Ronald K. Chavers v. Bright Truck Leasing Corp.

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

06-1011

RONALD K. CHAVERS, ET AL.

VERSUS

BRIGHT TRUCK LEASING, ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. 96-1119-A
HONORABLE JOHN D. TRAHAN,
DISTRICT COURT JUDGE

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JAMES T. GENOVESE
JUDGE

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Court composed of Sylvia R. Cooks, Marc T. Amy, and James T. Genovese, Judges.

AFFIRMED.

Anthony M. Fazzio
P. O. Box 2636-70502
1326 W. Pinhook Road, Suite 101
Lafayette, Louisiana 70503
(337) 235-1111
COUNSEL FOR PLAINTIFFS/APPELLANTS:
Ronald K. Chavers, Individually and as Tutor of the Minors,
Christopher Shane Chavers and Megan Elizabeth Chavers, and
Gloria Chavers, Individually

Jeffrey A. Rhoades
Swift & Rhodes
P.O. Box 53107
930 Coolidge Boulevard
Lafayette, Louisiana 70505-3107
(337) 572-9877
COUNSEL FOR DEFENDANTS/APPELLEES:
Southern County Mutual Insurance Company,
Associates Leasing, Inc., and Bright Truck Leasing Corporation

G. Andrew Veazey
Bradford H. Felder
Huval, Veazey, Felder & Aertker, L.L.C.
P. O. Box 80948
101 Feu Follet, Suite 101
Lafayette, Louisiana 70598-0948
(337) 234-5350
COUNSEL FOR DEFENDANT/APPELLEE:
Reliance Insurance Company (In Liquidation)

Joseph L. McReynolds
Beverly A. Aloisio
Deutsch, Kerrigan & Stiles, L.L.P.
755 Magazine Street
New Orleans, Louisiana 70130
(504) 581-5141
COUNSEL FOR DEFENDANT/APPELLEE:
Reliance Insurance Company (In Liquidation)

Edgar John Litchfield
Berrigan, Litchfield, Schonekas, Mann, Traina & Thompson, L.L.C.
400 Poydras Street, Suite 2000
New Orleans, Louisiana 70130
(504) 568-0541
COUNSEL FOR DEFENDANT/APPELLEE:
Reliance Insurance Company (In Liquidation)

Peter F. Liberto
6916 Colbert Street
New Orleans, Louisiana 70124
(504) 282-9433
COUNSEL FOR DEFENDANT/APPELLEE:
Reliance Insurance Company (In Liquidation)

Donald D. Landry
Perrin, Landry, deLaunay & Durand
P.O. Box 53597
225 La Rue France
Lafayette, Louisiana 70505
(337) 233-5832
COUNSEL FOR DEFENDANTS/APPELLEES:
Homer B. Lingo and Lingo International, Inc.

Ralph E. Kraft
Jessica Devitt
Preis, Kraft, & Roy
P.O. Drawer 94-C
600 Jefferson Street, Suite 410
Lafayette, Louisiana 70509
(337) 237-6062
COUNSEL FOR DEFENDANT/APPELLEE:
Walter Mortensen Insurance

Musa Rahman
Johnson, Stiltner & Rahman
P.O. Box 98001
2237 South Acadian Thruway
Baton Rouge, Louisiana 70098-8001
(225) 231-0756
COUNSEL FOR INTERVENOR/APPELLEE:
Louisiana Workers’ Compensation Corporation

GENOVESE, JUDGE.

In this personal injury case, Plaintiffs, Ronald K. Chavers, individually, and as

tutor of the minors, Christopher Shane Chavers and Megan Elizabeth Chavers, and

Gloria Chavers, individually (collectively Chavers), appeal a judgment of the trial

court granting the declinatory exception of lack of subject matter jurisdiction filed by

Defendant, Reliance Insurance Company (Reliance). Chavers also appeals the trial

court’s grant of the motion for summary judgment filed by the Defendant, Associates

Leasing, Inc. (Associates). For the following reasons, we affirm.

