In Calcasieu Parish School Board vs. Mary Miller, the Louisiana Third Circuit examines a case in which Ms. Miller’s daughter was involved in a fight at school that resulted in injury to an art teacher employed by the school board. The school board paid the teacher workers’ compensation, then sued Ms. Miller’s homeowner’s insurance company, Louisiana Citizens Property. Both the School Board and the insurance company filed for summary judgment. A summary judgment is a ruling by the judge in favor of the filing party before the evidence in the case is presented. The trial court granted the School Board’s motion and denied the insurance company’s. The Third Circuit, in an opinion that elucidates the court’s manner of interpretation of insurance contracts, upheld the trial court’s decision.
In insurance law, the service agreement is the governing contract. The interpretation of this contract may be the deciding factor in the case. When determining coverage, the law requires that the court interpret the parties’ common intent, beginning with the insurance policy itself. The words and phrases used are assumed to have their everyday meaning, stated by the Louisiana Supreme Court as their “plain, ordinary, and generally prevailing meaning,” unless they have obtained a technical meaning. The entire contract must be considered, meaning that if a sentence affects the meaning of another sentence, then that difference in interpretation must be taken into account.
After the application of these rules, if the meaning is clear, the court is bound to apply the contract as written. Of course, at times there may still be different ways that the agreement can reasonably be interpreted. If this situation occurs, there is an ambiguity in the contract. When there is ambiguity regarding the meaning, the court favors the interpretation of the contract that grants coverage.
In the agreement between Ms. Miller and Louisiana Citizens Property, the contract stated that coverage would be granted for medical expenses resulting from actions of one of the individuals insured. A later provision excludes any “loss…[c]aused by a peril…which is expected or intended by one or more ‘insureds’….” Any time a fight takes place, injuries can be expected. Thus injuries such as the teacher’s that result from a fight, would be excluded.
Of course, the daughter would not expect to injure the teacher. Citizens Property argued that because of the mention of “bodily injury,” including an injury “of a different kind, quality, or degree than initially expected or intended,” the exclusion applied. Under this argument, even if the daughter did not expect to harm the teacher, she may have had the expectation that someone would be injured, and thus the resulting injuries would fall under the exclusion. The insurance company would then not be liable for the teacher’s injury.
The insurance company’s argument may seem convincing; however, the language of the exclusion creates an ambiguity, speaking of a “loss” from a “peril.” A loss is not a liability as a liability results when an individual or entity’s actions cause harm to another person and that person has a legal claim to be recompensed for the harm. A loss, in the context of this agreement, is generally damage to property. In addition, peril, as used earlier in the agreement, refers to loss to property, not liability arising from injury to others. The provision, however, also refers to bodily injury. Some of the language seems to limit it to property loss, while the reference to bodily injury indicates that it may be more extensive. Thus, it is unclear whether the exclusion should include liability for injury.
Following the rule that an ambiguity will be interpreted in favor of coverage, the court upheld the lower court’s ruling against Louisiana Citizens Property and in favor of the Calcasieu School Board. Such matters demonstrate the ambiguity in language that requires careful legal argument and calculated application of clauses to receive a quality verdict.
If you have been injured and feel that your insurance company may be interpreting an ambiguous contract in its favor, contact Berniard Law Firm today.