Ed Stone v. Allstate Property and Casualty Insurance Company

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

18-547 consolidated with 18-763

ED STONE, ET AL.

VERSUS

ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY, ET
AL.

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ON APPLICATION FOR SUPERVISORY WRITS
FROM THE SEVENTH JUDICIAL DISTRICT COURT
PARISH OF CATAHOULA, NO. 28,822
HONORABLE KATHY A. JOHNSON, DISTRICT JUDGE

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SHANNON J. GREMILLION
JUDGE

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Court composed of Ulysses Gene Thibodeaux, Chief Judge, Shannon J. Gremillion,
and Van H. Kyzar, Judges.

THIBODEAUX, Chief Judge, concurs in the result.

REVERSED AND RENDERED.

Steven B. Rabalais
Melvin A. Eiden
Rabalais & Hebert
701 Robley Drive, Suite 210
Lafayette, LA 70503
(337) 981-0309
COUNSEL FOR DEFENDANT/APPLICANT:
Sentry Select Insurance Company

Barry A. Roach
Christopher S. Lacombe
Larry A. Roach, Inc.
2917 Ryan Street
Lake Charles, LA 70601
(337) 433-8504
COUNSEL FOR PLAINTIFF/RESPONDENT:
Ed Stone, Individually and as duly authorized agent
of River City Logistics, Inc.

Christina S. Slay
Bolen, Parker, Brenner, Lee & Engelsman, APLC
P. O. Box 11590
Alexandria, LA 71315-1590
(318) 445-8236
COUNSEL FOR DEFENDANT/RESPONDENT:
Allstate Property and Casualty Insurance Company

GREMILLION, Judge.

Sentry Select Insurance Company (Sentry) seeks our exercise of supervisory

jurisdiction to reverse the trial court’s denial of its motion for summary judgment.

Sentry also asks in this application that we reverse the trial court’s grant of summary

judgment in favor of Mr. Ed Stone. In a consolidated matter, Ed Stone, et al. v.

Allstate Prop. and Cas. Ins. Co., 18-763, Sentry also appeals the trial court’s

judgment in favor of Mr. Stone. For the reasons that follow, we grant Sentry’s

application for supervisory writs and make that grant peremptory.

FACTS AND PROCEDURAL POSTURE

Ms. Denise McClendon is the president of River City Logistics, Inc. In

August 2015, she procured a policy of automobile liability insurance from Sentry on

behalf of River City Logistics. Her agent, Mr. Don Pridgen, sent her a form for the

rejection of or selection of lower limits of uninsured/underinsured motorist coverage

(UM). Ms. McClendon placed a check mark in the space beside the clause indicating

rejection of UM. She then signed and dated the form and returned it to Mr. Pridgen.

The agency called her and told her she had to initial the space. The form was

returned to Ms. McClendon, who initialed in a space drawn by someone in Mr.

Pridgen’s office immediately adjacent to the check-marked space.

On April 28, 2016, an accident between a Peterbilt truck driven by Mr. Stone

and owned by River City Logistics, his employer, and a Chevrolet Silverado driven

by Mr. Stephen Card allegedly occurred on U.S. Highway 84 east of Jonesville,

Louisiana. Mr. Stone sued Mr. Card, Allstate Property and Casualty Insurance

Company, Mr. Card’s insurer, and Sentry as River City Logistics’ UM carrier for

damages he incurred in the accident.

Sentry filed a motion for summary judgment in which it asserted that there

was no UM. Sentry relied, in its motion, on an affidavit executed by Ms. McClendon

that affirmed her authority to execute the UM waiver on River City Logistics’ behalf

and recounts the events surrounding its execution. Mr. Stone filed his own motion

for summary judgment and asserted that the policy did provide UM because the UM

waiver had not been properly executed. The trial court denied Sentry’s motion and

granted Mr. Stone’s. Sentry then filed this application for supervisory writs and an

appeal of the judgment. We granted writs and determined that, in the interests of

judicial economy and efficiency, an opinion from the court should be held in

abeyance pending briefing in the appeal. Stone v. Allstate Prop. and Cas. Ins. Co.,

18-547 (La.App. 3 Cir. 9/10/18) (unpublished ruling).

