Summary
rejecting plaintiff's argument that "vague verbal warning" could substitute for written notice under the previous notice statute and dismissing plaintiff's handicap discrimination claim for failure to comply with notice provision
Summary of this case from Johnson v. Hospital Corp. of AmericaOpinion
Civil Action No. 99-0790, Section "K"(5)
August 23, 2000
ORDER
Before the court is a Motion for Summary Judgment filed by third-party defendant State Farm Fire Casualty Company ("State Farm") on the issue of coverage. For the reasons set forth below, the motion is denied.
I. Background
This case arises out of alleged housing discrimination and wrongful eviction of plaintiff herein, Michael Ray Brown ("Brown"). Brown has asserted various claims against both Sam Menszer ("Menszer"), individually, and Sam Menszer Realty Company, Inc ("Menszer Realty"). By order dated August 23, 2000, the court granted summary judgment in favor of defendants on plaintiffs claims under the Louisiana Civil Rights for Handicapped Persons Act. Several of plaintiffs claims, however remain extant, including: 1) unlawful conversion of Brown's property, both intentional (under the eviction articles) and negligent; 2) wrongful eviction pursuant to La.C.C. arts. 4701-4734; 3) violations of La.C.C. art. 2926, concerning return of the security deposit; 4) intentional infliction of emotional distress; 5) violation of the Fair Housing Act, 42 U.S.C. 3604; and 6) violation of the Louisiana Equal Opportunity Housing Act La.R.S. 51:2601.
Since Brown's death, his daughter, Dakota Lee Brown, has been substituted as the proper party plaintiff.
In its Motion for Summary Judgment, State Farm contends that coverage is excluded under the terms of the policy for plaintiffs discrimination claims and plaintiffs claims arising out of the defendants' alleged intentional conduct. After a brief review of the applicable law, the court will address the merits of each argument.
II. Standard for Summary Judgment
Summary judgment should be granted only where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing this motion, the court views all facts in the light most favorable to the non-movant. Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1357, 89 L.Ed.2d 538 (1986). If, taken as a whole, the record could not lead a rational trier of fact to find for the non-moving party, there is no "genuine issue for trial." Id.
III. Policy Interpretation
An insurance contract constitutes the law between the parties and must be interpreted using the general rules of contract interpretation as set forth in the Civil Code. Louisiana Ins. Guar. Assoc. v. Interstate Fire Cas. Co., 630 So.2d 759, 763 (La. 1994); In re Combustion, Inc., 960 F. Supp. 1076, 1079 (W.D.La. 1997) ( citing Pareti v. Sentry Indemnity Co., 536 So.2d 417 (La. 1988)); Crabtree v. State Farm Ins., 632 So.2d 735 (La. 1994). When no factual disputes exist, coverage is an issue of law to be decided by the trial court. United Services Automobile Assoc. v. Dunn, 598 So.2d 1169 (La.App. 1st Cir. 1992); Scherer v. Chaisson, 469 So.2d 510, 513 (La.App. 3rd Cir. 1985).
The Louisiana Supreme Court set forth a "comprehensive review of the rule for interpretation of insurance contracts" in Louisiana Ins. Guar. Assoc. 15 Civil law Treatise, Insurance law and Practice § 4, p. 6 n. 10. (1996). In relevant part, the Supreme Court stated:
The judicial responsibility interpreting insurance contracts is to determine the parties' common intent. The parties' intent as reflected by the words in the policy determine the extent of coverage. Such intent is to be determined in accordance with the general ordinary, plain and popular meaning of the words used in the policy, unless the words have acquired a technical meaning. An insurance policy should not be interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Absent a conflict with statutory provisions or public policy, insurers, like other individuals, are entitled to limit their liability and to impose and to enforce reasonable conditions upon the policy obligations they contractually assume. Ambiguity in an insurance policy must be resolved by construing the policy as a whole; one policy provision is not to be construed separately at the expense of disregarding other policy provisions. If after applying the other general rules of construction an ambiguity remains, the ambiguous contractual provision is to be construed against the drafter, or as originating in the insurance context, in favor of the insured. This rule of strict construction requires that ambiguous policy provisions be construed against the insurer who issued the policy and in favor of coverage to the insured. Under this rule, "[e]quivocal provisions seeking to narrow the insurer's obligation are strictly construed against the insurer, since these are prepared by the insurer and the insured had no voice in the preparation. . . ." Ambiguity will also be resolved by ascertaining how a reasonable insurance policy purchaser would construe the clause at the time the insurance contract was entered." The court should construe the policy "to fulfill the reasonable expectations of the parties in the light of the customs and usages of the industry."
