William Desoto v. Gerald S. Humphreys

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CW06-959

WILLIAM DeSOTO, ESTELLA DeSOTO,
AND DICKIE BERNARD

VERSUS

GERALD S. HUMPHREYS, ILLINOIS
NATIONAL INSURANCE COMPANY,
AND UNITED SERVICES AUTOMOBILE
ASSOCIATION

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WRIT APPLICATION FROM THE
TWELFTH JUDICIAL DISTRICT COURT,
PARISH OF AVOYELLES, NO. 06-6000, DIV. A
HONORABLE MARK A. JEANSONNE, DISTRICT JUDGE

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J. DAVID PAINTER
JUDGE

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Court composed of Oswald A. Decuir, Marc T. Amy, and J. David Painter, Judges.

WRIT GRANTED AND MADE PEREMPTORY;
SUMMARY JUDGMENT RENDERED.

Sidney W. Degan, III
Travis L. Bourgeois
Brian W. Harrell
Degan, Blanchard & Nash
400 Poydras Street, Suite 2600
New Orleans, LA 70130
Counsel for Defendant-Applicant:
Trinity Universal Insurance Company

Gary J. Delahoussaye
Briney & Foret
P.O. Box 51367
Lafayette, LA 70505-1367
Counsel for Defendants:
Gerald S. Humphreys and Illinois National Insurance Company

Gordon L. James
Hudson, Potts & Bernstein, L.L.P.
P.O. Drawer 3008
Monroe, LA 71210-3008
Counsel for Defendant:
First Insurance Funding Corporation

John C. Pickels
P.O. Box 1525
Alexandria, LA 71309-1525
Counsel for Defendant:
United Services Automobile Association

Darrel D. Ryland
J. B. Treuting
Wesley Elmer
P.O. Drawer 1469
Marksville, LA 71351
Counsel for Plaintiffs-Respondents:
William DeSoto, Estella DeSoto, and Dickie Bernard

PAINTER, Judge.

Trinity Universal Insurance Company (Trinity) filed this writ application

seeking review of the trial court’s judgment denying its motion for summary

judgment. This court denied the writ, finding no error in the trial court’s ruling.

Trinity sought writs from the Louisiana Supreme Court, which were granted. The

Louisiana Supreme Court remanded the matter to this court for briefing, oral

argument, and opinion. After due consideration, for the reasons set forth below, we

grant the writ, make it peremptory, and render summary judgment dismissing

Plaintiffs’ claims against Trinity.

FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of an automobile accident that occurred on December 5,

2003. William DeSoto (DeSoto) was the owner and operator of a 1992 Toyota in

which Dickie Bernard (Bernard) was a guest passenger. Gerald S. Humphreys

(Humphreys) was operating a 2001 Chevrolet which was owned by Christopher

Tackett. The DeSoto vehicle was stopped at a red light when it was rear-ended by the

Humphreys vehicle. Plaintiffs, William DeSoto, Estella DeSoto, and Dickie Bernard,

sued Trinity as the insurer of Elevated Tank Applicator (Elevated Tank) and

Humphreys. In the course of these proceedings, Trinity filed a motion for summary

judgment claiming that there was no coverage for the subject accident because the

policy was cancelled for non-payment of premiums four months before the accident.

The trial court denied Trinity’s motion for summary judgment, and Trinity timely

sought supervisory writs from this court. Finding no error in the trial court’s ruling,

on October 3, 2006, this court denied Trinity’s writ application. Trinity then sought

writs from the Louisiana Supreme Court. On February 2, 2007, the supreme court

granted writs and remanded the matter to this court for briefing, argument, and

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opinion. For the reasons that follow, we find that Trinity is entitled to the

presumption contained in La.R.S. 9:3550(G)(3)(c). Accordingly, we grant the writ

and enter summary judgment in favor of Trinity.

