Case Name: Harvey SHARP, Jr., Husband of/and Sheila S. Sharp v. Richard C. DAIGRE, Jr., United Service Automobile Association, Acceptance Insurance Company, and Aetna Life and Casualty Insurance Company
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1989-05-16
Citations: 545 So. 2d 1063
Docket Number: No. 87 CA 1266
Parties: Harvey SHARP, Jr., Husband of/and Sheila S. Sharp v. Richard C. DAIGRE, Jr., United Service Automobile Association, Acceptance Insurance Company, and Aetna Life and Casualty Insurance Company.
Judges: Before COVINGTON, C.J., and LOTTINGER, EDWARDS, WATKINS, SHORTESS, CARTER, SAVOIE, LANIER, ALFORD, LeBLANC and FOIL, JJ.
Reporter: Southern Reporter, Second Series
Volume: 545
Pages: 1063–1085

Head Matter:
Harvey SHARP, Jr., Husband of/and Sheila S. Sharp v. Richard C. DAIGRE, Jr., United Service Automobile Association, Acceptance Insurance Company, and Aetna Life and Casualty Insurance Company.
No. 87 CA 1266.
Court of Appeal of Louisiana, First Circuit.
May 16, 1989.
Rehearing Denied June 23, 1989.
Joseph J. Weigand, Jr., Houma, for plaintiffs and appellants-Harvey and Sheila Sharp.
Richard L. Edrington, LaPlace, for defendant and appellee-Aetna Life and Cas. Ins. Co.
James M. Funderburk, Houma, for defendant and appellee-Acceptance Ins. Co.
Wade D. Rankin, New Orleans, for defendant and appellee-Richard G. Daigre, Jr. and United Service Auto Assn.
Before COVINGTON, C.J., and LOTTINGER, EDWARDS, WATKINS, SHORTESS, CARTER, SAVOIE, LANIER, ALFORD, LeBLANC and FOIL, JJ.

Opinion:
CARTER, Judge.
This is an appeal from a trial court judgment denying recovery of exemplary (punitive) damages from an uninsured motorist insurer.
FACTS
On May 16, 1986, Harvey Sharp, Jr. was operating his personally owned vehicle on Hollywood Road in Houma, Terrebonne Parish, Louisiana, when he was rear-ended by a vehicle owned and operated by Richard G. Daigre, Jr. At the time of the accident, Daigre was insured by United Service Automobile Accident Insurance Company (United) in the amount of $100,-000.00. Sharp settled with Daigre and United for $100,000.00 prior to trial. The settlement gave Daigre and his insurance company a complete and final release. Sharp specifically reserved all rights against all remaining parties. The Sharp vehicle was insured by Aetna Life and Casualty Company (Aetna) with liability and uninsured motorist coverage of $100,-000.00. Additionally, Acceptance Insurance Company (Acceptance) had in effect a policy of garage insurance issued to Canal Auto Sales (an unincorporated company owned by Harvey Sharp, Jr.) with uninsured motorist insurance limits of $25,-000.00.
On the morning of trial, Aetna and Acceptance dismissed their third party demands against Daigre. At trial, Aetna and Acceptance stipulated that, in the event judgment was rendered against the uninsured motorist policies, Aetna and Acceptance would pro-rate the judgment according to the amount of coverage each provided, viz., Aetna to pay 80% of any judgment and Acceptance to pay 20% of any judgment.
After trial, the jury awarded Sharp $94,-200.00 in general and special damages and awarded Sharp an additional $28,000.00 for exemplary damages. The trial judge struck the award of exemplary damages against the uninsured motorist carriers, Aetna and Acceptance, on the grounds that the uninsured motorist policies did not cover exemplary damages. Since Sharp had already settled with Daigre and United for more than the amount awarded by the jury, no judgment was ultimately rendered against the uninsured motorist carrier.
From this adverse judgment, Sharp appeals. The only issue for review is whether or not an uninsured motorist insurer is liable for exemplary damages.
EXEMPLARY DAMAGES
To properly evaluate the issue in the instant case, we must first examine the distinctions between compensatory and exemplary damages.
