Chadwick Dukes and Dana Green on Behalf of Skylan Dukes VS Paul Declouette, XYZ Insurance Company and US Agencies Insurance Company

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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT NUMBER 2010 CA 0045 CHADWICK DUKES AND DANA GREEN ON BEHALF OF SKYLAH DUKES VERSUS PAUL J DECLOUETTE XYZ INSURANCE COMPANY AND US AGENCIES INSURANCE COMPANY Judgment Rendered June 11 2010 Appealed from the Eighteenth Judicial District Court In and for the Parish of West Baton Rouge Louisiana Trial Court Number 37 080 Honorable William C Dupont Judge Chad A Aguillard Attorneys for New Roads Plaintiffs Appellants Chadwick Dukes and Dana Green on and Ali Z Shields behalf of Skylah Dukes Plaquemine LA Paul D Oberle Jr Byron A Richie Shreveport LA Attorneys for Defendants Appellees Imperial Fire Casualty Ins Co and Paul Declouette Bryan J Haydel Jr Baton Rouge LA Attorney for Defendant Appellee USAgencies Casualty Ins Co Inc BEFORE WHIPPLE HUGHES AND WELCH JJ WELCH J Plaintiffs Chadwick Dukes and Dana Green on behalf of Skylab Dukes appeal a judgment granting a motion for summary judgment filed by defendant Imperial Fire and Casualty Insurance Company We reverse and remand BACKGROUND On June 8 2007 a vehicle driven by Chadwick Dukes in which his daughter Skylab was riding and a vehicle driven by Paul Declouette collided on Louisiana Highway 983 On May 23 2008 Dukes and Skylab mother Dana s Green filed this lawsuit against Declouette an unnamed insurer providing coverage to Declouette and USAgencies Insurance Company Dukes underinsured motorist carrier on behalf of Skylab seeking to recover damages sustained by Skylab in the accident Plaintiffs filed a supplemental petition adding Imperial Fire and Casualty Insurance Company Imperial Fire the insurer of Declouette as a defendant in the litigation Imperial Fire admitted that it had issued an automobile liability policy to Declouette covering Declouette liability s Subsequently plaintiffs filed a motion seeking to dismiss Declouette from the lawsuit On November 20 2008 the trial court entered judgment dismissing plaintiffs claims against Declouette with prejudice reserving all rights against any and all other persons or parties named or Imperial Fire filed a motion for summary judgment acknowledging that it did have in force and effect a policy of automobile liability insurance which was issued to Declouette but asserted that it could not be found liable as a matter of law because plaintiffs released its insured without a reservation of rights In support of the motion for summary judgment Imperial Fire attached a settlement agreement executed on February 19 2008 entitled PARENTGUARDIAN RELEASE AND INDEMNITY AGREEMENT Therein in consideration for the 2 stated sum plaintiffs settled their daughter claims against Declouette Direct s General Insurance Company of Louisiana the insurer of the vehicle Declouette was driving and Sheryl Rogers the owner ofthe vehicle The agreement stated as follows Iwe the undersigned parents guardians of Sky Dukes a minor La do forever release acquit discharge and covenant to hold harmless Direct General Insurance Company of Louisiana and Sheryl Rogers and Paul Declouette their heirs successors and assigns of and from any and all actions causes of action claims demands damages costs loss of services expenses and compensation on account of or in any way growing out of any and all known and unknown personal injuries which we may now or hereafter have as the parents of said minor and also all claims or rights of action for damages which the said minor has or may hereafter have either before or after she has reached her majority resulting or to result from a certain accident which occurred on or about June 8 2007 in West Baton Rouge Parish LA Emphasis in original Imperial Fire asserted that it was clear from the language of the release that plaintiffs failed to reserve rights against Declouette or any other party Imperial Fire pointed to the language of the insurance policy in which it agreed to pay damages for bodily injury for which an insured person becomes legally responsible because of an accident arising out of the ownership maintenance or use of a covered vehicle Emphasis added Imperial Fire urged that Declouette could never be found liable as a result of this accident because he was specifically released by way of settlement and because Declouette could not become legally responsible for the accident in question neither could his liability insurance carrier On June 3 2009 a peremptory exception raising the objection of res judicata was filed on behalf of Declouette on the basis of plaintiffs settlement of all claims on behalf of their child with Declouette and release of Declouette without a reservation of rights against Declouette with prejudice The exception sought dismissal of all claims However as noted above all of plaintiffs claims against Declouette had previously been dismissed with prejudice by the 3 trial court In opposition to the motion for summary judgment and the exception of res judicata plaintiffs filed a memorandum in which they argued that they only intended to release Direct General Rogers the owner of the vehicle and Declouette in his capacity as an omnibus insured of Direct General They pointed out that the release document did not include any broad language showing any intent on their part to release any and all other parties liable as a result of the accident Instead plaintiffs urged the release language was limited to Direct General Sheryl Rogers and Declouette along with their heirs successors and assigns Plainly plaintiffs asserted there was no intent on their part to release Imperial Fire from liability Moreover plaintiffs averred Louisiana law no longer required an express reservation of rights against a solidary obligor and therefore the release of Declouette did not release Imperial Fire from liability based on s Declouette conduct in the accident Plaintiffs insisted that they had a