Norman Trahan and Anna Levy v. Leon Boutte

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

08-650

ANNA LEVY AND NORMAN TRAHAN

VERSUS

ENTERPRISE LEASING COMPANY OF NEW ORLEANS

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT
PARISH OF LAFAYETTE, NO. C-2007-0954
HONORABLE PATRICK MICHOT, PRESIDING
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SYLVIA R. COOKS
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, and
Oswald A. Decuir, Judges.

REVERSED AND REMANDED.

L. Clayton Burgess, A.P.L.C.
605 West Congress Street
P.O. Drawer 5250
Lafayette, LA 70502-5250
(337) 234-7573
COUNSEL FOR PLAINTIFFS/APPELLANTS:
Anna Levy and Norman Trahan

Katherine M. Loos
Briney & Foret
P.O. Drawer 51367
Lafayette, LA 70505-1367
(337) 237-4070
COUNSEL FOR DEFENDANT-APPELLEE:
Enterprise Leasing Company of New Orleans

COOKS, Judge.

On February 25, 2006, Norman Trahan was driving a 2000 Lincoln in which

Anna Levy was riding as a guest passenger. Leon Boutte was driving a 2006

Chevrolet Malibu he rented from Enterprise Leasing Company of New Orleans at its

Lafayette, Louisiana location. Boutte pulled his vehicle out in front of Trahan’s

vehicle, causing Trahan to swerve and hit a pole. Both Trahan and Levy suffered

injuries as a result of the collision. At the time of the accident, Boutte did not have

automobile insurance. Boutte also did not purchase supplemental liability protection

from Enterprise when he rented the vehicle at issue.

Suit was filed by Trahan and Levy against Boutte and Enterprise for the

injuries sustained in the accident. Enterprise filed a Motion for Summary Judgment

seeking to dismiss it from the case arguing that Boutte did not buy rental insurance

for the vehicle he leased from Enterprise and that, pursuant to Louisiana law at that

time, Enterprise’s own insurance carrier is not liable for any judgment rendered

against any person it leased a vehicle to, even if that person did not have any

insurance when it rented the vehicle. Enterprise cited Paragraph 7 of the Rental

Agreement, which stated as follows:

7. Responsibility to Third Parties. Owner complies with
applicable motor vehicle financial responsibility laws as a state
certified self-insurer, bondholder, or cash depositor. Except to
the extent required by the motor vehicle financial responsibility
laws of the applicable state or otherwise by law, Owner does not
extend any of its motor vehicle financial responsibility or provide
insurance coverage to Renter, Additional Authorized Driver(s),
passengers or third parties through this Agreement. If valid
automobile liability insurance or self insurance is available on any
basis to Renter, Additional Authorized Driver(s) laws or any other
driver and such insurance or self insurance satisfies the applicable
state motor vehicle financial responsibility law, then Owner
extends none of its motor vehicle financial responsibility.
However, if Renter and Additional Authorized Driver(s) are in
compliance with the terms and conditions of this Agreement and
if Owner is obligated to extend its motor vehicle financial

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responsibility to Renter, Additional Authorized Driver(s) or third
parties, then Owner’s obligation is limited to the applicable state
minimum financial responsibility amounts. Unless required by
law, Owner’s financial shall not extend to any claim made by a
passenger while riding in or on or getting in or out of Vehicle.
Owner’s financial responsibility shall not extend to liability
imposed or assumed by anyone under any worker’s compensation
act, plan, or contract.

Enterprise argues its policy did not extend its financial responsibility to cover the acts

of renters as set forth in the terms and conditions of the Rental Agreement. Enterprise

argues Louisiana’s financial responsibility law as a self-insurer. According to its

standard rental agreement, Enterprise did not provide supplemental liability

protection unless a renter elected such protection by initialing the block requesting

same and paid for that service. Mr. Boutte did not initial the block requesting

supplemental liability protection nor did he pay for such services.

In opposition to this argument, Plaintiffs noted the newly amended La.R.S.

22:681, which now mandates that all rented vehicles be covered by some form of

insurance, is interpretive and should be applied retroactively. Enterprise countered

that the amendment made a substantive change in the law and thus could only be

applied prospectively. The trial court agreed with Enterprise and granted its Motion

for Summary Judgment dismissing it from the plaintiffs’ suit. This appeal followed.

ANALYSIS

Resolution of the issues raised in this matter requires an interpretation of

La.R.S. 22:681. An interpretation of a statute is a question of law that may be

decided by a motion for summary judgment. State Farm Mutual Automobile

Insurance Company v. U.S. Agencies, L.L.C., 05-0728 (La.App. 1 Cir. 3/24/06), 934

So.2d 745, writ denied, 06-933 (La. 6/16/06), 929 So.2d 1288.

