Naddia Melder, Et Ux. v. State Farm Mutual Auto Ins. Co.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

14-934

NADDIA MELDER, ET UX.

VERSUS

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, ET AL.

**********

APPEAL FROM THE
NINTH JUDICIAL DISTRICT COURT
PARISH OF RAPIDES, NO. 234,239
HONORABLE MARY LAUVE DOGGETT, DISTRICT JUDGE

**********

PHYLLIS M. KEATY
JUDGE

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Court composed of Sylvia R. Cooks, Billy Howard Ezell, and Phyllis M. Keaty,
Judges.

Cooks, J., dissents and assigns written reasons.

AFFIRMED.

Roy S. Halcomb, Jr.
Broussard, Halcomb & Vizzier
Post Office Box 1311
Alexandria, Louisiana 71309-1311
(318) 487-4589
Counsel for Plaintiffs/Appellants:
Naddia Melder
Randel Melder

Joseph P. Williams
Williams Family Law Firm, L.L.C.
Post Office Box 15
Natchitoches, Louisiana 71458-0015
(318) 352-6695
Counsel for Defendant:
Louisiana Farm Bureau Casualty Insurance Company

Bonita K. Preuett-Armour
Sheridan Hogue
Armour Law Firm
1744 Jackson Street
Alexandria, Louisiana 71301
(318) 442-6611
Counsel for Defendant/Appellee:
State Farm Mutual Automobile Insurance Company

KEATY, Judge.

Plaintiffs, Naddia and Randel Melder, appeal the trial court’s judgment in

favor of Defendant, State Farm Mutual Automobile Insurance Company. For the

following reasons, the trial court’s judgment is affirmed.

FACTS AND PROCEDURAL BACKGROUND

The issue in this case is whether the rejection of uninsured motorist and/or

underinsured (UM) insurance coverage was executed by a person with the

authority to waive coverage. In that regard, Mrs. Melder was injured in an

automobile collision occurring in Alexandria, Louisiana, on March 1, 2007, when

the vehicle she was driving, a 2006 Nissan truck, was struck by another vehicle

driven by Connie Turlington. Turlington ran a stop sign prior to striking

Mrs. Melder’s vehicle. Mrs. Melder was working in the course and scope of her

employment with Grimes Industrial Supply, L.L.C., at the time of the collision.

Mrs. Melder’s vehicle was provided to her by her employer although it was owned

by another company, Grimes True Value Hardware, L.L.C.

At the time of the collision, State Farm provided an automobile liability

insurance policy insuring the vehicle being driven by Mrs. Melder, which afforded

UM coverage to Plaintiffs as insureds. Plaintiffs also maintained a separate policy

with Louisiana Farm Bureau Casualty Insurance Company which provided

additional UM coverage to them as insureds. Since Turlington’s vehicle was

uninsured, Plaintiffs filed suit against State Farm and Farm Bureau for UM

coverage.

State Farm filed a motion for summary judgment seeking dismissal of

Plaintiffs’ claims against it. State Farm argued that Floyd Grimes (Floyd), the

owner of Grimes Industrial Supply, L.L.C., declined UM coverage under the State

Farm policy which provided coverage for the vehicle driven by Mrs. Melder.

Attached to its motion for summary judgment was the following: Plaintiffs’

Petition for Damages; a certified copy of the State Farm policy issued to “GRIMES,

FLOYD & GRIME[S], FRANK DBA GRIMES TRUE VALUE HDW STORE

8322 HIGHWAY 71 N PINEVILLE LA 71360-2751[;]” Floyd’s affidavit; and

Vera Beckham’s affidavit. Plaintiffs filed an opposition and cross-motion for

summary judgment, seeking a judicial determination that State Farm provided UM

coverage. State Farm then filed a reply and a supplemental memorandum in

support of its motion for summary judgment and attached the following additional

exhibits, including but not limited to: Floyd’s supplemental affidavit; Floyd’s

deposition taken on July 10, 2013, on behalf of Grimes True Value Hardware,

L.L.C.; and Vera Beckham’s supplemental and amending affidavit. State Farm

also filed a second supplemental memorandum.

Following a hearing on the cross-motions for summary judgment which took

place on October 18, 2010, the trial court denied Plaintiffs’ motion and granted

State Farm’s motion for summary judgment, dismissing it as a defendant.

Plaintiffs appealed. On appeal, this court reversed and remanded the trial court’s

judgment, finding that genuine issues of material fact existed as to Floyd’s

authority to reject UM coverage on the subject vehicle. Melder v. State Farm Mut.

Auto. Ins. Co., 11-98 (La.App. 3 Cir. 6/1/11), 66 So.3d 603. Specifically, we held

that:

Simply stated, the policy purports to insure a vehicle belonging to
Floyd and Frank Grimes, but Mr. Grimes[’] sworn affidavit states that
the vehicle belongs to a limited liability company. Furthermore, the
record contains no evidence of the authority by which Mr. Grimes
executed the UM rejection, either on behalf of the limited liability
company or the apparently non-existent partnership between himself

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and Frank Grimes. Given that unresolved material fact, the burden
never shifted to the Melders in the summary judgment hearing.

Melder, 66 So.3d at 608. The genuine issue of material fact regarding Floyd’s

authority to execute the waiver stems from the fact that although the State Farm

policy covering the vehicle was issued to Floyd Grimes and Frank Grimes DBA

Grimes True Value Hardware Store, the vehicle was titled to Grimes True Value

Hardware, L.L.C., and used by Grimes Industrial Supply, L.L.C.

On remand, State Farm filed a second supplemental memorandum in support

of its motion for summary judgment. After a hearing which took place on June 23,

2014, the trial court granted State Farm’s renewed motion for summary judgment

and dismissed Plaintiffs’ claims against it with prejudice.

