Preview:

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE FROM: CLERK OF SUPREME COURT OF LOUISIANA NEWS RELEASE #006

The Opinions handed down on the 28th day of January, 2011, are as follows:

BY WEIMER, J.: 2010-C -0703 LAURIE ANN SENSEBE v. CANAL INDEMNITY COMPANY, MISSISSIPPI FARM BUREAU CASUALTY INSURANCE COMPANY, TOP HATCH, INC. AND DEBORAH BOUDREAUX (Parish of St. Tammany) Because the insurance policy at issue contains an exclusion for a driver engaged in an automobile business, but that exclusion conflicts with the legislated public policy of affording coverage to permissive drivers, the automobile business exclusion cannot be enforced in this matter. The judgment of the district court granting Farm Bureau's motion for summary judgment and dismissing Farm Bureau from this lawsuit is therefore reversed. To the extent the court of appeal found the automobile business exclusion unenforceable, the decision of the court of appeal is hereby affirmed. This matter is remanded to the district court for further proceedings consistent with this opinion. AFFIRMED AND REMANDED. JOHNSON, J., concurs. GUIDRY, J., concurs in part, dissents in part, and assigns reasons.

01/28/11 SUPREME COURT OF LOUISIANA
No. 2010-C-0703 LAURIE ANN SENSEBE VERSUS CANAL INDEMNITY COMPANY, MISSISSIPPI FARM BUREAU CASUALTY INSURANCE COMPANY, TOP HATCH, INC. AND DEBORAH BOUDREAUX

On Writ of Certiorari to the Court of Appeal, First Circuit Parish of St. Tammany

WEIMER, Justice This court granted a writ application filed by a defendant insurer to determine whether coverage must be provided under a motor vehicle insurance policy that purports to exclude coverage for a driver who is engaged in the "automobile business." We find that the "automobile business" exclusion in the insurance policy violates Louisiana's public policy of requiring insurance coverage as expressed in the Louisiana Motor Vehicle Safety Responsibility Law, LSA-R.S. 32:851 to 1043. Most specifically, LSA- R.S. 32:900(B)(2) requires coverage for permissive drivers. The "automobile business" exclusion impermissibly conflicts with LSA-R.S. 32:900(B)(2). Therefore, the district court's dismissal from this lawsuit of an insurer invoking the "automobile business" exclusion is reversed. Though our reasoning significantly differs from the court of appeal, inasmuch as

the court of appeal ruled that the automobile business exclusion did not justify dismissing the insurer, the judgment of the court of appeal is affirmed. FACTUAL AND PROCEDURAL BACKGROUND The question of insurance coverage arises from the following events. On November 14, 2006, Laurie Ann Sensebe was driving on the I-10 "twin span" bridge in St. Tammany Parish when her vehicle was rear-ended by a pickup truck owned by Gregory Hyneman and operated by Deborah Boudreaux. At the time of the accident, Ms. Boudreaux was an employee of Top Hatch, Inc. ("Top Hatch"). Ms. Boudreaux was driving the pickup truck from Dub Herring Ford, Inc., the dealership where Mr. Hyneman had purchased the vehicle several months earlier. The dealership had contracted with Top Hatch to replace the seat covers with leather at Top Hatch's shop. Ms. Boudreaux was transporting the vehicle to Top Hatch so that the work could be done on the seats. Ms. Sensebe has filed the instant lawsuit seeking damages for personal injuries and property damages she allegedly suffered from the accident. In her petition, Ms. Sensebe names as a defendant Mississippi Farm Bureau Casualty Insurance Co. ("Farm Bureau"), which insured Mr. Hyneman's pickup truck. Ms. Sensebe also names as a defendant Canal Indemnity Co. ("Canal Indemnity"), which insured Top Hatch. Farm Bureau moved for summary judgment, urging that the Farm Bureau insurance policy provides no coverage and, therefore, Farm Bureau should be dismissed from the lawsuit. Farm Bureau explained that the insurance policy Mr. Hyneman purchased has an "automobile business" exclusion, and Farm Bureau argued that this exclusion applied because Ms. Boudreaux was driving the Hyneman vehicle while employed by Top Hatch. "[E]mploying the general rules
2

of interpretation of contracts set forth in the Louisiana Civil Code," argued Farm Bureau, the automobile business exclusion unambiguously reflected the insurer's and insured's intent to exclude a driver such as Ms. Boudreaux from coverage.1 Farm Bureau also cited examples from Louisiana's jurisprudence when courts have indeed enforced automobile business exclusions. Acknowledging that much of the jurisprudence upon which Farm Bureau relied pre-dated Louisiana's Compulsory Motor Vehicle Liability Security law enacted in 1977,2 Farm Bureau noted the possibility that the automobile business exclusion may violate the current public policy of this state. Therefore, in its motion, Farm Bureau advanced an alternative argument: "if the Farm Bureau automobile business exclusion is found to be contrary to public policy, Farm Bureau's coverage is limited to the statutory minimum limits of coverage of $10,000.00/$20,000.00." The limits of coverage stated in Farm Bureau's policy are $100,000 per person and $300,000 per accident. Both the plaintiff, Ms. Sensebe, and Farm Bureau's co-defendant, Canal Indemnity, opposed Farm Bureau's motion for summary judgment. Taking the lead in opposing Farm Bureau, Canal Indemnity argued that Top Hatch was not the type of business contemplated by the automobile business exclusion. Canal Indemnity urged that Top Hatch's upholstery work, such as replacing the seat covers in the pickup truck with leather, did not render Top Hatch a "repair shop" as

In this court's review of the record, we observe that Farm Bureau's insurance policy was issued to Mr. Hyneman at a Mississippi address. In the relevant pleadings, and in the decisions of the courts below, nowhere do we discern that choice of law issues have ever been raised. The court has previously ruled that where, as here, an accident occurs in Louisiana involving a Louisiana resident and the applicable insurance policy was issued outside of Louisiana, a choice of law analysis is appropriate. See Champagne v. Ward, 2003-3211, p. 22 (La. 1/19/05), 893 So.2d 773, 786. Here, given that Farm Bureau has argued for application of Louisiana law in its motion for summary judgment, we find that Farm Bureau concedes that the application of Louisiana law is proper.
2

1

See 1977 La. Acts, No. 115,

Download 2010-C-0703 LAURIE ANN SENSEBE v. CANAL INDEMNITY COMPANY, MISSISSIPPI FARM BURE

Louisiana Law