FACTS

On March 2, 1995, Ronald Chavers was operating a commercial truck-trailer

rig that overturned while descending a mountain in Utah, which Chavers alleges was

the result of defective brakes. As a result of the accident, Chavers filed suit against

several defendants, including Associates,1 the owner of the truck, and Reliance, the

insurer of the truck and the insurer of the garage responsible for the mechanical

upkeep of the truck. Chavers also named as a defendant, Bright Truck Leasing

Corporation (Bright Leasing), the lessee of the truck from Associates, and the

sublessor of the truck to Profco, Inc. (Profco). Profco was also the owner of the

trailer and the entity which hired Ronald Chavers to drive the rig.

The procedural history of this matter is extensive. However, pertinent to the

issues in this appeal are the exception of lack of subject matter jurisdiction filed by

Reliance and the motion for summary judgment filed by Associates. The trial court

sustained Reliance’s exception of lack of subject matter jurisdiction and granted

Associates’ motion for summary judgment, which ultimately dismissed the claims of

Chavers against both Reliance and Associates. It is from these two judgments that

1
The record reveals that subsequent to the accident at issue, Associates was purchased by
CitiCapital Commercial Leasing Corporation (CitiCapital).

1

Chavers has appealed. Additionally, on appeal, Chavers filed a motion to strike a

statement made by Reliance in its appellate brief. For the following reasons, we grant

Chavers’s motion to strike and we affirm the judgments of the trial court.

ISSUES

The following issues are raised by Chavers for our review:

1. whether the trial court erred in not considering only
Pennsylvania’s status as a reciprocal state as defined by the
Louisiana Uniform Insurance Liquidation Act;

2. whether the trial court erred in treating Reliance’s motion
as an exception of jurisdiction over subject matter rather
than an exception of res judicata;

3. whether the trial court erred in not considering whether the
Pennsylvania Commonwealth Court fully and fairly
considered its jurisdiction over the subject matter and
jurisdiction over the person of Ronald Chavers; and

4. whether the trial court erred in concluding that there was
no genuine issue of material fact and, as a matter of law,
Associates was entitled to a judgment of dismissal.

LAW AND ARGUMENT

Motion to Strike

On appeal, Chavers filed a motion to strike a statement made by Reliance in its

appellate brief, asserting that there is no evidence in the record on appeal of the

contents of said statement. Action on this motion was referred to the merits of this

appeal.

Pursuant to La.[Code Civ.]P. art. 2164, an appellate court must
render its judgment upon the record on appeal. The record on appeal
is that which is sent by the trial court to the appellate court and includes
the pleadings, court minutes, transcript, jury instructions, judgments and
other rulings, unless otherwise designated. La.[Code Civ.]P. arts. 2127
and 2128; Official Revision Comment (d) for La.[Code Civ.]P. art.
2127. An appellate court cannot review evidence that is not in the
record on appeal and cannot receive new evidence. Davis v. Anderson,
451 So.2d 1302 (La.App. 1st Cir.1984).

Tranum v. Hebert, 581 So.2d 1023, 1026 (La.App. 1 Cir. 1991), writ denied, 584

2

So.2d 1169 (La.1991). Additionally, “[t]he appellate briefs of the parties are not part

of the record on appeal, and this court has no authority to consider on appeal facts

referred to in appellate briefs, or in exhibits attached thereto, if those facts are not in

the record on appeal.” Id. at 1027 (citing Capital Drilling Co. v. Graves, 496 So.2d

487 (La.App. 1 Cir. 1986); Fred H. Moran Constr. Corp. v. Elnaggar, 441 So.2d 260

(La.App. 1 Cir. 1983)).

In brief, Reliance states that it will “extend the deadline for Appellants to file

their Proofs of Claim by December 31, 2006,” with the Pennsylvania Rehabilitation

Court. However, after a thorough review of the record, we note that there is no

evidence of such an extension within the record on appeal. Consequently, Chavers’s

motion to strike is granted.

