Articles Posted in Term Definitions

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On July 12, 2008 a ten-year-old girl was driving her parents golf cart with some friends in a nearby cul-de-sac in the Parish of East Baton Rouge in the State of Louisiana. While on her excursion, she encountered a neighbor boy who was six-years-old. Because the boy was so close to the front the car, she believed he was playing a reverse game of chicken and followed him closely. Unfortunately, she hit him with the golf cart and he fell. She believed he was only mildly injured, but she drove the golf cart home immediately to report the accident to her parents.

At first, her parents thought nothing of it, assuming that, other than a few scrapes and bruises, the boy was fine. However, after a few hours, they thought they would walk over to their neighbors’ house to be sure everything was okay and speak to the boy’s parents. When they arrived at the neighbor’s house, they found several neighbors outside and the boy was in his driveway, looking very ill. His parents explained that since the accident, the boy would not stop vomiting, and an ambulance was on the way to pick him up. The boy ended up having problems with his kidneys and subsequently had to have half of one removed.

The boy’s parents filed suit against the girl’s parents for the injuries to their son; they specifically asked for help with payment of the medical bills. The girl’s parents, believing that their insurance company would help with this this claim, entered the insurance company as a third party in the lawsuit. When an insurance company is entered as a third party, it is usually because the person who may be liable is expecting them to help pay for any of the damages should the case turn out to involve payment to the person who was injured.

However, partly because of the uniqueness of the injuries, the insurance company fought to be removed from the case, arguing that the insurance policy did not cover such an injury. The girl’s family had both vehicle insurance and homeowners insurance from this particular company. The court looked through the insurance policy and determined that they were right; this type of accident was not covered under the policy.

The reason that the court came to this conclusion was based on a strict reading of the insurance policy. Insurance policies are contracts and the court can only look outside the contract for meaning if the contract is unclear. If, for example, the contract had a confusing clause, then the court could look to other similar contracts or situations to help determine how to clarify the clause. If it is unclear, then the contract’s meaning is decided in favor of the party that did not write it. However, that is not the case here. The court decided that the contract was so plain and clear that they did not need to look beyond the wording in the contract to determine what it did and did not cover.

In addition to listing what this policy covered, it also listed a variety of exceptions. The court decided that this situation did not fit into any of the exceptions that would have established coverage. As a preliminary measure, the court points out that because a minor who had permission from the owners drove the cart, then it fits into the exceptions clause. The court then walked through all of the exceptions to see if it could find a fit. First, the policy would cover a golf cart that was being driven for the purpose of playing golf. However, the girl was not going to the golf course, she was simply using the cart around her neighborhood, so the policy would not cover that action. Second, the cart would be covered if it was being used to service the residence, such as hauling things to make improvements on the house. Again, that is not what the girl was doing in this situation. Third, it would have been covered if she was transporting people with disabilities, but she was not; she was only transporting her friends who had no real need for the transportation.

Lastly, the insurance would cover injuries that occur at an insured location. Typically, for homeowner’s insurance, the obvious insured location would be the house, but using this clause, it would also cover the yard and some surrounding areas. The court ruled, however, that that cul-de-sac was not an insured area. It argues that if the cul-de-sac, a public location, is an insured area because it is near the girl’s home, then that would extend coverage to a number of locations that likely fall beyond the intentions of the parties, such as public roads to and from insured locations.

The court also considers whether their vehicle insurance would have covered the golf cart. However, it could not cover either because the contract states that it does not cover vehicles that either have fewer than three wheels or are designed for off-road use. The golf cart is not designed to be used on public road, it is designed for use on a golf course, and it has four wheels, so it falls neatly into the exceptions for coverage under the vehicle insurance plan.

The strict view that the court took on this insurance policy led the insurance company to be able to sneak out of the case and leave the families to fight it out amongst themselves. The result is that both parties suffer; one loses money and the other gains money that may take years to obtain (instead of in a lump sum, as the insurance company would have been likely to provide). This case teaches us two lessons: (1) Read your insurance policy carefully and (2) obtain a competent lawyer like those at the Berniard Law Firm to help you with your case.

