Case Name: Paul KANTACK, M.D. v. PROGRESSIVE INSURANCE COMPANY
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1993-04-28
Citations: 618 So. 2d 494
Docket Number: No. 92-CA-1677
Parties: Paul KANTACK, M.D. v. PROGRESSIVE INSURANCE COMPANY.
Judges: Before BARRY, BYRNES, WARD, PLOTKIN and JONES, JJ.
Reporter: Southern Reporter, Second Series
Volume: 618
Pages: 494–500

Head Matter:
Paul KANTACK, M.D. v. PROGRESSIVE INSURANCE COMPANY.
No. 92-CA-1677.
Court of Appeal of Louisiana, Fourth Circuit.
April 28, 1993.
Writ Denied June 25, 1993.
Daryl A. Higgins, Michael L. Martin, Windhorst, Gaudry, Ranson, Higgins & Gremillion, Harvey, for plaintiff/appellant.
E. Phelps Gay, Linda M. Uzee, Christo-vich & Kearney, New Orleans, for defendant/appellee.
Before BARRY, BYRNES, WARD, PLOTKIN and JONES, JJ.

Opinion:
BARRY, Judge.
On June 3, 1988 Lois Young's vehicle was struck by Dr. Paul Kantack's vehicle. She sued Dr. Kantack, his primary insurer, Progressive Insurance Company, and R.L.I. Insurance Company, the doctor's excess insurer. Progressive's coverage was $100,000 and excess coverage was $250,000 to $1,000,000 leaving a $150,000 gap in coverage.
Young settled with Progressive for policy limits and reserved her right to proceed against Dr. Kantack. Progressive withdrew from representation of Dr. Kantack. Dr. Kantack filed a petition alleging a breach of Progressive's contractual duty to defend because the settlement and release did not release him. Dr. Kantack stipulated to fault and a $15,000 settlement was negotiated with Young. Dr. Kantack also incurred attorney's fees and costs. Progressive and Dr. Kantack filed motions for summary judgment. The trial court denied Dr. Kantack's motion and granted Progressive's motion, dismissing Dr. Kantack's suit with prejudice.
Dr. Kantack's appeal submits that summary judgment should have been granted in his favor because Progressive breached its contractual duty to defend and Progressive's motion should have been denied.
THE RECORD
Dr. Kantack stated that Progressive provided his defense until December 13, 1989 when the insurer's attorney withdrew after the settlement with Young. Dr. Kantack claims the settlement was without his consent, in bad faith, violated the insurance policy and disregarded his interests. Dr. Kantack alleged that Progressive was aware of the $150,000 coverage gap. Dr. Kantack claims that Progressive's withdrawal without his dismissal is evidence of bad faith.
To support its motion for summary judgment Progressive submitted its undisputed facts that Dr. Kantack's fault was clear (he stipulated to it) and damages exceeded the $100,000 coverage. Progressive attached Young's petition, its policy, and a January 30, 1991 joint stipulation that "the motor vehicle accident as alleged in the Petition in these proceedings occurred due to the sole fault of Dr. Paul Kantack, reserving to defendants all issues of medical causation and quantum." Also attached were:
A July 20, 1988 letter from Dr. Water-meier to Young's attorney relating to her condition;
A number of dated notations by Dr. Wat-ermeier;
Dr. Watermeier's discharge summary and two reports on operations;
Young's attorney's May 3, 1989 letter to Progressive's attorney offering to settle the claim against Progressive for policy limits of $100,000, waiving approximately $4,000 in interest and costs; Progressive's counsel's May 16, 1989 letter to Young's counsel stating that Progressive would settle for $100,000 in exchange for dismissal of Progressive and Dr. Kantack;
Young's attorney's May 17,1989 letter to Progressive's counsel declining the offer, but reiterating the May 3, 1989 offer; Dr. Kantack's counsel's May 18, 1989 letter advising that he was opposed to Progressive's proposal without a release of Dr. Kantack;
Progressive's counsel's June 1, 1989 letter to Dr. Kantack's counsel noting that Dr. Kantack had counsel long before the settlement negotiations, that Progressive had been in good faith in its negotiations and that Progressive intended to settle the case;
The motion and order of partial dismissal (order signed July 13, 1989) dismissing Progressive and reserving Young's rights to proceed against all of the defendants;
Statement of uncontested material facts.
