Opinion ID: 1887583
Heading Depth: 1
Heading Rank: 3

Heading: Validity of Exclusion

Text: The first issue in this appeal is whether the business use exclusion, which excludes coverage for damages resulting from the operation of any vehicle, including your insured car, in any business other than an auto business, violates these statutory provisions and the legislature's intent in enacting the compulsory automobile liability insurance law. It is undisputed that Sanchez was using his personal vehicle insured by American in the course and scope of his employment when the accident occurred. Thus, this issue is squarely presented for our review because coverage for the accident would be precluded under the clear and unambiguous terms of the exclusion if the exclusion is found not to contravene applicable statutory provisions and/or public policy. The appellate courts in our state have rendered conflicting decisions with respect to this and related issues. The first circuit in the instant case and in an earlier case, Stanfel v. Shelton, 563 So.2d 410 (La.App. 1 Cir.1990), held that such an exclusion violates public policy. In the case presently before this court, the first circuit relied on Stanfel, which held that an exclusion similar to the one at issue conflicted with the mandatory omnibus clause and was therefore invalid, to reach its conclusion that the exclusion was unenforceable. The Stanfel court reasoned that the exclusion conflicted with the compulsory law because it attempted to exclude coverage for vehicles used in the course of employment, even though at the time of the accident defendant was using the insured vehicle with the owner's permission. Thus, the statutory provision mandating compulsory insurance for all drivers who used the insured's vehicle with her permission must prevail over exclusions that conflict with the statute. The third and fourth circuits, on the other hand, have held that such a business use exclusion is not contrary to public policy and therefore valid. See Mayfield v. Imperial Fire & Cas. Ins. Co., 94-696 (La.App. 3 Cir. 12/7/94), 647 So.2d 627, rev'd on other grounds, 95-0046 (La.9/5/95), 659 So.2d 727, and Morris v. American Sur. & Fidelity Ins. Co., 573 So.2d 1227 (La.App. 4 Cir.1991), respectively. These courts held that where a policy excludes a specific risk rather than a specific class of users, there is no conflict with the compulsory insurance laws. In construing the automobile business exclusion, another use exclusion similar to the one at issue which excludes coverage when an owned auto is used by a person employed or otherwise engaged in the auto business, [3] the first, third, fourth and fifth circuits have held the exclusion violates public policy because it conflicts with the so-called omnibus clause. These courts found that because the exclusion conflicted with the statutory provisions mandating compulsory insurance for all drivers who use the insured's vehicle with his permission, the exclusion was unenforceable. McCrossen v. Star Auto Service, Inc., 628 So.2d 1350 (La.App. 5 Cir.1993); Arnaud v. Commercial Union Ins. Co., 594 So.2d 992 (La.App. 3 Cir.1992); Louisiana Farm Bureau Cas. Ins. Co. v. Darjean, 554 So.2d 1376 (La.App. 1 Cir.1989); Rudison v. Richard, 526 So.2d 369 (La.App. 4 Cir. 1988). The second circuit has held that an exclusion of liability coverage for a named employee of the insured who was driving the insured's vehicle in the course of his employment conflicts with the statutory omnibus coverage and is therefore invalid. Fields v. Western Preferred Cas. Co., 437 So.2d 344 (La.App. 2 Cir.1983). The first and second circuits have held that another type of business use exclusion which excludes coverage for the use of any vehicle in any business or occupation except when the vehicle being used is a private passenger auto, or a truck or van owned by the insured is valid and does not conflict with the compulsory liability insurance laws. See Parker v. American Guar. & Liability Ins. Co., 93-1556 (La.App. 1 Cir. 5/20/94), 637 So.2d 788; Krider v. Dixon, 609 So.2d 1089 (La.App. 2 Cir.1992). Of the other courts around the nation that have considered the above exclusions with reference to their compulsory liability insurance laws, most have concluded that such exclusions conflict with public policy and are unenforceable. See Smith v. Southeastern Fidelity Ins. Co., 258 Ga. 15, 365 S.E.2d 105 (1988) (holding business use exclusion similar to one at issue is contrary to statute requiring minimum coverage and therefore invalid); Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Parker, 282 S.C. 546, 320 S.E.2d 458 (App.1984) (holding business use exclusion similar to one at issue is contrary to statute requiring minimum coverage and therefore invalid); DeWitt v. Young, 229 Kan. 474, 625 P.2d 478 (1981) (holding automobile business exclusion contrary to compulsory insurance laws and therefore unenforceable); Hartford Accident & Indem. Co. v. Travelers Ins. Co., 167 N.J.Super. 