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Recently, in the State of Louisiana Court of Appeal for the Third Circuit, a case was decided that effectively laid out the requirements of a settlement agreement. These requirements are especially important because many cases are settled before they get to court. In fact, settlement is often preferable because it saves a significant amount of time, money, and it allows the parties to reach a compromise that they not only come up with themselves, but that is also acceptable to both parties. That way, the parties share the benefits instead of there being a clear-cut loser and clear-cut winner as is usually the situation should a case go to trial.

In this case, an individual was seeking to enforce a settlement agreement with an insurance company regarding a life insurance policy. The life insurance policy involved three beneficiaries; however, it was unclear as to when the money should go to each beneficiary. There may have been a contingent beneficiary. That is, the policy was set up so that if one of the beneficiaries had passed away prior to the money dispersion, then it would go to a different beneficiary. However, the insurance company was unsure of this stipulation, so they did not give out any money at all.

As a result of all of this confusion, one of the beneficiaries entered into negotiations with the insurance company in order to get at least some money out of the life insurance policy. Louisiana Civil Code, Article 3071, defines compromise as “a contract whereby the parties, through concession made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship.” Therefore, the parties in this case sought to compromise regarding the payment of the insurance policy.

In addition to defining compromise, the Court also points out that the settlement agreement must be in writing and signed by both parties as required by Louisiana Civil Code Article 3072. In this case, there was an oral agreement, but when the parties attempted to put the terms in writing, there was still dispute regarding the agreeability of quite a few of the terms of the settlement. They created drafts and sent them back and forth, but nothing was ever finalized by way of a signature from either party. The Court recognizes that there are no other cases where a settlement was validated even though neither party signed the final settlement agreement.

The Court also goes on to explain that contracts, which are the basis of a compromise, require that there be a “meeting of the minds.” That is, both parties should completely understand and agree to the terms in the contract. The contract embodies the intention of both parties and if the intention of both sides is not fully included in the settlement, then that settlement cannot be valid. In this case, both sides described other terms that were either not included in the agreement or that appeared, but they did not approve of their inclusion in the settlement. The Court notes that there was no “acceptance and acquiescent from both parties” in this case.

Although the settlement agreement can be included in more than one document, it is apparent that there was no such agreement. It based this conclusion on the testimony of both parties, lack of signature on the settlement agreement, and other communications between the parties at the negotiation stages in this case (such as letters between the attorneys that expressed displeasure with terms in the agreement). Therefore, the Court concluded that a settlement agreement did not actually exist and that it could not enforce a settlement agreement that does not actually exist.

Obtaining settlement agreements can be somewhat complicated because they involve getting both sides to agree to many different terms. However, they are very valuable because they allow the parties to avoid trial and get their conflicts resolved quickly. The Berniard Law Firm is always interested in solving our clients’ problems quickly and effectively.

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Wrongful death cases get very complicated when they involve insurance companies and employers. In a recent case, an individual was killed in the scope of his employment with Dunham-Price, Inc. He was driving a concrete truck at the time. The individual’s family brought a wrongful death case against the Department of Transportation and Development (DOTD). This case went to trial and awarded the individual’s wife and children $700,000 in damages, based on the finding that 50% of the fault was attributed to the DOTD and 50% of the fault was attributed to the individual driving the concrete truck.

This case seems like a classic wrongful death suit. However, it also involved two insurance companies, so it gets a little more complicated than it would first appear. There are two overreaching concepts in this case. The first is the third-party defendant and the second is appeals for partial judgments.

In most cases, there are two parties-one plaintiff and one defendant. However, the defendant also has the ability to call in parties who may be liable to the defendant should the court rule in the plaintiff’s favor. Insurance companies are usually privy to this type of liability. That is, if the defendant is found to be liable, then they have an insurance company that is supposed to cover them for that type of situation. In this case, DOTD called in two insurance companies: Liberty Mutual Insurance Company and Valley Forge Insurance Company (VFIC).

Third party defendants differ from a second defendant in that where there are two defendants, they could both be separately liable for the accident. For example, if there is a three-car pile-up and two cars hit one car at virtually the same time, then they could be both called into court. In a third-party defendant case, the third party should help compensate the defendant even though they were not liable for, or even remotely involved in, the accident itself.