direct cause of action against Imperial Fire as a separate insurer of the acts of its insured which could be maintained against Imperial Fire without naming Declouette as a party to the lawsuit Lastly they pointed out that in the judgment dismissing Declouette as a party in the instant litigation they specifically reserved their rights to proceed against other parties in the lawsuit including Imperial Fire Following a hearing the trial court granted the peremptory exception of res judicator and the motion for summary judgment dismissing all claims against Declouette and Imperial Fire with prejudice The trial court expressed the opinion that because Declouette had been released from liability Declouette could not be found to be legally liable for damages and therefore plaintiffs could not maintain an action against his insurer This appeal taken by plaintiffs followed RES JUDICATA At the outset we find that the trial court clearly erred in granting the exception of res judicata At the time the exception was filed on behalf of Declouette Declouette was no longer a party in this litigation having been previously dismissed with prejudice by order of the court Therefore as to Declouette the exception is clearly moot Moreover Imperial Fire could not raise the exception on its own as it was not a party to the release It is well established that a claim of res judicata on a compromise agreement must be brought by a party to the compromise agreement Carrie v Louisiana Farm Bureau Casualty Insurance Company 20041001 p 5 La App 4th Cir 2900 So 841 05 16 2d 844 writ denied 2005 0711 La 5 901 So 1099 Because the exception 05 6 2d was moot as to Declouette and Imperial Fire could not raise the plea of res judicata the trial court erred in granting the exception SUMMARY JUDGMENT A motion for summary judgment shall be rendered when the pleadings depositions answers to interrogatories and admissions on file together with the affidavits if any show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law La C art 966 P In this appeal we are asked to decide the legal effect of Declouette srelease with respect to plaintiffs rights against Imperial Fire The issue presented is whether the release of Imperial Fire insured Declouette resulted in the discharge of Imperial s s Fire obligation under the policy of insurance to provide coverage for plaintiffs damages This issue presents a question of law which is appropriate for decision by summary judgment Sumrall v Bickham 2003 1252 p 7 La App I Cir 04 8 9 887 So 73 78 writ denied 2004 2506 La 1 891 So 696 2d 05 7 2d Louisiana law establishes that the scope ofa compromise agreement extends to the differences clearly contemplated by the parties not to differences that the 5 parties never intended to include La C art 3073 Sumrall 2003 1252 at p 6 887 So at 77 In the release agreement plaintiffs clearly and unambiguously 2d released Direct General Sheryl Rogers Declouette and their heirs successors and assigns from liability for any causes of action arising out of the accident There is no broad language from which an intent to release any other parties could be construed from the language of the release Therefore our interpretation of the release agreement does not require an inquiry outside of the four corners of the document to ascertain intent See Sumrall 2003 1252 at p 7 887 So at 77 2d From the language of the agreement we conclude that plaintiffs clearly did not intend to release Imperial Fire from liability Nor did plaintiffs have to as a matter of law specifically reserve rights against Imperial Fire in order to maintain an action against Imperial Fire following the release of Declouette Louisiana law has consistently held that a liability insurer and its insured are codebtors in solido Sumrall 2003 1252 at p 10 887 2d So at 79 Former Louisiana Civil Code article 2203 provided that an obligee who remitted a debt in favor of one solidary obligor without expressly reserving his right against the others was deemed to have forfeited the entire obligation However this rule was abandoned in favor of the converse the present law provides that when partial payment is received solidary liability is preserved unless it is expressly renounced La C art 1802 Sumrall 2003 1252 at p 1 887 So at 80 Parro J concurring Thus Louisiana law no longer requires a 2d reservation of rights be included in a release to protect a settling plaintiffs right to pursue his or her claims against non settling solidary obligors 1252 at pp 1 2 887 So at 81 Parro J concurring 2d Sumrall 2003 Therefore plaintiffs release of Declouette without a reservation of rights against Imperial Fire did not extinguish the solidary obligation Having concluded that plaintiffs did not intend to release Imperial Fire from liability and that the failure to specifically reserve rights against Imperial Fire when releasing its insured did not destroy the solidary obligation we must decide what effect the release of Declouette had on Imperial Fire contractual obligation s to pay any claim for which Declouette became legally responsible In addressing this issue both sides rely on cases from this circuit which they claim are determinative Plaintiffs rely on Sumrall while Imperial Fire insists that Boatman v Gorman 2005 1369 La App 15t Cir 2 935 So 696 writ 06 7 2d denied 20060539 La 5 927 So 323 is controlling 06 2d Sumrall involved a remand from the Louisiana Supreme Court for an opinion solely on the issue of whether a plaintiff settlement with an insured s eliminates an insurer sobligation to pay the plaintiff according to the terms that the policy would otherwise require Sumrall 2003 1252 at p 5 So at 76 In 887 2d Sumrall the insurer made the identical argument asserted by Imperial Fire to the trial court and in this appeal The insurer in Sumrall argued that pursuant to the terms of the insurance contract it was obligated to only pay claims for which its insured is legally liable The insurer argued that because the plaintiff settled with and fully