Amanda Domingue v. Legion Indemnity Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

05-580

AMANDA DOMINGUE, ET AL.

VERSUS

LEGION INDEMNITY CO., ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 2000-2449-E
HONORABLE HERMAN C. CLAUSE, DISTRICT JUDGE

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JAMES T. GENOVESE
JUDGE

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Court composed of Sylvia R. Cooks, Michael G. Sullivan, and James T. Genovese,
Judges.

Cooks, J., concurs and assigns reasons.

AFFIRMED.

David O. Walker
Post Office Box 1190
Alexandria, Louisiana 71309
COUNSEL FOR PLAINTIFF/APPELLANT:
Amanda Domingue

Michael W. Adley
Post Office Drawer 51769
Lafayette, Louisiana 70505-1769
COUNSEL FOR DEFENDANT/APPELLEE:
Federal Insurance Co.

Larry Lane Roy
Frederick Douglas Gatz, Jr.
George Edward Williams, Jr.
Dawn L. Morris
Post Office Drawer 94-C
Lafayette, Louisiana 70509
COUNSEL FOR DEFENDANTS:
John Ard
Allstate Indemnity Company

Mark E. Stipe
Post Office Box 52169
Lafayette, Louisiana 70505
COUNSEL FOR DEFENDANT:
Louisiana Motors, Inc.

GENOVESE, Judge.

Plaintiff appeals the judgment of the trial court denying her motion for

summary judgment and granting summary judgment in favor of Defendant insurer

relative to the issue of liability insurance coverage. For the following reasons, we

affirm.

RELEVANT FACTS AND PROCEDURAL HISTORY

On May 21, 1999, Ronald Domingue was killed while riding his bicycle when

struck by an automobile being operated by Defendant, John Ard (“Ard”). Ard was

operating a vehicle owned by Defendant, Louisiana Motors, Inc. (“Louisiana

Motors”), with permission. Ard, an independent contractor, was hired by Louisiana

Motors to clean and detail the vehicle at his shop and return the vehicle to Louisiana

Motors.

On May 3, 2000, the mother of Ronald Domingue, Amanda Domingue

(“Domingue”), filed the instant wrongful death/survival action claims against Ard and

his personal auto liability insurer, Allstate Indemnity Company (“Allstate”),

Louisiana Motors and its auto liability insurer, Legion Indemnity Company

(“Legion”), and Federal Insurance Company (“Federal”), who provided a commercial

umbrella liability insurance policy to Louisiana Motors.

Louisiana Motors filed a motion for summary judgment seeking to dismiss the

claims asserted against it on the basis that it was not the employer of Ard at the time

of the accident and that there was no evidence to support a negligent entrustment

claim. The trial court granted summary judgment in favor of Louisiana Motors and

dismissed Domingue’s claims, with prejudice, by judgment signed on August 20,

2001.

Domingue asserted that Ard qualified as an omnibus insured under the Legion

insurance policy issued to Louisiana Motors providing $1,000,000.00 in commercial

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auto liability coverage. Legion filed a motion for partial summary judgment seeking

to reduce its coverage limits to $10,000.00. The trial court denied Legion’s motion

for partial summary judgment and ruled that the Legion policy provided

$1,000,000.00 in liability insurance coverage to Lafayette Motors which covered Ard

as an omnibus insured for the claims asserted against him.

In early 2002, Domingue purportedly settled all claims against Ard with Legion

at mediation; however, before the settlement proceeds were paid and formal

settlement documents were effectuated, Legion became insolvent and was liquidated

by court order dated April 9, 2003. Because Legion is a surplus line insurance carrier

not authorized to transact insurance business in the State of Louisiana, the claims

against Legion are not covered claims under the Louisiana Insurance Guaranty Law,

as set forth in La.R.S. 22:1379, et seq.

On March 29, 2004, Domingue filed a motion for summary judgment claiming

that the commercial umbrella liability insurance policy issued to Louisiana Motors

by Federal “dropped down” to provide primary liability insurance coverage to Ard.

Federal filed a cross-motion for summary judgment on May 14, 2004, asserting that

it was entitled to a judgment declaring that its insurance policy did not “drop down”

to provide primary liability insurance coverage to Ard.

The trial court granted summary judgment in favor of Federal and dismissed

Domingue’s claims against Federal, with prejudice, by judgment signed on October

25, 2004. Domingue appeals.

LAW AND DISCUSSION

Standard of Review

Since the trial court decided the issue of insurance coverage by summary

judgment, this court’s standard of review is de novo and is governed by the same

criteria that governed the trial court’s determination of whether summary judgment

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is appropriate. Sinegal v. Kennedy, 04-299 (La.App. 3 Cir. 9/29/04), 883 So.2d 1079;

La.Code Civ.P. art. 966.

Insurance Coverage

The sole issue on appeal is whether the Federal commercial umbrella liability

insurance policy issued to Lafayette Motors drops down to provide coverage due to

the insolvency of the primary insurer, Legion. The trial judge concluded that

Federal’s policy did not “drop down.” We agree.

