 So.2d 650, which
interpreted substantially the same policy language as the policy in the
case at bar. We note that under La. R.S. 22:671, the primary liability
coverage for a loaner vehicle is provided by the driver’s policy, not the
service dealer’s policy. Thus, Forrester’s policy which met the
requirements of La. R.S. 32:900 provided the plaintiff with
compensation contemplated by the Louisiana Motor Vehicle
Responsibility Law. Further, because the policy provided coverage in
the event the driver of the covered vehicle lacks the insurance coverage

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required by La. R.S. 32:900, we find that the language of the policy does
not violate public policy and should be interpreted as written.

Id. at 1244-45 (footnote omitted).

Savana, Gambino, and Baker can be distinguished from the instant case in that,

in those three cases, the vehicles at issue were vehicles loaned to the party involved

in the accident to replace a vehicle under repair and not loaned for a test drive. As

pointed out in Savana, because of that distinction, the three cases conflict with this

circuit’s decision in Stanfield v. Hartford Accident & Indemnity Co., 581 So.2d 340

(La.App. 3 Cir. 1991).

In Stanfield, this circuit interpreted language similar to the Columbia Casualty

language and drew a distinction between the dealership side and the garage side of

the business at issue. The majority concluded that exclusionary language applied to

a customer of dealership side, but did not apply to a customer of the garage side. We

do not have to determine whether Stanfield and Hargrove are correct in light of

Savana, Gambino, and Baker because Jester’s activity arose from the dealership side

of Hampton Toyota’s business.

Falgout and Touchet also argue that the exclusionary language is ambiguous

in that it does not define the term “customer.” Citing the definition of customer found

in The Merriam-Webster Dictionary, August 1974,4 they argue that, because there is

no evidence that Jester had done business with Hampton Toyota in the past, he is not

a customer within the meaning of the Columbia Casualty exclusion. We disagree.

Louisiana Civil Code Article 2047 provides that when interpreting a contract, “[t]he

words . . . must be given their generally prevailing meaning,” and that “[w]ords of art

4
In brief, Falgout and Touchet assert that this reference book defines a customer as one who
is”a regular or frequent buyer.”

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and technical terms must be given their technical meaning when the contract involves

a technical matter.” We do not find that the term “customer” is a word of art or a

technical term. Therefore, it must be given its generally prevailing meaning.

We find that the generally prevailing meaning of the word “customer” would

include a person such as Jester. Additionally, while Webster’s Third New

International Dictionary, published in 1986 by Merriam-Webster Inc., contains a

definition similar to that cited by Falgout and Touchet, it also contains several other

definitions which would suffice to establish someone such as Jester as a “customer”

of Hampton Toyota.

Considering the foregoing, we find no merit in the first three assignments of

error.

In their final assignment of error, Falgout and Touchet assert that the trial

court’s decision was premature because issues of material fact exist that require

additional clarification by discovery. They list as clarification needs whether Jester

was a customer of Hampton Toyota and determination of the intention of the parties

to the insurance contract given the ambiguous nature of the exclusionary language.

We first note that the litigation began in mid-2002, the motions for the partial

summary judgments now before this court were filed on July 16, 2003, and these

motions were not heard by the trial court until November 10, 2003. The appellate

records reflect no discovery activity during that entire period. Additionally, having

already determined that Jester was a customer of Hampton Toyota and that the

exclusionary language is not ambiguous, we find no need for additional discovery to

resolve the limited issue before us. We find no merit in this assignment of error.

DISPOSITION

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For the foregoing reasons, we affirm the trial court judgment in all respects.

We assess all costs of this appeal to James Falgout and Leon Touchet.

AFFIRMED.

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