Exception of Lack of Subject Matter Jurisdiction

Chavers asserts that the trial court erred in treating Reliance’s exception as one

of lack of subject matter jurisdiction as opposed to an exception of res judicata. We

disagree.

Subject matter jurisdiction is defined in La.Code Civ.P. art. 2 as “the legal

power and authority of a court to hear and determine a particular class of actions or

proceedings, based upon the object of the demand, the amount in dispute, or the value

of the right asserted.” “Res judicata is an issue and claim preclusion device which

prohibits relitigation of matters which were litigated or could have been litigated in

a prior suit.” Walker v. Howell, 04-246, p. 3 (La.App. 3 Cir. 12/15/04), 896 So.2d

110, 112 (emphasis omitted); La.R.S. 13:4231; La.Code Civ.P. art. 425. In the

present case, the issue is the legal power of a Louisiana district court to hear and

determine an action, the object of which encompasses assets which are subject to an

order of a Pennsylvania Commonwealth Court. Thus, the relevant inquiry is that of

subject matter jurisdiction. The principles of res judicata are not applicable.

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In support of its exception of lack of subject matter jurisdiction, Reliance

argues that Pennsylvania’s status as a “reciprocal state” under the Louisiana Uniform

Insurance Liquidation Act (UILA), La.R.S. 22:7572, et. seq., divested the trial court

of subject matter jurisdiction. We agree.

On October 3, 2001, Pennsylvania’s Insurance Commissioner obtained an order

from the Commonwealth Court of Pennsylvania (Commonwealth Court) which

placed Reliance, a Pennsylvania corporation domiciled in the state of Pennsylvania,

in liquidation. The order of the Commonwealth Court provided for a stay of all

actions “at law or equity” against Reliance as follows:

Unless the Liquidator consents thereto in writing, no action at law or
equity, or arbitration or mediation, shall be brought against Reliance or
the Liquidator, whether in this Commonwealth or elsewhere, nor shall
any existing action be maintained or further prosecuted after the date of
this Order. All actions, including arbitrations and mediations currently
pending against Reliance in the courts of the Commonwealth of
Pennsylvania or elsewhere are hereby stayed. All actions, arbitrations,
and mediations against Reliance or the Liquidator shall be submitted and
considered as claims in the liquidation proceedings.

The liquidation of Reliance during the course of the pending litigation resulted

in a previously filed exception of lack of subject matter jurisdiction by Reliance,

which was denied by the trial court. The exception of lack of subject matter

jurisdiction now before this court arose following the recent decision of the Louisiana

Supreme Court in All Star Adver. Agency, Inc. d/b/a/ All Star Auto. Group v. Reliance

Ins. Co., 04-1544 (La.4/12/05), 898 So.2d 369, which prompted Reliance to re-urge

its exception. Reliance contends that the decision in All Star mandates the granting

of its exception of lack of subject matter jurisdiction. We agree with Reliance that

the supreme court’s decision in All Star is controlling and that its application resolves

2
Louisiana Revised Statutes 22:757(7) defines a “reciprocal state” as “any state other than
this state in which in substance and effect the provisions of this law are in force, including the
provisions requiring that the insurance commissioner or equivalent insurance supervisory official
be the receiver of a delinquent insurer.”

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the issue of lack of subject matter jurisdiction.

