Case Name: Susie WINTERS v. Otha C. DODSON, et al.
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 2004-12-15
Citations: 896 So. 2d 121
Docket Number: No. 2004-665
Parties: Susie WINTERS v. Otha C. DODSON, et al.
Judges: Court composed of SYLVIA R. COOKS, JOHN D. SAUNDERS and OSWALD A. DECUIR, Judges.
Reporter: Southern Reporter, Second Series
Volume: 896
Pages: 121–126

Head Matter:
Susie WINTERS v. Otha C. DODSON, et al.
No. 2004-665.
Court of Appeal of Louisiana, Third Circuit.
Dec. 15, 2004.
Samuel H. Thomas, Tallulah, LA, for Plaintiff/Appellee: Susie Winters.
William H. Eckert, Ginger K. Deforest, Ungarino & Eckert, Metairie, LA, for Defendant/Appellant: State National Insurance Company.
Court composed of SYLVIA R. COOKS, JOHN D. SAUNDERS and OSWALD A. DECUIR, Judges.

Opinion:
1 yCOOKS, Judge.
STATEMENT OF THE CASE
The issue presented in this case is the validity of a waiver of UM coverage executed by an employee of Gunter Farms, Carey Marchand. The matter was tried before the Honorable Harry F. Randow. Following an extensive review of the testimony and law, the trial court found the waiver of UM coverage was not valid and the Plaintiff, Susie Winters, was entitled to recovery under the policy. State National Insurance Company (State National) filed this appeal. For the reasons assigned below, we affirm the decision of the trial court.
STATEMENT OF THE FACTS
The Plaintiff, Susie Winters, was a longstanding employee of Gunter Farms, Inc. On January 2, 2001, she was driving a company vehicle and was traveling westbound on La. 488 when an automobile driven by Otha Dodson ran a stop sign and struck her automobile. Ms. Winters was ejected from the rear window of her car and sustained severe injuries. The tort-feasor, Ms. Dodson, was insured by State Farm Insurance Company. State Farm paid its policy limits of $25,000.00.
The vehicle being driven by Ms. Winters was owned by Gunter Farms, Inc. and insured by State National Insurance Company. While the policy provided liability coverage of $1,000,000.00, State National argued UM coverage was waived by Gun-ter Farms, Inc. through its employee, Carey Marchand.
State National contends the trial court erred in concluding Mr. Marchand was not authorized to execute the waiver of UM coverage on behalf of the corporation. State National asserts Mr. Marchand was the vice-president of Gunter Farms, Inc. as evidenced by documents filed with the Secretary of State. Additionally, State National contends Mr. Marchand was responsible for making all decisions for the | .-¡corporation relating to insurance and other financial matters. It also contends Mr. Marchand was the business manager for Gunter Farms, Inc. and an equal partner in the decision-making for the company along with Joe Gunter. State National's contention is consistent with Carey Mar-chand's testimony at trial. Carey Mar-chand testified he was the vice-president for Gunter Farms, Inc. and responsible for all business decisions. However, under cross-examination he admitted that in the case of a conflict, Mr. Gunter's decision prevailed. The trial court found Mr. Mar-chand's characterization of his authority and the extent of his decision-making ability within the corporation was not credible. The trial court further found State National was not reasonable in relying on Mr. Marchand's authority absent some authorization from Gunter Farms, Inc.
The record indicates the Gunter family had been in the egg business for several years. Joe Gunter testified his grandfather started the egg business and his parents then took over the business. Joe graduated from college in Industrial Agricultural Technology with a speciality in nuclear science. He went to Airline Training Academy and became a commercial airline pilot. In 1993 he decided to return home and take over the family egg business. Gunter Farms, Inc. was then incorporated with Joe Gunter as president. His father, Kenneth Gunter, became the manager of the company and drew a salary of $500.00 a month. His mother drew a salary of $250.00 for bookkeeping and invoices. In 1993, when the business was in trouble and needed capital, Joe turned over 50% of his shares to an investor, and the C.E.O. of the corporation, Charles McCoy, who then became the holder of 100% of the stock of Gunter Farms, Inc.
Carey Marchand was hired by Joe Gun-ter in 1994 to help in the business office. Joe testified he met Carey Marchand when the two were students at LSU. At that |4time, Mr. Marchand owned a printing company which he started while in college. Mr. Marchand left college and went to work for Gunter Farms, Inc. Mr. Mar-chand was responsible for invoicing, the book work, inventory and the computer. When Mr. Marchand went to work for Gunter Farms, Inc., Joe testified: "The only thing that was said was that if the company started making a profit, Mr. McCoy would give back the shares to me and then I would in turn do a 50/50 with Carey." Mr. Gunter testified he never regained any of the stock he had turned over to Mr. McCoy in 1993. The company filed for bankruptcy in 2001.