. . . .
Yet if the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written. When the language of an insurance policy is clear, courts lack the authority to change or alter its terms under the guise of interpretation.Louisiana Ins. Guar. Assoc., 630 So.2d at 763-764 (internal citations omitted); see Peterson v. Schimek, 729 So.2d 1024 (La. 1999); Texas Eastern Transmission Corp. v. Amerada Hess Corp., 145 F.3d 737, 741-42 (5th Cir. 1998).
III. Analysis
A. Discrimination Claims
State Farm first contends that the policy excludes coverage for plaintiffs discrimination claims. The policy language at issue reads:
Under Coverage L, this insurance does not apply:
5. to bodily injury or personal injury:
a. to an employee of the insured arising out of and in the course of employment, or to the termination of employment, or the termination of employment, by the insured or to the spouse, child, parent brother or sister of that employee as a consequence of employment or termination of that employee by the insured; or
b. arising out of any:
(1) refusal to employ;
(2) termination of employment;
(3) coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination, or other employment-related practices, policies, acts, or omissions. . . .
This exclusion applies whether the insured may be liable as an employer or in any other capacity. . . .
State Farm's Exhibit A, pp. 21-22 (emphasis added). State Farm argues that the plain unambiguous language of the policy excludes coverage for discrimination on the part of the insured whether "liable as an employer or in any other capacity." At best, the policy language is ambiguous, in which event it should be construed against State Farm.
However, from the court's reading of the above quoted language, it is clear that the exclusion applies to discrimination and "other employment-related practices." The housing discrimination which plaintiff has alleged is not an "employment-related practice" like coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, and humiliation. Accordingly, the court will deny summary judgment with respect to the exclusion pertaining to discrimination claims.
B. Exclusion for Intentional Acts
State Farm additionally argues that the policy excludes coverage for "bodily injury" or "property damage" that is "(a) expected or intended from the standpoint of the insured;" or (b) "which is the result of willful and malicious acts of the insured." State Farm Exhibit A, p. 21. Menszer Realty is the named insured, and Menszer, as executive officer and employee, is an omnibus insured under the terms of the policy. State Farm Exhibit A, p. 27. Therefore, State Farm reasons that any intentional tort or discrimination committed by either Menszer or Menszer Realty is excluded under the terms of the policy. In opposition, the defendants argue that, while the policy may exclude coverage for Menszer Realty's and Menszer's intentional acts as insureds, the corporation is liable in its capacity as employer of Menszer by operation of the doctrine of respondeat superior.
The court has located a number of Louisiana appellate court cases addressing similar facts. In Rivers v. Brown, 168 So.2d 400 (La.App. 3d Cir. 1964), the plaintiff brought an action for assault and battery against a corporation and L.T. Brown, its president and principal stockholder. The president, who had pistol whipped and kicked the plaintiff, was an omnibus insured under the terms of the policy. The insurer denied coverage on grounds that the policy excluded coverage for assault and battery "committed by or at the direction of the insured" and maintained that the tort in this case was necessarily directed by the insured. Rivers, 168 So.2d at 401. The plaintiff, on the other hand, argued that the corporation was liable under the doctrine of respondeat superior. The court held that the policy did not exclude coverage for the omnibus insured and that the insurer was responsible for coverage of its executive officer's intentional torts. In so holding, the court relied on the language of the exclusion itself, which referred to "the insured," as opposed to "any insured." Id; see also Barringer v. Employer's Mutual Liability Ins. Co., 62 So.2d 173 (La.App. 2nd Cir. 1952); c.f. Hebert v. Talbot, 713 So.2d 647 (La.App. 2nd Cir. 1998) (criminal act of employee/owner was excluded from coverage where exclusion referred to "any insured").