The other concept that this case illustrates is appeals for partial judgment. In this case, VFIC stated that although they prove insurance for DOTD, the policy did not cover for the type of accident that the concrete driver experienced. Therefore, they sought a summary judgment to dismiss the claim against them. Summary judgment occurs when there are no material disputes of fact and one party is therefore entitled to have the decision run in their favor. This type of motion allows the court to throw out cases where there is a clear winner and bringing the case in full would be a waste of the court’s time. VFIC’s argument was that if the policy did not cover the accident then they cannot owe DOTD anything, as a result, they could not be involved as a third-party defendant.

The Court agreed with VFIC and granted the request for summary judgment. DOTD then proceeded with the rest of the case involving the family of the deceased. At trial, as mentioned, DOTD lost and was ordered to pay damages. Therefore, DOTD appealed the judgment and sought to also appeal the summary judgment that the Court granted for VFIC.

However, there is a time limitation in which a party is allowed to appeal. In Louisiana, parties have sixty days to appeal or seek a new trial after a final judgment. In the course of the other portion of the trial, DOTD’s sixty days had run, and although they were still in trial with other parties, the issue with VFIC was complete. Because VFIC was removed from the case previously, the grant of summary judgment constituted a partial final judgment and the sixty days to appeal started to run when the notice of judgment was served. Therefore, DOTD could appeal the rest of the case, but could not appeal the summary judgment granted to VFIC because its time limit had expired.

There were many procedural intricacies involved in this case. These intricacies require competent legal representation to navigate.

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Respondeat superior or, more simply, vicarious liability is a principle by which an employer can be found liable for the actions of its employees. It allows plaintiffs injured by people who are at work to collect money for their injuries from the often deeper pockets of the enterprise itself. However, an employer is not exposed to liability for activities of its employees that are not included in the course and the scope of their employment. The risks associated with doing business are placed upon those seeking to do business. In the case of Migliore v. Gill, a doctor was found not to be engaged in the course and scope of his employment during a period of “on call” time.

In terms of the incident, Dr. Javed Gill may have made an error while driving. As a result of this alleged error, or at least the resulting accident, Mr. George Migliore was injured. Regardless of who was actually at fault during that accident, which is a matter for another day, the accident happened. The issue at hand in the decision made by the Fifth Circuit Court of Appeal was whether or not Dr. Gill’s employer, Oschner Clinic Foundation, was in any way responsible for Dr. Gill’s conduct. Dr. Gill was not on an errand involving his work at the time of the accident. He was on call at the time of the accident. This meant that Dr. Gill was required to wear a beeper and report to Oschner within thirty minutes of receiving a call during this period. He was not performing activities for which he was employed. He was not driving in the location of the accident for any purposes besides his own. The trial court found, and the appellate court agreed, that Dr. Gill was outside both the course and scope of his employment. The appellate court stated that it might have found differently if Dr. Gill had been summoned by Oschner and was on his way to work at the time of the accident.

Having vicarious liability attach to the conduct of on call employees would be potentially disastrous for the types of companies that utilize an on call system. A company would be placed in the position of having either to have the employee come into the office or pay them to stay home thereby limiting the risk that their conduct would cause an accident. Having liability attach only when the employee’s activity is within both the course and scope of his or her employment is a much more narrow standard that seems to follow with such cases. When, however, are employee actions within the scope and course of an employee’s employment?

The Louisiana Supreme Court has determined that the “course” of a person’s employment refers to place and the “scope” of a person’s employment refers to the activities that a person is performing. In Orgeron v. McDonald, 639 So.2d 224 at 226 (La. 1994), the court stated that “an employee’s conduct is within the scope of his employment ‘if the conduct is of the kind he is employed to perform, occurs substantially within the authorized limits of time and space, and is activated at least in part by a purpose to serve the employer.'” Because of this, and because of the effects it would have on public policy, “on call” employees are not considered to be within the scope of their employment for purposes of vicarious liability.

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In Louisiana, like many other states, there are certain restrictions on the period in which you may bring a lawsuit. There are several practical reasons for these restrictions. First, it is important to restrict the period so that people are not in constant fear of being sued for actions that happened years ago. For example, if you cause a car accident, it would be unreasonable to have to defend that issue 20 years after it happened. If we did not have some restrictions, you could be sued for any wrongdoing you’ve ever done over the course of your entire lifetime. Second, if the complaining party brings the suit quickly, then the court is more likely to deal with more accurate information. In our simple car accident example, one can assume that it would be easier to remember the details of a car accident that happened six months ago as opposed to one that happened 20 years ago. Lastly, time frame limits help create efficiency for the court and for those who are involved in the suit. Evidence is easier to obtain when the suit is brought quickly and that makes the trial much easier on all the parties involved.

