Case Name: Earline GORDON v. SOUTHERN UNITED FIRE INSURANCE COMPANY
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1996-08-21
Citations: 679 So. 2d 582
Docket Number: No. 95-C-2388
Parties: Earline GORDON v. SOUTHERN UNITED FIRE INSURANCE COMPANY.
Judges: Before M. SCHOTT, C.J., and BARRY, KLEES, BYRNES, CIACCIO, LOBRANO, ARMSTRONG, PLOTKIN, JONES, WALTZER, LANDRIEU and MURRAY, JJ.
Reporter: Southern Reporter, Second Series
Volume: 679
Pages: 582–597

Head Matter:
Earline GORDON v. SOUTHERN UNITED FIRE INSURANCE COMPANY.
No. 95-C-2388.
Court of Appeal of Louisiana, Fourth Circuit.
Aug. 21, 1996.
Scott D. Beal, Morris Bart, P.L.C., New Orleans, for Plaintiff/Respondent.
Peirce A. Hammond II, New Orleans, for Defendant/Relator.
Before M. SCHOTT, C.J., and BARRY, KLEES, BYRNES, CIACCIO, LOBRANO, ARMSTRONG, PLOTKIN, JONES, WALTZER, LANDRIEU and MURRAY, JJ.

Opinion:
hBYRNES, Judge.
On its own motion, this Court grants .a second rehearing en banc in order to reconsider the decision rendered on the first rehearing. We now vacate the judgment rendered on the first rehearing, and reinstate the original judgment of this Court in which we granted the defendant's writ application and reversed the trial court's denial of defendant/relator, Southern United Fire Insurance Company's motion for summary judgment.
Plaintiff, Earline Gordon filed suit against the defendant, Southern United Fire Insurance Company (Southern), her late husband's UM insurer, seeking payment under for injuries she received in an automobile accident. Southern filed a motion for summary judgment on the grounds that UM coverage had been rejected. The Southern policy provided for liability coverage in the amount of $10,000 per person and $20,000 per accident. The application form contained the following section which was separately signed by the decedent:
UNINSURED MOTORISTS PROTECTION-COVERAGE SELECTION
Louisiana law requires that all automobile policies issued or delivered in this state shall afford Uninsured Motorist [sic] Coverage unless the insured shall, reject such coverage.
I HAVE BEEN OFFERED and I hereby REJECT Uninsured Motorists Bodily Injury coverage.
SIGNATURE OF APPLICANT
12D ate Time
The trial court denied the motion for summary judgment. We find no genuine issues of material fact and reverse.
As a matter of law, Mr. Gordon clearly and unambiguously rejected UM coverage and the UM rejection form was valid.
When bodily injury coverage is 10/20 and, therefore, there is no UM coverage available below those limits, the insurer is not required to explain the absence of lower limits or to offer a limit that was legally unavailable. In Morgan v. Sanchez, 635 So.2d 786 (La.App. 1st Cir.1994), the insured purchased a 10/20 policy; and the form that she signed gave her the option of selecting 10/20 UM coverage or of rejecting UM coverage entirely. In finding a valid rejection of UM coverage, the court stated:
Initially, we note that pursuant to La.R.S. 22:1406(D)(l)(a)(i) and La.R.S. 32:900(B)(2), the limits of a UM policy may not be less than 10/20. Accordingly, when the insured's bodily injury coverage is 10/20 and, therefore, there is no UM coverage legally available to the insured for limits lower than 10/20, there is no requirement that the insurer either explain the absence of a lower limit or make some meaningless offer of the non-existent lower limit. Id. at 787.
The same result was reached in Thomas v. Goodson, 26,356 (La.App. 2 Cir. 12/7/94), 647 So.2d 1192, and West v. Louisiana Indem. Co., 26,845 (La.App.2d Cir. 4/5/95), 653 So.2d 194.
The Southern form in the instant case adequately offered the two choices available, acceptance of UM coverage equal to the bodily injury liability limits or total rejection of UM coverage, because if the UM coverage was not affirmatively rejected, then it was necessarily accepted. The insured did not have to perform an affirmative act to accept UM coverage because such coverage is automatically written into the policy by operation of law unless it is rejected or lower limits are selected, and the insured is so informed.
Banks v. Patterson Insurance Company, 94-1176 (La.App. 1 Cir. 9/14/95), 664 So.2d 127, writ denied, 95-2951 (La. 2/16/96), 667 So.2d 1052), is not persuasive. In Banks, 664 So.2d at 129, the First Circuit was motivated by a finding that "Louisiana Indemnity's UM rejection form foreclosed informing Ms. Sullivan of an option given by law" based on the following policy language:
UNINSURED MOTORISTS COVERAGE REJECTION POLICY HOLDER'S REJECTION OF INSURANCE PROTECTION AGAINST UNINSURED MOTORISTS
The undersigned insured hereby rejects Protection Against Uninsured Motorists as provided in Louisiana Revised Statutes 22:1406 from Policy Number 610054270 on Emma Sullivan and subsequent renewals issued by Louisiana Indemnity Co.
