Ken Comer Auctioneers, Inc. D/B/A Harvest Motors v. Theresa Ann Harmon & Goauto Insurance Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

19-811

KEN COMER AUCTIONEERS, INC.,
D/B/A HARVEST MOTORS

VERSUS

THERESA ANN HARMON &
GOAUTO INSURANCE COMPANY

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APPEAL FROM THE
FOURTEENTH JUDICIAL DISTRICT COURT
PARISH OF CALCASIEU, NO. 2017-749
HONORABLE SHARON D. WILSON, DISTRICT JUDGE

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CANDYCE G. PERRET
JUDGE

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Court composed of Elizabeth A. Pickett, Shannon J. Gremillion, and Candyce G.
Perret, Judges.

AFFIRMED.

Robert C. McCorquodale
Stutes and Lavergne, LLC
600 Broad Street
Lake Charles, LA 70601
(337) 433-0022
COUNSEL FOR PLAINTIFF/APPELLEE:
Ken Comer Auctioneers, Inc., D/B/A Harvest Motors

Hoai T. Hoang
Voorhies & Labbe
700 St. John, 5th Floor
Lafayette, LA 70501
(337) 232-9700
COUNSEL FOR DEFENDANT/APPELLANT:
GoAuto Insurance Company

Jason W. Burge
Elizabeth Blair Schilling
Fishman Haygood, LLP
201 St. Charles Avenue, 46th Floor
New Orleans, LA 70170-4600
(504) 586-5252
COUNSEL FOR DEFENDANT/APPELLANT:
GoAuto Insurance Company

PERRET, Judge.

In this insurance dispute, GoAuto Insurance Company (“GoAuto”) appeals a

June 12, 2019 judgment granting Ken Comer Auctioneers, Inc., d/b/a Harvest

Motors’, (“Harvest Motors”) Motion for Partial Summary Judgment on the issue of

coverage.1 For the following reasons, we affirm.

FACTS:

This case involves a dispute over insurance coverage for property damage

resulting from an automobile accident that occurred in Lake Charles, Louisiana, on

March 22, 2016. The vehicle at issue is a 2009 Nissan Altima that Theresa Harmon

leased through a rental purchase agreement with Harvest Motors, which provided

financing for the purchase. Ms. Harmon purchased collision coverage from GoAuto,

and Harvest Motors was named as an additional insured under the lienholder

designation on the policy. Also, the policy contained an exclusion

provision/endorsement naming Ms. Harmon’s daughter, Jermika Mayne (“Jermika”),

as an excluded driver. On the day of the automobile accident, Jermika was driving

the Nissan Altima despite being an excluded driver. As such, GoAuto denied

coverage for the accident based on the named driver exclusion provision in Ms.

Harmon’s policy. Thereafter, on February 23, 2017, Harvest Motors filed this

lawsuit against Ms. Harmon and GoAuto, seeking to recover for property damage

caused to the Nissan Altima, as well as damages, penalties, and costs.

On August 24, 2017, GoAuto filed a Motion for Summary Judgment,

asserting that the claims against it should be dismissed because the insurance

coverage provided to Ms. Harmon specifically excluded Jermika as a driver and thus,

there was no coverage at the time of the accident. In opposition to the motion,

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On July 26, 2019, the trial court signed an amended judgment indicating that the trial
court’s June 12, 2019 ruling was intended “to be a final and appealable judgment as described in
Article 1915 of the Code of Civil Procedure.”

Harvest Motors argued that it, as the additional insured, was never notified by

GoAuto that the coverage associated with the policy was limited by an excluded

driver or that “Jermika Mayne” was listed as an excluded driver on the policy prior

to the accident. Further, Harvest Motors argued that there is no evidence that any

insured under the policy allowed Jermika to drive the vehicle on the day of the

accident. Following a hearing held on November 28, 2017, the trial court denied

GoAuto’s Motion for Summary Judgment. On May 25, 2018, this court denied writs

on that ruling.

