Opinion
No. 2002 CA 2399.
July 2, 2003.
On appeal from the Twenty-First Judicial District Court, Number 90376, Division II, Parish of Livingston, State of Louisiana, Honorable Zorraine M. Waguespack, Judge.
W. Ransom Pipes, Baton Rouge, LA, Counsel for Plaintiff/Appellee State Farm Mutual Automobile Ins. Co.
Craig J. Fontenot, Baton Rouge, LA, Counsel for Defendant/Appellant Allstate Insurance Co.
Daniel J. Balhoff, Baton Rouge, LA, Counsel for Defendant/Appellee Margaret Norwood.
This is a suit by State Farm Mutual Automobile Insurance Company (State Farm) seeking reimbursement for medical bills and damages it paid to Joseph Lacoste, its omnibus insured, arising out of an automobile accident involving Lacoste and Allstate Insurance Company's (Allstate's) alleged insured, Margaret Norwood. Allstate asserted it had cancelled Norwood's insurance policy the day before the accident. The trial judge found that Allstate's cancellation notice was not valid and rendered judgment in favor of State Farm and against Allstate and Norwood. Allstate filed appeal.
FACTS AND PROCEDURAL HISTORY
On October 28, 1999, Norwood and Lacoste were involved in an automobile accident. As a result of the accident, damages in the amount of $3,876.78 were sustained by Lacoste and Agnes Milton, who owned the vehicle being driven by Lacoste. Subsequently, State Farm paid a total of $3,767.78 to Lacoste and Ms. Milton. Then State Farm filed suit against Allstate and Norwood seeking reimbursement for the sums paid to Lacoste and Ms. Milton, as well as Ms. Milton's $100 deductible. Allstate filed a motion for summary judgment, asserting it had validly cancelled the policy of insurance that had been issued to Norwood. State Farm and Norwood opposed that motion, which was denied by the trial judge. At the trial on the matter, the parties stipulated as to damages and liability. The only issue was whether Allstate provided liability insurance coverage to Norwood at the time of the accident. Allstate asserted it did not do so because it had sent Norwood a notice of cancellation of the insurance policy in accordance with La.R.S. 22:636.1. Allstate urged that the policy had been canceled on October 27, 1999 for to non-payment of premiums. The trial judge found that the notice of cancellation constituted a demand for payment and found in favor of State Farm in the amount of $3,876.78, plus interest from the date of judicial demand. Allstate filed this suspensive appeal.
VALIDITY OF THE ALLSTATE CANCELLATION NOTICE
Allstate asserts "[t]he trial court erred in finding that Allstate's Notice of Cancellation for Non Payment of Premium was invalid pursuant to La.R.S. 22:636.1." Concerning the cancellation of a policy, La.R.S. 22:636.1 (D)(1) states:
D. (1) No notice of cancellation of a policy to which Subsection B or C of this Section applies shall be effective unless mailed by certified mail or delivered by the insurer to the named insured at least thirty days prior to the effective date of cancellation; however, when cancellation is for nonpayment of premium at least ten days notice of cancellation accompanied by the reason therefore shall be given. . . . Notice of cancellation for nonpayment of premiums shall not be required to be sent by certified mail . . .
A notice of intent to cancel if the premium is not paid is not the same as a notice of cancellation for non-payment of a premium under La.R.S. 22:636.1. State Farm Mut. Auto. Ins. Co. v. Villneuve, 98-2421, p. 5 (La.App. 1 Cir. 12/28/99), 747 So.2d 777, 780, writ denied, 2000-0273 (La. 3/24/00), 758 So.2d 156. A notice of intent to cancel is nothing more than a demand for payment, whereas a notice of cancellation positively puts an insured on notice that the policy will be cancelled. Villneuve, 747 So.2d at 780.
The notice of cancellation at issue in this case, states, in pertinent part:
AUTOMOBILE CANCELLATION NOTICE FOR NON-PAYMENT OF PREMIUM
. . . .
Cancel Date and Time October 27, 1999 at 12:01 A.M.
To Pay in Full $ 1402.80
Minimum Amount Due $ 524.81 . . . .Cancellation Information
The insurance afforded under your policy will be cancelled if we do not receive the Minimum Amount Due before the Cancel Date and Time of: 12:01 a.m. Standard Time on October 27, 1999. If you wish your coverage to stop before that date and time, you should contact your agent or producer of record immediately, as any unpaid premium amounts may be referred to collections.
