Matt v. Safeway Ins. Co. of La.

Citation: 269 So. 3d 1011Docket: CA 18-442

Court: Louisiana Court of Appeal; March 13, 2019; Louisiana; State Appellate Court

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Safeway Insurance Company appeals a trial court judgment favoring Plaintiffs Brandon Matt and Cathy West for damages stemming from an auto accident involving Justin Semien on February 27, 2016. The appeal contests the court's determination that a liability insurance policy issued to Demetrius Rubin covered the accident. Safeway had issued an automobile insurance policy to the Rubins on August 13, 2015, covering a 2002 Ford Expedition, which was renewed on February 13, 2016, and later modified to include a 1993 Lincoln Town Car on February 16, 2016. On February 26, 2016, Semien paid Rubin $2,000 for the Town Car, although the transaction's completion was disputed, as title transfer and registration were pending. Despite this, Rubin allowed Semien to drive the vehicle. Following the accident, the Rubins’ insurance agent removed the Town Car from the policy on February 29, 2016, leaving only coverage for a 2000 Lincoln Town Car. The Plaintiffs filed a lawsuit against Semien and Safeway on April 14, 2016. Safeway denied coverage, arguing that Rubin had no insurable interest in the Town Car at the time of the accident and had not obtained necessary consent to transfer policy interest to Semien. Additionally, Safeway later accused Rubin of material misrepresentation regarding the ownership and drivers of the insured vehicles. The court ultimately affirmed the trial court’s ruling in favor of the Plaintiffs.

Safeway argues that Mr. Rubin's insurance policy should be deemed void ab initio due to material misrepresentations. The policy was renewed on February 16, 2017, covering a 2000 Lincoln Town Car and later included a 1993 Buick Roadmaster, which was subsequently deleted. The policy was set not to renew at the end of the term, with premiums collected but not refunded to the Rubins. A bench trial on March 26, 2018, resulted in a judgment of $17,250.15 against Safeway and Mr. Semien, with the trial judge finding Mr. Semien solely at fault and stating that the policy provided coverage for the 1993 Town Car during the accident. The judge noted Safeway waived its coverage defenses by continuing to accept premiums and renew the policy despite knowing of potential issues, including the existence of Demetrius Coleman, also known as Demetrius Rubin.

Safeway's appeal includes four claims of manifest error: (1) the trial court's conclusion that Safeway waived defenses by delaying non-renewal or cancellation; (2) the lack of insurable interest in the 1993 Lincoln Town Car after it was purchased by Justin Semien; (3) the absence of an assignment of interest in the policy to Justin Semien; and (4) Mr. Rubin’s misrepresentation of material facts during the application and when the Lincoln Town Car was added to the policy.

The standard of review emphasizes that appellate courts cannot overturn trial court findings unless there is manifest error or clear wrongdoing, and must respect reasonable evaluations of credibility and inferences by the trial court. If there are two reasonable interpretations of the evidence, the factfinder's choice cannot be deemed manifestly erroneous.

An insurance policy is a contractual agreement interpreted according to the Louisiana Civil Code's general contract interpretation rules. Courts aim to determine the common intent of the parties involved, with ambiguous provisions typically interpreted in favor of coverage and against the insurer. Clear and unambiguous policy language must be enforced as written, and courts cannot modify terms under the guise of interpretation.

Safeway contests the trial court's conclusion that it waived coverage defenses, asserting the policy does not cover damages from Mr. Semien's use of a 1993 Town Car. Its arguments include: (1) Mr. Rubin lacked an insurable interest at the accident time because he sold the vehicle to Mr. Semien the day prior; (2) Mr. Rubin did not secure Safeway's consent to assign his policy interest; and (3) Mr. Rubin made significant misrepresentations during the coverage application.

Regarding insurable interest, Safeway claims that liability coverage is unavailable since Mr. Rubin had sold the car, referencing La.R.S. 22:853, which stipulates that insurance contracts are only enforceable for those with an insurable interest. However, the Louisiana Supreme Court has previously ruled that insurable interest requirements apply solely to property insurance, not liability coverage, as established in DiGerolamo v. Liberty Mut. Ins. Co. and Cousin v. Page. Therefore, Safeway's arguments are ineffective, and no insurable interest requirement exists for liability insurance without explicit policy language.

The Safeway insurance policy provides liability coverage for "owned automobiles" to the named insured and any person using such an automobile with permission. The 1993 Town Car was covered under this policy until it was deleted on February 29, 2016, following an endorsement adding the vehicle. Safeway does not dispute that Mr. Semien qualifies as a "person insured" under the policy and fails to identify provisions excluding coverage for an automobile sold to another party. Despite this, Safeway collected premiums for the Town Car until it was removed from the policy, which contradicts their claim that coverage terminated upon the sale on February 26, 2016. 

Underwriting supervisor Rhonda Marshall testified that proof of ownership is required to add a vehicle but only an endorsement application is needed to delete it, unless backdating is requested, which requires additional proof. As of February 26, 2016, the title transfer and other necessary documents for the sale were not completed, raising questions about the validity of backdating the deletion. Safeway was aware of the sale on February 29, 2016, but the vehicle still appeared on the declarations page as of February 27, 2016. The agent noted the sale and initiated the deletion request on the following Monday. Safeway’s failure to backdate the deletion or refund premiums indicates a waiver of any defense against coverage based on the sale to Mr. Semien. Consequently, Safeway's arguments on appeal regarding Mr. Rubin's lack of insurable interest are unfounded.

Safeway argues that the insurance policy does not provide liability coverage for the accident because Mr. Rubin allegedly failed to obtain the necessary consent for assignment of interest under the policy. However, the court found no evidence that Mr. Rubin assigned any interest to Mr. Semien, who is recognized as an insured under the policy simply by using the described vehicle. Additionally, Safeway's defense includes claims of material misrepresentations by Mr. Rubin regarding the ownership of the 1993 Town Car and his household composition at the time of policy acquisition. Specifically, Safeway asserts that Mr. Coleman's vehicles were insured under Mr. Rubin's name to lower premiums and argues that Mr. Rubin did not disclose Mr. Coleman as a resident when obtaining the policy in 2015. The policy's "Conditions" section allows for it to be voidable by Safeway if any insured intentionally misrepresents material facts. However, the trial court determined that Safeway waived its right to void the policy based on these misrepresentations. Waiver is defined as the intentional relinquishment of a known right or privilege, requiring knowledge of that right and a clear intention to relinquish it. The court will evaluate if sufficient evidence supports the finding of waiver regarding Safeway's option to deny coverage.

Reliable proof of a knowing and voluntary waiver is essential, with the burden of proof resting on the party demanding performance. Safeway's underwriting supervisor, Ms. Marshall, testified that the company has never voided a policy in Louisiana from inception. Instead, upon discovering material misrepresentations, Safeway typically cancels the policy if close to inception or sets it for "Do Not Renew" (DNR) to expire at the end of the term. Safeway first learned of the alleged misrepresentations after Mr. Rubin's deposition on October 3, 2016, and amended its Answer on November 7, 2016, to include defenses based on these misrepresentations. Despite confirmation of these misrepresentations from Mr. Coleman's December 2016 deposition, Safeway renewed the policy in February 2017 and continued collecting premiums until the end of the term. It wasn't until March 2017 that Safeway set the policy to not renew. The trial court found that Safeway's actions, including the renewal of the policy and collection of premiums despite knowledge of the misrepresentations, constituted a waiver of its right to void the policy. The trial court's judgment is affirmed, with costs of the appeal assigned to Safeway Insurance Company of Louisiana.