Appellate courts review summary judgments de novo under the same criteria

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

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appropriate. Schroeder v. Board of Supervisors of Louisiana State University, 591

So.2d 342 (La.1991); Costello v. Hardy, 03-1146 (La. 1/21/04), 864 So.2d 129. A

court must grant a motion for summary judgment “if 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). Summary judgment

procedure is favored and is designed to secure the just, speedy and inexpensive

determination of actions. La.Code Civ.P. art. 966(A)(2).

The trial court granted Enterprise’s motion for summary judgment on the

grounds that La.R.S. 22:681, prior to the 2007 amendment, did not require rental

companies to provide insurance coverage for the leased vehicle. The trial court

determined that it was the duty of the lessee to provide insurance coverage for the

leased vehicle. Plaintiffs counter this argument by asserting the amendment to R.S.

22:861 was interpretive and should be applied retroactively.

Prior to amendment La.R.S. 22:681, which became effective on August 15,

2007, read in entirety as follows:

Every approved insurance company, reciprocal or exchange,
writing automobile liability, physical damage, or collision insurance,
shall extend to temporary substitute motor vehicles as defined in the
applicable insurance policy and rental private passenger automobiles
any and all such insurance coverage in effect in the original policy or
policies. Where an insured has coverage on multiple vehicles, at least
one of which has comprehensive and collision insurance coverage, that
comprehensive and collision substitute coverage shall apply to the
temporary substitute motor vehicle or rental motor vehicle. Such
insurance shall be primary. However, if other automobile insurance
coverage is purchased by the insured for the temporary substitute or
rental motor vehicle, that coverage shall become primary. The coverage
purchased by the insured shall not be considered a collateral source.

We note initially the statute does not speak to vehicle owners, but rather references

insurance companies. Every insurance company writing a policy covering the

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liability of an owner also was required to extend such coverage to temporary

substitute motor vehicles and rental private passenger automobiles. However, if

other automobile insurance coverage was purchased by the insured for the temporary

substitute motor vehicle or rental private passenger automobile, that coverage became

primary and the other became secondary. La.R.S. 22:681 did not exclude, or for that

matter, even mention the obligation of rental companies to maintain “compulsory

insurance.” There appears to be no serious dispute between the parties that Section

A of the amended statute simply recites the former statute without making any

material changes. The amendment, however, added Section B.1

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The statute now provides, in pertinent part, as follows (changes to Section A
are italicized):

A. Every approved insurance company, reciprocal or exchange, writing
automobile liability, physical damage, or collision insurance, shall extend to
temporary substitute motor vehicles as defined in the applicable insurance policy and
rental motor vehicles any and all such insurance coverage in effect in the original
policy or policies. Where an insured has coverage on a single or multiple vehicles,
at least one of which has comprehensive and collision or liability insurance coverage,
those coverages shall apply to the temporary substitute motor vehicle, as defined in
the applicable insurance policy, or rental motor vehicle. Such insurance shall be
primary. However, if other automobile insurance coverage or financial responsibility
protection is purchased by the insured for the temporary substitute or rental motor
vehicle, that coverage shall become primary. The coverage purchased by the insured
shall not be considered a collateral source.

B. A rental company, as defined in R.S. 22:2102(5), shall maintain security on all
rental vehicles meeting the requirements of the Motor Vehicle Safety Responsibility
Law, R.S. 32:851 et seq., as follows:

(1) Such security maintained by the rental company shall apply only when there
is no other valid or collectible insurance or other form of security meeting the
minimum financial responsibility requirements under the Motor Vehicle Safety
Responsibility Law.

(2) Notwithstanding a rental company's obligation to provide minimum
financial responsibility pursuant to the Motor Vehicle Safety Responsibility Law as
the owner of the vehicle for the privilege of registering and titling such vehicle, a
rental company shall be relieved of any security obligation under the Motor Vehicle
Safety Responsibility Law when the renter or driver has valid and collectible
insurance, self-insurance, bond, deposit, or other form of security in an amount
sufficient to satisfy the minimum financial responsibility requirements of the Motor
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The added Section B recites that rental companies are required to maintain

security on all rental vehicles meeting the requirements of the Motor Vehicle Safety

Responsibility Law. The remainder of the section then sets forth essentially a

ranking order as to which coverage is primary or secondary between the rental car

owner’s insurer and the insurer providing collectible coverage to the driver or renter.

It is the language referring to the rental car owner’s obligation to maintain security

on all rental vehicle which defendant now insists “substantively changed the law” and

is not enforceable retroactively in this case.

The legislature did not express its intent concerning the retroactive or

prospective application of the amendment to La.R.S. 22:681. Therefore, we must

determine whether the amendment was substantive, procedural or interpretive.

Sudwischer v. Estate of Hoffpauir, 97-785 (La.12/12/97), 705 So.2d 724.

Substantive laws are laws that impose new duties, obligations or
responsibilities upon parties, or laws that establish new rules, rights and
duties or change existing ones. Interpretative laws are those which
clarify the meaning of a statute and are deemed to relate back to the time
that the law was originally enacted. Procedural laws prescribe a method
for enforcing a substantive right and relate to the form of the proceeding
or the operation of the laws.