The Minimum Amount Due includes a past due amount of $225.50.
Our records indicate we did not receive a payment from you last month. If you've made a payment since this notice was issued and the amount of that payment was less than the Minimum Amount Due shown above, we still need to receive the difference before the Cancel Date and Time to prevent your policy from canceling.
. . . .
If you have any questions about this cancellation notice, please contact your agent or producer of record as soon as possible.
This was followed by a second page, which advised Norwood of payment options.
State Farm and Norwood asserted at trial that the notice in the case sub judice is merely a demand for payment and relied on the following cases from this court in support of that assertion: Travelers Insurance Company v. Jenkins, 285 So.2d 839 (La.App. 1 Cir. 1973); Dairyland Ins. Co. v. Marks, 468 So.2d 841 (La.App. 1 Cir. 1985); and Villneuve, 98-2421, 747 So.2d 777.
In Jenkins, the letter of cancellation stated, in pertinent part, as follows:
Therefore, we will continue coverage on this policy until 12:01 am., July 11, 1969 in order that you may have an opportunity to submit a replacement payment to us. It will be necessary that you send a money order or a certified check in order to clear your account. If we have not received the replacement payment within the time mentioned above, the policy will be cancelled effective that date.
Jenkins, 285 So.2d at 842 (emphasis added). In Jenkins is found the following:
We detect a distinct difference in language which informs the insured that the policy "will be cancelled", and verbiage which states the policy "is cancelled". "is hereby cancelled", or "stands cancelled". In the first instance, there is no concurrent cancellation as of the [notice date], not even a conditional cancellation. We are of the view that the more equitable rule dictates an interpretation of the statute that requires expression of specific intent to cancel as of notice date, effective upon such date as will afford the insured at least the prescribed statutory notice. The notice in question did not cancel the policy at the time of notice, effective on a given future date. It merely informed the insured that unless the premiums due were paid, the policy would be cancelled. In our view, this amounted only to a demand for payment of premiums. It does not suffice as notice of cancellation.
Jenkins, 285 So.2d at 844 (emphasis added).
Subsequently, this court addressed the issue again in Marks in which the notice of cancellation stated, "IMPORTANT: INSURANCE IS SUBJECT TO CANCELLATION IF PAYMENT IS NOT RECEIVED WITHIN 10 DAYS OF THIS NOTICE." Marks, 468 So.2d at 843. In that case, the notice was held not to be a notice of cancellation but a notice of intent to cancel and, therefore, insufficient to effect cancellation. Marks, 468 So.2d at 844.
In Villneuve, the notice of cancellation was entitled "AUTO INSURANCE PREMIUM DUE NOTICE." Below that was written "CANCELLATION NOTICE IF NOT PAID." Villneuve, 747 So.2d at 778. The notice also contained the following language:
PLEASE PAY THE AMOUNT DUE. PARTIAL PAYMENTS ARE NOT ACCEPTED.
YOUR POLICY WILL BE CANCELLED FOR NONPAYMENT OF PREMIUM AT 12:01 A.M. ON 5/08/95, IF YOUR PREMIUM IS NOT PAID BY THE DUE DATE.
IF YOUR PAYMENT IS RECEIVED IN OUR OFFICE BY THE DUE DATE, YOUR POLICY CONTINUES IN FORCE.
Villneuve, 747 So.2d at 778. This court held that this cancellation notice did not "positively" put Villneuve on notice that the policy was going to be cancelled. Villneuve, 747 So.2d at 780.
Allstate asserts that Villneuve is not applicable to the case sub judice because in this case there are past due premiums whereas in Villneuve there was not. Allstate also contends that this court's holding in Villneuve is inconsistent with our prior decision in Hodges v. Colonial Lloyd's Insurance, 546 So.2d 898 (La.App. 1 Cir. 1989), and that the distinguishing factor between the cases is that in Villneuve the cancellation notice was sent out before the policy premium due date. In Hodges, the notice of cancellation stated as follows:
IMPORTANT, YOU ARE HEREBY NOTIFIED THAT THE BELOW MENTIONED INSURANCE POLICY WILL BE CANCELLED IF PAYMENT IS NOT RECEIVED BY THE DATE INDICATED IN NO. 3 BELOW. YOUR POLICY WILL BE CANCELLED BECAUSE YOU HAVE DEFAULTED IN THE PAYMENT OF AN INSTALLMENT DUE UNDER YOUR PREMIUM FINANCE AGREEMENT.