Furthermore, the Rivers court rejected the notion that the exclusion should apply to the omnibus insured because the named insured (a corporation) was not capable of committing or directing assault and battery). The court reasoned that excluding coverage for the intentional acts of all omnibus insureds would defeat "the very purpose for which the named insured purchased the insurance, i.e. to protect itself against such wrongful acts by its employees." Rivers, 168 So.2d at 402; see also Kipp v. Hurdle, 307 So.2d 125 (La.App. 1st Cir. 1974); McBride v. Lyles, La.App. 3d Cir. 1974).
The court finds the reasoning of these cases persuasive. The clause at issue excludes coverage for intentional acts of "the insured," not "any insured." By contrast, other exclusions within the State Farm policy refer to "any insured," which implies that a different result was intended. See, e.g., Plaintiff's Exhibit A, p. 22, § 6. To interpret the clause at issue as excluding coverage for intentional acts of Menszer, as well as any other Menszer Realty employee, would defeat the corporation's purpose for securing Business Liability Insurance.
At best, the policy language is ambiguous and should therefore be construed against the insurer. Accordingly, State Farm's Motion for Summary Judgment with respect to plaintiff's intentional tort claims is denied.
With respect to the state and federal housing discrimination claims, State Farm contends that those causes of action necessarily entail an intentional discriminatory act, citing Vaughner v. Pulito, 804 F.2d 873 (5th Cir. 1986). Because the housing discrimination claims involve intentional wrongdoing by the insured, State Farm argues that they are excluded from coverage. Nonetheless, for the reasons explained above, the court finds that the policy does not exclude coverage for the intentional acts of the omnibus insured and that coverage extends to Menszer Realty's respondeat superior liability under these circumstances.
C. Exclusion for Willful Violation of Penal Statute
State Farm argues that the policy excludes coverage for personal injury arising from the discrimination claims because the discriminatory acts constitute "the willful violation of a penal statute or ordinance committed by or with the consent of the insured," citing Matter of Insulation Technologies, Inc., 669 So.2d 1343, 1350 (La.App. 1st Cir. 1996) (holding that a statute which can result in the assessment of a civil penalty is penal in nature). See State Farm Exhibit A, p. 24, § 16. Nonetheless, for the same reasons that the court found coverage for the discrimination and intentional tort claims, this policy language does not exclude the acts of an omnibus insured.
In Hebert v. Talbot (cited above), the Louisiana Second Circuit held that the policy at issue excluded coverage for the criminal act committed by the insured's employee and that the exclusion applied to both omnibus and named insureds. Hebert, 713 So.2d at 649. In that case, the doctrine of respondeat superior did not operate to invalidate the exclusion of the employee's criminal acts.
This case is distinguishable from Hebert, however. The exclusion at issue here applies to "the insured," rather than "any insured." Therefore, even if the named insured's actions are excluded from coverage, the actions of Menszer, as employee, are covered.
D. Emotional Distress Arising Out of Discrimination Claims
State Farm argues that because the discrimination claims are excluded under the policy, any emotional distress arising from the act of discrimination is also excluded. Further, it argues that the only emotional distress damages alleged in this case arose directly from the alleged discrimination, and under Louisiana law, there is no separate cause of action for emotional distress when it is an element of damage in a different cause of action. See Kelly v. West Cash Carry Bldg. Materials, 745 So.2d 743 (La.App. 4th Cir. 1999).
As stated above, the court does not find that the policy clearly and unambiguously excludes coverage for the discrimination claims. Therefore, emotional distress damages arising from discriminatory acts are likewise covered by the policy. The court, however, will instruct the jury that the plaintiff may not recover twice for emotional distress arising from a single act or series of actions by the defendants.
In light of the foregoing,
IT IS ORDERED that State Farm's Motion for Summary Judgment is hereby DENIED.