Opinion
CIVIL ACTION NO. 01-0700 SECTION M
March 18, 2003
ORDER
Before the Court is a Motion for Summary Judgment filed by defendant, Old Republic Insurance Company, seeking dismissal of plaintiffs claims on the basis that the insurance policy does not provide coverage for this loss. For the following reasons, the Motion for Summary Judgment is GRANTED.
FACTS
Plaintiffs were injured on March 3, 2000, when the vehicle driven by Mr. Herkes was struck by a Penske tractor-trailer leased to Dae Nong, and operated by Rodney Taylor, a Dae Nong employee. Dae Nong leased the vehicle from Penske Truck Leasing, pursuant to a Vehicle Lease Service Agreement (VLSA). Under the terms of the agreement, Dae Nong was obliged to procure liability insurance to cover itself and Penske, which it obtained through Canal Insurance Company. At the same time, Penske had an auto insurance policy issued by Old Republic. Plaintiffs (and the other defendants) contend that the Old Republic policy provided liability coverage to any permissive user of the vehicle, including Rodney Taylor. They further argue that to the extent the Old Republic policy is ambiguous, it should be interpreted as providing coverage, and that under state law, Penske is required to provide liability insurance as the owner of the vehicle.
Old Republic maintains that the policy specifically excluded coverage to persons or entities that agree to provide their own liability coverage under a lease or rental agreement with Penske and that as a lessor, Penske is statutorily exempt from the necessity of providing omnibus coverage to permissive users.
LAW AND ANALYSIS
La. Rev. Stat. Ann § 32:1041(B) provides:
B. Any person, firm, association, or corporation licensed and engaged in the business of renting or leasing motor vehicles to be operated on the public highways shall only be required to furnish proof of financial ability to satisfy any judgment or judgments rendered against said person, firm, association, or corporation in his or its capacity as owner of the said motor vehicles, and shall not be required to furnish proof of its financial ability to satisfy any judgment or judgments rendered against the person to whom the motor vehicle was rented or leased at the time of the accident.
In Hearty v. Harris, 574 So.2d 1234, 1238 (La. 1991), the Louisiana Supreme Court held that a rental agency can lawfully restrict omnibus coverage provided under a rental agreement. The court further held that the agreement by the lessee to provide liability coverage constitutes the equivalent of an insurance policy and absent a conflict with statutory requirements or public policy, the agency has a right to restrict omnibus coverage. Id.
It is undisputed that Penske is in the business of leasing motor vehicles. Thus, the Court finds that under La. Rev. Stat. § 32:1041(B) and Hearty v. Harris, Penske is not required to provide omnibus coverage for permissive users. Old Republic's opponents argue, however, that Penske may not have intended to purchase omnibus coverage for permissive users such as Rodney Taylor, but it did. Pointing to Section 1(b) of the policy, which includes as an insured anyone who has permission to use Penske's covered autos, they contend that Rodney Taylor had permission to operate the vehicle. However, Endorsement 108 adds as insureds, "both lessee and rentees of covered autos as insureds, but only to the extent and for the limits of liability agreed to under contractual agreement with the Named Insured." Rodney Taylor's status as an insured is clearly addressed by this endorsement and absent a contractual agreement which provides otherwise, he is not covered under this policy.
The "Other Insurance" clause in Endorsement 101 states that if Penske leases an auto to others pursuant to any contract agreement wherein there is no provisions requiring Penske to provide liability insurance (which is the case here), then the "insurance afforded by the Policy shall not apply to any person or organization other than [Penske] unless a minimum limit shall be required by state statute . . ." This endorsement does not create any ambiguity with respect to who is an insured, but rather, eliminates coverage altogether when the lessee has agreed to provide coverage.
Under Louisiana law, an insurance policy should not be interpreted in an unreasonable manner so as to enlarge or restrict its provisions beyond what was reasonably contemplated by its terms or so as to achieve absurd conclusions. Doerr v. Mobil Oil Corp. 774 So.2d 119 (La. 2000). The interpretation of an insurance contract is nothing more than a determination of the common intent of the parties. Id. To conclude in this case that Rodney Taylor is a permissive user would render the endorsements meaningless and would be contrary to the intent of Penske and Old Republic. Accordingly, for these reasons, the Motion for Summary Judgment is GRANTED.