Dr. Kantack's motion for summary judgment argued that he was entitled to the $15,000 he paid in settlement and $4,043.40 for attorney's fees. Dr. Kantack refers to his affidavit (not in the record), his attorney's affidavit relating to fees, and a statement of uncontested facts including that Progressive and its attorney were aware of the $150,000 gap in coverage.
Dr. Kantack's statement of uncontested facts alleged that Progressive was aware of the $150,000 gap in coverage which exposed him to personal liability after Pro gressive settled without his consent and dismissal. Dr. Kantack's counsel wrote on May 18, 1989 (prior to settlement) that Dr. Kantack was unequivocally opposed to the settlement without his release. That letter expressed grave concern that tendering $100,000 would "fund" Young's case and provide "an economic cushion in which to continue to pursue this matter to Dr. Kan-tack's potential economic detriment." The letter objected to payment of policy limits in exchange for a partial release and requested Progressive to continue to defend.
Progressive filed a memorandum in opposition and attached Dr. Kantack's counsel's February 21, 1989 letter to Progressive's counsel advising that he had been retained and copies of the first two pages of depositions by Young and Dr. Kantack.
Dr. Kantack filed a response to Progressive's statement of uncontested material facts and Progressive responded to Dr. Kantack's statement of uncontested facts.
Part I — Liability to Others in the policy provides:
We will pay, on behalf of an insured, damages other than punitive or exemplary damages, for which an insured is legally liable because of bodily injury and property damage caused by accident. We will not pay more than the limits of liability shown in the Declarations for all damages resulting from one accident. We will defend any suit or settle any claim for these damages as we think appropriate. We will also defend any suit involving both punitive and compensatory damages. We will not defend or settle after our limit of liability has been paid.
LAW AND ANALYSIS
Appellate courts review summary judgments de novo and use the same criteria applied by the trial court to determine whether summary judgment is appropriate. Schroeder v. Board of Supervisors, 591 So.2d 342 (La.1991). Summary judgment is proper if the pleadings, depositions, admissions and supporting affidavits show there is no genuine issue of material fact and the mover is entitled to judgment as a matter of law. La.C.C.P. art. 966B; Barham & Churchill v. Campbell, 503 So.2d 576 (La.App. 4th Cir.1987), writ denied 503 So.2d 1018 (La.1987).
The mover must prove the absence of any genuine issue of material fact. Doubt shall be resolved against the mover and in favor of trial on the merits. Urbeso v. Bryan, 583 So.2d 114 (La.App. 4th Cir.1991). Summary judgment is rarely appropriate for determination of subjective facts, such as motive, intent, good faith, or knowledge. See Johnson v. Hitchens, 518 So.2d 1154 (La.App. 4th Cir.1987).
Ambiguous words and phrases in an insurance contract are to be construed in favor of the person claiming coverage. Credeur v. Luke, 368 So.2d 1030 (La.1979). Policy provisions which limit the insurer's liability or place restrictions on policy obligations should be enforced unless they conflict with statutes or public policy. Livingston Parish School Board v. Fireman's Fund American Insurance Company, 282 So.2d 478 (La.1973).
Dr. Kantack relies on Brown v. Lumbermans Mutual Casualty Company, 326 N.C. 387, 390 S.E.2d 150 (1990) which followed Pareti v. Sentry Indemnity Company, 536 So.2d 417 (La.1988). The duty to defend provision in Brown stated: "Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted." 390 S.E.2d at 153.