Plaintiffs appeal this new judgment and assign as error the following:

(1) Whether a material issue of fact exists as to the named insured’s
identity under the State Farm policy such that the trial court
legally erred by resolving this factual issue rather than holding
that such factual issue precludes summary judgment;

(2) Whether a material issue of fact exists as to the capacity in
which Floyd signed the UM rejection form such that the trial
court legally erred by not holding that such factual issue
precludes summary judgment;

(3) Whether Floyd, in his capacity as manager of Grimes True
Value Hardware, L.L.C., and pursuant to its Operating
Agreement, is contractually authorized to reject UM coverage
on its behalf and, if so, does having such authority matter if he
failed to sign the UM rejection form in a representative capacity
on behalf of Grimes True Value Hardware, L.L.C.;

(4) Whether ambiguity and lack of clarity invalidates the UM
rejection form because of the uncertain identity of the named
insured and whether Floyd signed the UM rejection form
individually and under the trade name Grimes True Value
Hardware, as alleged by State Farm, or as a legal representative
of Grimes True Value Hardware, L.L.C., as testified to by
Floyd, and;

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(5) Whether the trial court legally erred by deciding the validity of
the UM rejection form based on the intentions of the parties.

DISCUSSION

When reviewing a trial court’s judgment on a motion for summary judgment,

an appellate court employs the de novo standard of review “using the same criteria

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

appropriate, i.e., whether there is a genuine issue of material fact and whether the

mover is entitled to judgment as a matter of law.” Supreme Servs. & Specialty Co.,

Inc. v. Greer, 06-1827, p. 4 (La. 5/22/07), 958 So.2d 634, 638. The burden of

proof remains with the movant. La.Code Civ.P. art. 966(C)(2). If the moving

party, however, will not bear the burden of proof at trial and shows that there lacks

“factual support for one or more elements essential to the adverse party’s claim,

action, or defense[,]” then the non-moving party must produce “factual support

sufficient to establish that he will be able to satisfy his evidentiary burden of proof

at trial[.]” Id. If the opponent of the motion fails to do so, there is no genuine

issue of material fact, and summary judgment will be granted. Id. The motion for

summary judgment is granted “if the pleadings, depositions, answers to

interrogatories, and admissions, together with the affidavits, if any, admitted for

purposes of the motion for summary judgment, 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)(2). Thus, we must analyze the substantive law

governing the instant matter to determine whether a material fact exists. Jagneaux

v. Lafayette City-Parish Consol. Gov’t Parks & Recreation, 13-768 (La.App. 3 Cir.

12/11/13), 128 So.3d 681.

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“In Louisiana, UM coverage . . . embodies a strong public policy.” Roger v.

Estate of Moulton, 513 So.2d 1126, 1130 (La.1987). Determination of UM

coverage is by contractual provisions and applicable statutes, including La.R.S.

22:1295. Duncan v. U.S.A.A. Ins. Co., 06-363 (La. 11/29/06), 950 So.2d 544. The

UM coverage requirement is an implied amendment to any automobile liability

policy, and such coverage will be read into the policy unless validly rejected.

Duncan, 950 So.2d 544. This statute is liberally construed, and the statutory

exceptions to coverage are strictly interpreted. Id. “Any exclusion from coverage

in an insurance policy must be clear and unmistakable.” Id. at 547. The burden of

proof remains with the insurer who must prove that the “insured named in the

policy rejected in writing the coverage equal to bodily injury coverage or selected

lower limits.” Id. The law imposes UM coverage unless validly waived despite

the policy language, the parties’ intentions, or the presence or absence of payment

or a premium charge. Johnson v. Gov’t Emps. Ins. Co., 07-1391 (La.App. 3 Cir.

4/9/08), 980 So.2d 870, writ denied, 08-1031 (La. 8/29/08), 989 So.2d 105. A

waiver form failing to meet the formal requirements is not a valid rejection of UM

coverage. Id.

A valid UM waiver form, which must be complied with by the insurer,

requires the following six formalities as enunciated in Duncan, 950 So.2d 544:

(1) the insured must initial the selection or rejection chosen to indicate
that the decision was made by the insured; (2) if lower limits are
selected, then the lower limits are entered on the form to denote the
exact limits; (3) the insured or legal representative must sign the form
evidencing the intent to waive UM coverage; (4) the form must
include his or her printed name to identify the signature; (5) the
insured dates the form to determine the effective date of the UM
waiver; and (6) the form must include the policy number to
demonstrate which policy it refers to.

Johnson, 980 So.2d at 874.

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I. First Assignment of Error

In their first assignment of error, Plaintiffs contend that the trial court legally

erred by finding that Floyd and Frank are the named insureds under the State Farm

policy. The declarations page states the insureds as: “GRIMES, FLOYD &

GRIME[S], FRANK DBA GRIMES TRUE VALUE HDW STORE 8322

HIGHWAY 71 N PINEVILLE LA 71360-2751[.]” Plaintiffs allege that the

named insured is Grimes True Value Hardware, L.L.C.

In opposition, State Farm contends that the named insureds are Floyd and

Frank. State Farm asserts that “DBA GRIMES TRUE VALUE HDW STORE” is

a designation rather than a legal entity separate and apart from the person(s)

operating the business, i.e., Floyd and Frank. In support, State Farm cites

Trombley v. Allstate Ins. Co., 93-1669, pp. 3-4 (La.App. 3 Cir. 6/1/94), 640 So.2d

815, 817 (quoting Krawfish Kitchen Rest., Inc. v. Ardoin, 396 So.2d 990, 993

(La.App. 3 Cir. 1981) (alteration in original)), wherein this court noted that:

The designation “d/b/a” means “doing business as” but is
merely descriptive of the person or corporation who does business
under some other name. Doing business under another name does not
create an entity distinct from the person operating the business. The
individual who does business as a sole proprietor under one or several
names remains one person[.]

State Farm cites La.R.S. 22:1295(1)(a)(i) which provides that UM coverage

is inapplicable “when any insured named in the policy” rejects such coverage.