This quoted language from Banks is very different from the language found in Southern's policy that explicitly informs the insured of the fact that UM coverage will be provided as required by law unless rejected. The form in Banks allows the insured to reject UM coverage, but fails to inform the insured that such coverage must be furnished by the insured in the absence of rejection.
LSA-R.S. 22:1406(D)(l)(a) requires that a rejection of UM coverage be in writing. LSA-R.S. 22:1406(D)(l)(a) does not require that an acceptance of UM coverage be in writing. If any inference is to be drawn from the statute's insistence on written rejection of UM coverage while failing to symmetrically mandate that rejection be also in written form, it is that acceptance of UM may be tacit, not written. You might say that LSA-R.S. 22:1406(D)(l)(a) is an "R.S.V.P. regrets only" statute. There is no need to do the vain and useless task of executing a written election for what is given by law. The only matter of legal consequence is the making of an informed decision. Any reasonable manner of execution of that informed decision should Ube acceptable as the statute mandates no form other than the rejection of UM coverage be in writing. Had it been the intention of the legislature to require that the acceptance of such coverage be in writing, it would have specifically so stated at the same time it specifically required that the rejection of UM coverage be in writing. The intent of LSA-R.S. 22:1406(D)(l)(a) was to protect the insured from unwittingly being without UM coverage.
Holbrook v. Holliday, 93-1639 (La.App. 3 Cir. 6/1/94); 640 So.2d 804, 807, clearly shows both that informed election is the issue and that if the election is for UM coverage the policy holder need do nothing:
Because the statute automatically provides for UM coverage equal to the bodily injury limits, absent a rejection of UM coverage or selection of lower limits in writing, the customer possesses UM coverage as a matter of law. In other words, the policyholder does not have to do an affirmative act; that is, indicate in any manner their choice for UM coverage equal to the bodily injury liability limits of the policy. If the Holbrooks had done nothing on the form, UM coverage would have been automatically provided. Thus, although Tugwell and the statute provide for three options, only two of those options, [emphasis added] the rejection of UM coverage and the selection of UM coverage with limits lower than the policy's bodily injury liability limits, require an affirmative act on the part of the policyholder. [Emphasis added.]
We find that State Farm's Acknowledgement of UM Coverage Selection or Rejection form does not comply with the statutory and jurisprudential requirements allowing an insured to make an informed [emphasis original] decision as to the rejection of UM coverage where it does not list each option as Tugwell mandates.
Similarly, the issue in McCoy v. State Farm Mutual Automobile Insurance Company, 95-689 (La.App. 3 Cir. 11/2/95), 664 So.2d 572, 575, was whether the form "allowed an insured to make an informed decision."
Herman v. Rome, 95-666, 95-831 (La.App. 5 Cir. 1/17/96); 668 So.2d 1202 is not persuasive. In Herman the court noted that "the form does not state | Rthe failure of the applicant to reject UM coverage . would result in UM coverage being provided ." Id. at 1206. In the instant case the Southern form does so state.
Fontenot v. Henderson, 95-2784 p. 2 (La.App. 4 Cir. 2/15/96); 670 So.2d 489, 490, is inapposite. Unlike the form in the instant case, the policy form in Fontenot did not state that UM coverage is furnished "unless the insured shall reject such coverage." Therefore, as distinguished from the Southern form in the instant case, the Fontenot form did not explain that UM coverage would be provided as required by law unless rejected.
To provide plaintiff with coverage that was rejected under the facts of this ease is to provide a windfall for which no premiums were paid at the expense of the motoring public whose premiums must cover this cost. This is bad public policy. Plaintiff's reasoning is implicitly based upon a false analogy to those cases where the insurance company collects premiums and then attempts to renege on coverage based on obscure fine print or some casuistic interpretation of arcane policy language. Southern would certainly have been only too glad to collect more premium dollars by selling plaintiff the UM coverage. That is the nature of their business. Plaintiff, in effect, asks this Court to find that Southern would act contrary to its own economic best interest, rather than provide UM coverage to policyholders.
For the foregoing reasons, we reverse the judgment of the trial court and grant summary judgment in favor of the defendant/relator, Southern United Fire Insurance Company, and against the plaintiff/respondent, Earline Gordon, dismissing plaintiff's action.
SECOND REHEARING GRANTED; JUDGMENT ON FIRST REHEARING VACATED; ORIGINAL JUDGMENT REINSTATED, GRANTING THE WRIT AND REVERSING THE TRIAL COURT.
| (ARMSTRONG, J., dissents.
PLOTKIN, J., dissents for the reasons assigned by MURRAY, J.
JONES, J., dissents for the reasons assigned by WALTZER, J.
WALTZER and MURRAY, JJ., dissent with written reasons.