Louisiana has a variety of codes that describe the time frame limitations for bringing suit. They are known as liberative prescription and the time frames vary by the type of injury involved. For example, the liberative prescription for car accidents is generally one year from the date of the accident in Louisiana. However, you can also file for an interruption, suspension, or renunciation of the liberative prescription. In order to comply with the liberative prescription, you only need to take action that will bring the suit forward; the suit does not need to conclude within this time frame.

One such liberative prescription case was addressed by the Fifth Circuit Court of Appeal for the State of Louisiana in Dec of 2011. In this case, the complaining party was injured as a result of a car accident on March 19, 2003. Shortly after the accident (October 30, 2003), the injured party filed suit. At this point, the injured party was well within the yearlong liberative prescription for the type of suit he was bringing.

However, the next step in the suit would be to notify the other party that they are being sued and call them into court so that the litigation process can commence. There are very stringent methods involved in this notification process that the courts have detailed extensively. Time and manner restrictions are particularly important. The law has set up these safe guards so that when people are sued they are afforded every right of due process as required by not only state laws, but also by the Constitution of the United States. Unfortunately, the injured party in this case either failed to follow those rules or did not make any effort of informing the other party that they were being sued. Therefore, after giving them over six years to comply, the court dismissed the original complaint on November 30, 2009 without prejudice.

The concept of prejudice was important for this case as well. When a court dismisses a case without prejudice, that means that the complaining party is welcome to try the suit again in the future. Dismissal without prejudice is common when there are simple procedural errors that can be easily corrected. However, if the court dismisses with prejudice, then the complaining party cannot bring a suit for the same incident against the same party in the future. Because this complaint was dismissed without prejudice, the complaining party might be able to sue again.

However, the major issue in this case was that even after the suit was dismissed without prejudice, the defendant argued that the plaintiff could not sue again because the liberative prescription period of one year had already run. The plaintiff, in opposition, argued that the liberative prescription was interrupted because they already filed suit once within the liberative prescription period.

Following the general notion that the complaining party need only start the lawsuit within the liberative prescription period, then the complaining party may have been able to file again. However, when a complaint is dismissed, the party is starting an entirely new lawsuit, so it is possible that the court would have denied the commencement of this new lawsuit because it falls well outside the liberative prescription period.

Unfortunately, in this case, the court was unable to weigh in on the issue because the complaining party presented no evidence in support of their argument. When the court does not have evidence to consider, then it cannot rule in favor of the party whose burden it is to convince them of the facts – the plaintiff in this case. In fact, the plaintiff’s counsel did not even show up for the hearing regarding the liberartive prescription issues in this case.

Liberative prescription issues vary from case to case and can be somewhat complicated. Contact the Berniard Law Firm if you have any legal needs as soon as possible after a potential legal situation arises so that you can avoid these complications.

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The legal system is not perfect; courts will make the occasional error. However, in our system, we have many different levels in order to help ensure that if there are errors, the next court in the process will work to correct it. One of the ways that a court can correct an error is to grant a new trial. A motion must be made to the court by one of the parties to signify that they would like to have a new trial. In many cases, the same judge will hear the motion and decide whether to grant a new trial. Sometimes the Court of Appeals will review the motion and send the case back down to the lower court for a “re-do.”

A new trial can only be granted for serious legal errors. These errors can be based on the judge or jury, depending on the type of trial. An obviously incorrect result based on the evidence presented would be a strong candidate as a case for a new trial. Often, new trials will be granted when the jury makes a determination that is completely contrary to the facts that were presented.1
The Court of Appeals for the Fifth Circuit considered a motion for a new trial in February this year. The case involved a group of three victims who were in a car accident with a company car, where the company car hit the victim’s vehicle. The three individuals were treated for injuries relating to the accident. The defendant’s liability was proven at a separate hearing, but the damages to be awarded was left up to the jury.

