Charles J. Champagne, Jr. and Kerrie S. Champagne v. USAA Casualty Insurance Company, State Farm Mutual Automobile Insurance Company, XYZ Insurance Company, CajunLand Pizza, LLC d/b/a Marco's Pizza, Marco's Pizza, LLC, and Katharina M. Worringer ( 2019 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
1/( 2019 CA 0334
CHARLES CHAMPAGNE, JR. AND KERRIE CHAMPAGNE
VERSUS
USAA CASUALTY INSURANCE COMPANY, STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY, XYZ INSURANCE COMPANY,
CAJUNLAND PIZZA, LLC D/B/ A MARCO' S PIZZA, MARCO' S PIZZA, LLC
AND KATHARINA M. WORRINGER
Judgment Rendered: NOV 1 5 2019
APPEALED FROM THE TWENTY-SECOND JUDICIAL DISTRICT COURT
IN AND FOR THE PARISH OF ST. TAMMANY
STATE OF LOUISIANA
DOCKET NUMBER 14328, DIVISION " G"
HONORABLE SCOTT C. GARDNER, JUDGE
Wade A. Langlois, III Attorneys for Defendant/Appellant
William D. Dunn, Jr. SELA Pizza # 2, LLC d/ b/ a Marco' s Pizza
Gretna, Louisiana
Laurent J. Demosthenidy Attorneys for Defendant/Appellee
William H. Dunckleman, Jr. USAA Casualty Insurance Company
New Orleans, Louisiana
BEFORE: McDONALD, THERIOT, and CHUTZ, JJ.
McDonald, J.
In this case, SELA Pizza # 2, LLC d/ b/ a Marco' s Pizza ( SELA), appeals a
trial court judgment granting summary judgment in favor of a co- defendant, USAA
Casualty Insurance Company ( USAA), denying SELA's motion for summary
judgment, and dismissing SELA's cross- claim against USAA with prejudice.
SELA also appeals a judgment certifying the first judgment as final. After review,
we affirm the trial court judgments.
FACTS AND PROCEDURAL HISTORY
On November 6, 2013, Katharina Worringer, a pizza delivery driver
employed by SELA, was driving through the intersection of Highway 190 and
Maris Stella Avenue in St. Tammany Parish when she rear-ended a vehicle driven
by Charles J. Champagne. Kerri S. Champagne was a passenger in her husband' s
vehicle at the time.' Ms. Worringer was driving a 2010 Ford Focus owned by her
father, Robert Worringer. The vehicle was a covered vehicle under an automobile
policy issued by USAA to Mr. Worringer, with limits of $30, 000. 00 per person and
60, 000. 00 per accident.
Before the Champagnes ( hereafter the plaintiffs) filed suit, USAA attempted
to negotiate a settlement for the full $ 30, 000. 00 per person and $ 60, 000. 00 per
accident limits of Ms. Worringer' s policy. The plaintiffs were initially reluctant to
enter into a complete compromise of their claims against USAA due to the severity
of their injuries and because they were investigating other possible sources of
recovery, specifically against Ms. Worringer' s employer, SELA. USAA tendered
checks for its policy limits to the plaintiffs in May of 2014, and later reissued the
checks several times when they were not cashed and became stale.
On September 26, 2014, the plaintiffs filed suit, naming as defendants
Ms. Champagne' s name was erroneously spelled " Kerrie" in the original petition and was later corrected
in an amended petition.
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USAA, Ms. Worringer, State Farm Mutual Automobile Insurance Company,
SELA, and American Safety Indemnity Company ( ASIC), an excess non -owned
auto liability insurer for SELA.'
Plaintiffs eventually confirmed in writing a settlement agreement wherein
they released Ms. Worringer from any liability in excess of the USAA policy
limits, in exchange for the payment of those policy limits by USAA. By letter
dated December 5, 2014, counsel for the plaintiffs wrote to counsel for USAA:
This is to confirm that we reached a settlement in this matter. The
terms are as follows:
1) USAA will tender its limits and reissue the settlement checks;
2) Plaintiffs will not attempt to collect any judgment against Ms.