State Farm notes that La.R.S. 22:1295(1)(a)(ii) provides that the rejection form can

be “signed by the named insured or his legal representative.” State Farm refers to

Terrell v. Fontenot, 11-1472, p. 6 (La.App. 4 Cir. 6/27/12), 96 So.3d 658, 662, writ

denied, 12-2085 (La. 11/16/12), 102 So.3d 43, wherein the fourth circuit

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understood “the words ‘legal representative’ in La.R.S. 22:1295(1)(a)(ii) to mean

an individual authorized on behalf of an entity.”

In agreeing with State Farm at the hearing, the trial court stated that Floyd is

a named insured since “he’s listed on the ‘dec’ page as the named insured.” We,

therefore, look to the evidence to determine whether Floyd is a named insured

under the policy. In that regard, the State Farm declarations page states that the

insured is “GRIMES, FLOYD & GRIME[S], FRANK DBA GRIMES TRUE

VALUE HDW STORE[.]” In Floyd’s initial affidavit, he attests that he owns and

is “involved with the management and day-to-day operations of Grimes True

Value Hardware, L.L.C. and Grimes Industrial Supply, L.L.C.” He attests that the

2006 Nissan truck “was titled to Grimes True Value Hardware, L.L.C. but used by

Grimes Industrial Supply, L.L.C.” Grimes attests that he purchased the State Farm

policy, and he is listed as “a named insured[.]” He attests that the policy was

issued to “Floyd Grimes and Frank Grimes d/b/a Grimes True Value Hardware

Store and provided liability insurance” for the Nissan truck. He attests that he

signed the “UM selection form and opted to reject UM coverage.”

Our review of the waiver shows that the initials “FG” were written next to

the sentence stating: “I do not want UMBI Coverage. I understand that I will

not be compensated through UMBI coverage for losses arising from an accident

caused by an uninsured/underinsured motorist.” (Emphasis in original.) The

waiver contains a line asking for the printed name of the “Named Insured or Legal

Representative[,]” and “Floyd Grimes” is printed on that line. Directly underneath

is another line containing Floyd Grimes’ signature representing the “Signature of a

Named Insured or Legal Representative[.]”

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In Louisiana, a contract is interpreted within its four corners whenever the

words of a contract are clear, explicit, and lead to no absurd consequences.

Peterson v. Schimek, M.D., 98-1712 (La. 3/2/99), 729 So.2d 1024. Our review of

the evidence shows that Floyd is a named insured. Although the declarations page

contains the designation “DBA GRIMES TRUE VALUE HDW STORE[,]” Floyd

is still a named insured since “‘[d]oing business under another name does not

create an entity distinct from the person operating the business.’” Trombley, 640

So.2d at 817 (quoting Krawfish Kitchen Restaurant, Inc. v. Ardoin, 396 So.2d 990,

993 (La.App. 3 Cir. 1981)).

Accordingly, we agree with the trial court in this regard, and Plaintiffs’

argument is without merit.

II. Second Assignment of Error

In their second assignment of error, Plaintiffs contend that the trial court

legally erred by failing to find the existence of a material issue of fact regarding

Floyd’s signatory capacity. Plaintiffs allege that Floyd’s deposition testimony that

he signed the waiver as the legal representative of Grimes True Value Hardware,

L.L.C., contradicts State Farm’s allegation that he signed in his individual capacity

utilizing the trade name of a sole proprietorship.

In support, Plaintiffs point to State Farm’s second supplemental

memorandum wherein it allegedly asserts that Floyd signed the waiver in his

individual capacity utilizing the trade name Grimes True Value Hardware Store.

Plaintiffs are mistaken, however, as State Farm’s second supplemental

memorandum states that Floyd and Frank “had the authority, as the named

insured[], to execute the UM rejection; no separate authority was required to be

established in order to obtain insurance or execute a UM rejection under the trade

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name ‘Grimes True Value Hardware Store.’” Plaintiffs are correct, however, in

that Floyd testified that he signed the waiver “on behalf of Grimes True Value

Hardware, L.L.C.”

The trial court’s transcript shows that Floyd’s signatory capacity was not an

issue since he had the capacity to sign the waiver both individually and

representatively. Specifically, the trial court stated that Floyd could sign the

waiver since he was a named insured on the declarations page. It further stated

that “[w]hether it’s the LLC, he’s a member. He’s the person who has authority on

behalf of the LLC. Whether it’s a sole proprietorship, DBA, whether he’s a named

insured himself; it all comes down to the same person[.]” Thus, we must

determine whether the evidence shows Floyd’s capacity to sign the waiver both

personally and representatively.

To determine personal signatory capacity, we must review Louisiana law

regarding insurable interests. In that regard, an insured must have an insurable

interest in the property in order to recover under the policy. Erikson v. Audubon

Ins. Co., 99-284 (La.App. 3 Cir. 10/13/99), 745 So.2d 727, writ denied, 753 So.2d

219 (La. 1/14/00). An insurable interest is “any lawful and substantial economic

interest in the safety or preservation of the subject of the insurance free from loss,

destruction, or pecuniary damage.” La.R.S. 22:853(B). “No contract of insurance

on property or of any interest therein or arising therefrom shall be enforceable

except for the benefit of persons having an insurable interest in the things insured.”

La.R.S. 22:853(B). The insurable interest must exist at the time the policy is

written and at the time of loss. Armenia Coffee Corp. v. Am. Nat’l Fire Ins. Co.,

06-409 (La.App. 4 Cir. 11/21/06), 946 So.2d 249.

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State Farm contends that Floyd and Frank’s insurable interest arose by virtue

of their ownership of Grimes True Value Hardware, L.L.C., and cites Haddad v.

Elkhateeb, 10-214, 10-308 (La.App. 4 Cir. 8/11/10), 46 So.3d 244, writ denied, 10-

2076 (La. 11/12/10), in support. In Haddad, this court affirmed the trial court’s

granting of summary judgment in favor of the defendants, American Tri-State

Underwriters, Inc. (American Tri-State) and Certain Underwriters at Lloyds,

London (Lloyds), dismissing all of the plaintiffs’ claims against them. The

plaintiffs, Issa Haddad (Haddad) and Safari, Inc. of New Orleans (SINO), owned

commercial property including a building and business personal property that were

used to operate a convenience store called Safari Supermarket. In December 2004,

the defendant, Ali Elkhateeb (Elkhateeb), leased the premises and the business

personal property. He also purchased the store merchandise from the plaintiffs in

order to take over the running of the store. After the lease and sale, the plaintiffs

retained no further business interest in the store other than collecting monthly rent.