1) POLICY NUMBER: PA103632
2) IPAC ACCOUNT NUMBER 41762
3) DATE POLICY TO BE CANCELLED: 02/26/85 **
IMPORTANT: CANCELLATION DATE
4) DATE THIS NOTICE MAILED: 02/13/85
Hodges, 546 So.2d at 903. This language was held to be sufficient for the purpose of notification of cancellation required by La.R.S. 9:3550. Although this language appears similar to that in Villneuve, in Hodges a second notice was also sent which stated that the policy "has been terminated." Hodges, 546 So.2d at 903 (emphasis added).
These notices were sent pursuant to La.R.S. 9:3550 which entails a different procedure for notification of cancellation of an insurance policy.
In addition, the holding in Villneuve was not based on the fact that the notice of cancellation was sent before the policy premium due date when no premium was overdue. This court in Villneuve specifically stated that "we find it unnecessary to address the issue of whether a notice of cancellation for nonpayment of premium can properly be issued prior to the premium due date" Villneuve, 747 So.2d at 781. More specifically, this court reasoned that the notice of cancellation wasconditioned on the failure to pay the premium by the due date, and found the language used did not "positively put Villneuve on notice that the policy was going to be cancelled." Villneuve, 747 So.2d at 780. In Villneuve, this court found the notice lacked the unequivocal cancellation language that was present in Folds v. Protective Casualty Insurance Co., 26,323 (La.App. 2 Cir. 12/7/94), 647 So.2d 1215, in which the notice stated the policy "is cancelled effective 09/21/86 at 12:01 a.m." Villneuve, 747 So.2d at 780. This holding is in accord with other decisions of this court which have held that "will be cancelled" language is insufficient to effect a cancellation and have required language that states the policy "is cancelled," "is hereby canceled" or "stands cancelled." See Villneuve, 747 So.2d at 781; Jenkins, 285 So.2d 839.
Allstate asserts its notice of cancellation to Norwood was sufficient and cites the following cases in which the notice of cancellation used language similar to the one in the instant case: Narcisse v. Evans, 2001-1092 (La.App. 4 Cir. 1/16/02), 807 So.2d 339; Hunter v. Automotive Cas. Ins. Co., 606 So.2d 571 (La.App. 5 Cir.), writ denied, 609 So.2d 225 (La. 1992); Hemperly v. Aetna Cas. Surety Co., 516 So.2d 1202 (La.App. 2 Cir. 1987); Rachuba v. Hickerson, 503 So.2d 570 (La.App. 4 Cir. 1987).
In Hemperly, across the top of the notice was printed "NOTICE OF CANCELLATION." Underneath that, the notice stated, "Cancellation Effective Date 7/15/84, 12:01 A.M. Standard Time." The notice stated further:
We are sending this Notice of Cancellation for non-payment because we have not received your last payment. Perhaps you overlooked your previous bill or sent less than the minimum due. If so, there is still time to prevent cancellation of your policy. If we receive a payment of $96.19, which was due 6/05/84, on or before the cancellation effective date shown above, your policy will be continued in force with no lapse in coverage.
Hemperly, 516 So.2d at 1206-1207. In addition, at the bottom of the notice was printed "PREMIUM NOTICE" followed by instructions to the insured on how to prevent cancellation of the policy. Hemperly, 516 So.2d at 1207.
In Hemperly the Second Circuit stated the following:
We conclude language providing the insured with the opportunity to prevent cancellation of his policy does not constitute either a mere demand for payment or a notice of intent to cancel where the notice includes clear and unequivocal language giving notice to the insured that the policy has been cancelled effective on the cancellation date set forth in the notice. In this case, the notice imparted the date and time the policy had been cancelled as evidence by the language quoted above. There is no sound reason why the insured should be denied the opportunity to avoid a clear, unambiguous cancellation date by payment of the delinquent premium before the date of cancellation and be advised of the existence of this opportunity in the notice of cancellation. The statute specifically provides that he be given ten days advance notice of the cancellation in order that he might have the opportunity to provide himself with coverage.
Id.
