Case Name: Raphael THIBODEAUX and his Wife, Alice Thibodeaux v. David M. BURTON, ABC Insurance Company and XYZ Insurance Company
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1989-01-30
Citations: 538 So. 2d 1001
Docket Number: No. 88-C-1566
Parties: Raphael THIBODEAUX and his Wife, Alice Thibodeaux v. David M. BURTON, ABC Insurance Company and XYZ Insurance Company.
Judges: LEMMON, J., concurs and assigns reasons.
Reporter: Southern Reporter, Second Series
Volume: 538
Pages: 1001–1010

Head Matter:
Raphael THIBODEAUX and his Wife, Alice Thibodeaux v. David M. BURTON, ABC Insurance Company and XYZ Insurance Company.
No. 88-C-1566.
Supreme Court of Louisiana.
Jan. 30, 1989.
Rehearing Denied March 2, 1989.
Thomas Anzelmo, Sr., Michael Sistrunk, Dermot McGlinchey, McGlinchey, Stafford & Mintz, New Orleans, for applicants.
Thomas Breslin, Jr., Arthur Miller, Susan Chehardy-Williams, Jefferson, Charles La-Barre, New Orleans, Wendell Gauthier, Gauthier, Murphy, Sherman, McCabe & Chehardy, Metairie, Fred Butler, Leslie La-nusse, Adams & Reese, New Orleans, for respondents.

Opinion:
DIXON, Chief Justice.
Plaintiffs Raphael Thibodeaux and his wife Alice Thibodeaux filed suit against several defendants as a result of an automobile accident that left him a quadraplegic. Plaintiffs later amended their petition to include Pacific Employers Insurance Company as a defendant in its capacity as the excess insurer of plaintiffs employer, Barriere Construction Company. Pacific failed to answer timely and after the requisite delays, the plaintiffs obtained a two million dollar default judgment against it. After the confirmation of the default judg ment, Pacific petitioned for a new trial. The trial court refused to grant a new trial and Pacific appealed to the Fifth Circuit. That court upheld the judgment of the lower court granting the default judgment and refusing a new trial. Thibodeaux v. Burton, 525 So.2d 1103 (La.App. 5th Cir.1988). Pacific then applied for writs in this court, which were granted. We now reverse the judgments of the lower courts and remand the case to the trial court for a new trial.
Plaintiff was an employee of Barriere Construction Company, and was working the night shift on construction work in progress on Veterans Boulevard. The construction site was marked by a flashing yellow sign which instructed traffic to detour out of the lane where the construction was taking place. The sign was attached to a trailer which was connected to a pickup truck owned by Barriere. On the night of the accident, David Burton, an intoxicated driver driving his father's van, collided with the sign. The force of the collision propelled the pickup truck forward, striking the plaintiff and causing the serious injuries. Police investigating the accident gave Burton a field sobriety test, which he failed. He was later taken to the police station where his blood alcohol level was found to be .20%.
On November 20, 1986, Mr. and Mrs. Thibodeaux filed suit against Burton, ABC Insurance Company and XYZ Insurance Company. On December 29, 1986, plaintiffs took the deposition of Carolyn Horno-sky, the safety director of Barriere. In response to a subpoena duces tecum she delivered to plaintiffs' counsel a copy of the insurance contracts in favor of Barriere, which included an underlying policy issued by National Union Fire Insurance Company, and an excess policy issued by Pacific. The Pacific policy provided coverage for liability over one million dollars, with a limit of two million dollars. The insured, Barriere, was to maintain underlying coverage for the first one million dollars of liability. While the underlying policy with National did provide one million dollars worth of coverage for general liability, Barriere limited the uninsured motorist coverage in the National policy to $20,000.
