#### Charles CAVALIER v. LOUISIANA FARM BUREAU CASUALTY INSURANCE COMPANY, Insurance Company of North America, Joseph Gillard, et al.

No. 88-CA-85.

Court of Appeal of Louisiana, Fifth Circuit.

June 7, 1988.

Rehearing Denied Aug. 17, 1988.

Writ Granted Sept. 1, 1988.

Steve Joffrion, Gonzales, for Charles Cavalier, plaintiff-appellant/appellee.

McGlinchey, Stafford, Mintz, Cellini & Lang, P.C., Michael R. Sistrunk and Mark M. Gloven, New Orleans, for National Union Fire Ins. Co. of Pittsburgh, Pa., defendant-appellant.

Barham & Churchill, John F. Whitney, New Orleans, for Ins. Co. of North America, defendant-appellant.

Porteous, Hainkel, Johnson <& Sarpy, John J. Hainkel, Jr., New Orleans, for Louisiana Farm Bureau Cas. Ins. Co., defendant-appellee.

Durrett, Hardin, Hunter, Dameron & Fritchie, David T. Butler, Jr., Baton Rouge, for Shell Pipeline Corp., intervenor-appel-lee.

Before CHEHARDY, C.J., BOWES and GAUDIN, JJ.

CHEHARDY, Chief Judge.

This is an appeal by defendants National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National), and Insure *1039anee Company of North America (INA), and plaintiff, Charles Cavalier, from a summary judgment dismissing defendant Louisiana Farm Bureau Casualty Insurance Company (Farm Bureau) from Cavalier’s suit to recover uninsured/underinsured motorist’s insurance (U/M) benefits. The judgment further found National provided primary coverage for uninsured/underin-sured motorist’s insurance coverage and INA provided excess insurance coverage.

Charles Cavalier suffered injuries when an automobile driven by Joseph Gillard collided with the truck Cavalier was driving. Cavalier was in the course and scope of his employment with Shell Pipeline Corporation (SPLC) at the time, but the truck he was driving was owned by LOCAP, Inc. LOCAP is a pipeline company owned by SPLC, its parent company, Shell Oil Company and several other corporations, and which contracted with SPLC for SPLC to operate the pipeline for the carriage of its crude oil.

At the time of the accident, the tort-fea-sor Gillard was insured by State Farm Mutual Automobile Insurance Company (State Farm). Following the accident, State Farm tendered its policy limits of $25,000 to Cavalier, after a portion was paid to SPLC as reimbursement for workers’ compensation payments. The remainder was deposited into the registry of the court pending final determination. In addition, National insured the LOCAP vehicle that plaintiff was driving when the accident occurred for one million dollars; INA provided 10 million dollars in liability insurance to SPLC; and Farm Bureau insured a vehicle owned by plaintiff’s wife, Anita Cavalier, for $25,000 in U/M benefits.

As a result of the accident, Cavalier filed suit against National, INA and Farm Bureau for U/M benefits. INA and National denied liability on the basis they had executed rejections of U/M coverage pursuant to LSA-R.S. 22:1406(D)(l)(a).

In due course, all three insurance companies filed separate motions for summary judgment. INA and National again asserted they had rejected coverage. Farm Bureau contended the rejections by INA and National were invalid and that it was entitled to dismissal because the National policy provided primary U/M coverage and INA’s coverage was excess. Thus, under R.S. 22:1406 Farm Bureau concluded it did not provide coverage.

After a hearing on the motions, the trial judge granted Farm Bureau’s motion and dismissed it from the suit. In the judgment he further found that the National policy was primary and INA’s policy was excess pursuant to R.S. 22:1406(D)(l)(c). In his reasons for judgment he determined the National and INA rejections were invalid because the person who signed the rejections lacked corporate authority.

On appeal defendants argue that the motion was improperly granted because material issues of disputed fact remain. Alternatively, they assert that Lowell Emmett, the signor, validly rejected coverage as a legal representative of SPLC and LOCAP by virtue of SPLC’s general corporate resolution; by virtue of SPLC’s policy; by virtue of Emmett’s extended job description; and by virtue of LOCAP’s general grant of authority to SPLC to obtain insurance as found in the operating agreement between the companies.

