Case Name: Herman THIBODEAUX v. PARKS EQUIPMENT COMPANY, The Travelers Insurance Company, Humble Oil and Refining Company and Ashbury S. Parks
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1962-03-14
Citations: 140 So. 2d 215
Docket Number: No. 5472
Parties: Herman THIBODEAUX v. PARKS EQUIPMENT COMPANY, The Travelers Insurance Company, Humble Oil and Refining Company and Ashbury S. Parks.
Judges: Before ELLIS, HERGET, and MILLER, JJ.
Reporter: Southern Reporter, Second Series
Volume: 140
Pages: 215–225

Head Matter:
Herman THIBODEAUX v. PARKS EQUIPMENT COMPANY, The Travelers Insurance Company, Humble Oil and Refining Company and Ashbury S. Parks.
No. 5472.
Court of Appeal of Louisiana. First Circuit.
March 14, 1962.
Rehearing Denied May 4, 1962.
Certiorari Denied June 15, 1962.
Durrett, Hardin, Hunter, Dameron & Fritchie, by Wallace A. Hunter, Baton Rouge, for plaintiff-appellant. W. J. Mc-Anelly, Jr., and Bernard J. Caillouet, and Milling, Saal, Saunders, Benson & Woodward, New Orleans, for third-party-plaintiff-appellant, Humble Oil & Ref. Co.
Taylor, Porter, Brooks, Fuller- & Phillips by Robt. J. Vandaworker, Baton Rouge, for defendant-appellee, Travelers Insurance Co. Sanders, Miller, Downing, Rubin & Kean by Ben R. Miller, Baton Rouge, for defendant-appellee, Parks Equipment Co.
Before ELLIS, HERGET, and MILLER, JJ.

Opinion:
HERGET, Judge.
Plaintiff, Herman Thibodeaux, alleges in this suit for personal injuries that while he was an employee of Delta Tank Manufacturing Company he was injured on March 10, 1959 while testing a Dryex unit being manufactured by Delta Tank Manufacturing Company under the supervision of Humble Oil and Refining Company. He alleges at the time of the test a valve manufactured, designed and sold by Parks Equipment Company failed and because of its failure other parts of the unit struck and injured him. Plaintiff further alleges that the employees of Parks Equipment Company were negligent: (a) in the manufacture of the valve; (b) in its inspection; (c) in its design; (d) in representing to Delta Tank Manufacturing Company that the valve could be used as a component part of the Dryex unit; (e) in failing to warn Delta that the valve could not safely be used in the Dryex unit ; (f) in failing to give proper instructions for its use; and (g) in failing to give proper instructions for its installation in the unit.
Plaintiff filed a petition originally against Parks Equipment Company, its insurer The Travelers Insurance Company and Humble Oil and Refining Company. In the same suit Plaintiff filed a supplemental petition against Ashbury S. Parks in his capacity as executive officer of Parks Equipment Company and his insurer The Travelers Insurance Company. Humble answered the original petition and filed a third party petition against Travelers, Parks Equipment Company and Ashbury S. Parks. Travelers filed exceptions of no cause of action to the petitions of Plaintiff and the third party petition, contending the policy by which it insured Parks Equipment Company excluded "products hazard" and failed to provide coverage for the alleged accident. The Trial Court sustained the exceptions, thereby dismissing both Plaintiff's suit and the Third party action against Travelers, from which judgments both Plaintiff and third party petitioner Humble Oil and Refining Company bring these consolidated appeals.
Appellee admits that it issued a Comprehensive General Liability Policy to Parks Equipment Company whereby it agreed:
"1. COVERAGE A — BODILY INJURY LIABILITY
"To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury, sickness or disease, including death at any time resulting therefrom, sustained by any person and caused by accident."
The policy contains an endorsement providing :
"It is agreed that the policy does not apply to the products hazard as defined therein."

This definition, found in another section of the policy, under "Conditions" reads as follows :
"3. DEFINITIONS.