Black's Law Dictionary, 5th Edition, page 352, defines "compensatory damages" as follows:
Compensatory damages are such as will compensate the injured party for the injury sustained, and nothing more; such as will simply make good or replace the loss caused by the wrong or injury.
Generally, compensatory damages are awarded on the basis of the loss suffered and are designed to replace the loss caused by the wrong or injury. Compensatory damages are divided into general and special damages. Black's Law Dictionary, pp. 351-352 (5th ed. 1979). Stated another way, the purpose of a compensatory damage award is to restore the injured party, as closely as possible, to the position in which he would have been had the accident or incident never occurred. Great American Surplus Lines Insurance Co. v. Bass, 486 So.2d 789 (La.App. 1st Cir.1986), writ denied, 489 So.2d 245 (La.1986).
"Exemplary damages" are defined as: Exemplary damages are damages on an increased scale, awarded to the plaintiff over and above what will barely compensate him for his property loss, where the wrong done to him was aggravated by circumstances of violence, oppression, malice, fraud, or wanton and wicked conduct on the part of the defendant, and are intended to solace the plaintiff for mental anguish, laceration of his feelings, shame, degradation, or other aggravations of the original wrong, or else to punish the defendant for his evil behavior, or to make an example of him, for which reason they are called "punitive" or "punitory" damages or "vindictive" damages. Black's Law Dictionary, 5th Edition, page 352.
LSA-C.C. art. 2315.4 was enacted by Act 511 of 1984 as article 2315.1, redesignated as article 2315.2, and again redesignated in 1986 as article 2315.4, provides:
In addition to general and special damages, exemplary damages may be awarded upon proof that the injuries on which the action is based were caused by a wanton or reckless disregard for the rights and safety of others by a defendant whose intoxication while operating a motor vehicle was a cause in fact of the resulting injuries.
LSA-C.C. art. 2315.4 has a dual purpose, to penalize (and therefore deter) the drunk driver, as well as to provide damages for the victim of such driver. Elery Morvant v. United States Fidelity & Guaranty Company, et al, 538 So.2d 1107 (La.App. 5th Cir.1989). Although the purpose of punitive damages is to punish and deter, the injured party receives the benefit of such payment and, from the plaintiffs standpoint, punitive damages are additional compensation for the egregious conduct inflicted upon him. Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra; Creech v. Aetna Casualty & Surety Company, 516 So.2d 1168 (La.App. 2nd Cir.1987), writ denied, 519 So.2d 128 (La.1988).
In the instant case, LSA-C.C. art. 2315.4 clearly applies to the defendant, Daigre. Daigre rear-ended the Sharp vehicle, which was stopped for a traffic light. Daigre registered a .17 on an intoxilyzer test within an hour of the accident. The jury determined that Daigre was intoxicated at the time of the accident and that his intoxication was a cause of the accident.
Having determined that LSA-C.C. art. 2315.4 applies to the instant case, we must determine whether exemplary damages are covered by uninsured motorist protection.
The trend in the jurisprudence has been to find that uninsured motorist policies provide protection for exemplary damages. Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra; Bauer v. White, 532 So.2d 506 (La.App. 1st Cir.1988). See Johnson v. Fireman's Fund Insurance Co., 425 So.2d 224 (La.1982).
In Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra, our Brethren of the Fifth Circuit held that exemplary damages are recoverable from the insured victim's uninsured motorist insurer, up to the policy limits of the uninsured motorist coverage, unless such damages are specifically excluded by clear and unqualified language in the policy. The court in Morvant stated:
We find that compensation for the victim plaintiff is an aspect of LSA-C.C. art. 2315.4, which is just as important as is deterrence. Moreover, in cases such as the one at bar, deterrence is a moot issue to a deceased drunk driver. In effect, were we to deny exemplary damages to the plaintiff because the deterrent effect is seemingly absent, as the defendant insurer urges, we would defeat one of the purposes of the statute and the purpose of obtaining UM coverage. This would also penalize the victim plaintiff who paid the stipulated UM premium to the defendant insurer who agreed that "we will pay all sums the insured is legally entitled to recover as damages from the owner or driver of an uninsured motor vehicle." The very purpose of obtaining and paying an extra premium for UM coverage is to protect oneself from the failure of the other motorist to adequately insure himself. The appellee insurer also argues, in effect, that it is not fair or logical for it to have to pay exemplary damages under UM coverage because it has no chance to review the record of or assess the insura-bility of the uninsured motorist, whereas it does have such opportunity under liability coverage. We disagree. The insurer never knows who it is insuring against under UM coverage. This is a calculated risk, in any event, so this argument must fall. Defendant's reasoning would defeat the ultimate purpose of UM coverage.