State National contends Gunter Farms, Inc. never opted to have UM coverage on any owned vehicle and the policy in dispute in this case was no exception. However, Joe testified Gunter Farms, Inc. purchased its first vehicle, a Volvo truck, in 1995 or 1996. He admitted that vehicle did not have UM coverage. However, he explained UM coverage was rejected because "I was the only driver, I think I put myself as the only driver on the policy so I'm — you know, I'm President of the company, I'm not going to sue the company if I got hurt." However, Joe testified when Gunter Farms, Inc. began renting a fleet of trucks and expanded its inventory of vehicles, he insisted on "full coverage" which meant UM coverage. When questioned regarding a meeting at Ruth's Chris Steakhouse with Gaynell Martin, insurance agent for State National, to discuss switching to State National for insurance coverage, he recalled that he made it clear to Ms. Martin he wanted "full coverage" which meant UM coverage. Mr. Mar-chand was present at this meeting. He denied ever authorizing or directing Mr. Marchand to subsequently waive UM coverage on behalf of Gunter Farms, Inc. He further testified Mr. Marchand served as a officer of the corporation in name only, since no formal action was ever taken to install him as such; and Mr. Marchand had no actual or implied authority to act on |sbehalf of the corporation without his express approval.
In a well-reasoned opinion, the trial court found Joe was "adamant and consistent in his testimony that he informed Mr. Marchand, following a discussion of the issue, that UM coverage was to be purchased." He found Mr. Marchand exaggerated his importance within the company and his decision making authority. The trial court found Mr. Marchand gave up his college career to pursue a business venture which ultimately failed. For this reason, the trial court found Mr. Marchand was not objective nor entirely credible regarding his role in the business. Specifically, he noted:
Mr. Gunter and Mr. Marchand further testified that they would discuss any issues that arose and then make a decision. However, Mr. Gunter expressly stated in his testimony that he had the final authority and "say so" when he and Mr. Marchand had a disagreement over the business. Mr. Mar-chand, on the other hand, was adamant in his opinion that he and Mr. Gunter were "equals." He was incensed when plaintiffs counsel questioned him regarding the fact that he was an employee while Mr. Gunter was President of the corporation. However, when pressed by opposing counsel, Mr. Mar-chand did admit that Mr. Gunter had the final decision-making authority when there was a disagreement between the two. Furthermore, Mr. Gunter testified that he informed Mr. Marchand for the need for "full" coverage. Mr. Gunter also testified that Mr. McCoy, a private investor and stockholder in the corporation, requested that they maintain full coverage in order to protect his investment in the corporation. Mr. Gunter further testified that he informed Mr. Marchand to purchase a policy that provided full coverage with a $1,000,000.00 umbrella. He stated that he told Mr. Marchand that the corporation needed more coverage than it had .previously needed, since it had expanded to include more trucks and other equipment.
Mr. Gunter testified regarding a meeting with defendant, State National Insurance Company, Inc., agent, Gaynell Martin. Mr. Marchand recommended Gaynell Martin as the - agency [which] had provided insurance to a similar egg company in New Orleans. Mr. Gunter and Mr. Marchand met with Gaynell Martin, and Mr. Gunter testified that he informed Gaynell Martin that the company had recently leased a number of delivery trucks and he wanted full coverage with a million dollar umbrella.
The Court found Mr. Gunter to be reliable and forthcoming with Ifiinformation. On the other hand, it was clear to the Court that Mr. Marchand felt slighted by the demise of Gunter Farms, Inc. He testified that he was placed in an uncomfortable situation as he is now eight (8) years behind career-wise and must make other plans for a career. The Court is also mindful of Mr. Marchand's obstinate attitude as to the issue of whether Mr. Gunter had authority over him when the two disagreed over decisions to be made on behalf of the corporation. Accordingly, the Court finds that Mr. Marchand had no implied authority to waive UM coverage for Gunter Farms, Inc. Defendant further claims, that even if Mr. Mar-chand was not given express or implied authority, he was clothed with the apparent authority to waive UM coverage for Gunter Farms, Inc. Apparent authority is a "judicially created concept of estoppel when binds the principal for the unauthorized act of an apparent agent in favor of a third person." Id. at 732. However, the principal must give the third party reason to believe that the agent had authority to act and the third party must have reasonably relied upon this. Id. Defendant cannot rely blindly upon the assertions of an agent, but has a duty to determine whether the principal permits the proposed act by the agent. Desormeaux v. Lalonde, 578 So.2d 226, 230-231 (La.App. 3 Cir.1991). Clearly, the burden of proving an agency relationship lies with the party seeking to prove the existence of such a relationship. Bank of Green-berg[Greensburg] v. Forrest, 520 So.2d [728] at 732 [(La.1988)].
Mr. Gunter was clear in his testimony that neither defendant, State National Insurance Company, nor their agent, Gaynell Martin, inquired into whether Mr. Marchand had authority to waive UM coverage for Gunter Farms, Inc. nor did it request a corporate resolution for such authority. State National Insurance Company was unreasonable in relying upon Mr. Marchand's assertions that he was Vice-President of Gunter Farms, Inc. and, as such, had authority to validly waive UM coverage.... Further, the Court finds that Gaynell Martin was not reasonable in relying upon the instructions of Mr. Marchand in light of the statements by Mr. Gunter regarding full coverage.
Accordingly, we affirm the decision of the trial court.
DECREE
Based on the foregoing review of the record, we affirm the decision of the trial court. All costs of this appeal are assessed to State National Insurance Company.
AFFIRMED.
DECUIR, J., dissents and assigns reasons.