On April 9, 2019, Harvest Motors filed a Motion for Partial Summary

Judgment, arguing that GoAuto’s insurance policy provided coverage to it as the

additional insured/lienholder and that there are no genuine issues of material fact in

dispute. In opposition, GoAuto argued, again, that because Jermika was driving the

car at the time of the accident, coverage is excluded because the insurance policy

specifically lists her as an excluded driver.

At the hearing on the Partial Motion for Summary Judgment, Harvest Motors

argued that it is not a “named insured” because it is not listed in the section for named

insureds in the policy issued by GoAuto to Ms. Harmon. Rather, Harvest Motors

argued that it is listed in a different section of the policy as an additional

insured/lienholder. Harvest Motors argued that the policy fails to explain if and how

the “named insured” and “additional insured” are to be treated differently in

situations in which the named excluded driver drives the vehicle and causes damage.

Harvest Motors maintained that because GoAuto left that issue open for

interpretation, the interpretation of that issue must be resolved against GoAuto and

in favor of coverage.

GoAuto argued at the hearing that “Louisiana law focuses on the bargain

that’s reached between the insured and the insurance company” and that Ms.
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Harmon expressly excluded coverage for Jermika in exchange for a discounted

premium. GoAuto argued that if it has to pay Harvest Motors “as the lien holder for

the very risks that [it] agreed not to take, [it has] lost that bargain entirely.” GoAuto

argued that Harvest Motors is limited by the insurance coverage Ms. Harmon

purchased because it did not directly enter into any contract with it for insurance

coverage and did not pay any additional premium to it.

After a hearing on May 30, 2019, the trial court granted Harvest Motors’

Partial Motion for Summary Judgment. In its judgment, the trial court stated, in

pertinent part:

There is no dispute that [Harvest Motors] was an insured under the
policy. The issue before the Court is whether or not the exclusion to
coverage relied upon by GoAuto Insurance Company was intended to
apply to the Additional Insured/Lienholder, which in this case was
[Harvest Motors].

After having reviewed the briefs submitted and considered the
arguments made, this Court finds that it is unclear and vague whether
or not the exclusion from coverage relied upon by GoAuto Insurance
was intended to apply to the additional insured/lienholder.

Under these peculiar facts, the Court finds that it must interpret the
contract in favor of coverage.

GoAuto now appeals this judgment, alleging the following sole assignment of

error:

The district court’s granting of summary judgment on coverage
in favor of [Harvest Motors] was contrary to the terms of the Named
Driver Exclusion Endorsement, was contrary to Louisiana statutes
providing that such exclusion is enforceable, was contrary to this
Court’s prior decision in Thibeaux [v. GoAuto Insurance Co., 18-333
(La.App. 3 Cir. 3/27/19) 269 So.3d 843], and was error.

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STANDARD OF REVIEW:

This court reviews a trial court’s granting of a motion for summary judgment

de novo. Duncan v. U.S.A.A. Ins. Co., 06-363 (La. 11/29/06), 950 So.2d 544. Under

this standard of review, the appellate court uses the same criteria as the trial court in

determining if summary judgment is appropriate: whether there is a genuine issue

of material fact and whether the mover is entitled to judgment as a matter of law. Id.

Additionally, the “[i]nterpretation of an insurance policy ordinarily involves a legal

question that can be properly resolved by a motion for summary judgment.” Bernard

v. Ellis, 11-2377, p. 9 (La. 7/2/12), 111 So.3d 995, 1002.

DISCUSSION:

In Bernard, 111 So.3d at 1002 (citations omitted), the Louisiana Supreme

Court provided the following guidelines for interpreting insurance contracts:

An insurance policy is a contract between the parties and should be
construed by using the general rules of interpretation of contracts set
forth in the Civil Code. An insurance policy should not be interpreted
in an unreasonable or a strained manner so as to enlarge or to restrict
its provisions beyond what is reasonably contemplated by its terms or
so as to achieve an absurd conclusion. Absent a conflict with statutory
provisions or public policy, insurers, like other individuals, are entitled
to limit their liability and to impose and to enforce reasonable
conditions upon the policy obligations they contractually assume. If
the policy wording at issue is clear and unambiguously expresses the
parties’ intent, the insurance contract must be enforced as written.
When the language of an insurance policy is clear, courts lack the
authority to change or alter its terms under the guise of interpretation.
A court should only grant the motion for summary judgment when the
facts are taken into account and it is clear that the provisions of the
insurance policy [do or] do not afford coverage.