DISCUSSION

We conduct a de novo review of a trial court’s grant or denial of a motion for

summary judgment. In Clement v. Reeves, 05-616, pp. 3-4 (La.App. 3 Cir. 6/28/06),

935 So.2d 279, 281, we stated the following:

A fact is material if it potentially insures or
precludes recovery, affects a litigant’s ultimate success, or
determines the outcome of the legal dispute. Smith v. Our
Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La.7/5/94),
639 So.2d 730, 751. A genuine issue is one as to which
reasonable persons could disagree; if reasonable persons
could reach only one conclusion, there is no need for trial
on that issue and summary judgment is appropriate. Id.

Louisiana Code of Civil Procedure art. 966(C)(2) provides:

(2) The burden of proof remains with the movant.
However, if the movant will not bear the burden of proof
at trial on the matter that is before the court on the motion
for summary judgment, the movant's burden on the motion
does not require him to negate all essential elements of the
adverse party's claim, action, or defense, but rather to point
out to the court that there is an absence of factual support
for one or more elements essential to the adverse party's
claim, motion, or defense. Thereafter, if the adverse party
fails to produce factual support sufficient to establish that
he will be able to satisfy his evidentiary burden of proof at
trial, there is no genuine issue of material fact.

Here, Trinity bears the burden of proving that the policy has been cancelled for

nonpayment of premiums prior to the date of loss. Under the facts of this case, we

find that Trinity is aided in this burden by the presumption contained in La.R.S.

9:3550(G)(3)(c), which states:

The receipt of such notice of cancellation and statement by the
insurer shall create a conclusive presumption that the facts stated
in said notice and statement are correct, that the insurer is entitled
to rely on such facts and that the cancellation of the insurance

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contract or contracts is concurred in and authorized by the insured.
No liability of any nature whatsoever either in favor of the insured,
any governmental agency, holder of a security interest in the
insured property, or third party shall be imposed upon the insurer
as a result of any misstatement of fact contained in said notice of
cancellation or statement furnished by the insurance premium
finance company to the insurer, or as a result of failure by the
insured, any governmental agency, holder of a security interest in
the insured property, or third party to receive the notice of
cancellation required by Paragraph (2) of this Subsection, or as a
result of failure of the insurance premium finance company to
comply with any of the requirements of this Subsection. Upon
mailing of any unearned premium and unearned commission to the
insurance premium finance company as soon as practicable following
such cancellation, the insurer shall be fully discharged from all liability
under the insurance contract or contracts for any loss occurring
subsequent to the effective date of cancellation.

(Emphasis added).

Elevated Tank entered into a contract with First Insurance Funding Corporation

(FIFC) for the payment of its insurance premiums to Trinity. Trinity contends that

Elevated Tank failed to pay FIFC and was placed in default. On August 4, 2003,

FIFC provided notice to Trinity and Elevated Tank that the insurance policy would

be cancelled on August 14, 2003, if the premiums were not paid. FIFC contends that

no payments were made and issued a notice of cancellation dated August 18, 2003,

effective for that date. Despite the discrepancy in dates, Trinity contends that FIFC

provided proper notice to Elevated Tank of its intent to cancel the policy for non-

payment of premiums and then provided proper notice of cancellation of the policy.

Consequently, Trinity avers that it cannot be held liable for the accident in accordance

with the express language of La.R.S. 9:3550(G)(3)(c). With respect to its motion for

summary judgment, Trinity argued that no genuine issue of material fact exists

because the occurrence for which Plaintiffs brought this suit allegedly took place on

December 5, 2003, and thus occurred after the cancellation of the Trinity policy and

that because the Trinity policy was cancelled prior to the accident, it cannot provide

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coverage to the claimants in this lawsuit. Additionally, Trinity argues that even if the

trial court properly found that FIFC did not comply with all the requirements of

cancellation, that would have no effect on Trinity because once it received notice

from FIFC, Trinity was relieved of any liability in this case.

In opposition, Plaintiffs argue that Trinity bears the burden of proving that the

policy was properly cancelled. Plaintiffs point to several facts in an attempt to show

that the policy was not properly cancelled. For example, Plaintiffs assert that the

notice of intent to cancel shows that it was sent on August 4, 2003, but the payment

history shows that it was sent on August 5, 2003 and that the notice of intent states

the effective cancellation date would be August 14, 2003, but the notice of

cancellation and the payment history both show the cancellation date to be August 18,

2003. Plaintiffs contend that the inconsistencies in the cancellation dates render the

cancellation invalid.