The jury awarded damages significantly lower than expected. Both sides presented experts to testify regarding the severity of the injuries and the treatments that the victims had to endure. The victim’s personal physicians testified and the defendant’s expert countered their testimony. The defendant’s expert pointed out that the procedures given to the victims were actually not credible treatments in the state of Louisiana and therefore unnecessary.

The Court of Appeals for the Fifth Circuit determined that the reason that the jury awarded damages that were so low was because the jury found the defendant’s expert to be more credible and awarded damages accordingly. The court decided that although the damages were very low if the jury would have believed the plaintiff’s experts, they did match the statements of the defendant’s expert.

In Louisiana, the jury is given great deference and their decisions can only be altered if there is an obvious flaw in their outcome. When deciding whether or not to grant a new trial, the court can consider whether the jury gave one expert too much credit. However, because of the need to balance between the deference granted to the jury and the ability to evaluate an expert, the court is only allowed to overrule the jury in extreme cases where the expert was not credible at all.

The court gives an example of such an occasion where they can overrule rule the jury’s decision. In their example, the defense flew in an from another state and he had a reputation for the testimony that he had provided, which was meant to refute the opposing party’s testimony as well. They granted a new trial because of this unwarranted grant of credibility to this individual. In this case, however, the court did not find any of these circumstances and determined that the jury could have reasonably believed the defendant’s expert testimony.

There are many checks built into our court system and new trial is one that can be used in some occasions. Having the right attorney can help preserve this opportunity and move your case forward.

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The appellate process is somewhat complicated. One of the major confusions is when a party is allowed to appeal. The simple answer is that a party can appeal a judgment after the lower court has rendered a final decision. But, what makes a decision final? Does the decision include the case as a whole or just a single part of the case? An attorney can address these questions can specifically, but a short overview is helpful as well.

Just like the federal level, a party cannot appeal a decision without that decision being final in Louisiana. A final decision will decide all of the elements of the case. None of the issues will be excluded. The court looks at each issue and renders a decision for either one party or the other on every issue. Therefore, if the court does not address even one issue, then the decision cannot be final.

There is one exception to this rule that is provided in the Louisiana Code of Civil Procedure, which governs all of the court procedures in civil lawsuits for the state. The exception states that a decision can be final even if it does not resolve all the issues as long as the court specifically states that their decision is final and gives valid reasoning for that ruling.

In a recent case, an individual brought suit against their insurance company because he believed that the insurance company failed to replace his roof adequately. He asked for attorney’s fees and penalties. The insurance company argued with this claim and the court granted their motion to dismiss the individual’s suit. The court ruled only on the attorney’s fees and penalties, and not on the adequacy of the roof’s repairs. The lower court stated that this was a final judgment, but did not give reasoning for their declaration as required by Louisiana Code of Civil Procedure. Therefore, the Louisiana Court of Appeals had to determine whether the lower court was justified in their final judgment.

Occasionally, the court will also allow a single issue to be appealed because that issue is extremely important to the rest of the case. The Louisiana Supreme Court has listed several factors to determine whether one of these “partial judgments” can be considered a final judgment for the purpose of appeal. These factors include:

– The relationship between the issues that have been resolved and the issues that have not been addressed. Does one issue need to be determined in order to find out the other? For example, the court may say that the decision cannot be final if the lower court found that car A hit car B because they did not resolve whether car B was making an illegal turn at the time of the collision. Whether car B was making an illegal turn could be a deciding factor in the case and needs to be addressed.

– Whether the issue might resolve itself as the case progresses. In the insurance case mentioned above, if the insurance company was not found to be at fault, then there would be no need to appeal the attorney’s fees and penalties because the insurance company would not be liable. There is no need to appeal when the trial court can make these determinations on its own.

– Whether the appeals court might have to consider the issue again in the future. If the court finds that they will likely have to review the issue again when the entire case is brought on appeal then they will probably not review that particular issue. Reviewing it twice would be a waste of resources for both parties.

– Miscellaneous factors such as delay, shortening the time of trial, frivolity of competing claims, expense, and economic and solvency considerations. For example, if deciding one particular issue will resolve a whole line of issues, then the appellate court may decide that issue and send it back to the lower court to finish the case.

Obviously, the court has quite a bit of discretion to decide whether or not to resolve an issue. Experienced attorneys can sometimes pick out these issues ahead of time, which would give clients an edge on appeals proceedings.

