Wanda Lafleur, Indiv. v. Aftco Enterprises, Inc.

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CW 05-127

WANDA LAFLEUR, INDIVIDUALLY, ET AL.

VERSUS

AFTCO ENTERPRISES, INC., ET AL.

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APPEAL FROM THE
FIFTEENTH JUDICIAL DISTRICT COURT,
PARISH OF LAFAYETTE, NO. 2004-0523-C,
HONORABLE J. BYRON HEBERT, DISTRICT JUDGE

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MICHAEL G. SULLIVAN
JUDGE

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Court composed of Sylvia R. Cooks, Michael G. Sullivan, and Glenn B. Gremillion,
Judges.

WRIT DENIED IN PART AND GRANTED
IN PART; JUDGMENT RENDERED.

Howard L. Murphy
Deutsch, Kerrigan & Stiles, L.L.P.
755 Magazine Street
New Orleans, Louisiana 70130
(504) 581-5141
Counsel for Defendant/Respondent:
Acceptance Indemnity Insurance Company

John P. Guillory
The Dill Firm, A.P.L.C.
Post Office Box 3324
Lafayette, Louisiana 70502-3324
(337) 261-1408
Counsel for Defendants/Applicants:
Harco National Insurance Company
Southern County Mutual Insurance Company

James D. Hollier
Laborde & Neuner
Post Office Drawer 52828
Lafayette, Louisiana 70505-2828
(337) 237-7000
Counsel for Defendants/Respondents:
Norman Roberts
Francisco Gonzales
V.C. Enterprises, L.L.C.

Hal. J. Broussard
Ped C. Kay, III
Broussard & Kay
Post Office Drawer 3308
Lafayette, Louisiana 70502
(337) 232-1666
Counsel for Plaintiffs/Respondents:
Richard J. Lafleur, Jr.
Tina T. Lafleur
Sarah R. LaFleur
Wanda LaFleur

Michael J. Remondet, Jr.
Scott F. Higgins
Jeansonne & Remondet
Post Office Box 91530
Lafayette, Louisiana 70509
(337) 237-4370
Counsel for Defendants/Respondents:
Aftco Enterprises, Inc.
Etsi, Inc.
Home State County Mutual Ins. Co.

SULLIVAN, Judge.

This lawsuit arises from a multi-vehicle accident that occurred on April 24,

2003, when a tractor/trailer rig failed to stop for a red light on U.S. Highway 90 East

in Lafayette Parish. Plaintiffs and three insurers filed motions for summary judgment

regarding insurance coverage and the ranking of insurance policies. The trial court’s

rulings on the motions for summary judgment are the subject of this writ application.

For the following reasons, we deny the writ application as it pertains to coverage

under one policy, and we grant the writ application as it pertains to coverage under

another policy.

Facts

Norman Roberts was driving a tractor/trailer rig when he failed to stop for a red

light on Highway 90 and plowed into the thirteen or fourteen vehicles that had

stopped ahead of him for the light. Richard Lafleur was the driver of a vehicle

stopped for the red light. He died in the accident. Mr. Lafleur’s wife and children

filed this suit.

Plaintiffs and Acceptance Indemnity Insurance Company (AIIC) filed motions

for summary judgment which were granted by the trial court. Motions for summary

judgment filed by Southern County Insurance Company (Southern County) and Harco

Insurance Company (Harco) were denied by the trial court. Southern County and

Harco sought writs, asserting that the trial court’s rulings on all of the motions for

summary judgment were erroneous.

Summary Judgment

Appellate courts review motions for summary judgments de novo, asking the

same questions the trial court asks to determine whether summary judgment is

appropriate. Champagne v. Ward, 03-3211 (La. 1/19/05), 893 So.2d 773. This

inquiry seeks to determine whether any genuine issue of material fact exists and

whether the mover is entitled to judgment as a matter of law. La.Code Civ.P. art.

966(B). “[F]acts are material if they potentially insure or preclude recovery, affect

a litigant’s ultimate success, or determine the outcome of a legal dispute.” Smith v.

Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La. 7/5/94), 639 So.2d 730, 751

(quoting S. La. Bank v. Williams, 591 So.2d 375, 377 (La.App. 3 Cir. 1991), writ

denied, 596 So.2d 211 (La.1992) (alteration in original)).