"(c) PRODUCTS HAZARD. The term 'products hazard' means
"(1) goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured or on premises for which the classification stated in division (a) of the declarations excludes any part of the foregoing; provided, such goods or products shall be deemed to include any container thereof, other than a vehicle, but shall not include any vending machine or any property, other than such container, rented to or located for use of others but not sold;
"(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement;
It is stipulated that the accident occurred after possession of the valve had been relinquished by Parks . Equipment Company and it is also stipulated that the accident occurred away from the premises of Parks Equipment Company.
Appellants urge us to consider that the alleged accident, while it involved the operation of a product, also resulted from the negligent acts of the employees of Parks Equipment Company. They contend that products liability is limited to a contractual liability imposed by a warranty agreement between the insured and another, but the contractual liability would not prevent coverage for liability in tort. They allege that products hazard insurance was simply additional insurance to the general contract. But, they argue, if the general contract covers the alleged negligence, the exclusion of products hazard does not eliminate nor exclude that liability for negligence. Appellants argue that liability under the general terms of the contract and liability under the products hazard clause are not mutually exclusive.
Learned counsel for Appellee maintains that the broad unrestricted language of the "Insuring Agreements — 1. Coverage A," supra, does, in the absence of any limitations, provisions or exclusions, afford coverage for any and all liability of the assured so long as the liability arose by accident and involved. bodily injury. He maintains that the endorsement 3998 reading in part, as follows:
"EXCLUSION OF PRODUCTS HAZARD
"It is agreed that the policy does not apply to the products hazard as defined therein."
*
under the definition of the term "products hazard" in the "Conditions" quoted in part, supra, effectively excludes from coverage the claims of Plaintiff asserted in his petition. The position of counsel for Appel-lee is succinctly stated in his brief as follows :
"The exclusion of products hazard in the policy at issue in this case had the effect of deducting, excluding and eliminating from INSURING AGREEMENT I, A, coverage for all claims arising under the products hazard. In other words, if the claim could come under products hazard, it is not covered by this policy. Now products hazard relates to claims arising out of:
" 'goods or products manufactured, sold, handled or distributed by the named insured if the accident occurs after possession of such goods or products has been relinquished to others by the named insured and if such accident occurs away from premises owned, rented or controlled by the named insured
It has been stipulated that the named insured had parted with possession of the valve in question and that the accident occurred away from the assured's premises. It is simply impossible to read the allegations of the petitions in this litigation and reach any conclusion except that this is a products liability case. Directly or indirectly, the alleged liability arises out of the goods or products of the named insured which were out of the insured's possession at the time of the accident and away from the insured's premises. "
It is axiomatic in Louisiana in passing upon an exception of no cause of action that all well-pleaded allegations of fact in plaintiff's petition are accepted as true. The issue before the Court at this time is purely one of law and to maintain the decision of the Trial Court sustaining the exceptions of no cause of action filed by Defendant-appellee to the petition and third party petition, this Court must conclude that the exclusion of products hazard is all-inclusive so as to relieve coverage by Defendant of all claims of the insured arising directly or indirectly out of goods or products of the named insured. To conclude that the exclusion of products hazard effectively relieves Defendant of all claims asserted by Plaintiff we must, in order to reach such determination, decide that the language of the contract of insurance providing such exclusion clearly and unambiguously so provides, for it is well settled in Louisiana that if the language of the contract of insurance is ambiguous such ambiguities must be construed in favor of the insured and against the insurer. Albritton v. Fireman's Fund Insurance Company, 224 La. 522, 70 So.2d 111, and cases therein cited.
Though in the case of Kendrick v. Mason, 234 La. 271, 99 So.2d 108, the Supreme Court of this State said, at page 116 of 99 So.2d:
"We are constrained to conclude that the liability exclusion provisions of the policy herein issued by the defendant to Mason are inapplicable herein for the reason that Mason handled no products but was engaged solely as a contractor and the exclusion provisions of the policy have no application to the construction work performed by him. "
In commenting upon provisions of the policy therein involved identical with those here under consideration it adopted as its own excerpts from the case of King v. Mason, La.App., 95 So.2d 705, 717 and said, 99 So.2d at page 115:
" 'The first part of this definition is conceded to apply or refer to the warranty of goods or manufactured products, but it is argued that the second part of the definition has reference to •contractors. We do not think the language of the contract and the endorsements and documents attached thereto warrant the conclusions urged as to this part of the definition; at least, the language used leaves the meaning vague, obscure and indefinite and it cannot be said, on this score, the policy is free from ambiguity.' " King v. Mason, supra.