Sudwischer, 97-785, p. 9, 705 So.2d at 728 (internal citations omitted) (internal

quotations omitted).

Procedural and interpretive laws apply both prospectively and retroactively,

unless there is legislative expression to the contrary. La.Civ.Code art. 6. The

supreme court in St. Paul Fire & Marine Ins. Co. v. Smith, 609 So.2d 809 (La.1992),

elaborated on the distinction: substantive laws create and/or change rights, duties and

Vehicle Safety Responsibility Law, when the claimant maintains uninsured or
underinsured motorist coverage for bodily injury or property damage claims, or when
the renter violates the terms or conditions of the rental agreement.

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rules, while procedural laws provide the avenue by which those rights, duties, and

rules are enforced. Id.

The legislature has historically required that the owner of every motor vehicle,

before it is allowed to be registered for use on the highways, give security for any

possible injuries to persons or property caused by the faulty operation of a motor

vehicle by taking out a policy of motor vehicle liability insurance, or by depositing

cash, bond or other securities, or by becoming certified as a self-insurer. This

requirement is found in the Compulsory Motor Vehicle Liability Security Law,

La.R.S. 32:861, which existed prior to the amendment of La.R.S. 22:681. It provides

in pertinent part as follows:

A. (1) Every self-propelled motor vehicle registered in this state [with
the exception of certain classifications of vehicles] . . . shall be covered
by an automobile liability policy with liability limits as defined by
La.R.S. 32:900(B)(2) or 900(M), or a binder for same, or by a motor
vehicle liability bond as defined by Subsection B of this Section, or by
a certificate of the state treasurer stating that cash or securities have been
deposited or securitized with said treasurer as provided by Subsection
C of this Section, or by a certificate of self-insurance as provided by
R.S. 32:1042.

“At the heart of this statutory scheme is the decision to attach the financial

protection to the vehicle rather than to the operator.” Hearty v. Harris, 574 So.2d

1234, 1237 (La. 1991). Thus, the owner of the vehicle, who is at all times required

to maintain “an automobile liability policy” on any vehicle registered in this state

cannot absolve itself of this duty simply by renting the vehicle to a third party. There

was no exclusion for leased vehicles set forth in La.R.S. 32:861. Had the legislature

intended to exclude rental cars from the Compulsory Insurance Law, it could have

expressly provided so when it enacted La.R.S. 32:861. The excepted vehicle

classifications were “those motor vehicles used as agricultural or forest vehicles

during seasons when they are not used on the highways, those used primarily for

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exhibit or kept primarily for use in parades, exhibits or shows, and lease-bound

mobile rig haulers. . .” Pertinent to this case, commercial vehicles were not excluded

from the Compulsory Motor Vehicle Liability Security Law.

It is well settled in our jurisprudence that in determining the applicability of

laws, the more specific governs over the more general. In the Interest of A.C.,

93-1125 (La.1/27/94), 643 So.2d 719, 730, cert. denied, 515 U.S. 1128, 115 S.Ct.

2291 (1995). In short, the added language found in section B reciting that the rental

company shall maintain security as required by La.R.S. 32:861 et seq., did nothing

more than reference their then existing obligation to do so under the specific

Compulsory Insurance Law. The remaining language in section B was procedural in

nature and did not materially impose on rental car insurers a greater obligation than

they had prior to the amendment.

The amendment to this section did not create or change any vested rights of the

respective parties. The owner, here the rental company, had an obligation under the

Compulsory Insurance Law to maintain insurance on the vehicle up to the statutory

minimum, and the driver, as the tortfeasor, had a legal obligation to pay for the harm

he caused.

Section B (1) also provides that “security maintained by the rental company

shall apply only when there is no other valid or collectible insurance.” Section B (2)

further specifies the rental company’s security is primed by a renter or driver’s “valid

and collectible insurance, self-insurance, bond, deposit, or other form of security in

an amount sufficient to satisfy the minimum financial responsibility requirements of

the Motor Vehicle Safety Responsibility Law, [a] claimant[’s] . . . uninsured or

underinsured motorist coverage for bodily injury or property damage claims, or when

the renter violates the terms or conditions of the rental agreement.”

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These provisos seek to rank the order in which the responsible insurers must

pay. La.R.S. 22:681 prior to the amendment provided “if other automobile insurance

coverage is purchased by the insured for the temporary, substitute, or rental motor

vehicle, that coverage shall become primary.” The present amended language found

in Section B does the same thing. It too is interpretive.

None of the language changes or additions to La.R.S. 22:681 increases or

burdens the rental car companies prior obligation to maintain security.

DECREE

For the above reasons, we hereby reverse the trial court’s judgment granting

of Enterprise’s motion for summary judgment and dismissing with prejudice all

claims of Plaintiffs. We remand the case for a full trial on the merits as to the

liability for the alleged negligent acts of Leon Boutte. Costs of this appeal are

assessed to appellee, Enterprise Leasing Company of New Orleans.

REVERSED AND REMANDED.

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