A motion for summary judgment will be granted “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 the mover is entitled

to judgment as a matter of law.” La.Code Civ.P. art. 966(B). Summary judgment is

favored and shall be construed “to secure the just, speedy, and inexpensive

determination of every action.” La.Code Civ.P. art. 966(A)(2).

The mover bears the initial burden of proof to show that no genuine issue of

material fact exists. However, if the mover will not bear the burden of proof at trial,

he need not negate all essential elements of the adverse party’s claim, but he must

point out that there is an absence of factual support for one or more elements essential

to the claim. La.Code Civ.P. art. 966(C)(2). Once the mover has met his initial

burden of proof, the burden shifts to the nonmoving party to produce factual support

sufficient to establish that he will be able to satisfy his evidentiary burden at trial. Id.

“Interpretation of an insurance contract is usually a legal question that can be

properly resolved in the framework of a motion for summary judgment.” Robinson

v. Heard, 01-1697, p. 4 (La. 2/26/02), 809 So.2d 943, 945.

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Discussion

Insurance policies are contracts between the parties and have the effect of law

between them. Bryant v. United Servs. Auto. Ass’n, 03-3491, 04-28 (La. 9/9/04), 881

So.2d 1214. “The intention of the parties is to be determined in accordance with the

plain, ordinary, and popular sense of the language used in the agreement and by

giving consideration on a practical basis to the instrument in its entirety.” Fleniken

v. Entergy Corp., 99-3023, 99-3024, p. 6 (La.App. 1 Cir. 2/16/01), 790 So.2d 64, 68,

writs denied, 01-1269, 01-1295 (La. 6/15/01), 793 So.2d 1250, 1252. “When the

language of an insurance policy is clear and unambiguous, a reasonable interpretation

consistent with the obvious meaning and intent of the policy must be given.”

Robinson, 809 So.2d at 945 (citing Sanchez v. Callegan, 99-137 (La.App. 1 Cir.

2/18/00), 753 So.2d 403). Further, when the words of a contract are clear, explicit,

and lead to no absurd consequences, the contract must be interpreted within its four

corners and cannot be explained or contradicted by parol evidence. La.Civ.Code art.

1848; Peterson v. Schimek, 98-1712 (La. 3/2/99), 729 So.2d 1024.

Insurance companies have the right to limit coverage in any manner they

desire, but the limitations cannot conflict with statutory provisions or public policy.

Reynolds v. Select Props., Ltd., 93-1480 (La. 4/11/94), 634 So.2d 1180.

“Exclusionary provisions in insurance contracts are strictly construed against the

insurer, and any ambiguity is construed in favor of the insured.” Garcia v. St.

Bernard Parish Sch. Bd., 576 So.2d 975, 976 (La.1991). This rule of strict

construction does not allow courts to pervert policy language or be inventive and

create an ambiguity where none exists. Muse v. Metro. Life Ins. Co., 193 La. 605,

192 So. 72 (1939).

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In an effort to clarify our discussion of the issues presented herein, the

following outline of ownership, contractual relationships, and insurance coverage at

issue has been prepared:

Tractor Trailer

Owner: V.C. Enterprises, Inc./ Owner: Performance Rental, L.C.
Francisco Gonzales

Leased to: ETSI, Inc. Leased to: AFTCO Enterprises, Inc.

Driver: Norman Roberts

Insurers: Home State–$1 million Insurers: Southern County–
$1 million
AIIC–$1 million Harco–$10 million

AFTCO contracted with its sister company, ETSI, to haul the Performance Rental

trailer. ETSI leased the tractor from V.C. Enterprises, Inc./Francisco Gonzales and

hired Roberts to drive it. Home State and AIIC issued policies of insurance to

AFTCO, as the named insured; ETSI was named an additional insured by an

endorsement. Performance Rental is a named insured of policies issued by Southern

County and Harco.

Coverage under Southern County’s Policy

Southern County issued a policy of business auto insurance to Cleveland Mack

Sales, Inc. Performance Rental, L.C. is a named insured of the policy, and the trailer

involved in this accident is listed as a “covered auto” in the policy. The tractor driven

by Roberts is not identified as a “covered auto,” and neither AFTCO/ETSI nor

Roberts are named insureds under Southern County’s policy. Plaintiffs assert that

Southern County’s policy of insurance on the trailer owned by Performance Rental

provides coverage to them for this accident; Southern County contends there is no

coverage under its policy for this accident.