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The state of Louisiana, like many other states, has very specific requirements that the judicial branch uses to help interpret contracts when the parties are in dispute. Generally, the court likes to stay out of contracts because the right to contract without interference from the government is something that the American society greatly cherishes. The ability to contract is a basic fundamental right that is guaranteed by the Fourteenth Amendment. The court will usually only interfere if there is a dispute or if the contract was in some way illegal. Therefore, it is very important to have a contract that is well written and that all parties understand completely.

If the court has to step in to work with a contract, then it will follow a few select guidelines. The ultimate goal of the court is to determine the common intent of the parties and enforce the contract in that way. In order to determine the intent, the court will look to the contract itself. In contracts that include terms of art or very technical requirements, the court will look to the common use of the word within that trade. For example, some trades include quantity information that is always larger than actually stated; think of a “baker’s dozen.” Even though twelve is technically considered a dozen, a contract between bakers may actually mean thirteen. This notion disregards the fact that in any other contract that is not between bakers, a dozen would equal twelve.

The court will also consider the contract in its entirety, not just a few sections or a single disputed term. It will determine what outcome is practical for both parties and technical terms will be given their technical meaning. In addition, if a word has more than one meaning, then the court will defer to the meaning that will carry out the goal of the contract. Consider a simple example. If a grocery store contracts to receive bananas and they receive plastic bananas instead of real bananas, the court will likely conclude that the other party providing the plastic bananas was at fault because the definition of a banana is commonly a consumable food, especially if it is going to be sold at a grocery store. The contract did not say that the grocery store wanted edible bananas, but the court will assume this information because the outcome becomes ridiculous without this assumption.

The court will generally try to stay within the language of the contract when attempting to resolve disputes. When the contract is clear and doesn’t lead to ridiculous consequences, then external evidence provided by the parties to show an alternative intent cannot be considered. The contract’s wording is therefore very important. However, if the contract is not clear or is ridiculous, then the court can consider some outside evidence in order to determine the common intent of the parties. In our banana example, if the grocery store has always ordered real bananas from this seller and has never requested plastic bananas from this seller, then that information could be considered in the court’s analysis.

The court has a means to determine whether the meaning of the contract is clear or not. Obviously if a term or issue is missing from the contract entirely, then the court will most likely deem the issue to be unclear or ambiguous. In addition, the court will also reason that an issue is ambiguous when “the language used in the contract is uncertain or is fairly susceptible to more than one interpretation.” If this is the case, then the outside evidence can be used to determine what the intent of both parties actually is.

A well written contract will convey the intention of both parties and will define all of its questionable terms so that there is no contention in the future. Sometimes, one party does not think a term in unclear when it actually is, so a conflict will arise. Competent attorneys are needed to create a well written contract and deal with conflict.

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Insurance can be a tricky subject for the average consumer. There is a lot of paperwork, confusing terms, and many people do not understand what their insurance actually covers. However, the easiest way to combat the confusion is to take the time to read through your insurance policy. Oftentimes, the answers to all of your questions can be found buried deep within your policy. You just have to know where to look.

It is important to note that insurance companies will strictly follow and enforce the written policy, so it is vital that you are familiar with your plan. You should get a complete copy of the plan and keep it in your records in case you need it in the future. Pay particular attention to the four major sections. The four sections include declarations, conditions, insuring agreements, and exclusions.

The declarations section states who is being insured, what is covered, policy limits, and the effective dates of coverage. The correct name of the insurance company will also be found in this section. The timing of the coverage is very important. If the policy says that it is in effect January 1, then it does not apply if you have an accident a few hours sooner. For example, one man was rushed the hospital with a medical emergency, but was denied coverage by his insurance company because his hospital visit was merely five hours before his plan activated.

The next piece of the policy is the conditions section. This part includes all of the things that you must do in order to be insured. There may also be a conditions section for each coverage part (such as liability, collision, etc.). These conditions are important because they may also limit what the insurance company will cover and your ability to file a claim. A common condition, for example, is if you are going to file suit then you must file within a certain amount of time. Definitions for some of the terms of the policy may also be found in this section if they do not have their own section within the policy.

The third part of the policy is the insuring agreements section. This section states specifically what the policy will actually cover. Insuring agreements is also the most important section of your policy, so read this part carefully!