ANALYSIS

On appeal, summary judgments are reviewed de novo. Magnon
v. Collins, 98–2822 (La.7/7/99), 739 So.2d 191. Thus, the appellate
court asks the same questions the trial court asks to determine whether
summary judgment is appropriate. Id. This inquiry seeks to determine
whether any genuine issues of material fact exist and whether the
movant is entitled to judgment as a matter of law. La.Code Civ.P. art.
966(B) and (C). This means that judgment must be rendered in favor of
the movant if the pleadings, depositions, answers to interrogatories,
admissions on file, and affidavits show a lack of factual support for an
essential element of the opposing party’s claim. Id. If the opposing
party cannot produce any evidence to suggest that he will be able to
meet his evidentiary burden at trial, no genuine issues of material fact
exist. Id.

Material facts are those that determine the outcome of the legal
dispute. Soileau v. D & J Tire, Inc., 97–318 (La.App. 3 Cir. 10/8/97),
702 So.2d 818, writ denied, 97–2737 (La.1/16/98), 706 So.2d 979. In
deciding whether facts are material to an action, we look to the
applicable substantive law. Id. Finally, summary judgment procedure
is favored and designed to secure the just, speedy, and inexpensive
determination of every action. La.Code Civ.P. art. 966(A)(2).

Am. Zurich Ins. Co. v. Caterpillar, Inc., 12-270, pp. 4-5 (La.App. 3 Cir.

10/3/12), 99 So.3d 739, 742-43.

Whole forests have been felled to publish the myriad cases discussing whether

UM waivers are valid. In Duncan v. U.S.A.A. Ins. Co., 06-363 (La. 11/29/06), 950

So.2d 544, the Louisiana Supreme Court conducted an exhaustive examination of
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the legislature’s struggles to address the toll this issue has taken on the legal and

physical environment of the State; and this case will not restate that effort. The key

point in Duncan is the conclusion drawn by the supreme court: the legislature ceded

to the Insurance Commissioner the responsibility to formulate a uniform UM

rejection/selection form, and, “Pursuant to that mandate, compliance with the form

prescribed by the commissioner of insurance is necessary for the UM waiver to be

valid.” Id. at 553. Post-Duncan, the focus of courts was not to be on the intent of

the parties, i.e., whether the insured knowingly rejected UM, but on compliance with

formal requirements.

Duncan has faced significant criticism. As the leading Louisiana treatise on

insurance succinctly put it:

The Duncan decision was unduly strict. Since the insured had
only one automobile liability policy, there was no reasonable doubt that
the waiver was applicable to that policy and that the insured had made
an informed decision to reject UM coverage. The insignificant omission
of the policy number gave the insured a windfall for which he had paid
no premium. The commissioner’s form is completed many times daily
throughout the state. Insignificant mistakes are inevitable. Such
mistakes should not invalidate the form when there is no reasonable
doubt of the insured’s intent. Duncan has spawned a new wave of
wasteful waiver litigation, unfairly compensates persons who paid no
premium for UM coverage that they knowingly waived and ultimately
places the financial burden of their windfall through increased
insurance premiums on those with the foresight to purchase UM
coverage.

15 La. Civ. L. Treatise, Insurance Law & Practice § 4:8 (4th ed.). Duncan has also

been distinguished by many courts of appeal and the supreme court. In Lynch v.

Kennard, 09-282 (La. 5/15/09), 12 So.3d 944, the supreme court refused to

invalidate a waiver that was dated by the insured’s secretary. In doing so, the

supreme court stated that the properly completed form established a rebuttable

presumption that the insured knowingly rejected UM. Id. So, the issue of whether

a waiver was knowing was once again relevant to the discussion.

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Mr. Stone argues that the fact that Ms. McClendon initialed the form after she

signed it renders the rejection invalid. This argument is based upon the instructions

contained in Bulletin 08-02, which states the following:

•The following tasks must be completed by the insured:

- His/Her signature

- His/Her printed name to identify his/her signature

- The date the form is completed

- Initials to select/reject UMBI coverage prior to signing the form.

These instructions are not, however, provided to the insured, which merely instructs:

By law, your policy will include UMBI Coverage at the same
limits as your Bodily Injury Liability Coverage unless you request
otherwise. If you wish to reject UMBI Coverage, select lower limits of
UMBI Coverage, or select Economic-Only UMBI Coverage, you must
complete this form and return it to your insurance agent or insurance
company.