Elkhateeb operated Safari Supermarket as the sole proprietor, and, when he applied

for a commercial business insurance policy, Elkhateeb utilized the fictitious

business name Safari Supermarket, Inc. The insurance application listed “Tarek or

Ali” as the contact persons, and only Elkhateeb signed the policy application.

On appeal, Haddad and SINO argued that since they retained ownership of

the equipment and other movables used by Elkhateeb in the daily operations of the

store, they, rather than Elkhateeb, maintained an insurable interest in the business

personal property. We disagreed and held that ownership of the property in

question is not a pre-requisite for the existence of an insurable interest. We held:

Although Elkhateeb did not own the premises or business personal
property, other than the inventory or stock, at the time he procured the
insurance, he was a lessee and in possession of the property. No

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dispute exists that Elkhateeb used and depended upon each and every
item of lost and/or damaged business personal property located in the
store in the daily operation of the supermarket. Accordingly, we find
that Elkhateeb, who had the right to possess the premises and to use
the business personal property, had a significant and substantial
economic interest in preserving the damaged and/or stolen business
personal property and that he was subject to pecuniary loss due to his
inability to operate his grocery without the property, sufficient to
constitute an insurable interest. We further find that this insurable
interest existed both at the time Elkhateeb procured the insurance
covering the business personal property and at the time of loss.

Haddad, 46 So.3d at 252 (citations omitted).

The evidence in the instant case shows that Floyd and Frank are listed as the

named insureds on the declarations page. Floyd’s deposition testimony states that

he and Frank own Grimes True Value Hardware, L.L.C, and that Grimes True

Value Hardware, L.L.C. owned the truck in question on the date of the accident.

Floyd attested in his initial affidavit that the truck was titled to Grimes True Value

Hardware, L.L.C. although it was used by Grimes Industrial Supply, L.L.C. The

invoice of the vehicle’s purchase shows Grimes True Value Hardware, L.L.C. as

the purchaser. The Certificate of Title, which is dated August 21, 2006, lists

Grimes True Value Hardware, L.L.C. as owner. The waiver was executed by

Floyd on August 21, 2006.

Unlike Haddad wherein the parties involved landlords, a commercial tenant,

and the commercial property insurer, the parties in this case involve Grimes, a

corporation, and the automobile insurer. Haddad also differs from this case in that

in Haddad the issue related to the identity of which party, the landlords or tenant,

was entitled to recover the insurance proceeds provided by the coverage whereas

an issue in this case is whether UM coverage was applicable. Nevertheless, the

main issue in Haddad, just as in this case, is whether ownership of the property in

question is a pre-requisite for the existence of an insurable interest. We, therefore,

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find the analysis in Haddad applicable to the instant case with respect to

determining whether Floyd had an insurable interest in the truck.

In that regard, Floyd did not own the truck, but rather, he was the owner of

Grimes True Value Hardware, L.L.C., which owned the truck at the time he

procured the insurance and at the time of the accident. No dispute exists that Floyd

used and depended upon the truck in the daily operation of the business. We,

therefore, find that Floyd, who had the right to possess and use the truck as part of

his business, had a significant and substantial economic interest in the truck and

that he was subject to pecuniary loss due to his inability to operate his business

without the truck, sufficient to constitute an insurable interest. As an insured under

the State Farm policy, Floyd had the authority to execute the UM form and exclude

UM coverage pursuant to La.R.S. 22:1295(1)(a)(1) which allows “any insured

named in the policy” to reject UM coverage. Floyd, therefore, had the personal

capacity to sign the waiver.

As to his authority to sign the waiver in a legal capacity on behalf of Grimes

True Value Hardware, L.L.C., Floyd’s second supplemental affidavit states that he

is the “registered agent, the manager, and a member of Grimes True Value

Hardware, L.L.C.[,]” and that he maintained the same status on August 21, 2006,

when he signed the waiver. Grimes attested that as a manager, he is in charge of

“all business affairs and full management authority” and that he has the “authority

to obtain insurance on vehicles titled in the name of Grimes True Value Hardware,

L.L.C., including the authority to execute UM forms in connection therewith.” He

attested that he had the authority to obtain insurance coverage on the truck in

question as well as the authority to execute the waiver pursuant to his managerial

authority. In his initial affidavit, he attested that the truck was a business vehicle.

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The Articles of Organization, which is discussed in more detail below, further give

Floyd power to contractually bind the company. Thus, the foregoing evidence

shows that Floyd had the legal capacity to sign on behalf of Grimes True Value

Hardware, L.L.C.

Nevertheless, Duncan provides that the trial court in the instant matter was

not required to determine Floyd’s signatory capacity as long as he executed the

waiver in accordance with the law. Specifically, this court in Duncan, 950 So.2d

at 552 (citations omitted), stated:

The statute dictates that a “properly completed and signed form,” is
now presumed to constitute a knowing waiver of UM coverage. This
presumption exists because the prescribed form, if properly completed,
clearly evidences the insured’s intent to waive UM coverage. The
legislature, therefore, shifts the analysis away from the muddied
question of whether the insured made an informed decision to
knowingly waive coverage. Instead, the legislature states if the
insurer uses the form prescribed by the commissioner of insurance and
makes certain that it is properly completed and signed, then the
insurer receives a presumption that the insured’s waiver of coverage
was knowing.

In the instant case, the waiver contains Floyd’s initials, name, and signature,

thus satisfying the third Duncan requirement, i.e., the insured or legal

representative must sign the form evidencing the intent to waive UM coverage. As

such, any further inquiry into Floyd’s signatory intent is not required under

Duncan. Accordingly, this assignment of error is without merit.