On January 12, 1987, plaintiffs' counsel telephoned Suzette Bertucci, an employee of Barriere's insurance agent, and was advised that Barriere had rejected uninsured motorist coverage in its excess policy with Pacific. Nonetheless, on January 12, 1987, plaintiffs filed a first supplemental and amended petition for damages, substituting State Farm Mutual Insurance Company, Burton's insurer, for ABC Insurance Company, and National and Pacific for XYZ Insurance Company, alleging that Burton was under-insured, and that they provided uninsured motorist coverage. Pacific was served through the Secretary of State on January 19,1987. On February 13,1987, a default judgment was confirmed against Pacific for the full limits of its two million dollar excess policy based on the policy that the plaintiffs had received in response to the subpoena duces tecum. That policy did not contain the rejection of uninsured motorist coverage. Three hours after the confirmation of the default judgment, Pacific filed a motion for extension of time within which to plead.
On February 23, 1987, Pacific filed a timely motion for a new trial. A hearing was held in which Pacific claimed that it should be granted a new trial due to the deficiencies in the plaintiffs' prima facie case, as well as on the grounds that the default judgment was obtained through the ill practices of the plaintiffs' attorney in securing a default judgment against Pacific when he was advised that it did not provide uninsured motorist coverage in the policy issued to Barriere due to its rejection of such coverage. On July 17, 1987, the trial court denied the motion for a new trial; Pacific appealed to the court of appeal where the judgment was affirmed. Pacific then applied for writs in this court alleging several errors in the judgments of the lower courts.
Pacific makes several arguments in favor of the granting of a new trial. Its arguments attack both the prima facie case presented by the plaintiffs at the confirmation hearing as well as the conduct of the plaintiffs' counsel in securing the default judgment. Since we find that the trial judge abused his discretion in not granting a new trial, we pretermit discussion of the other issues.
For a plaintiff to obtain a default judgment, he must establish the elements of a prima facie case with competent evidence, as fully as though each of the allegations in the . petition were denied by the defendant. Holmes v. Rachal, 525 So.2d 59 (La.App. 3rd Cir.1988); Booker v. Winding, 522 So.2d 1240 (La.App. 4th Cir.1988); Perrodin v. Zander, 441 So.2d 12 (La.App. 3rd Cir.1983). In other words, the plaintiff must present competent evidence that convinces the court that it is probable that he would prevail on a trial on the merits. In the present case the plaintiffs attempted to establish their prima facie case by the introduction of the insurance policy issued by Pacific to Barriere. As mentioned above, that policy did not contain the written waiver of uninsured motorist coverage signed by the president of Barriere. The officer who investigated the accident was also called to establish the cause of the accident. Finally, the plaintiffs presented medical reports and bills to prove the extent of Raphael Thibodeaux' injuries, as well as the testimony of his wife Alice.
Pacific has alleged several deficiencies in the prima facie case presented by the plaintiffs. First, Pacific alleges that the trial court erred in admitting the policy issued by it to Barriere since it was obtained as a result of a deposition in which it was not present or given notice. The deposition of Carolyn Hornosky was taken on December 29, 1986, before Pacific was a named defendant. Pacific claims that under C.C.P. 1450 the deposition cannot be used against it, and that the subpoena duc-es tecum which accompanied the deposition and the evidence that was derived from it are also inadmissible. This argument lacks merit because the policy belonged to the insured Barriere, and not Pacific.
Next, Pacific contends that the plaintiffs failed to present competent evidence of the medical condition of Mr. Thibodeaux and the extent of his injuries. Pacific contends that the evidence presented by the plaintiffs was hearsay and incompetent. The record shows that the plaintiffs presented the medical reports and bills at the confirmation hearing, as well as the testimony of Alice Thibodeaux to show the pain and suffering of her husband. Inasmuch as we find that the case must be remanded to the trial court for a new trial, we express no opinion on this issue.
Pacific next contends that the plaintiffs failed to establish with competent evidence that the truck in question was "in use" at the time of the accident. The policy issued by Pacific to Barriere provides in pertinent part:
"PERSONS OR ENTITIES INSURED
(d) Any person while using, with the permission of the Named Insured, any automobile or aircraft owned by, loaned to or hired for use by or on behalf of the Named Insured and any person or organization legally responsible for the use thereof, provided the actual operation or other actual use is within the scope of such permission, ." (Emphasis added).