A motion for summary judgment is properly granted only when the pleadings, depositions, answers to interrogatories and admissions on file, if any, show there is no genuine issue as to material fact and that mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966.

Louisiana law statutorily imposes U/M coverage on all motorists in the State. The statute, R.S. 22:1406, embodies strong public policy designed to protect the innocent victims of the negligent uninsured or underinsured motorist. *Roger v. Estate of Tod Moulton,*513 So.2d 1126 (La.1987). Although the statute also provides the insured or his authorized representative may reject U/M coverage, that right is a derogation of the public policy. Thus the portion of the statute allowing a party to reject U/M coverage is read narrowly in order to carry out the primary objective of protecting the innocent. *Roger,*supra. Consequently the jurisprudence holds that *1040a rejection must be written in clear and express terms. *Roger,*supra.

The parties agree herein that the rejections executed on behalf of LOCAP and SPLC were in proper form. However, Farm Bureau challenges Emmett’s authority to sign the rejections as the “legal representative” of the companies. Farm Bureau points out Emmett was not specifically authorized to reject the coverage by corporate resolution, or any other corporate directive by either company, and that Emmett’s status as LOCAP's representative is even more tenuous because Emmett was neither an officer nor employee of LOCAP.

Insofar as SPLC is concerned, the response of National and INA is that Emmett’s authority arose from a combination of Emmett’s actual job duties as an insurance administrator for SPLC, from a general corporate resolution entitling SPLC’s treasurer (Emmett’s superior) to reject coverage when allowed by law, and from past company policy. As to LOCAP, the authority allegedly derived from a general grant to procure insurance at LOCAP’s direction which is contained in the operating agreement between SPLC and LOCAP.

The evidence is clear that Emmett did not have formal authority to reject U/M coverage for SPLC or LOCAP. We are of the opinion that the lack of formal authority is fatal to the validity of the two rejections in light of the public policy favoring U/M coverage, and considering the strict interpretation of the rejection provision in the statute. Consequently we find the trial judge did not err in determining the rejections executed on behalf of LOCAP and SPLC were invalid and in dismissing Farm Bureau from the suit. However, we also find the judgment is erroneous in another respect.

The trial court judgment, in addition to dismissing Farm Bureau from the suit, summarily decided that National provided primary coverage and INA provided excess coverage. Classification of the available insurance as either primary or excess is a determination more appropriately and procedurally disposed of at a trial on the merits.

Accordingly, the judgment of the trial court is hereby reversed as to that portion which holds that National Union Fire Insurance Company of Pittsburgh, Pennsylvania, provides the primary uninsured/under-insured coverage and Insurance Company of North America provides excess uninsured/underinsured coverage. The judgment is hereby affirmed in all other respects.

AFFIRMED.

BOWES, J., concurs in part and dissents in part.

BOWES, Judge,

concurring in part and dissenting in part.

I concur with my learned brothers in their majority opinion insofar as it reverses that portion of the trial court’s judgment holding that National and INA provide primary and excess UM coverage, respectively. I dissent from the remainder of the opinion which makes findings on the validity of the rejections and further releases Farm Bureau from the suit on the basis of those findings.

In my opinion, it is far from clear that Emmett had no authority to reject UM coverage on behalf of either SPLC or LO-CAP. There are too many questions concerning interlocking directorships, interlocking ownership of subsidiaries, ratification, implied and apparent authority, estoppel (particularly because of past actions that were approved) and other considerations, for the trial court to find, by summary judgment, that Emmett could not have validly waived UM coverage. A recent decision of this court, *Kemna v. Warren,*514 So.2d 237 (La.App. 5 Cir.1987), discusses the law and jurisprudence regarding implied authority to bind a corporation, as well as express or implied ratification of an act of a corporate official without authority with retroactive effect, all with reference to a corporate rejection of UM coverage. This case indicates to me that Emmett’s acts may well have been legally ratified by SPLC and LOCAP in the present situation.