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Southern County’s policy provides liability coverage as follows:

We will pay all sums an insured legally must pay as damages because
of bodily injury or property damages to which this insurance applies,
caused by an accident and resulting from the ownership; maintenance
or use of a covered auto.

The policy defines insureds in pertinent part as “[a]nyone else while using with your

permission a covered auto you own, hire or borrow” and “[a]nyone liable for the

conduct of an insured described above but only to the extent of that liability.”

Plaintiffs assert AFTCO/ETSI and Roberts were insureds under these

provisions because Performance Rental’s trailer was a “covered auto” insured by

Southern County’s policy. The policy defines “covered autos” in pertinent part as:

SPECIFICALLY DESCRIBED AUTOS. Only those autos described
in ITEM THREE of the Declarations for which a premium charge is
shown (and for Liability Coverage any trailers you don’t own while
attached to any power unit described in ITEM THREE).

“Auto” is defined in Southern County’s policy as “a land motor vehicle, trailer or

semitrailer designed for travel on public roads but does not include mobile

equipment.”

Plaintiffs and AIIC first argue that, when the trailer, a “specifically described

auto,” was coupled with the tractor, the two became one vehicle, a “specifically

described auto”; therefore, Roberts was an insured under the policy and the policy

provides primary coverage for this accident. Countering, Southern County asserts

that an accident must result from the “use” of the trailer for there to be coverage under

its policy. It argues that Roberts’ driving of the tractor caused the accident, not his

“use” of the trailer; therefore, there is no coverage under this provision.

In Aetna Casualty & Surety Co. v. Hertz Corp., 366 So.2d 1362 (La.1978), the

supreme court held that a tractor and the trailer it was hauling became one vehicle for

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the transportation of the cargo. This holding is premised on the decision in Mays v.

Aetna Casualty & Surety Co., 242 So.2d 264 (La.App. 2 Cir. 1970). In Mays, the

court was faced with the opposite of Southern County’s argument, i.e., the tractor was

not in use because it was stationary while the trailer it was hauling was being loaded.

The court dismissed the argument, explaining:

[The tractor insurer] contends that [the driver] did not use the
truck-tractor, because it was stationary and was not being loaded; that
only the trailer was being loaded; that the truck-tractor, possessing only
a cab and a fifth wheel, was not capable of being loaded.

Common sense interpretation of the situation resists such an
argument. The truck-tractor and the semitrailer become one vehicle for
transporting things like the caterpillar tractor. See Johnson Transfer &
Freight Lines, Inc. v. American National Fire Insurance Company, 168
Tenn. 514, 79 S.W.2d 587, 99 A.L.R. 277; Delametter v. Home
Insurance Company, 233 Mo.App. 645, 126 S.W.2d 262.

The truck-tractor insured by Tri-State is designed to haul cargo.
It has no efficient or economic utility otherwise. In order to haul cargo,
it is designed to pull a trailer which in turn contains the cargo. This is
the very use for which the vehicle is made. Although it was at rest, it
supported the trailer on which the caterpillar machine was being loaded.
To load the trailer is to load the truck-tractor.

Id. at 266-67. See also Pitre v. Elliott, 541 So.2d 989 (La.App. 3 Cir. 1989).

Delametter v. Home Ins. Co., 233 Mo.App. 645, 126 S.W.2d 262 (1939), is

analogous to the situation here. In Delametter, the trailer insurer argued that its

policy did not provide coverage because the tractor pulling the trailer, not the trailer,

caught on fire. The court rejected the insurer’s argument, explaining:

When the defendant issued its policy of insurance on this trailer
it, of course, knew that the trailer was not equipped with any automotive
power within itself and that it could be operated only when attached to
an automobile tractor, and that the trailer when in operation must of
necessity be a part of a single operating unit consisting of a tractor and
the insured trailer.

Id. at 659, 126 S.W.2d at 268.