Pacific claims that the only evidence showing that plaintiff was using the truck was the hearsay testimony of the investigating officer and Alice Thibodeaux, neither of whom was a witness to the actual accident. The lower courts relied on Hellmers v. Department of Transportation and Development, 503 So.2d 174 (La.App. 4th Cir.1987) in holding that the truck was "in use" at the time of the accident. Pacific claims that case is not controlling because in Hellmers there was testimony of actual witnesses as to the use of the vehicle. The vehicle in Hellmers was being used to block the highway as part of a warning system, much as the truck in this case was being used. In this case the evidence to establish the use of the truck consisted of the testimony of the arresting officer. Contrary to the assertions of Pacific, he testified as to what he saw before the accident as well as what he observed after the accident when he was investigating it. Therefore, the evidence presented by the plaintiffs was competent and not hearsay.
The only remaining issue is whether or not this evidence showed that the truck was "in use" at the time of the accident. The language of the policy does not limit coverage to situations where the vehicle is actually being operated, but instead uses the broader concept of "actual use." In this case, the vehicle was being used as part of a warning system to prevent oncoming traffic from endangering the people working at the construction site. Plaintiff was the operator of the truck and the sign, and while he was not actually operating the vehicle at the time of the accident, the vehicle was in actual use under the language of the policy since the lights were operating and the truck was part of a barricade erected to detour traffic.
Pacific also argues that the lower courts erred in casting it in judgment for damages exceeding $20,000 instead of damages over $1,000,000 as the policy states. As Pacific states, its policy requires Barri-ere to maintain an underlying policy for the first $1,000,000 of liability. Barriere did not meet this requirement for its UM coverage, since it elected to only maintain $20,-000 worth of UM coverage in its policy with National. This court addressed an identical issue in the ease of Washam v. Chancellor, 507 So.2d 806 (La.1987). In that case, plaintiffs employer selected lower limits in its underlying policy than those required by the excess policy. As in the case at bar, the excess policy provided that in the event the insured failed to maintain the requisite underlying policy, the excess policy would not be invalidated, but the insurer would only be liable to the extent that it would have been liable if the insured had maintained the underlying policy limits. In Washam we held that the excess insurer is only liable for damages that exceed the limits of the underlying policy as the insured should have maintained it. See also Mohr v. State Farm Insurance Company, 528 So.2d 144 (La.1988). In the present case, the insured, Barriere, was required by the language of the policy to maintain $1,000,000 worth of underlying coverage, which it did not do. In the event that Pacific is found liable at the new trial, its liability will not begin until the damages reach $1,000,000.
Pacific's final contention is that the trial court should have granted a new trial in the interest of justice. Pacific claims that the trial court abused its discretion in not granting the new trial. While Pacific argues that there are peremptory grounds for the granting of a new trial under C.C.P. 1972, we find that the proper analysis of the granting of a new trial in this case necessitates an examination of C.C.P. 1973, which states that: "A new trial may be granted in any case if there is good ground therefor, except as provided otherwise by law." "New trials are granted in the interest of justice, and are left largely to the discretion of the trial judge." Succession of Robinson, 186 La. 389, 394, 172 So. 429, 430 (1937), but this discretion is not immune from appellate review. As we stated in Hardy v. Kidder, 292 So.2d 575, 578 (La.1974): "Although the trial judge has much discretion regarding applications for a new trial, in a case of manifest abuse the appellate court will not hesitate to set the trial court's ruling aside, or grant a new trial when timely applied for." Also, as stated in Hardy: "The trial judge's ruling is subject to review and is not final, and where an injustice is done and substantial rights are lost through mere technicalities, it is our duty to interfere. Such arbitrary and harsh rulings prolong litigation and do not end it, as is shown by the cases themselves." Supra at 578. This court is especially careful to review denials of a new trial in cases of default judgments. "With respect to cases, such as the one at bar, wherein a timely motion for a new trial is denied after the proper confirmation of a default judgment, this court has been particularly cautious in examining the circumstances underlying the judgment due to the general policy consideration, weighing in the defendant favor, that every litigant should be allowed his day in court." Lamb v. Lamb, 430 So.2d 51, 53 (La.1983).