This court recently held in Bauer v. White, supra, that exemplary damages may be awarded to an insured under an uninsured motorist provision where the insurer of the policy promises to pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle and caused by an accident. In resolving the issue in this manner, the court stated:
The Louisiana Uninsured Motorist Statute, La.R.S. 22:1406(D), requires that each insurance policy written in Louisiana provide the statutorily set minimum coverage to drivers injured by uninsured motor vehicles, absent a written choice by the insured not to elect such coverage, " for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom The object of the statute is to promote full recovery for damages by innocent automobile accident victims by making uninsured motorist coverage available for their benefit as primary protection when the tortfeasor is without insurance and as additional or excess coverage when he is inadequately insured. Roger v. Estate of Moulton, 513 So.2d 1126 (La.1987); Block v. Reliance Insurance Company, 433 So.2d 1040 (La.1983); Johnson v. Fireman's Fund Insurance Company, 425 So.2d 224 (La. 1982); Hoefly v. Government Employees Insurance Company, 418 So.2d 575 (La.1982); Bond v. Commercial Union Assurance Company, 407 So.2d 401 (La.1981); Niemann v. Travelers Insurance Company, 368 So.2d 1003 (La.1979).
The intent of uninsured motorist coverage is "to protect the insured at all times against the generalized risk of damages at the hands of the uninsured motorists and not to limit coverage to certain situations or to a certain degree of risk of exposure to the uninsured motorists." Elledge v. Warren, 263 So.2d 912, 918 (La.App. 3d Cir.), writ denied, 266 So.2d 223 (La.1972). To carry out this objective of providing reparation for those injured through no fault of their own, our supreme court has held the statute is to be liberally construed. Hoefly, 418 So.2d at 578. The purposes of the uninsured motorist statute are all furthered by liberally construing the statute to include exemplary damages as well as compensatory damages in those "damages . because of bodily injury" that insurers are required to pay their insureds. [532 So.2d at 508]
In reaffirming the position taken by this court in Bauer v. White, supra, we find that the coverage afforded by uninsured motorist insurance includes exemplary damages, for several reasons.
LSA-R.S. 22:1406 states, in pertinent part, as follows:
D. The following provision shall govern the issuance of uninsured motorist coverage in this state:
(l)(a)(i) No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle designed for use on public highways and required to be registered in this state or as provided in this Subparagraph unless coverage is provided therein or supplemental thereto, in not less than the limits of bodily injury liability provided by the policy, under provisions filed with and approved by the commissioner of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom; provided, however, that the coverage required under this Subsection shall not be applicable where any insured named in the policy shall reject in writing, as provided herein, the coverage or selects lower limits. Such coverage need not be provided in or supplemental to a renewal or substitute policy where the named insured has rejected the coverage or selected lower limits in connection with a policy previously issued to him by the same insurer or by any of its affiliates, (emphasis added)
The object of the uninsured motorist statute is to promote full recovery of damages by innocent automobile accident victims by making uninsured motorist coverage available for their benefit as primary protection when the tortfeasor is without insurance and as additional or excess coverage when he is inadequately insured. Johnson v. Fireman's Fund Insurance Company, supra; Bond v. Commercial Union Assurance Co., 407 So.2d 401 (La.1981); Niemann v. Travelers Insurance Company, 368 So.2d 1003 (La.1979); Whitten v. Empire Fire and Marine Insurance Company, 353 So.2d 1071 (La.App. 2d Cir. 1977). The central purpose of the uninsured motorist statute is the protection of the injured person. The uninsured motorist act protects him by making available in all situations an opportunity for some recovery in place of what he would have gotten if the tortfeasor had been insured. See 2A A. Larsen, The Law of Workmen's Compensation, § 71.23(h) (Desk Ed.1982).