Federal issued a commercial umbrella policy to Louisiana Motors bearing

policy number 7975-52-67 KCO. The liability insurance policy features two insuring

agreements.

The first insuring agreement, Coverage A, provides excess follow form liability

coverage. Coverage A provides, in pertinent part (emphasis in original):

Under Coverage A, we will pay on behalf of the insured, that part of
loss covered by this insurance in excess of the total applicable limits of
underlying insurance, provided the injury or offense takes place during
the Policy Period of this policy.

The policy defines “underlying insurance” as “the policy or policies of insurance

listed in the Schedule of Underlying Insurance forming a part of this policy.” The

“Schedule of Underlying Insurance” lists a garage keepers legal liability insurance

issued by Legion in the amount of $500,000.00 per location, and a garage liability

insurance issued by Landmark Insurance Company in the amount of $1,000,000.00

per occurrence.

The policy imposes the condition upon the insured that “while this policy is in

effect you agree to maintain underlying insurance in full force” (emphasis in

original). The policy’s terms and conditions further provide, in pertinent part, that

“collectibility of underlying insurance limits as listed in the Schedule of Underlying

Insurance, or replacements thereof, must be available regardless of the bankruptcy or

insolvency of the underlying insurer” (emphasis in original). There is clearly no

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“drop down” under this policy provision since the collectibility of the underlying

insurance issued by Legion was not available due to Legion’s insolvency. Federal’s

policy does specifically provide, in respect to Coverage A, that there are situations

in which the policy will “drop down.” Those situations are only “if the limits of

underlying insurance have been reduced by payment of loss” or “if the limits of

underlying insurance have been exhausted by payment of loss” (emphasis in

original). Thus, we agree that Coverage A of Federal’s policy does not “drop down”

to provide coverage due to the insolvency of the primary insurer, Legion.

The second insuring agreement, Coverage B, provides umbrella liability

coverage. Coverage B provides, in pertinent part (emphasis in original):

Under Coverage B, we will pay on behalf of the insured damages the
insured becomes legally obligated to pay by reason of liability imposed
by law or assumed under an insured contract because of bodily injury,
property damage, personal injury, or advertising injury covered by
this insurance which takes place during the Policy Period of this policy
and is caused by an occurrence. We will pay such damages in excess
of the Retained Limit Aggregate, specified in Item 4d, of the
Declarations or the amount payable by other insurance, whichever is
greater.

The exclusions applicable to Coverage B specifically provide that this insurance does

not apply to “any liability arising out of the ownership, maintenance, use, loading or

unloading or entrustment to others of autos within the United States of America,

including its possessions and territories, Puerto Rico, Canada or while autos are

being transported between these places” (emphasis in original).

The accident which forms the basis of this suit occurred when Louisiana

Motors entrusted Ard with a vehicle for the purpose of detailing said vehicle. The

cited exclusion applies to negate coverage under Federal’s policy. Therefore, we

agree that Coverage B of Federal’s policy does not “drop down” to provide coverage

either.

Damages for Frivolous Appeal

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Finally, Federal asserts in its response brief to Domingue’s appeal that it is

entitled to damages for “frivolous” appeal. We note that the record does not reflect

that Federal ever filed an answer to this appeal. An appellee shall answer an appeal

when he desires to have the judgment modified, revised, or reversed in part, or when

he demands damages against the appellant. La.Code Civ.P. art. 2133. This request

for damages for frivolous appeal by Federal in its response brief to Domingue’s

appeal does not satisfy the requirements of Article 2133 as it is neither an answer nor

an appeal. Roberts v. Robicheaux, 04-1405 (La.App. 3 Cir. 3/2/05), 896 So.2d 1232,

writ denied, 05-792 (La. 5/13/05), 902 So.2d 1021, citing Gibbs v. Gibbs, 33,169

(La.App. 2 Cir. 6/21/00), 764 So.2d 261; Gay v. Gay, 31,974 (La.App. 2 Cir.

6/16/99), 741 So.2d 149. Therefore, the issue of Federal’s request for damages for

frivolous appeal is not before this court and is thereby denied.

DECREE

For the foregoing reasons, the judgment of the trial court granting Federal’s

motion for summary judgment and denying Domingue’s motion for summary

judgment is affirmed. Costs of this appeal are assessed against Appellant.

AFFIRMED.

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STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

05-580

AMANDA DOMINGUE, ET AL.

VERSUS

LEGION INDEMNITY CO., ET AL.

COOKS, J., concurring:

I concur in the result. I agree with the conclusion that the Federal policy does

not provide coverage as a result of Exclusion C, which provides:

C. Under Coverage B, this insurance does not apply to:

* * *

any liability arising out of the ownership, maintenance, use
loading or unloading or entrustment to others of autos
within the United States of America, including its
possessions and territories, Puerto Rico, Canada or while
autos are being transported between these places.