III. Third Assignment of Error

In their third assignment of error, Plaintiffs contend that a genuine issue of

material fact exists as to whether Floyd, in his capacity as manager of Grimes True

Value Hardware, L.L.C., and pursuant to its Operating Agreement, is authorized to

contractually reject UM coverage on its behalf. If so, Plaintiffs contend that a

genuine issue of material fact exists as to whether having such authority matters if

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Floyd failed to sign the UM rejection form in a representative capacity on behalf of

Grimes True Value Hardware, L.L.C.

Section 13.3 of Grimes True Value Hardware, L.L.C.’s Operating

Agreement provides:

No Manager shall have the power to sign for or enter into
contracts on behalf of the Company, said power being reserved to the
Members, unless authorized by the Members.

In Louisiana, “[a]n operating agreement is contractual in nature; thus, it

binds the members of the LLC as written and is interpreted pursuant to contract

law.” Kinkle v. R.D.C., L.L.C., 04-1092, p. 7 (La.App. 3 Cir. 12/8/04), 889 So.2d

405, 409. “Interpretation of a contract is the determination of the common intent

of the parties.” La.Civ.Code art. 2045. “When the words of a contract are clear

and explicit and lead to no absurd consequences, no further interpretation may be

made in search of the parties’ intent.” La.Civ.Code art. 2046. However, “[w]ords

susceptible of different meanings must be interpreted as having the meaning that

best conforms to the object of the contract.” La.Civ.Code art. 2048. Any doubtful

provision should be interpreted “in light of the nature of the contract, equity,

usages, the conduct of the parties before and after the formation of the contract,

and of other contracts of a like nature between the same parties.” La.Civ.Code art.

2053. Where doubt arises from a provision in the contract that cannot be removed,

that must be interpreted against the party who furnished it. La.Civ.Code art. 2056.

“The determination of whether the words of a contract are clear and explicit or

ambiguous is a question of law[]” such that “an appellate court’s determination on

review is whether the trial court interpreted the contract correctly or incorrectly.”

Kinkle, 889 So.2d at 409.

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The Operating Agreement shows that Frank and Floyd signed the last page

as “MEMBERS/APPEARERS” on August 25, 1999. Section 1 states that these

two individuals are “APPEARERS” who “shall become and remain members of

Grimes True Value Hardware, L.L.C.” (Emphasis added.) The preamble states

that it was formed “in furtherance of the purposes and provisions of the Articles of

Organization[.]” Article IV of the Articles of Organization provide that “[t]here

are no limitations on the authority of members to bind the limited liability

company.” (Emphasis added.) In his second supplemental affidavit, Grimes

attested that pursuant to the Articles of Organization and the Initial Report, he is

the “registered agent, the manager, and a member of Grimes True Value

Hardware, L.L.C.,” and that he held the same positions on August 21, 2006.

(Emphasis added.)

The foregoing shows that Floyd was both a manager and a member.

Although he may not have had the authority as a manager to bind the business

pursuant to the terms of the Operating Agreement, he had such authority as a

member pursuant to the terms of the Articles of Organization and the Operating

Agreement. Floyd would retain this authority even if he was only a manager since

the Operating Agreement allows members to authorize the manager to

contractually bind the company, and he attested that he was authorized to execute

UM forms on behalf of the company in a managerial capacity.

At trial, the trial court discussed Floyd’s authority as a member to bind

Grimes True Value Hardware, L.L.C., when it stated: “[W]hether it’s the LLC,

he’s a member. He’s the person who has authority on behalf of the LLC.” Based

on the above reasoning, we find that the trial court correctly interpreted the

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contract. Thus, Plaintiffs’ argument regarding his managerial authority to bind the

company is without merit.

Plaintiffs further contend that Floyd’s failure to sign the waiver in a

representative capacity creates a genuine issue of material fact. This argument is

without merit pursuant to the reasons discussed above in addition to National

Interstate Insurance Co. v. Collins, 08-693 (La.App. 1 Cir. 2/13/09), 9 So.3d 881,

a case cited by State Farm. In National Interstate, the issue was whether the trial

court legally erred in finding that a UM waiver form was valid, notwithstanding

the fact that the insured company’s name failed to appear on the form and the

insured company’s legal representative failed to state that he was signing the

waiver in his representative capacity. The appellate court reviewed the Duncan

factors and found that the UM waiver was not valid and reversed the trial court’s

judgment granting of National Interstate’s motion to dismiss. The appellate court

reasoned that the signatory’s capacity on the face of the form was uncertain. The

decision was subsequently reversed by the supreme court in National Interstate,

09-1214, p. 1 (La. 11/6/09), 21 So.3d 316, 316, “because there was no question as

to which policy was involved and the legal representative’s name was printed on

the waiver form[.]”

In the present case, there is no question as to which policy was involved.

Floyd’s name was initialed, signed, and printed on the waiver form. Pursuant to

the supreme court’s holding in National Insurance, Floyd’s failure to state that he

was signing the waiver in a representative capacity does not invalidate the waiver.

Thus, Plaintiffs’ argument is without merit.

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IV. Fourth Assignment of Error

In their fourth assignment of error, Plaintiffs allege that a genuine issue of

material fact exists as to whether the waiver is invalidated by ambiguity and a lack

of clarity arising from the uncertain identity of the named insured along with the

unknown signatory capacity.

We have already addressed these issues above. Thus, this assignment of

error is without merit.

V. Fifth Assignment of Error

In their fifth assignment of error, Plaintiffs contend that the trial court legally

erred by deciding the validity of the waiver based on the intentions of the parties.

Plaintiffs cite Duncan, 950 So.2d at 553, as authority wherein the court held that

“[t]he insurer cannot rely on the insured’s intent to waive UM coverage to cure a

defect in the form of the waiver.”