And at page 116:
" In the instant case the exclusions and exceptions relied upon by the insurer to escape liability were not stated with clearness and precision, thereby defining the limits of its obligation therein. An analysis of the exclusion and exceptions therein clearly demonstrates an ambiguity and vagueness which under our well settled jurisprudence must be construed against the insurer. See Albritton v. Fireman's Fund Ins. Co., 224 La. 522, 70 So.2d 111, wherein general principles in the interpretation of insurance contracts are enunciated."
In Nielson v. Travelers Indemnity Company, 174 F.Supp. 648 the U. S. District Court, Central Division, State of Iowa, had under consideration the interpretation of the identical policy exclusions and quoted approvingly copiously from the decision of the Supreme Court of Louisiana in the Kendrick case, supra, and, at page 662, in commenting on said provisions, said:
"The Court is of the view and finds under the circumstances in this case the terms of the policy are ambiguous as to the matter of coverage here involved and leaves that matter in doubt. Under the Iowa law such doubt and ambiguity are to be resolved in favor of the insured."
See also Fidelity and Casualty Company of New York v. Fratarcangelo et al., 201 Va. 672, 112 S.E.2d 892.
We have read and reread the language of the products hazard definition but are unable to attribute to it the all-inclusive exclusion Appellee maintains same provides.
Certain allegations of the original petition and supplemental petition relate to negligence in connection with the Dry ex unit, a contrivance or unit manufactured not by Parks but by Delta Manufacturing Company. These allegations of negligence relate to the installation and the use of the valve on the Dryex unit rather than to any defect in the valve itself.
In the recent case of Swillie v. General Motors Corporation et al., La.App. 133 So. 2d 813, coverage was afforded by a liability policy issued to Natchez Steel Products, Inc., which had manufactured and installed what was known as a "Natchez Double Loadster" and because of negligence attributable to the installation of the loadster plaintiff's husband was killed in an accident, the Court of Appeal for the Third Circuit of Louisiana held that the manufacture of the double loadster was a separate and distinct operation from the installation and as the alleged negligence resulted from the installation it was unnecessary to decide whether or not there was coverage under the products hazard exclusion.
Concededly the case of New Amsterdam Casualty Company v. Ellzey, 5 Cir., 240 F.2d 618, relied on by counsel for Appellee and accepted by the Trial Court as decisive of the issue involved and authority for sustaining Appellee's exception of no cause of action, in this language of the opinion found at page 620:
" The endorsement clearly states that it is the products hazard which is excluded, not the definition thereof as appears in Paragraph 3(f) of the Definitions. The endorsement also makes it clear that the products hazard which is excluded is the products hazard 'as defined in the policy.' Thus, the 'products hazard' definition was not 'out of the case as if it had not been printed in the body of the policy,' but instead formed an integral part of the typewritten endorsement as if it were set forth-therein in full. "
sustains the contention of counsel for Ap-pellee that the products hazard exclusion eliminates all claims arising out of or directly or indirectly connected with the manufacture of the valve by Parks Equipment Company.
However, we are of the opinion that under the broad coverage of the "Insuring Agreements — 1. Coverage A" the alleged negligent acts of Parks Equipment Company relating to (d) in representing to Delta Tank Manufacturing Company that the valve could be used as a component part of the Dryex unit; (e) in failing to warn Delta that the valve could not safely be used in the Dryex unit; (f) in failing to give proper instructions for its use; and (g) in failing to give proper instructions for its installation in the unit, are not excluded by virtue of the policy's products hazard exclusions endorsement and definition thereof and as to said acts the petitions set forth a cause of action against Appellee for coverage, and Travelers is a proper party defendant. Therefore, the exceptions of no cause of action filed by The Travelers Insurance Company levelled at Plaintiff's original and supplemental petitions and the Third Party petition of Humble Oil and Refining Company are overruled; the judgments of the Trial Court sustaining same are reversed and the case is remanded to the District Court for further proceedings not inconsistent with this decree.
Reversed and remanded.