Opinion ID: 1834307
Heading Depth: 1
Heading Rank: 3

Heading: Elevating Boat's Liability

Text: The Louisiana Motor Vehicle Safety Responsibility Law (hereinafter LMVSRL) provides a mandatory, comprehensive scheme for the protection of the public from damage caused by motor vehicles. Specifically, La.R.S. 32:861 provides as follows: A. (1) Every self-propelled motor vehicle registered in this state ... shall be covered by an automobile liability policy with liability limits as defined by R.S. 32:900(B)(2), or a binder for same, or by a motor vehicle liability bond as defined by Subsection B hereof, or by a certificate of the state treasurer stating that cash or securities have been deposited with said treasurer as provided by Subsection C hereof, or by a certificate of self insurance as provided by R.S. 32:1042. (2) It shall be the duty of the registered owner of a motor vehicle to maintain the security hereinabove required. Failure to maintain said security shall subject the registered owner to the sanctions hereinafter provided in Sections 863, 864, and 865 of this Part. As the registered owner of the school bus involved in the accident, EBI satisfied the above statutory requirements by applying for and obtaining a certificate of self-insurance pursuant to La.R.S. 32:1042. Having concluded that EBI satisfied the requirements of the LMVSRL by listing the school buses on its annual application for self-insurance, we must determine whether EBI, as the self-insured lessor of the school buses, is required to provide omnibus coverage. The overall design of the LMVSRL carefully distinguishes self-insurers from those who post security or hold policies of insurance. Unlike La.R.S. 32:900(B)(2), 32:861(B) and 32:861(C), which specifically require policy holders and those who post security as proof of financial responsibility to provide omnibus coverage, [3] we find no provision in La.R.S. 32:1042 which requires a self-insurer to provide permissive user coverage. The failure of the legislature to prescribe omnibus liability for self-insurers manifests the legislative intent for self-insurers to be treated differently. Accordingly, we hold those who choose to satisfy La.R.S. 32:861 by obtaining a self-insurance certificate do not have to provide omnibus coverage. Although we agree with EBI that self-insurers are not statutorily required to provide omnibus coverage, we feel the peculiar factual circumstances surrounding the instant case justify a finding of liability on other grounds. While the negligence of a lessee cannot normally be imputed to the lessor, [4] we believe liability rests upon the lessor in the instant case based upon the relationship and conduct of the parties to the lease agreement. The evidence in the record establishes that EBI and LOS have close ties of kinship. The idea to create LOS was originally envisioned by Lynn Dean, the President of EBI. Lynn Dean and several members of his family presently serve, or have previously served, on the Board of Directors of LOS. In its brief submitted to this court, EBI admits that it has a philanthropic concern for LOS. In summary, EBI's relationship with LOS could easily be characterized as paternalistic in nature. It is, therefore, not unreasonable to conclude that EBI intended to facilitate LOS' operation of the school buses by insuring the school buses as part of the agreement between the parties, thereby allowing LOS to escape the financial burden associated with costly insurance premiums. Furthermore, the course of conduct between the parties lends support to our conclusion that the parties intended for EBI to be financially responsible for any damages caused by the negligent operation of the school buses by LOS. The record reveals that EBI continuously provided LOS with a copy of its certificate of self-insurance which LOS maintained and displayed on the buses. LOS purchased no insurance of its own. When Mrs. Dean was asked by the officer at the scene of the accident if she carried insurance, she replied that the school bus was self-insured. Thus, we find the language of the agreement between the parties which provides that EBI will furnish the school buses to LOS, coupled with EBI's repeated furnishing of a certificate of self-insurance to LOS, indicates EBI intended to insure the school buses operated by LOS. Based on our consideration of the lease agreement in light of the surrounding circumstances, we hold EBI liable for the damages caused by the negligent operation of the leased vehicle. Consequently, EBI is required to satisfy the judgment entered against its lessee, and must be cast as a solidary obligor. In reaching the above conclusion, we disagree with EBI's contention that pursuant to paragraph 5 of the lease agreement, [5] it contracted out of its requirement as the owner of the school buses to provide proof of financial responsibility. Although paragraph 5 contemplates that LOS is responsible for repairing damages to all leased vehicles caused by the negligence of their employees, the lease agreement is silent as to who is to provide public liability protection necessary to satisfy the requirements of La.R.S. 32:861. Absent a clear and unambiguous provision compelling the lessee to procure and maintain adequate proof of financial responsibility to operate the vehicles, EBI retained the statutory duty to provide proof of financial responsibility to satisfy the requirements of La.R.S. 32:861. [6]