In All Star, Reliance filed an exception of lack of subject matter jurisdiction

contending that the Fifteen Judicial District Court of the State of Louisiana did not

have subject matter jurisdiction, citing the Pennsylvania order liquidating Reliance

and the UILA. The Louisiana Supreme Court granted the writ application filed by the

Pennsylvania Insurance Commissioner, Reliance’s Liquidator, and specifically

addressed the issue of “whether Pennsylvania is a reciprocal state with Louisiana

pursuant to La.[R.S.] 22:757(7).” All Star, 898 So.2d at 375. The supreme court, in

All Star, opined that the UILA is the state of Louisiana’s codification of one of two

model laws3 designed to provide “[u]niformity and predictability in interstate

relations regarding insurer delinquency and liquidation proceedings.” Id. at 370. The

supreme court “[a]fter examining the respective laws of both Louisiana and

Pennsylvania governing interstate relations in multi-state insurer liquidation

proceedings, [found] that the laws of the two states are ‘in substance and effect’ the

same. Therefore, Pennsylvania is a reciprocal state pursuant to La.[R.S.] 22:757(7).”

Id. at 382.

As stated above, this court is bound by the decision of the Louisiana Supreme

Court holding that Pennyslvania is a reciprocal state. We must, therefore, turn to the

UILA to determine whether the Fifteenth Judicial District Court has subject matter

jurisdiction over the present claims.

Louisiana Revised Statutes 22:760 contains the relevant provision within the

UILA for claims asserted against foreign insurers, stating as follows:

A. In a delinquency proceeding in a reciprocal state against an
insurer domiciled in that state, claimants, against such insurer, who
reside within this state may file claims either with the ancillary receiver,

3
The two model laws are “the Uniform Insurers Liquidation Act (UILA) proposed in 1939
by the National Conference of Commissioners on Uniform State Laws, and the superseding Insurers
Rehabilitation and Liquidation Model Act proposed in 1978, and since amended, by the National
Association of Insurance Commissioners” Id. at 370.

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if any, appointed in this state, or with the domiciliary receiver. All such
claims must be filed on or before the last date fixed for the filing of
claims in the domiciliary delinquency proceeding.

B. Controverted claims belonging to claimants residing in this
state may either (1) be proved in the domiciliary state as provided by the
law of that state, or (2) if ancillary proceedings have been commenced
in this state, be proved in those proceedings. In the event that any such
claimant elects to prove his claim in this state, he shall file his claim
with the ancillary receiver in the manner provided by the law of this
state for the proving of claims against insurers domiciled in this state,
and he shall give notice in writing to the receiver in the domiciliary
state, either by registered mail or by personal service at least forty days
prior to the date set for hearing. The notice shall contain a concise
statement of the amount of the claim, the facts on which the claim is
based, and the priorities asserted, if any. If the domiciliary receiver,
within thirty days after the giving of such notice, shall give notice in
writing to the ancillary receiver and to the claimant, either by registered
mail or by personal service, of his intention to contest such claim, he
shall be entitled to appear or to be represented in any proceeding in this
state involving the adjudication of the claim. The final allowance of the
claim by the courts of this state shall be accepted as conclusive as to its
amount, and shall also be accepted as conclusive as to its priority, if any,
against special deposits or other security located within this state.

Thus, the application of La.R.S. 22:760 results in a limitation of jurisdiction over

claims against an insurer to the state court of the receiver/liquidator of that insurer,

when no ancillary receivership proceedings have commenced.

The liquidation proceedings involving Reliance were instituted in the state of

Pennyslvania, the domiciliary state of Reliance’s incorporation. There have been no

ancillary proceedings instituted in Louisiana. Therefore, pursuant to the provisions

of La.R.S. 22:760, the Louisiana district court is divested of subject matter

jurisdiction over the claims against Reliance. For the foregoing reasons, we find that

the trial court’s determination that it lacked subject matter jurisdiction over the claims

asserted against Reliance was legally correct.4 We, therefore, affirm the trial court’s

granting of the exception of lack of subject matter jurisdiction in favor of Reliance.

4
The issue of subject matter jurisdiction presented by Chavers on appeal involves a question
of law. Questions of law are reviewed under the de novo standard of review. La. Mun. Ass’n v.
State, 04-227 (La. 1/19/05), 893 So.2d 809. Therefore, we must determine whether the court below
was legally correct. City of New Orleans v. Bd. of Comm’r of Orleans Levee Dist., 93-690 (La.
7/5/94), 640 So.2d 237.