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The court’s reasoning in Fruehauf Trailer Co. v. South Carolina Electric &

Gas Co., 223 S.C. 320, 75 S.E. 2d 688, (S.C. 1953), pointedly reveals the fallacy of

Southern County’s argument that the trailer did not cause or contribute to this

accident. In Fruehauf, the issue was whether a trailer drawn by a tractor was subject

to attachment for damages which resulted from an accident involving the

tractor/trailer. The plaintiff had a contract to buy the trailer; he sought to resist the

attachment of the trailer to satisfy the damages resulting from the accident, arguing

it was not a vehicle within the meaning of the attachment statute. The court ordered

the attachment, explaining:

The trailer and the truck-tractor form one unit. They are both part of
one operation out of which the damages arose. The truck-tractor is by
the nature of its construction designed to operate with the trailer, and
likewise the trailer to operate with the tractor. The trailer, because of
the additional weight and momentum given to the unit, has a definite
bearing on the operation of the truck tractor. These considerations are
but common experience.

Id. at 323, 75 S.E. 2d at 689 (emphasis added). Pursuant to this jurisprudence, we

find that Performance Rental’s trailer and the tractor were one vehicle and that

Roberts is an insured under Southern County’s policy.

Southern County argues this finding is misplaced because the defendant-drivers

in Mays and Hertz were named insureds or employees of named insureds and

unquestionably insureds under the policies in question. It urges that because insured

status was not an issue in those cases, they are not applicable to the determination

herein. Based on our consideration of the discussions presented in the cited cases,

especially, Fruehauf, we find this argument is without merit.

Southern County cites Carter v. Vangilder, 803 F.2d 189 (5th Cir. 1986), in

support of its proposition that Mays and Hertz should not be applied to this case. In

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Carter, the issue was whether the policy insuring the trailer involved in the accident

sued on was primary and payable pro-rata with the insurance on the tractor or excess

to the insurance on the tractor. Louisiana Farm Bureau argued that “once the tractor

and trailer were joined, the separate policies on each unit became one, and, therefore,

the liability must be shared on a pro rata basis.” Id. at 192. The clause at issue read:

“when the covered auto is a trailer which is connected to a power unit, this policy’s

liability coverage . . . (b) Is excess if the power unit is not a covered auto.” Id. at 193.

The issue was not whether the policy provided coverage but whether the coverage

was primary or excess. Carter is not analogous to the issue presented here, and any

language employed by the court in its decision is not pertinent to a decision on the

facts presented here. We find no error with the trial court’s determination that the

tractor and trailer were one vehicle and that Roberts was an insured under Southern

County’s policy.

The trial court also found coverage under the “Nonowned Autos Only”

provision which provides:

NONOWNED AUTOS ONLY. Only those autos you do not own,
lease, hire, rent or borrow that are used in connection with your
business. This includes autos owned by your employees or partners or
members of their households but only while used in your business or
your personal affairs.

Plaintiffs and AIIC contend that the tractor is a “covered auto” under this

provision because it was not owned, leased, hired, rented, or borrowed by

Performance Rental and it was used in connection with Performance Rental’s

business of leasing trailers. Southern County argues that, because Roberts was not

in the course and scope of employment with Performance Rental and Performance

Rental did not have anything to do with the trailer at the time of the accident,

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Roberts’ driving the tractor/trailer did not constitute “use[] in connection with”

Performance Rental’s business.

We must determine whether the trailer was being used in AFTCO/ETSI’s

business and Performance Rental’s business at the time of the accident. AFTCO

rented the trailer from Performance Rental. Performance Rental’s involvement with

the trailer was leasing it to AFTCO, which was completed before the accident

occurred. There is no evidence Performance Rental was involved in contracting to

deliver cargo or delivering cargo in any way.

Plaintiffs argue the nature of the business of transporting goods requires a

finding that the trailer was being used in both AFTCO and Performance Rental’s

businesses. They contend federal regulations of the trucking industry mandate such

a finding and cite federal regulations which mandate that authorized motor carriers

maintain liability insurance in the minimum amount of $750,000.00 on tractors and

trailers. Federal regulations do impose a liability insurance requirement of

$750,000.00; however, this requirement is imposed on the lessee/authorized motor

carrier, not the owner/lessor of the leased equipment. 49 U.S.C. § 13906.