In Hickerson, the cancellation notice stated that "THE INSURANCE AFFORDED WILL STOP ON THE DATE AND TIME STATED ABOVE." In addition, it stated, "IF YOU DESIRE TO CONTINUE YOUR INSURANCE PROTECTION, RETURN THIS PART OF THE NOTICE WITH YOUR PAYMENT FOR THE AMOUNT SHOWN AS PAST DUE. IT MUST REACH US PRIOR TO THE DATE SHOWN BELOW." Hickerson, 503 So.2d at 571. The Fourth Circuit held that the notice was "a clear notice of cancellation" and, therefore, valid. Hickerson, 503 So.2d at 573.
In Narcisse, the notice of cancellation was entitled "Premium Due Notice." The Fourth Circuit described the notice as follows:
At the top of the Notice, there was a graph providing that $74.06 was due on July 19, 1995, and that a $5.00 late fee would be assessed if payment was postmarked after the due date. It further provided that payment postmarked on or after the Cancellation Date of July 30, 1995 will NOT be accepted. The middle of the Notice listed a payment schedule as well as the fact that July 30, 1995 at 12:01 AM. Standard Time was to be the effective date of cancellation or termination. The bottom of the Notice contained the following language:
NOTICE OF INTENT TO CANCEL FOR NON-PAYMENT OF PREMIUM * * THIS IS THE ONLY NOTICE YOU WILL RECEIVE * *
You are hereby notified in accordance with the terms and conditions of the above-mentioned policy that your insurance will be cancelled at 12:01 am Standard Time on 7/30/95 if premium due is not postmarked prior to the cancellation date.
Narcisse, 807 So.2d at 340. In Narcisse, the court held that this notice "was an unambiguous and unequivocal notice of cancellation" and that the insured was "clearly put on notice that his coverage would terminate at 12:01 am. on July 30, 1995, if his payment was not received." Narcisse, 807 So.2d at 344.
In Hunter, the notice of cancellation stated as follows:NOTICE OF CANCELLATION
You are hereby notified that those policies listed in the schedule of policies will be cancelled for non-payment of financed premium. Any question or inquiries concerning this notice should be directed toward Automotive Financial Services or the agent listed below. If total due Automotive Financial is received on or before the effective date shown below the insurance policy may be reinstated.
Hunter, 606 So.2d at 572. In Hunter, the Fifth Circuit held this notice to be a valid notice cancellation notice, specifically approving of the wording "will be cancelled." Hunter, 606 So.2d at 574.
However, these decisions relied on by Allstate were not decisions rendered by this court. We also distinguish those cases cited by Allstate in which the notices of cancellation stated that the insurance "is cancelled, effective [on a certain date]." See Alexander v. State Farm Mut. Auto. Ins. Co., 148 So.2d 898 (La.App. 1 Cir. 1963) (on rehearing); Folds, 647 So.2d at 1218. As noted, this court has stated that language that states the policy "will be cancelled" if a premium is not paid is insufficient notice of cancellation under La.R.S. 22:636.1 (D)(1). See Villneuve, 747 So.2d at 781; Jenkins, 285 So.2d at 844; Ellzey v. Hardware Mut. Ins. Co. of Minnesota, 40 So.2d 24 (La.App. 1 Cir. 1949). In Ellzey, this court found the following:
The notice must clearly and unequivocally show a present cancellation. In the notice there is a condition, viz: "Payment of $39.57 premium, prior to the effective date of this notice, will keep this policy in force." By simple calculation, the amount of $39.57 is the outstanding amount due on the whole premium. To our way of thinking, the notice is merely a demand for the payment of the balance due. "It has been held that a notice stating that, unless the premium is paid by a certain date, the policy will be canceled is insufficient."
Ellzey, 40 So.2d at 28.
As in Villneuve, the language used in the cancellation notice in the case sub judice lacks unequivocal language stating that the policy "is cancelled." The language used in the notice of cancellation in the instant case is more similar to that used in Villneuve and Ellzey, and, as in Villneuve, the cancellation is conditioned on the non-payment premiums by the due date. As noted, in Jenkins, this court stated specifically that similar language "did not cancel the policy at the time of notice, effective on a given future date" but "merely informed the insured that unless the premiums due were paid, the policy would be cancelled." In this court's view, this "amounted only to a demand for payment of premiums" and "does not suffice as notice of cancellation." Jenkins, 285 So.2d at 844. Accordingly, Allstate's assignment of error is without merit.
Allstate also asserts "the only party who could contest the validity of the notice was the insured." However, the insured in this case did contest the validity of the notice in its opposition to the motion for summary judgment and at trial.
CONCLUSION
The judgment of the trial court is affirmed. All costs of this appeal are to be paid by Allstate.