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Champagne v. Commercial Union Insurance Co.
Citations: 574 So. 2d 534; 1991 La. App. LEXIS 226; 1991 WL 13286Docket: No. 89-794
Court: Louisiana Court of Appeal; February 5, 1991; Louisiana; State Appellate Court
Gary and Simone Champagne's automobile insurance policy with Commercial Union Insurance Company expired on May 12, 1985, without them receiving the required notice of non-renewal, leading to a one-car accident on May 29, 1985, where their 1980 Toyota Célica was totalled. After Commercial Union denied coverage, the Champagnes sued, asserting that the lack of notice violated La.R.S. 22:636.1 E. Commercial Union settled with the Champagnes for $7,500 and subsequently filed a third-party claim against Techeland Insurance Center, which had initially placed their policy, and E.C. Forbes, Jr., who acquired Techeland shortly before the policy expired. Techeland had agreed not to send non-renewal notices and to replace the Champagnes' policy but failed to do so and did not notify Commercial Union. Forbes, unaware of this agreement at the time of his acquisition, stated he would not have purchased Techeland had he known of it. Commercial Union argued that it could recover from Forbes based on an assignment from the Champagnes, citing a previous case where Forbes allegedly breached a duty to the Champagnes. However, the court found that according to La.R.S. 22:636.1 E, the remedy for failure to send a non-renewal notice is automatic renewal of the policy, and since Commercial Union fulfilled its obligation to renew the policy, the Champagnes no longer had grounds for an assignment of a cause of action against Forbes. In Carroll v. State Farm Mutual Automobile Insurance Co., 419 So.2d 57 (La.App. 2d Cir. 1982), the court addressed an insurer's attempt to seek indemnity from a premium finance company for failing to provide timely notice of cancellation to the insured. The Second Circuit rejected the insurer's claim, stating that State Farm, having received the full premium payment, remained the insurer regardless of the improper cancellation notice from the finance company, which did not comply with legal requirements. The court emphasized that an insurer's duty to notify its insured about cancellation or non-renewal is non-delegable unless expressly allowed by law. Furthermore, the court found that there was no evidence that the agent, Forbes, breached any duty to the Champagnes. The court referenced a related case, Ferrara, which established that an agent's duty to inform the insured arises only when the agent is aware of the insurer's intent to cancel. In this case, Forbes lacked knowledge of the insurer's non-renewal intentions or any agreements with another party. The court disagreed with the trial judge's conclusion that Forbes had assumed a duty based solely on a letter that was not part of the record and which the insured had discarded. Ultimately, the court reversed the trial court's judgment, determining that the fault lay with Commercial Union, not Forbes, and assessed the costs of the appeal against Commercial Union Insurance Company. The relevant statutory provision, La.R.S. 22:636.1 E, requires insurers to provide at least twenty days' notice before non-renewal, unless specific conditions are met. The facts of Carroll predate the enactment of La.R.S. 9:3550, which governs insurance premium finance companies.