Federal regulations also require a written lease agreement between the

equipment owner/lessor and the lessee/authorized motor carrier, which:

[S]hall clearly specify the legal obligation of the authorized carrier to
maintain insurance coverage for the protection of the public pursuant
to [Federal Motor Carrier Safety Act] regulations under 49 U.S.C.
13906. The lease shall further specify who is responsible for providing
any other insurance coverage for the operation of the leased equipment,
such as bobtail insurance. If the authorized carrier will make a charge
back to the lessor for any of this insurance, the lease shall specify the
amount which will be charged-back to the lessor.

49 C.F.R. § 376.12(j)(1) (emphasis added). Plaintiffs have not cited any federal law

or regulation which requires both the owner/lessor and the lessee/authorized motor

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carrier to carry liability insurance which provides coverage for an accident which

occurs when the truck or trailer is leased, in the possession of the lessee/authorized

motor carrier, and being operated by the lessee/authorized motor carrier.

Louisiana jurisprudence has “interpreted the nonowned autos provision as

requiring that the accident occur while the nonowned auto is being used in the course

and scope of the insured’s business or personal affairs.” Perkins v. Guar. Nat’l Ins.

Co., 95-229, p. 6 (La.App. 3 Cir. 11/2/95), 667 So.2d 559, 563, writ denied, 96-759

(La. 5/31/96), 673 So.2d 1033. See also Adams v. Thomason, 32,728 (La.App. 2 Cir.

3/1/00), 753 So.2d 416, writ denied, 00-1221 (La. 6/16/00), 764 So.2d 965. In

Adams, the court found that a cotton trailer owned by a gin company was not being

used in the gin company’s business when one of its officer’s employees was involved

in an accident while hauling the officer’s cotton to the gin. Plaintiffs argued the

trailer was being used in the gin company’s business. The court rejected the

argument, observing that the driver of the truck hauling the trailer was not an

employee of the gin company, but of the officer, who was also a cotton farmer, and

that the officer/farmer was vicariously liable for the driver’s actions, not the gin

company.

As in Adams, Roberts was not an employee of the insured, Performance Rental,

but ETSI. He was not performing services for Performance Rental, but for

AFTCO/ETSI at the time of the accident. The tractor/trailer was being used in

AFTCO’s business at the time of the accident, not Performance Rental’s business.

Therefore, there is no coverage for the tractor under the “nonowned autos only”

provision of Southern County’s policy.

10

For these reasons, we find no error with the trial court’s judgment in favor of

Plaintiffs that Southern County’s policy of insurance provides coverage for this

accident pursuant to its “specifically described auto” and permissive user provisions.

However, we do find error with the trial court’s denial of summary judgment in favor

of Southern County under the “nonowned auto” provision, and we grant judgment in

favor of Southern County that the tractor is not insured under the “nonowned auto”

provision of its policy.

Leasing or Rental Concerns-Contingent Coverage

At the hearing on these motions for summary judgment, counsel for Southern

County admitted coverage under the policy, stating “I insure anyone who uses the

trailer with Performance Rental’s permission.” However, in its cross-motion for

summary judgment, Southern County contends its policy does not provide primary

coverage for this accident. It argues that the Leasing or Rental Concerns-Contingent

Coverage Endorsement to its policy requires the lessee, AFTCO/ETSI, to provide

primary insurance coverage to Performance Rental, and that, pursuant to the terms of

the endorsement, its policy does not provide primary coverage for this accident.

Plaintiffs argue the endorsement is inapplicable.

AIIC seeks a judgment declaring that the coverage provided by its policy for

this accident is excess to the coverage provided by Home State on the tractor and by

Southern County on the trailer. It asserts that its policy is an umbrella policy that

pays on behalf of ETSI, lessee of the tractor, only if the ultimate net loss for the

accident is greater than the sum of coverage from all collectible primary insurance,

i.e., Home State and Southern County’s policies.

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The trial court held that Southern County’s policy was primary on the trailer

and that AIIC’s policy was excess to Southern County’s policy. Southern County

urges that the trial court’s ranking of these two policies is wrong and that any

coverage its policy provides for this accident is excess to Home State’s primary

coverage and AIIC’s umbrella coverage on the tractor. It also argues that it did not

contemplate liability for damages caused solely by the fault of tractor drivers who

have no relationship with its insured, Performance Rental, when it issued the policy.

The “Leasing or Rental Concerns-Contingent Coverage” endorsement of

Southern County’s policy provides, in pertinent part:

This endorsement applies when the “lease or rental agreement” in
effect at the time of an “accident” specifies that the lessee or rentee is
responsible for providing primary liability insurance or primary physical
damage.

