BERNARD v. ELLIS, 2010-1495 (La.App. 4 Cir. 9/27/11)

PATRICIA RIVET MURRAY, Judge.Page 3

This matter is before this court en banc on remand from the Louisiana Supreme Court to resolve a conflict between two of this court's writ dispositions: Knight v. Edwards, 10-1474 (La. App. 4 Cir. 1/7/11)( unpub.), writ denied, 11-0245 (La. 3/4/11), 58 So.3d 479 (the " Knight case"); and Bernard v. Ellis, 10-1495 (La. App. 4 Cir. 1/25/11)( unpub.), writ granted, 11-0329 (La. 3/31/11), 60 So.3d 1239 (the Bernard case"). Imperial Fire Casualty Insurance Company ("Imperial") is the Relator in both writs. Both writs seek review of a trial court's judgment denying Imperial's motion for summary judgment on an insurance coverage issue.

The Bernard and the Knight cases involved the same factual scenario: a two-vehicle accident that occurred when Imperial's insured was driving her vehicle, and nonresident relative guest passengers were riding with her in her vehicle. In both cases, the guest passengers filed suit against, among others, Imperial in its capacity as the named insured's liability insurer. The guest passengers averred that they were covered under the uninsured or underinsured motorist ("UM/UIM") provision of Imperial's policy. Imperial responded by filing a motion for summary judgment contending that its policy does not provide UM/UIM to the guest passengers. In support, Imperial cited the definition of an insured in the UM/UIM portion of its policy, which does not include nonresident relative guest passengers. In both cases the trial court denied Imperial's motion for summary judgment. Seeking review of those rulings, Imperial filed an application for supervisory writ in each case.

A three-judge panel of this court in the Knight case granted Imperial's writ and held that the guest passengers were not entitled to UM/UIM coverage. The panel reasoned that "the liability portion and the uninsured motorist portion of the Imperial Policy present two distinct definitions of `insured persons.'" The panel further reasoned that "plaintiffs' attempts to use the definition of `insured person' found in the liability portion of the policy is in error." The panel still further reasoned that "Imperial's provision limiting coverage to `insured persons' under the uninsured motorist section of its policy is only extended to those who reside in the same household and are blood related; the plaintiffs do not meet this criteria." The panel thus concluded that Imperial was entitled to summary judgment based on "[a] clear reading of the policy in conjunction with the law."

Another three-judge panel of this court in the Bernard case denied Imperial's writ and held that the guest passengers were entitled to UM/UIM coverage. The panel reasoned that the guest passengers fall within the definition of "insured persons" under the omnibus provision of the liability portion of the policy, which defines "insured person" or "insured persons" to mean "[a]ny person with respect to an accident arising out of that person's use of a covered vehicle with the express or implied permission of you." The panel further reasoned that the word "use" of a vehicle includes the act of riding in the vehicle as a passenger; the panel explained:

The Imperial policy does not define the term "use." The jurisprudence has construed the term "use" as not limited to driving the vehicle. See Bolton v. N. River Ins. Co., 102 So. 2d 544, 545 (La. Ct. App. 1958) (holding that "use" included a back-seat passenger who slammed the door of the automobile on the plaintiffs hand); Home Indem. Co. v. Lively, 353 F. Supp. 1191, 1193 (W.D. Okla. 1972) (citing Bolton, supra, and noting that "[i]t is well settled that a passenger in a car as distinguished from the driver thereof may be using the vehicle.") The purpose of liability insurance is to afford the insured protection from damage claims; therefore, insurance contracts should be interpreted to effect, not deny, coverage. Yount v. Maisano, 627 So.2d 148 (La. 1993).

Noting that it was "[l]iberally construing the policy," the panel held that the guest passengers were "insured persons" under the liability portion of the policy and thus were entitled to UM/UIM coverage under the policy.

The Louisiana Supreme Court denied writs in the Knight case, granted writs in the Bernard case, and remanded the Bernard case with instructions that this court en banc reconcile its holding in the Bernard case with its holding in the Knight case. The Supreme Court also asked this court to consider the effect, if any, of the 2009 amendment to La.R.S. 22:1282. On remand, this court en banc entertained additional oral and written arguments from the parties.

In its supplemental brief on remand, Imperial contends that even assuming the guest passengers were using the vehicle, as this court found in the Bernard case, the definition of an "insured person" at issue contains an additional requirement that the "accident arise out of that person's use." Imperial contends that it cannot be concluded that the accident arose out of the guest passengers' mere riding in the vehicle. In support of its position, Imperial cites the First Circuit's recent decision in Batiste v. Dunn, 10-1812 (La. App. 1 Cir. 6/10/11), ___ So.3d ___, 2011 WL 2975637.

The Batiste case involved the same factual scenario and policy provisions at issue in the Bernard and Knight cases. In the Batiste case, the First Circuit, with one judge dissenting, affirmed a judgment granting Imperial's motion for summary judgment on the same coverage issue. The First Circuit reasoned that "[t]o find that plaintiffs were `using' the vehicle simply because they were riding as guest passengers would require a strained interpretation inconsistent with the meaning of the word and beyond what could have been contemplated by the parties." Batiste, 10-1812 at p. 4, ___ So.3d at ___. The court further reasoned that even assuming the passengers were using the vehicle, the accident did not arise out of their use. The court still further reasoned that the "use" provision is "designed to limit coverage to liability resulting from conduct of the insured which constitutes both a use of the vehicle and a legal cause of the injury." Id. Based on this reasoning, the court held that the guest passengers who were riding in the insured vehicle did not legally cause or contribute to the accident, did not fall within the definition of "insured persons" for purposes of liability coverage, and thus are not entitled to UM/UIM coverage.

We are not bound by and decline to follow the Batiste case. The omnibus provision in the liability portion of Imperial's policy defines an insured as "any person with respect to an accident arising out of that person's [permissive] use of a covered vehicle." As we stated in our prior writ disposition in the Bernard case, use includes riding as a passenger. But for the guest passengers' permissive use of the covered vehicle — riding in the insured's vehicle when the accident occurred — they would not have been injured. Liberally construing the policy language, we hold that the guest passengers fall within the definition of "insured persons" for purpose of liability coverage and thus are entitled to UM/UIM coverage.

Our finding is buttressed by the policy considerations underlying mandatory UM coverage and inherent in the 2009 amendment to La.R.S. 22:1282, which the Supreme Court instructed we consider on remand. Discussing the policy considerations, we noted in a footnote in our prior writ disposition in the Bernard case that "a contrary holding would result in the anomaly of allowing the driver to recover, but the driver's two innocent guest passengers to have no recourse." We further noted that "[t]his anomalous result is inconsistent with the underlying purpose of mandatory uninsured motorist coverage." Judge Bonin expressed the same policy considerations in his concurrence to the prior writ disposition. Based on the policy considerations, a liberal construction of Imperial's policy, and the jurisprudence, we again deny Imperial's writ application in the Bernard case and overrule en banc our contrary writ disposition in the Knight case.