Plaintiffs rely on LaFleur v. Safeway Ins. Co., 99-191 (La.App. 3 Cir. 6/2/99),

741 So.2d 759, wherein this court found that the Safeway policy at issue had not been

properly cancelled under La.R.S. 9:3550 because Safeway did not strictly adhere to

the cancellation requirements contained therein. Safeway’s notice of intent of

cancellation was dated September 30, 1997, but was not mailed until October 1, 1997.

Additionally, the cancellation notice stated that cancellation was effective October

11, 1997, despite the fact that the notice of cancellation gave a cancellation date of

October 10, 1997. This court explained:

Louisiana courts require strict adherence to these statutory
requirements when a finance company exercises it power of attorney to
cancel an insurance policy. Britten v. Reavis, 503 So.2d 1149 (La.App.
3 Cir.), writ denied, 506 So.2d 1232 (La.1987); Eaglin v. Champion Ins.
Co., 558 So.2d 284 (La.App. 3 cir. 1990). In Britten, 503 So.2d at 1153-
1154, we found the steps in La.R.S. 9:3550(G) to be mandatory, stating
that: “Strict adherence to the statutory procedure for exercising the
power of attorney and effecting cancellation of a policy by a finance

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company is necessary because that is the only way the effective date of
cancellation can be accurately determined.”

Id. at 762.

However, we find that this case is not controlled by LaFleur because that case

came before us after a full trial on the merits. Thus, we were constrained by the

manifest error standard of review. This case is before us on the denial of a motion for

summary judgment, and, as stated above, we review this matter de novo. Moreover,

LaFleur did not address the specific area of the statute that deals with the insurer’s

liability where the premium finance company fails to comply with statutory

procedures. This is the pivotal issue now before us.

We cite with approval the language of the first circuit in Stephens v. LeBlanc,

03-1460, pp. 5-6 (La. App. 1 Cir. 5/14/04), 879 So.2d 262, 265-266:

Although the trial court may have been correct in finding that, at the
very least, LIFCO failed to send the requisite notice to the specifically
named agent, the trial court committed legal error by not applying La.
R.S. 9:3550 G(3)(c).

Under section G(3)(c), and in spite of LIFCO's procedural
failures, the insurer, defendant U.S. Agencies, is entitled to the
“conclusive presumption” provided by statute upon its receipt of the
notice of cancellation and certifying statement. Section G(3)(c) further
provides that the insurer cannot be held liable “in favor of the insured,”
Mr. LeBlanc, “as a result of any misstatement of fact contained in said
notice of cancellation or statement furnished by the insurance premium
finance company to the insurer, ... or as a result of failure of the
insurance premium finance company to comply with any of the
requirements of this Subsection.” The statutory directive is clear.
Although LIFCO may have made mistakes, under the specific facts here,
the legislature has determined that the insurer cannot be held liable for
the coverage based only on the procedural failures of the insurance
premium finance company asserted by Mr. LeBlanc. Thus, the policy
was properly cancelled by the insurer prior to the accident.

Under the statute, Trinity was entitled to rely on the facts stated in the notice of

cancellation sent by FFIC. Thus, we agree with Trinity’s assertion that it cannot be

held liable for the alleged improper cancellation effected by FIFC under the express

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language of the statute. We find that Trinity met its burden of proof and that

Plaintiffs have done nothing to rebut the presumption. Therefore, there is no genuine

issue of material fact that would preclude the grant of summary judgment in favor of

Trinity.

DECREE

For the foregoing reasons, we find in favor of Trinity on its motion for

summary judgment. We hereby grant Trinity’s writ application, make it peremptory,

and render judgment in favor of Trinity, dismissing Plaintiffs’ claims against Trinity.

Costs of this proceeding are assessed equally to Plaintiffs-Respondents, William

DeSoto, Estella DeSoto, and Dickie Bernard, and to Defendant/Third Party Plaintiff-

Respondent-United Services Automobile Association.

WRIT GRANTED AND MADE PEREMPTORY; SUMMARY JUDGMENT
RENDERED.

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