Carlton Maxey v. Universal Casualty Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

11-339

CARLTON MAXEY

VERSUS

UNIVERSAL CASUALTY COMPANY

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APPEAL FROM THE
TENTH JUDICIAL DISTRICT COURT
PARISH OF NATCHITOCHES, NO. 81,786
HONORABLE ERIC ROGER HARRINGTON, DISTRICT JUDGE

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OSWALD A. DECUIR
JUDGE

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Court composed of Sylvia R. Cooks, Oswald A. Decuir, and Jimmie C. Peters,
Judges.

AFFIRMED.

Joe Payne Williams
Williams Family Law Firm, L.L.C.
Post Office Box 15
Natchitoches, LA 71458-0015
(318) 352-6695
Counsel for Plaintiff/Appellant:
Barbara Renee Maxey, as Representative of Estate

Charles K. Charrier
Attorney at Law
P. O. Box 1007
Alexandria, LA 71309
(318) 448-3952
Counsel for Plaintiff/Appellant:
Barbara Renee Maxey, as Representative of Estate

R. Todd Musgrave
Musgrave, McLachlan & Penn, L.L.C.
1515 Poydras Street, Suite 2380
New Orleans, LA 70112
(504) 799-4300
Counsel for Defendant/Appellee:
Universal Casualty Company

Amanda H. Aucoin
Musgrave, McLachlan & Penn, L.L.C.
1515 Poydras Street, Suite 2380
New Orleans, LA 70112
(504) 799-4300
Counsel for Defendant/Appellee:
Universal Casualty Company

DECUIR, Judge.

Carlton Maxey filed suit against his automobile insurer, Universal Casualty

Company, seeking payment under the comprehensive coverage provision of his policy

after his vehicle was stolen and destroyed by fire. After prevailing on the coverage

question, Maxey sought penalties and attorney fees which were denied by summary

judgment. Maxey’s succession representative, Barbara Maxey, perfected this appeal.

For the following reasons, we affirm.

Sometime between 9:00 a.m. and 1:00 p.m. on July 24, 2008, Maxey’s 2006

Nissan Altima was stolen from the driveway of his home in Derry, Louisiana. The car

was unlocked, and a spare key was hidden under the floor mat. Maxey was away

from home during those hours; when he returned shortly after 1:00 p.m., he noticed

the car was gone. He immediately reported the car stolen, and it was located by police

later that day elsewhere in the parish. The car had been set on fire and was a total loss.

Universal does not deny that it had in full force and effect a policy of insurance

in favor of Carlton Maxey providing comprehensive coverage for loss due to both

theft and fire. However, the policy contains a specific exclusion for theft under

certain circumstances: specifically, under Part IV, Exclusion (o) of the policy,

coverage does not apply “to loss due to theft under coverage (a) of this part if

evidence exists that forcible entry was not required to gain access to the automobile.”

Based on this exclusion, and Maxey’s admissions that the car was unlocked and a key

was inside at the time it was stolen, Universal denied coverage. Universal then filed a

motion for summary judgment on the issue of coverage.

Maxey responded by filing a cross motion for summary judgment, arguing that

his loss was the result of a fire, not theft. The trial court agreed and granted Maxey’s

motion. Universal unsuccessfully took up writs to this court and the Louisiana

Supreme Court. Universal then immediately tendered to Maxey the full amount of his

loss plus interest. However, Maxey sought statutory penalties and attorney fees for

Universal’s delay in paying the claim. Maxey specifically alleged that Universal’s

delay in tendering payment was based upon a misinterpretation of its own policy, and

Maxey asserts that when an insurer misinterprets its policy, “it does so at its own risk,

not at the risk of the insured.”

The trial court described the case as presenting a unique factual situation and

determined that Universal had a reasonable basis to defend the claim. The court

found Universal acted in good faith reliance on its defense of a theft exclusion.

Penalties and attorney fees were denied via summary judgment, and Maxey appealed.

In this appeal, Maxey relies on the case of Louisiana Bag Co. v. Audubon

Indemnity Co., 08-453, pp. 19-20 (La. 12/2/08), 999 So.2d 1104, 1117, which held:

This court has found that an insurer “must take the risk of misinterpreting
its policy provisions,” and that, if an insurer “errs in interpreting its own
insurance contract, such error will not be considered as a reasonable
ground for delaying payment of benefits, and it will not relieve the
insurer of the payment of penalties and attorney’s fees.” Id. (citing
Albert v. Cuna Mut. Ins. Soc’y, 255 So.2d 170 (La.App. 3 Cir.1971)).
“In other words, insurers should not have their policy provisions
interpreted at the expense of the insured, especially when they are
charged with knowledge of their policy’s contents.” Id. In short,
Audubon’s potential error in the interpretation of its insurance contract
was not a reasonable ground for refusing timely payment. Therefore,
Audubon could not avoid the payment of penalties for its delay in
tendering payment within the statutorily mandated time period by reason
of its interpretation of the coverage afforded by its policy.

We find Maxey’s reliance on the Louisiana Bag language to be misplaced. The

coverage in the present case does not rest on the interpretation of the policy. Rather,

the issue confronting the trial court was simply a question of whether Maxey’s

damages were due to fire or theft. If the damages were due to theft, then the

undisputed “forced entry” terms of the policy would exclude coverage. If the

damages were due to fire, then the undisputed fire terms of the policy would provide

coverage. The trial court considered the facts and determined the damages were due

to fire.
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In Louisiana Bag, the disputed coverage question was based on a legal issue,

the resolution of which would affect only the extent of coverage. The insurer had

knowledge of the undisputed portion of the claim and refused to pay even that amount

while it waited for a legal opinion from its retained counsel on the full extent of the

claim. In the present case, the insurer sought judicial resolution of a factual question:

whether Maxey’s damages were the result of fire or theft. The trial court found this

coverage question to be reasonably disputed by the insurer, even though the court

ultimately ruled against the company. We agree with the trial court’s rationale. We

do not believe Universal acted unreasonably in contesting coverage in this particular

case.

Accordingly, we find no error in the decision reached by the trial court.

Universal’s motion for summary judgment was properly granted, with the dismissal of

all remaining claims asserted by Maxey. For these reasons, the judgment appealed

from is affirmed. Costs of the appeal are assessed to Barbara Maxey.

AFFIRMED.

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