Worringer over and above the policy limits once a judgment is
taken; and
3) Plaintiffs will pursue any and all efforts to collect a judgment over
the policy limits against Ms. Worringer' s employer or their
insurance provider.
We will not deposit the settlement checks until either a final
judgment is taken or the case settles in full. You agree to reissue the
checks if stale at the time necessary for deposit.
In accord with the settlement agreement, USAA subsequently reissued the
settlement checks, again tendering the full policy limits to plaintiffs' counsel.
SELA filed a motion for summary judgment on its cross claim for defense
and indemnity against USAA on January 27, 2016. USAA opposed SELA's
motion.
USAA filed a cross motion for summary judgment on February 16, 2016,
seeking dismissal of SELA's cross claim against USAA, asserting that USAA had
no obligation to defend SELA as it had settled the plaintiff' s claims and paid its
policy limits. SELA opposed USAA's motion.
After a hearing, the trial court denied SELA's motion for summary judgment
2 SELA Pizza # 2, LLC d/ b/ a Marco' s Pizza was substituted for Cajunland Pizza, LLC d/ b/ a Marco' s
Pizza by amended petition. The claims against Cajunland Pizza, LLC d/b/ a Marco' s Pizza and Marco' s
Pizza, LLC, were dismissed on February 16, 2016. State Farm Mutual Automobile Insurance Company
was dismissed from the suit on April 16, 2015.
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and granted USAA's motion for summary judgment. SELA' s cross claim against
USAA seeking defense and indemnity was dismissed with prejudice. The
judgment was signed on April 1, 2016. SELA sought supervisory review of the
trial court' s judgment denying its motion for summary judgment, and appealed the
judgment granting USAA's motion for summary judgment. The writ was referred
to the merits panel. This court determined that the judgment denying SELA's
motion
for summary judgment and granting USAA's motion for summary
judgment on the issues of defense and indemnity, but not addressing the remaining
issues in the litigation against the parties, was not a final judgment. The appeal
was dismissed and the writ was denied. Champagne v. USAA Casualty
Insurance Company, 2016- 1079 ( La. App. 1 Cir. 4/ 9/ 18), 2018 WL 1723044unpublished). Thereafter, SELA filed a motion in the trial court to designate the
judgment as final. The motion was granted and the judgment was designated as a
final judgment by the trial court, by judgment dated August 28, 2018. SELA
appealed both judgments.3
THE APPEAL
On appeal, SELA makes four assignments of error: 1) SELA as an insured is
entitled to a defense under the USAA primary policy; 2) USAA is not relieved of a
duty to defend SELA by a potential future settlement; 3) USAA's duty to defend
SELA is primary to any duty of ASIC as an excess insurer; and, 4) issues of bad
faith preclude summary judgment dismissing SELA's claims pursuant to LA. R.S.
22: 1892 and 1973.
ANALYSIS
Summary judgments are reviewed on appeal de novo, with the appellate
court using the same criteria that govern the trial court's determination of whether
3 USAA filed a motion to dismiss the appeal as untimely, which was denied. Champagne v. USAA
Casualty Insurance Company, 2019- 0334 ( La. App. 1 Cir. 4/ 29/ 19) ( unpublished).
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summary judgment is appropriate. Smith v. Our Lady of the Lake Hospital, Inc.,
93- 2512 ( La. 7/ 5/ 94), 639 So. 2d 730, 750.
The policy issued by USAA, which covers Ms. Worringer, provides:
PART A —LIABILITY COVERAGE
INSURING AGREEMENT
We will pay compensatory damages for BI or PD for which any
covered person becomes legally liable because of an auto accident.
We will settle or defend, as we consider appropriate, any claim or suit
asking for these damages. Our duty to settle or defend ends when
our limit of liability for these coverages has been paid or tendered.