In their brief, Plaintiffs cite approximately one page of the colloquy between

the trial court and Plaintiffs’ counsel, Mr. Roy S. Halcomb, Jr., contained in the

trial court transcript. We only list those parts wherein the trial court mentioned

intent:

BY THE COURT:

But this is a case [where] the insured is arguing, I intended to waive
UM coverage. The insured is arguing that. The, the person who
(interrupted)

BY MR. HALCOMB:

It doesn’t matter what (interrupted)

BY THE COURT:

. . . . [I]t all comes down to the same person and he is, he is testifying
through numerous affidavits that his intent was to not have coverage
and to not pay premiums for this coverage and I think we’re just

17

stretching this so far by finding, trying to split hairs here to, to get a
policy that clearly wasn’t intended by these people and I mean, both
parties to the contract are saying we clearly did not intend for this
policy to, to be in effect and as, as bad as the result is for the injured,
it’s, it’s just not good law, to go split these hairs and, and try to
(interrupted)

In opposition, State Farm contends that the foregoing colloquy occurred

after Mr. Halcomb stated the following:

[I]f he had authority - even if you concede he had authority, which we
don’t, but if you concede he had authority, State Farm alleges he did
not exercise that authority. They allege that he did not sign it as a
representative of the LLC. They can’t have it both ways. They come
in here and they say, He didn’t sign it as a representative of the LLC
and so we don’t ever get to the question of, Did he have authority to
do it? State Farm has alleged he didn’t.

State Farm contends that the trial court was referring to signatory capacity intent in

direct response to Plaintiffs’ counsel’s argument,.

After our reading of the entire transcript, we agree with State Farm in that

Plaintiffs exceeded the authority issue by questioning Floyd’s signatory capacity.

It was only at this point wherein the trial court discussed his intent, which was in

direct response to Plaintiffs’ argument. The trial court, therefore, did not decide

the validity of the waiver issue based upon Floyd’s intent. Rather, and as

previously discussed, it decided the validity of the waiver based upon the law and

the evidence. Further, and as discussed above, the trial court correctly found that

Floyd had the authority to sign in both an individual and representative capacity

utilizing the law and the evidence. Thus, Plaintiffs’ assignment of error is without

merit.

DECREE

The trial court’s judgment is affirmed. All costs of this appeal are assessed

to Plaintiffs, Naddia and Randel Melder.

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AFFIRMED.

19

COURT OF APPEAL

THIRD CIRCUIT

STATE OF LOUISIANA

14-934

NADDIA MELDER, ET UX.

VERSUS

STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY, ET AL.

Cooks, J., Dissent.

Plaintiff Naddia Melder (Melder)was injured in an auto accident when her

vehicle was struck by a vehicle driven by Connie Turlington. Melder was working

as an employee of Grimes Industrial Supply, L.L.C. The vehicle driven by Melder

was titled to and owned by a different L.L.C., namely Grimes True Value

Hardware, L.L.C. Both L.L.C.’s are owned by Frank Grimes and Floyd Grimes.

The Grimes’ vehicle was insured under a policy with State Farm Insurance which

was obtained to cover the vehicle on the day it was purchased by Grimes True

Value Hardware, L.L.C. The bank financing the purchase was named as an

additional insured as the lienholder. On the declarations page of the policy the

policy purports to be issued to: “Grimes, Floyd & Grime[s], Frank DBA Grimes

True Value HDW Store, 8322 Highway 71 N Pineville, LA 71360-275.” The UM

Selection Form for this policy indicates on two lines that Floyd Grimes signed that

form rejecting UM coverage identifying him as the “Named Insured or Legal

Representative” and that Floyd’s signature is the signature representing the

“Signature of a Named Insured or Legal Representative[.]” State Farm paid the

claim for the total loss of the Grimes’ vehicle by making a payment to the

1

bank/lienholder for the balance on the loan, and paying the remaining amount to

Grimes True Value Hardware, L.L.C. State Farm maintains there is no UM

coverage on the policy insuring the Grimes’ vehicle as coverage was waived in

writing.

This appeal was taken from the second ruling on State Farms Re-Fixed

Motion for Summary Judgment. Previously, this court reversed the trial court’s

granting of summary judgment in favor of State Farm and remanded the case

finding there were unresolved genuine issues of material fact. This court held:

Simply stated, the policy purports to insure a vehicle belonging to
Floyd and Frank Grimes, but Mr. Grimes[’] sworn affidavit states that
the vehicle belongs to a limited liability company. Furthermore, the
record contains no evidence of the authority by which Mr. Grimes
executed the UM rejection, either on behalf of the limited liability
company or the apparently non-existent partnership between himself
and Frank Grimes. Given that unresolved material fact, the burden
never shifted to the Melders in the summary judgment hearing.

The case was remanded to the trial court. No writ was filed with the State

Supreme Court.

State Farm filed a second supplemental memorandum in support of its

Motion for Summary Judgment which it asked to be re-fixed for hearing.

Following a hearing on the re-fixed Motion for Summary Judgment, the trial court

again granted summary judgment in favor of State Farm finding there is no UM

coverage under the policy insuring the Grimes’ vehicle. The trial court dismissed

Plaintiff’s claims against State Farm with prejudice. Plaintiffs appeal.

The majority affirms the trial court’s ruling applying the de novo standard of

review. I disagree with the majority decision reversing the ruling of the previous

panel of this court. The majority recognizes that Louisiana law favors UM

coverage and that any exception to coverage must be strictly construed. It also

2

acknowledges that the law requires adherence to strict formalities for rejecting UM

coverage. The majority recites six requirements of form which must be met for a

valid UM waiver: (1) the insured must initial the selection or rejection (2) if lower

limits are selected the lower limit must be entered on the form denoting the exact

limit (3) the insured or legal representative must sign the form evidencing the

intent to waive UM coverage (4) the from must include his or her printed name to

identify the signature (5) the insured dates the form to determine the effective

date of the UM waiver and (6) the form must include the policy number to

demonstrate which policy it refers to. Because Floyd Grimes is the only person

who signed the waiver form the majority sets out to determine if his signature

meets the above criteria. The majority finds there is no genuine issue of material

fact that Floyd Grimes is an insured under the policy and as such signed a valid

waiver of UM coverage on this policy for the subject vehicle.