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Jurisdiction Over the Person

Chavers also assigns as an error of the trial court, the trial court’s failure to

consider whether the Commonwealth Court fully and fairly considered its jurisdiction

over the person of Ronald Chavers.

Louisiana Code of Civil Procedure Article 6 defines personal jurisdiction as

“the legal power and authority of a court to render a personal judgment against a party

to an action or proceeding.” By definition, personal jurisdiction relates only to a

party defendant against whom a judgment is sought. Therefore, the issue of personal

jurisdiction only arises when a defendant asserts that a tribunal lacks the authority to

exercise jurisdiction over his person. In the instant matter, the Chavers are plaintiffs.

The Chavers are seeking a judgment against Reliance. Thus, the Commonwealth

Court’s personal jurisdiction over Chavers is of no consequence. The issue is the

exclusive jurisdiction of that court over Reliance. We find no merit to Chavers’s

assertion that the trial court erred in not considering Pennsylvania’s jurisdiction over

the person of Ronald Chavers.

Motion for Summary Judgment

“Appellate courts review summary judgments de novo, using the same criteria

that govern the trial court’s consideration of whether summary judgment is

appropriate.” Richard v. Hall, 03-1488, p.4 (La. 4/23/04), 874 So.2d 131, 137 (citing

Goins v. Wal-Mart Stores, Inc., 01-1136 (La. 11/28/01), 800 So.2d 783). The

appellate court must determine whether “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to material fact, and that mover is entitled to judgment as

a matter of law.” La.Code Civ.P. art. 966(B).

Admissibility of Affidavit

Chavers contend that the trial court erred in considering the affidavit of Ken

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Freeman (Freeman) in support of Associate’s motion for summary judgment on the

grounds that the affidavit was not based upon his personal knowledge as required by

La.Code Civ.P. art 967. We find no merit to this assertion.

The affidavit of Freeman expressly states that he is the senior vice-president

of CitiCapital and that CitiCapital purchased Associates subsequent to the accident

at issue. The trial court noted that Freeman’s position as senior vice-president

demonstrated his competence to testify as to the substance within his affidavit, the

crux of which evidenced the fact that Associates never took possession of the vehicle

nor did it exercise any control over it.5 We agree with the trial court that Freeman,

in his capacity as senior vice-president of CitiCapital, had the requisite knowledge

to attest to the contents of his affidavit. We, therefore, affirm the ruling of the trial

court that the affidavit of Ken Freeman was admissible in support of Associates’

motion for summary judgment.

Liability of Associates

Chavers did not assert any negligent act or omission by Associates as a cause

of the accident in question. Rather, Chavers’s claims against Associates are premised

on its ownership of the truck which Ronald Chavers was driving at the time of the

accident. Associates filed a motion for summary judgment contending that its status

as an owner of the vehicle is insufficient for the imposition of liability under

Louisiana law. We agree.

The record reveals that in 1990 Associates purchased the truck at issue for the

purpose of leasing it to Bright Leasing pursuant to a “TRAC” leasing agreement6

between the parties. The vehicle was purchased by Associates as part of a block of

5
We also note that the testimony of Freeman was corroborated by the terms of the lease
agreement as well as the testimony obtained in the corporate deposition of Bright Leasing.
Moreover, Chavers did not put forth any contradictory evidence on this issue.
6
According to the record, a “TRAC” lease is a lease financing arrangement that confers
certain tax advantages to both the owner/lessor and the lessee.

8

vehicles which had been ordered by Bright Leasing. Associates never took

possession of the vehicle. Instead, the vehicle was shipped directly from the dealer

to Bright Leasing. In 1993, Bright Leasing subleased the truck to Ronald Chavers’s

employer, Profco. It was approximately two years later, in 1995, that the vehicle was

involved in the subject accident allegedly due to defective brakes.