In no way does the form prescribe that the insured must initial the selection or

rejection before signing it. The parties and the court should be able to look to the

four corners of the rejection form to determine its validity; to reiterate the supreme

court’s holding in Lynch, 12 So.3d 944: a properly executed form creates a

rebuttable presumption of a knowing waiver. Resorting to extrinsic evidence should

only occur in instances of doubt. In the present instance, only the extrinsic evidence,

Ms. McClendon’s affidavit, would have indicated to anyone that the form was

initialed after it was signed. We find this argument of Mr. Stone to be without merit.

Mr. Stone also argues that the form was not properly completed because Ms.

McClendon placed a check mark in the space in which she was to have initialed her

rejection of UM. As a corollary to this argument, Mr. Stone also asserts that by

adding an additional blank and initialing the form, the agency and Ms. McClendon

altered the form in violation of La.R.S. 22:1295 (formerly La.R.S. 22:680,

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renumbered by 2008 La. Acts No. 415, §1). We will address the placing of the check

mark first.

The instructions contained on the form clearly indicated that Ms. McClendon

was to have initialed the form in the appropriate space. Instead, she placed a check

mark in the space. When informed that her initials were required, Ms. McClendon

initialed the blank space added by her agent. Our colleagues of the first circuit faced

a similar scenario in Green v. State Farm Mut. Auto. Ins. Co., 07-94 (La.App. 1 Cir.

11/2/07), 978 So.2d 912, writ denied, 08-74 (La. 3/7/08), 977 So.2d 917. The

insured representative attested by affidavit that she personally placed the “X” in the

rejection space and personally initialed next to the space. Under these circumstances,

the court of appeal found the rejection was valid. In the present matter, the only

distinguishing factor from Green is the blank drawn by the agency for Ms.

McClendon to initial.

Mr. Stone argues that Bulletin 08-02 forbids altering a form. The form

approved by the commissioner does state, “This form may not be altered or

modified[.]” We note, however, that the form approved by the commissioner in

1998 contained the same language. The Louisiana Supreme Court, in the per curiam

opinion in Tuson v. Rodgers, 15-1334 (La. 10/30/15), 178 So.3d 127, reversed a

panel of this court, which had invalidated the selection of lower limits by the insured,

who materially altered the form to provide for a selection of lower UM limits on a

combined single-limit basis, which the form did not seem to allow. The form then

provided only for selection of an amount of coverage for “each person” and an

amount for “each accident.” Id. The insured struck through the phrase “each person”

and wrote “CSL” above it. Id.

In Scarborough v. Randle, 12-1061 (La.App. 3 Cir. 2/6/3), 109 So.3d 961, we

found valid a rejection form that omitted the wording from the commissioner’s form
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that the form could not be modified or altered and which contained an abbreviated

name for the insured.

Clearly, according to the Louisiana Supreme Court and this court, some

alterations of the form do not rise to the level of invalidating the insured’s selection

or rejection of UM. In the present case, the insured’s representative altered the form

to make her rejection definitive. In no way can Ms. McClendon initialing the form

as well as placing a check mark next to her selection be construed as creating any

ambiguity in her selection; indeed, it further demonstrates Ms. McClendon’s

unmistakable intent to waive UM. We agree with the result reached by the first

circuit in Green, 978 So.2d 912. This argument lacks merit.

CONCLUSION

Despite the rigidity of the holding in Duncan, 950 So.2d 544, subsequent

jurisprudence indicates that mere formal deviation from the commissioner’s form is

not sufficient to invalidate a UM waiver that unmistakably signifies the insured’s

rejection or selection. That Ms. McClendon intended to reject UM lies beyond all

doubt.

The judgment of the trial court denying Sentry Select Insurance Company’s

motion for summary judgment and granting the motion for summary judgment in

favor of Mr. Ed Stone is reversed. Judgment is rendered herein in favor of Sentry

Select Insurance Company and against Mr. Ed Stone dismissing the demands against

Sentry Select Insurance Company. All costs of this appeal and in the court below

are taxed to Plaintiff/Respondent/Appellee, Ed Stone.

REVERSED AND RENDERED.

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