I do not believe this matter is ripe for summary judgment. The majority, like

the trial court, errs in making determinations of credibility, considering the merits

of the case, evaluating deposition testimony and testimony by affidavit, and

engaging in the weighing of evidence, all of which are not appropriate on summary

judgment. As this court stated in Fusilier v. Dautrive, 99-692 (La.App. 3 Cir.

12/22/99), 759 So.2d 821, 831, reversed on other grounds by 2000-151

(La.7/14/00), 764 So.2d 74 (emphasis added):

The first issue that must be addressed in reviewing a trial court's
grant of summary judgment is whether any genuine issues of material
fact exist. Smith v. Our Lady of the Lake Hosp. Inc., 93-2512
(La.7/5/94); 639 So.2d 730, appeal after remand, 96-1837
(La.9/27/96); 680 So.2d 1163. The reviewing court must next address
whether reasonable minds could conclude, based on the facts
presented, the mover is entitled to judgment. Id. In other words,
summary judgment is appropriate when all relevant facts are brought
before the court, the relevant facts are undisputed, and the sole

3

issue remaining is the conclusion to be drawn from the relevant
facts. Id
In this case, the relevant facts are seriously disputed and Plaintiffs have put

forth more than sufficient evidence to create factual disputes which cannot be

resolved on summary judgment. As we have often stated: “Issues of credibility

have no place in summary judgment procedure.” Hinds v. Clean Land Air Water

Corp., 96–1058 (La.App. 3 Cir. 4/30/97); 693 So.2d 321. Any of the State's

conclusions, which are contained within the records, cannot be substituted for the

fact-finding process provided by a trial.” Carriere v. State, 708 So.2d 822, 824

(La. 3 Cir. 1998) (emphasis added). The Plaintiffs have shown that they can put

forth substantial evidence which calls into question many genuine issues of

material fact necessary to a fair and full resolution of this matter. Summary

judgment is not a substitute for a trial on the merits.

“It is not the court's function on a motion for summary judgment
to determine or even inquire into the merits of the issues
presented. While deposition testimony may be used to support or
oppose a motion for summary judgment, it may not be weighed.”
Lexington House v. Gleason, 98-1818, p. 6 (La.App. 3 Cir. 3/31/99);
733 So.2d 123, 126 (citations omitted).

Mouton v. Sears Roebuck, 99-669 (La.App. 3 Cir. 11/31/99), 748 So.2d 61,67, writ

denied, 99-3386 (La.2/4/00), 754 So.2d 232 (emphasis added).

The majority bases its reasoning on its finding that Floyd Grimes is an

insured under the policy because he had an insurable interest in the vehicle. It

finds the affidavit presented in supplemental support of the re-fixed Motion for

Summary Judgment shows that Floyd Grimes is a member of both the True Value

LLC and the Industrial Supply LLC and is involved in the daily operations of both

LLCs, and further finds these affidavits show that the truck was used by both

LLCs. The majority states “Grimes’ attests that he purchased the State Farm

4

policy, and he is listed as a ‘named insured[.]’” It further states “[Floyd] attests

that the policy was issued to ‘Floyd Grimes and Frank Grimes d/b/a Grimes True

Value Hardware Store and provided liability insurance’ for the Nissan truck. He

attests that he signed the ‘UM selection form and opted to reject UM coverage.’”

After Defendants filed the Motion to Re-fix the Motion for Summary

Judgment and the attendant affidavits in support thereof, Plaintiffs took the

deposition of Grimes True Value Hardware, LLC. Floyd Grimes appeared at the

deposition as the designated representative of Grimes True Value Hardware, LLC.

Plaintiffs also obtained the Allstate Insurance Company (the insurer of the

Turlington vehicle) claim file regarding this accident. They assert that the

documents obtained from Allstate, along with the deposition testimony of Floyd

Grimes, demonstrate there are unresolved genuine issues of material fact which

can only be resolved by a trial on the merits. Plaintiffs assert, as they previously

asserted in the prior case before this court, that many material issues of fact remain

unresolved including but not limited to the question regarding what person and/or

entity constitutes the “named insured” on the policy; in what capacity did Floyd

Grimes sign the UM rejection form; if Floyd Grimes signed the rejection form on

behalf of the LLC did he have authority to do so. Plaintiffs aver that the evidence

submitted at the hearing on the Re-fixed Motion for Summary Judgment shows

that the vehicle was purchased by Grimes True Value Hardware, LLC with a loan

from Union Bank, secured by the vehicle. The vehicle was titled in the name of

the LLC and the bank was listed as a mortgage holder. The bank required the LLC

to insure the vehicle and name Union Bank as an additional insured. Grimes True

Value Hardware, LLC purchased the insurance policy via telephone conversation

between Floyd Grimes and State Farm’s agent on August 21, 2006, the same day

5

the vehicle was purchased by the LLC. The LLC paid all premiums for the policy

and paid all payments on the loan from Union Bank. At this point in the litigation

there has been no testimony from the other member of the two LLCs. Plaintiff

further asserts that the evidence shows that Floyd Grimes testified in deposition

that he has never operated any business or sole proprietorship known as “Grimes

True Value Hardware” or “Grimes True Value Hardware Store,” and the only

entity which has ever operated at the address listed in the insurance policy is

“Grimes True Value Hardware, LLC.” Plaintiff also maintains the evidence thus

far shows that the rejection form was filled in by an employee of State Farm, Ms.

Anderson. Anderson does not know on what date Floyd Grimes signed the

rejection form and does not recall if she was even present when Floyd signed the

form. Our court previously found that Floyd does not recall on what date he went

to the insurance agency to sign the UM rejection form. No new light is shed on

this question in the Re-fixed Motion for Summary Judgment hearing. State Farm

asserts Floyd signed the rejection form in his personal capacity as “Floyd Grimes”

d/b/a “Grimes True Value Hardware Store.” State Farm also asserts that the LLC

is not insured for its vehicle under this policy and alternatively asserts Floyd signed

for the LLC in his capacity as Manager and/or Member of the LLC with authority

to bind the LLC. The facts remain genuinely disputed.