Louisiana jurisprudence also holds that “[e]xclusionary provisions in insurance

contracts are strictly construed against the insurer, and any ambiguity is construed

in favor of the insured.” Ledbetter v. Concord Gen. Corp., 95-809, p. 4 (La. 1/6/96),

665 So.2d 1166, 1169, amended on other grounds, 95-809 (La. 4/18/96), 671 So.2d

915. Further, “an ambiguity exists in an insurance policy when the pertinent

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provision can reasonably be construed in two different ways.” McCarthy v. Berman,

95-1456, p. 8 (La. 2/28/96), 668 So.2d 721, 726.

In this case, the declarations page lists Ms. Harmon as an insured and lists

Harvest Motors as an additional insured/lien holder. The policy also contains a

Named Driver Exclusion Endorsement that states, in pertinent part (emphasis in

original):

In consideration of the premium charged, the Named Insured agrees
that no coverage provided by the Company is afforded while any
vehicle listed on this policy is being used, driven, operated or
manipulated by, or under the care of:

Jermika Mayne[.]

....

The Named Insured further agrees that in the event the Company
becomes obligated to pay any sum or sums of money because of loss
for which there would otherwise have been no coverage based on this
endorsement because of any interest of any lienholder or any other
additional interest, the Named Insured shall reimburse the Company
for any and all sums, costs and expenses paid or incurred by the
Company.

The pertinent provision in the automobile liability insurance policy that

excludes coverage further states, in pertinent part (emphasis in original):

There is no coverage for Damage to Your Auto for:

1. Arising out of the operation or use of any auto insured
under Parts D, E, F and/or G by a named excluded
operator.

Because the parties argue over the word “Your,” as used in the above

exclusion, it is necessary to provide the following definitions as stated in the policy:

2. The words “you” and “your” refer to the person named on the
declarations page and that person’s spouse if living in the same
household.

3. The words “person” or “persons” refers to a natural person and
not any other entity.

....
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21. “Named Insured” means the person or persons listed as a
named insured on the declarations page of this Policy.

On appeal, GoAuto argues that the policy states explicitly that “no coverage

provided by the Company is afforded while any vehicle listed on this policy is being

used, driven, operated or manipulated by, or under the care of: Jermika Mayne.”

Thus, GoAuto argues that the named driver exclusion was clear and unambiguous

and that the “policy expressly provided that it did not cover damage to the 2009

Nissan Altima caused by Jermika.”

In support of its argument, GoAuto cites to Thibeaux, 269 So.3d 843, for the

proposition that a named driver exclusion endorsement bars insurance coverage of

any kind under a first party collision insurance policy for an accident caused by a

named excluded driver. GoAuto argues that this court, in Thibeaux, specifically

found that the named driver exclusion endorsement barred collision coverage for

damage caused by the named insured’s teenage son in a single vehicle accident, even

though he took the car without the named insured’s permission.2

GoAuto also cites to La.R.S. 32:900(L) to support its argument that Louisiana

law permits the parties to expressly exclude coverage for certain named drivers in

exchange for a discounted premium for the named insured. Louisiana Revised

Statues 32:900(L) provides:

(1) Notwithstanding the provisions of Paragraph (B)(2) of this
Section, an insurer and an insured may by written agreement exclude
from coverage the named insured and the spouse of the named insured.
The insurer and an insured may also exclude from coverage any other
named person who is a resident of the same household as the named
insured at the time that the written agreement is entered into, and the
exclusion shall be effective, regardless of whether the excluded person
continues to remain a resident of the same household subsequent to the

2
In Thibeaux, the mother had executed a named driver exclusion for her son, who later
took her car without her permission or knowledge and wrecked it. This court found “that the
named driver exclusion . . . is clear and unambiguous” and held that the named driver exclusion
precluded the mother’s recovery under the collision coverage policy. 269 So.3d at 848.