335, 400 A.2d 862 (1979) (holding automobile business exclusion conflicts with Financial Responsibility Law and therefore invalid); Nationwide Mut. Ins. Co. v. Aetna Life & Cas. Co., 283 N.C. 87, 194 S.E.2d 834 (1973) (holding automobile use exclusion is against public policy as expressed in financial responsibility laws and therefore invalid); Exchange Cas. & Sur. Co. v. Scott, 56 Cal.2d 613, 15 Cal.Rptr. 897, 364 P.2d 833 (1961) (holding automobile use exclusion contravenes public policy and therefore unenforceable); Universal Underwriters Ins. Co. v. American Motorists Ins. Co., 541 F.Supp. 755 (N.D.Miss.1982) (holding automobile use exclusion contrary to financial responsibility laws and therefore invalid). But see United Services Automobile Ass'n v. Reilly, 122 Or.App. 459, 858 P.2d 457 (1993) (holding exclusion for business use of non-owned vehicle not contrary to financial responsibility laws); Murray v. Remuck, 108 R.I. 179, 273 A.2d 491 (1971) (holding automobile business exclusion not contrary to public policy or minimum statutory requirements). In considering a related issue, we recently held that an exclusion in an automobile liability policy that excludes the named insured and anyone driving the insured vehicle with the permission of the named insured who has an invalid driver's license is unenforceable because it contravenes the purpose of La. R.S. 32:900(B)(2) and La. R.S. 22:655(D). Adams v. Thomas, 98-2003 (La.4/13/99), 729 So.2d 1041. We reasoned that if such an exclusion were upheld, it would exclude coverage of an entire class of drivers who would otherwise be covered under the omnibus clause of the policy and would result in an impermissible restriction on the intent and purpose of the legislature's statutory scheme. Id. at p. 6, 729 So.2d at 1044. Furthermore, we noted that the illegality of the act of driving with an invalid driver's license does not give rise to the validity of such an exclusion of insurance coverage. In this case, we likewise conclude the business use exclusion that excludes from coverage the named insured while operating his insured car in any business other than an auto business, contravenes the purpose of the Louisiana Motor Vehicle Safety Responsibility Law and La. R.S. 22:655(D), which is to provide compensation for persons injured by the operation of an insured vehicle. If the exclusion were upheld, a named insured driving his personal, insured vehicle in his own or someone else's business would be denied coverage. This result would undermine the intent and purpose of the statutory scheme enacted to ensure that all Louisiana motorists have available to them automobile liability insurance coverage. The statutory scheme is intended to attach financial protection to the vehicle regardless of the purpose for which the vehicle is being operated. Similarly, the goal of all liability policies, which is to benefit injured persons and to give protection and coverage to all insureds, cannot be realized if the instant exclusion is allowed to be enforced. An anomalous result would be created if the rights of third parties, for whose protection the law was adopted, could be defeated by the private agreements of two parties. Further, if we were to sanction the exclusion at issue, motorists would be allowed to drive in and out of coverage, depending on the purpose of a particular excursion, which would wreak havoc on the legislature's goal in enacting an orderly and comprehensive scheme designed for the protection of injured victims of careless drivers. Moreover, if we were to find the exclusion to be valid and enforceable, an undue burden would be placed on some named insureds to determine whether their employer's insurance policy provides coverage for their business-related travel. Finally, enforcing the exclusion could place many named insureds in the untenable position of deciding whether to refuse to undertake business-related vehicle travel and risk losing their jobs or to embark on a business trip without mandated coverage. Because the purpose of automobile liability coverage is the protection of the injured person and the coverage and protection of the insured and the business use exclusion at issue contravenes this purpose, the exclusion is invalid and unenforceable. It is not the prerogative of the judiciary to ignore the public policy decisions that underlie particular legislation or to re-weigh balances of interests and policy considerations previously struck by the legislature. Progressive Sec. Ins. Co. v. Foster, 97-2985, p. 21 (La.4/23/98), 711 So.2d 675, 688. Furthermore, it is not the courts' role to consider the wisdom of the legislature in adopting statutes. Id. Obviously, if the legislature wishes to allow coverage of the named insured driving his insured vehicle in any business other than an auto business to be excluded, it can expressly do so. At the present time, however, the instant business use exclusion is unenforceable. Accordingly, the court of appeal's decision on this issue is affirmed.