Plaintiff also asserts that the Operating Agreement governing the LLC

provides: “No manager shall have the power to sign for or enter into contracts on

behalf of the company, said power being reserved to the members, unless

authorized by the members.” Plaintiff points out the trial court “made a factual

finding that Floyd Grimes is the named insured under the policy and, regardless,

the intent of the parties was to reject UM coverage.” Plaintiff correctly maintains

6

that “In determining whether an issue is ‘genuine’, Courts cannot consider the

merits, make credibility determinations, evaluate testimony or weigh evidence,”

and cites numerous cases in support of their position. I agree with Plaintiff’s cited

line of cases for this proposition.

The majority further states that “the trial court stated that Floyd is a named

insured since ‘he’s listed in the “dec” page as the named insured.’ We, therefore

look to the evidence to determine whether Floyd is a named insured under the

policy.” The majority then “reviews” the factual evidence and finds that Floyd

Grimes had an insurable interest in the vehicle, and, as he is named on the policy

as “Floyd Grimes DBA Grimes True Value HDW Store,” is an insured who may

properly reject UM coverage. The majority again engages in inappropriate fact

finding and determinations of credibility. It then proceeds to reason that the DBA

designation “does not create an entity distinct from the person operating the

business,” citing Trombley v. Allstate Ins. Co., 93-1669 (La.App. 3 Cir. 6/1/94),

640 So.2d 815 and Krawfish Kitchen Rest., Inc. v. Ardoin, 396 So.2d 990 (La.App.

3 Cir. 1981). Thus, says the majority, the trial court correctly found that Floyd is a

named insured on the policy who could reject UM coverage in his individual

capacity.

Having engaged in making this determination, the majority next finds that

the question of “in what capacity did Floyd sign the rejection form” is not an issue

because the trial court found Floyd could sign in both his individual capacity as

Floyd Grimes, and in a representative capacity for the LLC. This finding is made

despite this issue being genuinely disputed by the parties and no court having yet

heard from the other member of the LLCs who is also listed on the insurance

policy. Nevertheless, the majority proceeds to “determine whether the evidence

7

shows Floyd’s capacity to sign the waiver both personally and representatively.”

The majority also determines that Floyd has a personal insurable interest in

the vehicle under the jurisprudence defining an insurable interest as “any lawful

and substantial economic interest in the safety or preservation of the subject of the

insurance free from loss, destruction, or pecuniary damage.” The majority finds

that ownership of the property is not a prerequisite for the existence of an insurable

interest and then finds that Floyd is a member of both the LLC that owned the

truck and the LLC that most often used the truck. It also finds that as there is no

factual dispute Floyd used and depended on the truck in the daily operations of the

LLC that he “had the right to possess and use the truck as part of his business, had

a significant and substantial economic interest in the truck and that he was subject

to pecuniary loss due to his inability to operate his business without the truck,

sufficient to constitute an insurable interest.” Thus, the majority concludes, Floyd

had the authority as one with an insurable interest to obtain coverage on the vehicle

and reject UM coverage. The majority reasons that since Floyd is listed on the

policy as “Floyd Grimes DBA” he personally/individually was a named insured

who is now determined to have had an insurable interest and could therefore

validly reject UM coverage. This determination ignores substantial facts presented

by Plaintiffs regarding the owner/purchaser/insurer of the vehicle owned by the

LLC which disputes Defendant’s claims and the majority’s findings.

The majority also addresses the factual issue of whether Floyd could sign the

rejection on behalf of the LLC if it would be determined that the policy insured the

LLC, the only record title owner of the vehicle. It concludes that the evidence

shows he had such capacity as a member and/or manager of the LLC, and, finds

8

that Floyd’s “failure to state that he was signing the waiver in a representative

capacity does not invalidate the waiver.”

The majority rejects Plaintiff’s assertion that there is a genuine issue of

material fact as to whether the waiver should be invalidated because it is

ambiguous and unclear as to the identity of the named insured and/or the unknown

signatory capacity of Floyd. Plaintiff asserts:

[T]here is no way to determine if the UM rejection form was
signed by the named insured or its legal representative simply by
looking at the UM rejection form as prepared by State Farm and
signed by Floyd Grimes. In fact, the parties themselves cannot agree
on who the named insured is under the policy and whether Floyd
Grimes signed the UM rejection form in his individual capacity or in a
representative capacity. Adding to this ambiguity is the fact that the
name Grimes True Value Hardware, LLC appears nowhere on the
UM rejection form, and Floyd Grimes purchased all of his automobile
insurance, personal and business, through the same State Farm
agency, this ambiguity and lack of clarity invalidates the UM rejection
form.

An unresolved ambiguity and/or lack of clarity on the UM rejection form would

invalidate rejection of UM coverage. The majority acknowledges this is so.

Additionally, the majority acknowledges that there must be strict

adherence to the formalities of what constitutes a valid waiver and lists among

those formalities the specific requirement that the “insured” must date “the form

to determine the effective date of the UM waiver.” Clearly this requirement

remains completely unresolved in this case. At this stage the evidence presented

by both parties shows that no one can say if or when Floyd Grimes dated his

purported rejection of UM coverage. Thus, at present, there is not strict adherence

to the requirements of a valid waiver. In order to reach the conclusions reached by

the trial court and the majority one must engage in some serious fact finding,

credibility determinations, and the weighing of evidence and deposition testimony

9

presented in support of and in opposition to the Motion for Summary Judgment,

and, one must overlook the fact that the date criteria listed by the majority as a

strict requirement of formality is not met. I agree with the original panel’s finding

that there are unresolved genuine issues of material fact. Plaintiffs have now

introduced more than enough evidence to demonstrate that multiple issues

necessary to the disposition of this case remain in serious dispute. With all due

respect, I do not agree with the majority opinion because I believe it goes beyond

what either the trial court or this court may do on a motion for summary judgment.

For the reasons stated I respectfully dissent.

10