In Brown the North Carolina Supreme Court found ambiguity in the duty to defend provision (different from Progressive's policy) and construed the ambiguity in favor of the insured. The Court concluded that "the insurer's duty to defend continues until its coverage limits have been exhausted in the settlement of a claim or claims against the insured or until judgment against the insured is reached." Id. at 154. The Brown court concluded that under the policy's ambiguous terms relating to the duty to defend, the insurer's unilateral tender to and the injured party's acceptance of the policy's limit without a release of the insured did not relieve the insurer of its duty to defend. Id., 390 S.E.2d at 155-56.
Brown is distinguishable from this case. The insurance policy in this case is not ambiguous. The North Carolina court's broad interpretation of the policy is not persuasive here. That case involves different circumstances and different policy provisions.
Progressive relies on Pareti, 536 at 417 which is also distinguishable from this case. Pareti involved a cross claim, not a summary judgment, and there was no allegation of the insurer's bad faith. In Pareti the defendants' insurer negotiated a compromise and release whereby the insurer and its insureds were released from all liability for the policy's limit. The plaintiffs' uninsured carrier filed a cross claim seeking indemnity against the defendants. Subsequent to the compromise the defendants were still represented by the insurer's attorney whose motion for a summary judgment (in the UM carrier's cross claim) was denied. The insurance company then notified its insureds/defendants that it would no longer provide a defense against the cross claim. The defendants cross claimed against their insurer alleging a breach of its duty to defend and prayed for attorney's fees and costs.
In Pareti, 536 So.2d at 420 the following policy language was unambiguous:
We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted.
The insureds in Pareti argued that it was against public policy for an insurance company to terminate its defense after policy limits are paid. The Louisiana Supreme Court reviewed cases from other jurisdictions and concluded that public policy did not mandate disregarding the clear policy provision that the duty to defend terminates on payment of policy limits. Id. at 422-23.
Pareti further stated:
[T]he protection afforded to insureds against this contingency is that in every case, the insurance company is held to a high fiduciary duty to discharge its policy obligations to its insured in good faith — including the duty to defend the insured against covered claims and to consider the interests of the insured in every settlement. (Citations omitted).
Id. at 423.
Pareti made it clear that an insurer must make every effort to avoid prejudicing its insured by the timing of its withdrawal:
Further, any payment of the policy limits which does not release the insured from a pending claim (e.g., unilateral tender of policy limits to the court, the claimant or the insured), even if sufficient to terminate the duty to defend under the wording of the policy involved, raises serious questions as to whether the insurer has discharged its policy obligations in good faith.
Id. at 424. Based on the unambiguous policy language and no showing of bad faith, Pareti held that the insurer's duty to defend terminated upon payment of policy limits through settlement.
Our case is distinguishable from Pareti. According to the documentation, Progressive wasted no time to secure its release in exchange for the policy's limit. Young's offer was made May 3, 1989. On May 16, 1989 Progressive attempted to negotiate a release for Dr. Kantack and itself. Young declined Progressive's offer on May 17, 1989 and reiterated the initial offer to release only Progressive. Progressive informed Dr. Kantack on June 1, 1989 that it would accept Young's offer (after Dr. Kan-tack's May 18, 1989 letter advising that he was adamantly opposed). Progressive was dismissed on July 13, 1989 and its counsel withdrew from representation of Dr. Kan-tack.
Unlike the insurer in Pareti, Progressive did not secure a release for Dr. Kantack and itself. The Pareti insurer upheld its obligation to defend by having its insured released from liability. The insurer did not defend as to the cross claim (after denial of its motion for summary judgment).
Dr. Kantack's allegations and documentation raise genuine issues of material fact as to whether Progressive's payment of policy limits fulfilled its duty to defend, whether the timing of Progressive's withdrawal was detrimental to Dr. Kantack, and whether Progressive discharged its policy obligations in good faith.
The summary judgment in favor of Progressive is reversed. Denial of summary judgment as to Dr. Kantack is affirmed. The matter is remanded for further proceedings.
AFFIRMED IN PART; REVERSED IN PART; REMANDED.
WARD, J., concurs with reasons.
PLOTKIN, J., concurs with written reasons.
JONES, J., concurs for the reasons assigned by PLOTKIN, J.
BYRNES, J., dissents with reasons.