In the present case, the trial judge was confronted with a timely motion for a new trial filed by Pacific. In that motion Pacific attached the written rejection of UM coverage signed by the president of Barri-ere. This waiver was not attached to the copy of the policy presented by the plaintiffs at the confirmation of the default judgment, but nevertheless such a waiver is conclusively presumed to be a part of the policy. R.S. 22:1406(D)(1)(a)(ii) provides:
"After September 1, 1987, such rejection or selection of lower limits shall be made only on a form designed by each insurer. The form shall be provided by the insurer and signed by the named insured or his legal representative. The form signed by the named insured or his legal representative which initially rejects such coverage or selects lower limits shall be conclusively presumed to become a part of the policy or contract when issued and delivered, irrespective of whether physically attached thereto." (Emphasis added).
The trial court was presented with serious allegations by Pacific that there was no liability on their part for any UM claims by the plaintiffs. The trial court was also presented with allegations that the plaintiffs' attorney was aware that the Pacific policy did not provide UM coverage. Pacific has alleged that this behavior by the plaintiffs' attorney is not revealing to the trial judge the substance of his telephone conversation with Barriere's insurance agent, in which she told him that there was a written rejection of UM coverage by Bar-riere, amounts to ill practices and is a violation of the Rules of Professional Conduct. Concluding that the waiver presented new evidence, the trial court declined to give it any weight in deciding whether to grant the new, trial. Both parties have presented arguments as to whether this waiver was new evidence or simply a part of the policy that was originally introduced into evidence at the confirmation hearing. Regardless of how this evidence is characterized, it presented to the trial judge a seriously contested issue which warranted the granting of a new trial. Counsel for plaintiffs has made a credible argument to the effect that the waiver is a defense that should have been pleaded by Pacific. Pacific, on the other hand, has argued that the waiver is not merely a defense, but is evidence of a lack of coverage on its part, which negates the prima facie case that the plaintiffs are required to prove. This conflict presented, at the very least, a "good ground" for which the trial court should have granted a new trial.
Counsel for plaintiffs seriously argues that he merely availed himself of the law on his clients' behalf when he confirmed the default judgment. Pacific failed to timely answer the petition and has presented no reasonable excuse for its failure. This court by no means endorses the practice of neglecting to file an answer. Plaintiff's injuries are obviously very serious. Pacific might have an absolute defense. Only after further proceedings will we be able to determine where justice lies. The interests of justice require a new trial.
In the case at bar the trial judge confirmed the default judgment on an incomplete record. While he did have the Pacific policy at the default confirmation, he did not have the complete policy. If the wáiver had been before the trial judge at the confirmation hearing, he might have been able to determine whether there was coverage under the Pacific policy. In the absence of the waiver, the trial court made the only decision justifiable under the circumstances. However, when presented with the waiver at the hearing on the new trial, the trial court should have granted the motion of Pacific and conducted a new trial in which Pacific would be allowed to assert its defense of no coverage.
"When the record of a suit discloses enough to satisfy the court that the whole story of the case is not told, that essential facts have not been given in evidence, and important documents have been omitted, and that substantial justice cannot be done between the parties in the state of the record as filed here, the court will, in its discretion, in the interests of justice, remand the case." Muller v. Hoth, 105 La. 246, 29 So. 709 (1901).
For these reasons the ruling of the court of appeal denying the motion for a new trial is reversed, and the case is remanded to the trial court for a new trial consistent with the views expressed in this opinion. The costs of the confirmation of the default are taxed to the defendants; the costs of appellate review are taxed to the plaintiffs; all other costs to await the final determination of these proceedings.
LEMMON, J., concurs and assigns reasons.
CALOGERO, WATSON and COLE, JJ., dissent and assign reasons.
. Plaintiffs have claimed that the written waiver of uninsured motorist coverage signed by the president of Barriere is invalid since there is no board resolution authorizing the president to reject uninsured motorist coverage. This argument lacks merit since there is no requirement that there be such a resolution. See Cavalier v. Louisiana Farm Bureau Casualty Insurance Company, 530 So.2d 73 (La.1988); see also Cluse v. Pat's Warehouse et al., No. CW/88/1227 (La.App. 1st Cir. Sept. 28, 1988).
. "Rule 3.3 Candor toward the tribunal
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer which will enable the tribunal to make an informed decision, whether or not the facts are adverse."