Associates’ status as the owner of the truck in and of itself does not render it

strictly liable under Louisiana law for damages resulting from an alleged defect in the

vehicle. Louisiana Code of Civil Procedure Article 2317 provides, in pertinent part,

that “[w]e are responsible, not only for the damage occasioned by our own act, but

for that which is caused by the act of persons for whom we are answerable, or of the

things which we have in our custody.” The element of “custody” under La.Civ.Code

art. 2317, was recently summarized by the supreme court as follows:

[La.Civ.Code] art. 2317 provides: “We are responsible, not only
for the damage occasioned by our own act, but for that which is caused
by the act of persons for whom we are answerable, or of the things
which we have in our custody. . . .” In Doughty v. Insured Lloyds Ins.
Co., 576 So.2d 461, 464 (La.1991), this Court explained:

This article imposes strict liability based on a
person’s relationship of custody (garde) to a defective
thing which creates an unreasonable risk of injury to
others. King v. Louviere, 543 So.2d 1327, 1329 (La.1989);
Loescher v. Parr, 324 So.2d 441, 446 (La.1975). As a
general principle, the guardian is in a better position than
the innocent victim to detect, evaluate and take steps to
eliminate an unreasonable risk of harm arising in a
defective thing. Ross [v. La Costa de Monterville], 502
So.2d [1026,] 1032 [(La.1987)]; Kent v. Gulf States
Utilities Co., 418 So.2d 493, 497 n. 5 (La.1982). In King,
we determined that “[t]he things in one’s care are those
things to which one bears such a relationship as to have the
right of direction and control over them, and to draw some
kind of benefit from them.” King, 543 So.2d at 1329.

Moreover, this Court explained that “[u]nder most circumstances
ownership alone establishes the requisite benefit, control and authority
to find garde.” Doughty, 576 So.2d at 464. However, although
ownership creates the presumption of garde, this presumption is
rebuttable by the owner. Finally, whether the law imposes a duty of
garde upon a party is a factual inquiry based upon the determination of

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(1) what benefit the party received from the thing, and (2) what kind of
direction and control the party had over it. Doughty, 576 So.2d at 464.

Essential to a finding of liability under article 2317 is a finding of
the defendant’s relationship of custody to the defective thing.

Giorgio v. Alliance Operating Corp. 05-02, p. 13 (La. 1/19/06), 921 So.2d 58, 73.

Thus, the jurisprudence is clear that custody and ownership are not synonymous.

Under La.Civ.Code art. 2317, “[l]iability is imposed based on custody or garde, not

just ownership.” Dupre v. City of New Orleans, 99-3651, p. 7 (La. 8/31/00), 765

So.2d 1002, 1008.

As set forth above, the uncontested facts are that Associates never did have

physical possession of the vehicle nor did Associates have control over it.7 Therefore,

Associates did not have the requisite “custody” under La.Civ.Code art. 2317 for the

imposition of liability. We agree with the trial court that there was no genuine issue

of material fact as to the control or custody of the truck and that Associates is not

liable as a matter of law for the damages allegedly sustained by Chavers. Therefore,

the judgment of the trial court granting the motion for summary judgment in favor of

Associates is affirmed.

DECREE

For the foregoing reasons, the judgment of the trial court granting the exception

of lack of subject matter jurisdiction in favor of Reliance Insurance Company is

affirmed. The judgment of the trial court granting the motion for summary judgment

in favor of Associates Leasing, Inc. is also affirmed.

Costs of this appeal are assessed against Plaintiffs/Appellants, Ronald K.

Chavers, individually, and as tutor of the minors, Christopher Shane Chavers and

Megan Elizabeth Chavers, and Gloria Chavers, individually.

AFFIRMED.

7
Paragraph one of the TRAC lease gave Bright Leasing “full and complete control” of the
vehicle as well as the responsibility for the expenses associated with the operation and maintenance
of the vehicle.

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