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execution of the written agreement. It shall not be necessary for the
person being excluded from coverage to execute or be a party to the
written agreement. For the purposes of this Subsection, the term
“named insured” means the applicant for the policy of insurance issued
by the insurer.

GoAuto argues that because La.R.S. 32:900(L) sanctions named driver

exclusion provisions, such as the one included in the policy it issued to Ms. Harmon,

the exclusion provision is enforceable. Further, GoAuto maintains that the

exclusionary provision is also enforceable against a lienholder like Harvest Motors,

which is listed as an additional insured under the policy that GoAuto issued to Ms.

Harmon. GoAuto notes that even though Harvest Motors did not directly enter into

any contract with it for insurance coverage and did not pay any additional premium

to it, Harvest Motors relied on Ms. Harmon to contract with it for insurance. Thus,

GoAuto argues that Harvest Motors is limited to the insurance coverage that Ms.

Harmon purchased.

In its appellee brief, Harvest Motors responds that only Ms. Harmon, the

named insured, violated the policy by allowing the excluded driver to use the vehicle

and that nowhere in the policy does it dictate that the additional insured’s coverage

can be limited by the actions of the primary insured. Harvest Motors also argues

that the wording of the policy indicates that the exclusion provision does not apply

to it. Specifically, Harvest Motors argues that in order for a party to be considered

a “your” as defined by the policy and referred to in the exclusion provision, the party

would have to be named on the declarations page and would have to be a natural

person. Although Harvest Motors is listed as an additional insured on the

declarations page, it argues that it, as a juridical entity, does not satisfy the

requirement of being a natural person.

Additionally, Harvest Motors asserts that GoAuto’s policy treats an additional

insured differently from a named insured as evidenced by the section of the Named
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Driver Exclusion Endorsement, which, as stated previously, reads (emphasis in

original):

The Named Insured further agrees that in the event the Company
becomes obligated to pay any sum or sums of money because of loss
for which there would otherwise have been no coverage based on this
endorsement because of any interest of any lienholder or any additional
interest, the Named Insured shall reimburse Company for any and all
sums, costs and expenses paid or incurred by the Company.

Harvest Motors argues that GoAuto included this provision under the Named

Driver Exclusion Endorsement because it was aware of the possibility of having to

pay a claim by an additional insured/lienholder for damages caused if in fact the

named insured permitted the excluded driver to use the vehicle and because GoAuto

wanted to make sure that the named insured would reimburse it in such situations.

We first note that we find no merit to GoAuto’s argument that Thibeaux is

relevant to the facts of this case. In Thibeaux, the issue before this court was whether

the named driver exclusion barred coverage when the insured’s son, the excluded

driver, had stolen and used the car. This court did not address the issue that is

presently before this court, which is whether the named driver exclusion in the policy

bars coverage to an additional insured/lienholder who had no notice by the insurer

that the insured had a named driver exclusion in the policy.

After reviewing the policy, we find that it clearly lists Harvest Motors as a

“Lienholder/Additional Insured” and is listed in a different section of the policy to

where Ms. Harmon, the insured, is listed. We also find merit to Harvest Motors’

argument that the policy fails to explain if and how the “named insured” and

“additional insured” are to be treated in situations in which the named excluded

driver drives the vehicle and causes damage. Even though Louisiana law permits

the parties to expressly exclude coverage for certain named drivers in exchange for

a discounted premium for the named insured, we find that the reimbursement

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provision in this policy, which obligates the named insured to reimburse GoAuto for

any amount that GoAuto may have to pay to the additional insured/lienholder for

damage caused by the named excluded driver, creates ambiguity as to whether

GoAuto intended to treat the insured differently than the additional

insured/lineholder. Because an ambiguous contractual provision, such as this

reimbursement provision, is generally construed against the insurer and in favor or

coverage, we find no legal error in the trial court’s ruling “to interpret the contract

in favor of coverage.”

For these reasons, we affirm the judgment of the trial court that granted

Harvest Motors’ Motion for Partial Summary Judgment on the issue of coverage.

All costs of this appeal are assessed to GoAuto.

AFFIRMED.

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