(Emphasis added). The endorsement further provides that Southern County’s

obligation is contingent upon liability insurance “required in the ‘lease or rental

agreement’” not being “collectible” and that its coverage is “excess over any other

collectible insurance.”

Plaintiffs and AIIC argue this endorsement does not apply because the rental

agreement between Performance Rental and AFTCO does not “specify” that AFTCO

must provide “primary liability insurance.” Southern County does not deny this but

argues that the lease agreement evidences its and Performance Rental’s intent for

AFTCO/ETSI to provide primary insurance and for this endorsement to apply in

situations like this one. It points to Performance Rental’s lease agreement which

requires AFTCO to maintain liability insurance in the amount of $1 million with

Performance Rental being named an additional insured and to indemnify and hold

Performance Rental harmless “against all loss or liability (including reasonable

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attorney’s fees) for injuries or damages to persons or property resulting from use of

trailers rented from Performance [Rental].”

The trial court strictly construed the endorsement because it limits coverage;

it granted AIIC’s motion and denied Southern County’s motion. Southern County

urges that the trial court’s strict construction of the endorsement was improper,

arguing that strict construction inures only to the benefit of the insured, Performance

Rental. Southern County’s argument fails in the face of Article 2046 of the Civil

Code, which provides: “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.” The “Leasing or Rental Concerns-Contingent Coverage”

endorsement is clear and explicit. It is applicable if Performance Rental’s lease

agreement “specifies” that AFTCO is responsible for providing primary liability

insurance. The lease does not specify this requirement; therefore, the endorsement

is not applicable, and “no further interpretation can be made in search of the parties’

intent.”

Southern County urges that this court’s decision in Pitre, 541 So.2d 989,

requires a different conclusion: that it and AIIC pay on a pro-rata basis. In Pitre, the

two policies at issue each contained an excess coverage provision which was

mutually repugnant to the other policy’s excess coverage provision, resulting in no

coverage under either policy. That is not the case here. Southern County’s “Leasing

or Rental Concerns-Contingent Coverage” endorsement is not applicable; therefore,

it is not mutually repugnant with AIIC’s policy, an excess policy.

The trial court’s rulings that Southern County’s policy provides primary

coverage for this accident and that AIIC’s policy provides excess coverage to Home

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State’s policy on the tractor and Southern County’s policy on Performance Rental’s

trailer are affirmed.

Coverage under Harco’s Policy

Harco filed a motion for summary judgment, arguing its policy does not

provide coverage for this accident; Plaintiffs filed a motion for summary judgment,

seeking a judgment that Harco’s policy does provide coverage. The trial court found

Harco’s $10 million excess policy provided coverage for this accident. Harco makes

three arguments regarding the trial court’s determination. Finding merit in one of

those arguments, we need not address the other two.

Harco contends that its policy’s “Leased Autos” exclusion excluded the trailer

Performance Rental rented to AFTCO from coverage provided by its policy. Harco’s

policy provided in pertinent part:

This insurance does not apply to:

....

17. Leased Autos

Any “covered auto” while leased or rented to others. But
this exclusion does not apply to:

a. A “covered auto” you rent to one of your
customers while their “covered auto” is left
with you for service or repair;

b. “Bodily injury” or “property damage” arising
out of the work you performed or defective
products; or

c. “Bodily injury” or “property damage” caused
by an “occurrence” resulting from the
ownership of a “covered auto.”

Harco points to this exclusion and argues its policy did not provide coverage

because the trailer was leased by Performance Rental to AFTCO. Plaintiffs argued

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to the trial court that this exclusion applies only when “anyone who is an insured

under this policy” leases Performance Rental’s trailers to someone else, e.g., AFTCO

subleases one of the trailers it leased from Performance Rentals to another. Plaintiffs

and AIIC also argue that, because no lease agreement existed between Performance

Rental and ETSI or Roberts, this exclusion does not apply. Lastly, Plaintiffs argue

Roberts, as a permissive user of Performance Rental’s trailer, was an insured under

Harco’s policy; therefore, he cannot be an “other” within the meaning of this

exclusion. AIIC also argues that, because the exclusion does not expressly negate

coverage for users of leased autos, there is coverage. The trial court found that

Harco’s policy provided coverage for ETSI and Gonzales, Robert’s employer, that is

not excluded by this provision.