We have no duty to defend any suit or settle any claim for BI or PD
not covered under this policy.
LIMIT OF LIABILITY
For BI sustained by any one person in any one auto accident, our
maximum limit of liability for all resulting damages, including, but
not limited to, all direct, derivative or consequential damages
recoverable by any persons, is the limit of liability shown in the
Declarations for " each person" for BI Liability. Subject to this limit
for " each person", the limit of liability shown in the Declarations for
each accident" for BI liability is our maximum limit of liability for
all damages for BI resulting from any one auto accident. The limit of
liability shown in the Declarations for " each accident" for PD
Liability is our maximum limit of liability for all damages to all
property resulting from any one auto accident.
These limits are the most we will pay regardless of the number of -
1.1. Covered persons;
2. Claims made;
3. Vehicles or premiums shown in the Declarations; or
4. Vehicles involved in the auto accident.
Words and phrases used in an insurance policy are to be construed using
their plain, ordinary, and generally prevailing meaning, unless the words have
acquired a technical meaning. See La. C. C. art. 2047; Cadwallader v. Allstate
Ins. Co., 2002- 1637 ( La. 6/ 27/ 03), 848 So. 2d 577, 580. The rules of construction
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do not authorize a perversion of the words or the exercise of inventive powers to
create an ambiguity where none exists or the making of a new contract when the
terms express with sufficient clearness the parties' intent. Id.In assignment of error numbers one and three, SELA argues that the USAA
policy is a true primary policy under which SELA is an insured. Thus, it asserts,
ASIC' s excess policy was not applicable until USAA's primary auto liability policy
limits were exhausted in payment of a settlement or a tender into the registry of the
court. In assignment of error number two, SELA argues that unaccepted offers do
not relieve USAA of its duty to defend. It argues that no settlement existed, no
payments had been accepted by plaintiffs, and no tender of policy limits into the
registry of the court had been made by USAA.
The policy provides that USAA's duty to settle or defend ends when their
limits of liability for those coverages is paid or tendered. An insurance policy is a
contract and, as with all other contracts, it constitutes the law between the parties.
Pareti v. Sentry Indem. Co., 536 So. 2d 417, 420 ( La. 1988). An insurer is
entitled to limit its duty to defend, and to terminate that duty once the policy limits
are exhausted. Pareti, 536 So. 2d at 422- 423.
SELA maintains that the policy is ambiguous because it does not define
paid or tendered." Further, it asserts that the policy limits had to be put into the
registry of the court. After de novo review, we find that SELA relies on a strained
interpretation of the USAA policy to argue that USAA, having paid the full policy
limits in connection with a settlement entered into 2014, was obligated to bear the
cost of defending SELA over several more years of litigation as long as SELA and
its insurers desired to defend the case. This argument is made despite USAA
having no ability to settle those claims, as USAA had issued checks for its policy
limits and had no control over SELA's commercial policy with limits in excess of
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1, 000, 000. 00. We find no genuine issue of material fact that USAA met its policy
language requirements and that its policy limit payments were " paid or tendered"
when its checks for its policy limits were given to the plaintiffs. These
assignments of error have no merit.
In assignment of error number four, SELA argues that issues of fact preclude
summary judgment in favor of USAA dismissing SELA's bad faith claims pursuant
to La. R.S. 22: 1892 and La. R.S. 22: 1973.
In support of its motion for summary judgment, USAA submitted medical
documentation to show that it investigated the plaintiffs' claims in good faith.
Further, USAA paid or tendered the policy limits prior to suit being filed, and its
duty to defend any insured under the policy terminated upon payment or tender of
the policy limits pursuant to its policy terms. Thus, we find no genuine issue of
material fact regarding a bad faith claim which would preclude summary judgment
in favor of USAA. This assignment of error has no merit.
DECREE
For the foregoing reasons, the trial court judgments are affirmed. Costs of
this appeal are assessed against SELA.
AFFIRMED.
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