*1041In addition, one of my chief objections to the holding of the majority is that I find no statutory or jurisprudential authority which gives the trial judge the discretion to dismiss from a lawsuit a viable defendant whose liability is not an issue, simply on the grounds that his policy limits are not as high as those of a co-defendant.

It appears to be the position of Farm Bureau that if the UM rejections are invalid, and National is indeed the primary UM carrier, then INA as the excess carrier with substantially higher limits is *automatically*the excess carrier against whom Cavalier *must*proceed; further, if this argument is correct, then Farm Bureau seems to urge that it may be dismissed from the suit *as providing no coverage.*I am of the opinion that this interpretation of the statute and jurisprudence is patently erroneous as a matter of law.

Plaintiff impleaded Farm Bureau as an original defendant in his initial proceedings. Farm Bureau is a solidary obligor, along with National and INA, as to the tort action. See *Burton v. Foret,*498 So.2d 706 (La.1986). A reading of R.S. 22:1406 appears to permit the injured victim *his*choice of excess UM coverage when more than one such policy is available to him. Furthermore, the jurisprudence supports this conclusion. This court, in *Rogers v. Ambassador Ins. Co.,*452 So.2d 261 (La.App. 5 Cir.1984), considered a situation in which a plaintiff sought to recover under a UM policy. Although the factual situation was somewhat different, the principle enunciated therein is sound and applicable. There we said:

> ... we consider that the statute which requires uninsured motorists coverage cannot be interpreted so as to deny that coverage to those persons who sought it. We see nothing to prevent Rogers from choosing to proceed against his own insurance company under this factual situation. We believe this conclusion to be supported by the decision in the recent case of *Taylor v. Tanner,*442 So.2d 435 (La.1983), which permitted a claimant to choose a provision or policy with the highest limits amongst those available to him. As pointed out by the court:

> “... the primary objective of the uninsured motorists scheme is to protect innocent victims of the negligent and financially irresponsible motorist by providing such victims with full recovery. *Booth v. Fireman’s Fund Insurance Company*[253 La. 521] 218 So.2d 580 (La.1968); *Bond v. Commercial Union Assurance Company,*407 So.2d 401 (La.1981).”

See also *Branch v. O’Brien,*396 So.2d 1372 (La.App. 2 Cir.1981), for the conclusion that amongst available UM carriers, plaintiff may choose to his advantage.

I find nothing in the law or jurisprudence which permits or gives the trial court authority to make the choice on behalf of plaintiff, who has not moved to dismiss Farm Bureau from the action.

It may appear to be obvious that in this particular case the plaintiff would make the same choice as the trial judge did for him and choose the policy with the highest limits. But this is not necessarily so. This plaintiff, and any plaintiff, may have reasons of his own for selecting a carrier (perhaps one with greater financial stability) with lower (but perfectly adequate) limits, rather than the “fattest cat” available. In any case, the law is clear that it *is his*choice and not that of the trial judge. Equally important, in my opinion, as this observation, is that the majority opinion sets a precedent for future use by allowing the trial judge to usurp the right of the plaintiff.

In addition, to being unauthorized procedurally, I believe that the judgment of the trial court declaring that Farm Bureau provided no coverage to be erroneous as a matter of law.

*Taylor v. Tanner,*442 So.2d 435 (La.1983), cited in *Rogers,*supra, dealt with a plaintiff who entered into settlements with the tortfeasor’s liability insurer, the UM carrier of the automobile in which plaintiff was injured, and plaintiffs own UM carrier. Suit was pending against a third UM carrier with substantially higher limits than the two policies on which plaintiff had already collected. In reversing a summary *1042judgment in favor of the third insurer, the Supreme Court stated:

> We do not believe that the Legislature, by enacting a statute which limits stacking, intended to prohibit a claimant from conditionally accepting the tendered limits of a known excess policy with undisputed coverage and then litigating to determine whether another policy affords coverage with greater limits. Such an interpretation would be directly contrary to the primary objective of the uninsured motorist scheme — to protect innocent victims of the negligence of financially irresponsible motorists by providing such victims *with full recovery. Booth v. Fireman’s Fund Insurance Company*[253 La. 521], 218 So.2d 580 (La.1968); *Bond v. Commercial Union Assurance Company,*407 So.2d 401 (La.1981). The result reached by the lower courts also penalizes the excess insurer who immediately tenders payment and rewards the excess insurer who is dilatory or evasive.