Lastly, the final section is the exclusions section. The exclusion section takes away or limits some of the insuring agreements coverage. It is vital that you read both of these sections together because you may think something should be covered based on the insuring agreements section, but actually, it is not covered because of the exclusions section.

A case in the Eastern District of Louisiana gives a good example of the importance of reading through your policy and knowing your plan well. An individual was in a car accident with a company vehicle. At the time of the accident, the individual who ran the company was insured under his own name in the amount of $300,000. Four months after the accident, the insurance was extended to $1 million and the policy changed to the company name. The victim of the accident then sued claiming that the insurance company had fraudulently led the victim to believe that the insurance coverage was only $300,000, not $1 million.

Unfortunately, the victim did not read the policy very well. The court ruled that the policy clearly stated the amount that it covered and who it covered. There was actually no fraud involved. It was just a matter of reading the policy. The timing of the accident was also important. At the time of the accident, the coverage was for $300,000, not $1 million, so the accident was only covered for up to $300,000.

Insurance coverage is very complicated and it is too important to be misunderstood. Coverage could be the determining factor in whether you have to pay a big bill on your own or with help from your insurance company.

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It is widely accepted in Louisiana that insurance companies may limit coverage in any manner they desire, so long as the limitations do not conflict with the law or with public policy. Coverage limitations must be written into the policy and the burden to prove that a claim is excluded generally falls on the insurer. One common limitation for auto insurance policies is a driver exclusion. Louisiana law specifically authorizes insurance carriers and their customers to agree to exclude a resident of an insured’s household from coverage under a policy. LSA-R.S. 32:900(L). This arrangement allows the insured to pay a lower premium since excluding one or more drivers in the household from the policy would reduce the insurance company’s potential liability. A dispute over the effectiveness of an excluded driver provision was at the center of the recent case of Young v. McGraw.

In December of 2007, Vernon Washington took out an insurance policy for his two cars with the USAgencies Casualty Insurance Company. During the application process, Washington signed an excluded driver endorsement. The provision expressly excluded as insured drivers Aretha McGraw and her two children, Christopher McGraw and Tiffany McGraw. During the policy’s period of coverage, Aretha McGraw was involved in a car accident while driving one of Washington’s cars. The owner of the other vehicle, Jacqueline Young, filed a suit which named McGraw, Washington, and USAgencies as defendants. USAgencies filed a motion for summary judgment, arguing that McGraw was an excluded driver under its policy and therefore was not covered. The trial court denied the motion and, after a trial, the court concluded that the evidence presented failed to establish that Washington and McGraw lived in the same household when the policy was issued. Therefore, McGraw could not be considered an excluded driver under the policy because the requirements of LSA-R.S. 32:900(L) were not met. The trial court awarded Young personal injury and property damages totaling $5,800. USAgencies appealed.

The Second Circuit Court of Appeal reviewed the evidence presented at the trial concerning whether McGraw was actually a member of Washington’s household at the time he took out the auto policy. McGraw testified that she and her children had lived with Washington continuously since 1998 and at the address of 1996 Joe G. Drive in Monroe since 2003. She admitted to giving the address of her parents’ house to the police officer at the accident scene, but said she “didn’t think it was a big deal” since she visits there every day and receives her mail there. Washington testified that he and McGraw had lived together at 1996 Joe G. Drive for seven years. He also explained that at the time he bought the auto policy, he informed USAgencies that McGraw was a member of his household but wanted to exclude her from coverage due to “financial constraints.” The court noted: “Our review of the record convinces us that the lower court’s finding that McGraw and Washington were not residents of the same household at the time the automobile liability policy was issued is clearly wrong.” “Consequently,” the court reasoned, “the trial court was manifestly erroneous in concluding that the policy endorsement excluding Aretha McGraw … under the policy was inapplicable and that … [she] was a covered operator of the vehicle at the time of the automobile accident.” The trial court’s judgment was, accordingly, reversed.

This case demonstrates the requirement that insurance companies carefully follow all statutory requirements, if they exist, when writing coverage limitations into policies. Post-contract reviews of the insurer’s processes may, like in this case, require a fact-intensive analysis and a clear understanding of the law’s requirements. Thus, a skilled attorney is essential for any party facing a dispute over a coverage limitation.

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