In Brown v. Coregis Insurance Co., 99-48, 99-49, p. 7 (La.App. 1 Cir. 2/18/00),

752 So.2d 347, 353, the court interpreted a leased autos exclusion which contained

language identical to the language at issue here: “[a]ny ‘covered auto’ while leased

or rented to others.” The plaintiffs argued the accident resulted from the lessor’s

negligence in installing a mirror on the vehicle; therefore, the exclusion should not

apply. The court rejected the argument, finding “[t]he language of the policy clearly

and unambiguously excludes all coverage under the policy for any covered auto while

it is leased to another . . . [T]he ‘leased auto’ exclusion . . . excludes coverage,

without qualification, once a covered auto is leased to another.” Id.

The plaintiffs in Ranger Insurance Co. v. Mancuso, 94-464, p. 8 (La.App. 5

Cir. 2/15/95), 652 So.2d 28, 32, argued that “others,” which was undefined, meant

“anyone other than the ‘insureds.’” They urged that, because the defendant-driver of

the truck was using the truck with the named insured’s permission, he was an

15

“insured” under the policy. Plaintiffs make the same argument here. The fifth circuit

rejected this argument because the facts established that the defendant-driver was

leasing the truck from the named insured, stating: “We read the policy at face value

and declare [defendant-driver] was not an ‘insured’ under the policy, because he was

. . . leasing the truck from [the named insured.]” Id.

As previously discussed, the supreme court held in Hertz, 366 So.2d 1362, that

the owner of the trailer “partially owned” the “automobile” which resulted when the

tractor and trailer were operated as one unit. Applying that rationale here, the

tractor/trailer driven by Roberts was “partially leased” by Performance Rental.

Applying the rationales of Hertz, Brown, and Ranger, the tractor/trailer unit was

excluded from the coverage provided by Harco’s policy. Based on Hertz, we reject

the arguments that, because no lease agreement existed between Performance Rental

and ETSI or Roberts, the exclusion does not apply. For the reasons stated in Brown

and Ranger, we reject the arguments that the leased autos exclusion applies only

when “anyone who is an insured under this policy” subleases one of Performance

Rentals’ leased trailers to someone else and that Roberts, a permissive user insured

under Harco’s policy, cannot be an “other” within the meaning of this exclusion.

AIIC cites the case of Keen Leasing, Inc. v. Fireman’s Fund Insurance Co., 39

Pa.D.&C.3d 653 (C.P. 5/12/86), for the proposition that the exclusion is ambiguous.

In Keen, the plaintiff leased a truck. When the truck needed repairs, plaintiff sent an

employee to pick it up and bring it in to be repaired. Plaintiff’s employee was

involved in an accident while driving the truck. The plaintiff made demand on its

insurer to defend and pay the claim. The insurer refused on the basis of the leased

autos exclusion in its policy. The policy at issue was a garage policy, and the

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plaintiff’s primary business, “if not the very raison d’etre,” was the repair and

maintenance of vehicles it leased. Id at 658. The trial court held that the provision

was ambiguous because “the premiums charged were substantially greater than the

coverage which [the insurer] now alleges was available.” Id. at 65. The court noted

that the vehicle was subject to a lease agreement but was not in the possession of the

lessee at the time of the accident, and AIIC contends that this observation means that

a leased autos exclusion applies only when the leased vehicle is in the possession of

the lessee. We do not agree. Possession was important in Keen because the

plaintiff/insured’s primary business was repairing and maintaining the vehicles it

leased and the vehicle was being driven by its employee to its shop to be repaired

when the accident occurred. The situation in Keen is not comparable to the situation

here.

We find that the leased autos exclusion is clear: the tractor/trailer unit and the

trailer individually were excluded from coverage under Harco’s policy. The

judgment of the trial court in favor of Plaintiffs against Harco is reversed, and

judgment is rendered in favor of Harco against Plaintiffs denying them coverage

under its policy.

Disposition

The judgment of the trial court is affirmed in part and denied in part. Costs of

these consolidated writs are to be paid equally by Plaintiffs, AIIC, Southern County,

and Harco.

WRIT DENIED IN PART AND GRANTED IN PART; JUDGMENT
RENDERED.

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