> The purpose of the limitation of Subsection 1406D(1)(c)(ii) is to prevent a claimant from recovering *more*than the limits of any one of several excess uninsured motorist coverage provisions or policies available to him. Nevertheless, the *claimant*should be able to *choose*the provision or policy with the highest limits. The only question in this case is whether plaintiffs' decision to collect the proceeds of one excess policy tendered by that insurer was an irrevocable election which precludes recovery when plaintiffs later determined that another excess policy has higher limits.

> Here, plaintiffs accepted the policy limits tendered by one excess insurer and reserved their rights against Home, while awaiting a determination during protracted litigation about possible coverage available under Home’s policy. In such a situation, the logical conclusion is that the interim acceptance constituted a conditional acceptance, pending a determination of whether the other excess insurer provided coverage with greater limits. [Emphasis supplied]

The court concluded that payment by one excess insurer is irrelevant to the liability of the other as long as the amount of excess uninsured motorist coverage does not exceed the limits of the highest excess policy, which is ultimately determined to be available to plaintiffs.

> “As long as there is no ultimate recovery which increases the limits of available excess uninsured motorist coverage beyond that provided by any one policy, Subsection 1406 D (1)(c) is not violated, and the purpose of uninsured motorist insurance is fulfilled.”

Under the rationale of *Taylor,*it appears to me that Cavalier could, under certain circumstances, collect from both Farm Bureau *and*INA as excess insurers (provided that the rejection of UM coverage on behalf of INA is invalid), as long as the ultimate recovery by Cavalier does not exceed the ten million dollar limit provided by the INA policy.

In any event, I believe that it was manifest error for the trial judge to dismiss Farm Bureau from the action on the basis that INA provided excess coverage, thereby concluding that no other policies were available to Cavalier, and that, ergo, Farm Bureau provided no coverage. In my view, Farm Bureau is not entitled to summary judgment and I am perplexed by what I judge to be the inconsistency of the majority. On the one hand, they disapprove of the summary judgment because the trial judge “summarily decided that National provided primary coverage and INA provided excess coverage” and they remand the case for a trial on the merits regarding these issues. Yet, on the other hand, they approve of the trial judge summarily dismissing Farm Bureau, a viable defendant, from the suit without any request or motion from the plaintiff. Logic would seem to dictate that if the case is to be remanded, then it should be remanded for a full trial on the merits as to *all*insurers involved so that the plaintiff may be afforded his rightful choice.

In my opinion, there are grave issues of material fact existing in regard to the validity or invalidity of the rejections of the uninsured/underinsured motorist coverage by INA and National. This being so, it is *1043logical that such questions materially affect the position taken by Farm Bureau in this appeal. Should one or both rejections be actually valid, plaintiff obviously still has Farm Bureau to proceed against. However, should Farm Bureau be dismissed from the lawsuit, as the majority does, this ruling will have operated so as to completely deprive the plaintiff of his right of action against that insurer, i.e., Farm Bureau.

Finally, an interesting and realistic question was raised at oral argument by counsel for INA when he said that if there was no proper authority for Emmett to reject U M coverage on behalf of INA and National, then, perhaps, for the same reason, there was no proper authority to take out the insurance policies at all, so there may be no insurance whatsoever in force for these two companies. This possibility would leave Farm Bureau as the *only*UM carrier for Cavalier to proceed against.

I firmly believe that all of these issues can be properly resolved *only*by a trial on the merits where evidence and testimony may be freely offered and fully developed by all concerned. Consequently, I would annul and set aside the summary judgment and remand the entire case for a full trial on the merits.

For the foregoing reasons, I respectfully concur and dissent, as outlined above.