Several other circuit courts of appeal have expressly held that liability policies (as distinguished from UM coverage) cover .award for exemplary damages granted under LSA-C.C. art. 2315.4 unless expressly excluded. See Creech v. Aetna Casualty & Surety Company, supra; Louviere v. Byers, 526 So.2d 1253 (La.App. 3rd Cir. 1988), writ denied, 528 So.2d 153 (La.1988); Falgout v. Wilson, 531 So.2d 492 (La.App. 1st Cir.1988), writ denied, 532 So.2d 154 (La.1988). See also Morvant v. USF & G, et al, 538 So.2d 1107 (La.App. 5th Cir.1989).
In Falgout v. Wilson, supra, this court held that a liability policy covers an award for exemplary damages under LSA-C.C. art. 2315.4 even when personal injury damages were not sought. Chief Judge Cov-ington, writing for this court, stated:
We find that the language of the policy, which makes the insurer liable for "all sums which the insured shall become legally obligated to pay" because of "injury to or destruction of property, including loss of use thereof . arising out of the ownership, maintenance or use of the owned automobile," imposes liability on the insurer for exemplary damages. The words "all sums" is very broad; they clearly extend coverage to all sums that the insured is legally obligated to pay. This language does not limit coverage merely to "compensatory damages." There is no exclusionary or limiting clause pertaining to the intoxicated condition of the insured motorist.
Moreover, the insured has a reasonable expectation of coverage for driving while intoxicated unless such coverage is expressly excluded.
Additionally, we see no legislative intent to preclude insurance coverage of exemplary damages under uninsured motorist coverage. Nowhere in LSA-C.C. art. 2315.4 does the legislature prohibit insurance coverage of exemplary damages. The legislature is well aware that motorists are required to have automobile insurance and that these policies generally provide protection against claims of any character not intentionally inflicted. The legislature could easily have provided that no insurance coverage shall be allowed to cover exemplary damages, but did not do so.
Furthermore, at issue is also a very important public policy, namely that an insurance company which accepts a premium for covering all liability for damages should be required to honor its obligation. Public policy is better served by giving effect to the insurance contract rather than by creating an exclusion based on a judicial perception of public policy not expressed by the legislature. We hold that public policy does not preclude insurance coverage of exemplary damage-awards under LSA-C.C. art. 2315.4. See Creech v. Aetna Casualty & Surety Company, supra.
A careful examination of the provisions of the respective uninsured motorist policies in the instant case demonstrates that policy provisions are sufficiently broad enough to encompass exemplary damage and do not attempt to specifically exclude such coverage.
The Aetna policy provided:
We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury:
1. Sustained by a covered person; and,
2. Caused by an accident.
(Emphasis added)
The Acceptance policy provided, in pertinent part, as follows:
In accordance with the provision of Section 1406 of Title 22 of the Louisiana Revised Statutes of 1950, Subsection D, amended, which permits the insured named in the policy to reject the Uninsured Motorists Coverage or select a limit for such coverage lower than the limit for Bodily Injury Coverage in the policy, the undersigned insured (and each of them) does hereby reject such coverage, or (if amounts are inserted) selects limits of $25,000 each person, $25,000 each accident for said insurance, being the insurance provided for protection of persons insured under this policy who would legally be entitled to recover damages from the owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom. (Emphasis added)
Therefore, we find that to effectuate the purposes of LSA-C.C. art. 2315.4, the Louisiana UM Statute, LSA-R.S. 22:1406(D), and as well as clear reading of the policies, exemplary damages are recoverable under both uninsured motorist policies.
RELEASE OP DAIGRE AND UNITED
The UM carrier has no right (other than subrogation) to recover against the tortfeasor and its insurer. Bosch v. Cummings, 520 So.2d 721 (La.1988). Furthermore, release of the tortfeasor and the tortfeasor's insurer does not release the UM carrier. Carona v. State Farm Insurance Company, 458 So.2d 1275 (La.1984); Pace v. Cage, 419 So.2d 443 (La.1982).
We do not believe that a different rule should apply in suits for exemplary damages even though, in the particular circumstances, the deterrent effect is removed. Deterrence is only one aspect of exemplary damages; the right of the injured party to enhanced damages is still present. A similar situation is presented when the tort-feasor is killed in the accident. Cf. Elery Morvant v. United States Fidelity & Guaranty Company, et al, supra. Therefore, we find that the release of the tort-feasor and his insurer does not excuse a UM insurer from his obligation to respond in damages, compensatory or exemplary.
Therefore, we find that Sharp is entitled to recover exemplary damages against Aet-na and Acceptance.
CONCLUSION
For the above and foregoing reasons, that portion of the judgment of the trial court rejecting plaintiff's claim for exemplary damages is reversed, and the jury award is herein reinstated. Judgment is rendered herein in favor of plaintiff and against the defendants for $22,200.00 in the proportion of 80% of the jury award for exemplary damages to be paid by Aetna and 20% of the jury award for exemplary damages to be paid by Acceptance, with legal interest from date of judicial demand. Aetna and Acceptance are jointly taxed with all costs of this appeal.
REVERSED AND RENDERED.
SHORTESS, J., concurs in part & dissents in part with reasons.
FOIL, J., dissents in part for the reasons set forth by SHORTESS, J.
LeBLANC, J., dissents for reasons assigned by LANIER, J.
SAVOIE, J., dissents for reasons assigned by LANIER, J.
LANIER, J., dissents and assigns reasons.
. Sheila S. Sharp was awarded $2,800 for loss of consortium.
. The Louisiana Supreme Court in Johnson v. Fireman's Fund Insurance Company, 425 So.2d 224 (La.1982), determined that a UM carrier was liable to reimburse injured employee by repeatedly emphasizing the purpose of UM coverage. The court stated:
We conclude that when an uninsured motorist carrier becomes liable under its policy, it is required to pay "damages" within the meaning of La.R.S. 23:1101 to the person protected. Although uninsured motorist coverage is provided for the protection of persons injured by uninsured or underinsured tort-feasors, and not for the benefit of such wrongdoers, the statutorily specified coverage guarantees the injured person's recovery of damages as if the tortfeasor had been insured. La.R.S. 22:1406(D)(l)(a). Subject to conditions not granted the tortfeasor, the uninsured motorist carrier Is Independently obliged to repair the same damage which the tortfeasor has wrongfully caused. By effect of law and the delivery or issuance for delivery of automobile liability insurance, both the uninsured motorist carrier and the tortfeasor are obliged to the same thing. Hoefly v. Government Employee's Ins. Co., 418 So.2d 575 (La.1982). The .fact that the uninsured motorist carrier is bound by the combined effect of the tortfeasor's wrongful act, the uninsured motorist statute, and the carrier's delivery or issuance for delivery of automobile liability insurance, while the tort-feasor is obliged merely because of his delict, does not prevent them from being obliged to the same thing. (Emphasis supplied) [425 So.2d at 227]
. See Footnote 4, infra.
. We note, however, that, in the instant case, we are not called upon to decide whether or not an insurer can exclude exemplary damages under its uninsured motorist protection and speciflcally do not address that issue. In the case sub judice, each policy did not attempt to exclude coverage for exemplary damages in its uninsured motorist provisions.
. The jury rendered a verdict in favor of Sharp for $94,200.00 in compensatory damages and $28,000.00 in exemplary damages, for a total award of $122,200.00. Sharp settled his claims against Daigre and United for $100,000.00. Therefore, Aetna and Acceptance are liable to Sharp for the remaining $22,200.00.
. The petition only prayed for interest from date of judicial demand. Landry v. Louisiana Hospital Service, Inc., 449 So.2d 584 (La.App. 1st Cir.1984).