released the insured a natural consequence of the release is that the insured could no longer be found legally liable for the plaintiff injuries and s therefore the insurance policy could not be triggered Imperial Fire insists that a clear reading of its policy shows that it only becomes liable for damages for which an insured person becomes legally responsible because of a covered accident and because Declouette cannot be found legally responsible due to the release executed by plaintiffs neither can Imperial Fire In Sumrall this court held that an insured tortfeasor could be legally liable for the victim sdamages even though he cannot be cast in judgment due to his release from liability Under the circumstances of the case this court concluded that the plaintiff lawsuit against the non settling insurer remained s 7 viable despite the release of the insured tortfeasor In so doing this court relied on language in the settlement agreement in which plaintiff released the insured but reserved rights as to the insurer as well as language indicating that payment was not to be construed as an admission of liability along with an express denial of liability This court disagreed with the insurer assertion that it had no s independent liability simply because its insured had been released pursuant to a pretrial settlement with the plaintiff This court observed that the insurer was not involved in negotiating the settlement agreement between the plaintiff and the insured and should not be able to claim the benefit of the agreement by declaring it should automatically be dismissed from the lawsuit as a natural consequence of the release of its insured This conclusion was especially compelling this court stressed in light of the clear language in the release agreement stating that the insured was expressly denying all liability leaving the issue of legal liability yet to be determined and language that the plaintiff was specifically reserving all rights without limitation as to the insurer Sumrall 2003 1252 at pp 911 887 So 2d at 79 80 Additionally this court observed the Direct Action Statute creates solidary liability on the part of the insurer and the insured although the solidary obligation arises from different sources and that the statute was passed for the very purpose of protecting plaintiffs from insurers who attempt to avoid coverage after collecting premiums from insured tortfeasors Sumrall 20031252 at pp 911 887 So at 79 Accordingly this court held the release of the insured did not bar 2d the plaintiff separate right to pursue the non settling insurer through a direct s action Plaintiffs contend that the question of whether Imperial Fire can be cast in judgment where its insured has been released from liability has been addressed and answered by this court in Sumrall Imperial Fire points out differences between I the facts of this case and Sumrall which it insists mandate a different result First it states that in a footnote in Sumrall this court observed that it was important to note that the insurer was not an excess or uninsured motorist carrier and therefore the jurisprudence maintaining actions against excess insurers or uninsured motorists insurers after the insured tortfeasor had been released was not applicable Imperial Fire claims that it is an excess insurer and urges that the distinction as to the type of insurer is of critical importance but does not explain in what way We note that it has long been held that a plaintiff victim does not forfeit any right against his UM carrier by releasing the tortfeasor See Martin v Champion Insurance Company 95 0030 p 13 La 6656 So 991 999 Gaspard 95 30 2d v Allstate Insurance Company 20041502 p 2 La App P Cir 5 903 05 4 2d So 518 520 writ denied 20051510 La 12 917 So 1114 See also 05 16 2d Buford v Blanchard 2009 187 p 5 La App 3 Cir 10 19 So 1255 09 7 3d 1260 writ denied 2009 2419 La 228 So3d 270 finding that a release of 10 26 the tortfeasor and the primary insurer on the vehicle with a reservation of rights against all other parties did not release the insured excess carrier Moreover in s the case of an excess insurer it has long been held that the release of the insured and primary insurer did not extinguish the excess insurer obligation under its s policy where the clear intent of the compromise was to release the primary insurer in consideration of the sums paid by it and the plaintiff reserved rights in the release to proceed against the excess insurer Futch v Fidelity Casualty Company of New York 246 La 688 166 So 274 1964 Wirick v Wyble 2d 300 So 571 La App 3d Cir 1974 2d Therefore we plainly reject Imperial s Fire implication that if the insurer in Sumrall was an excess rather than a primary carrier this court would have reached a different conclusion Imperial Fire urges that the second distinction between this case and Sumrall is that the plaintiff in Sumrall specifically reserved rights against the Z s tortfeasor liability insurer naming the insurer in the release document whereas in this case there was no express reservation of rights as to the non settling insurer Of further significance Imperial Fire urges in Sumrall there was apparently never a determination of liability on behalf of the alleged tortfeasor a fact stressed by this court throughout the opinion However in this case Imperial Fire claims there has been a determination of liability because the tortfeasor s liability carrier made a payment exhausting its policy limits Because of these distinctions Imperial Fire submits that the Boatman case is on point and controls the resolution of the issue before this court In Boatman decided after Sumrall the plaintiff was involved in an accident with a vehicle driven by Chad Rivere and owned by his employer Doug Gorman The plaintiff filed suit against Gorman and his insurer State Farm Thereafter plaintiff settled with State Farm and signed a release discharging Gorman Rivere and State Farm with no reservation of rights The plaintiff later amended her petition to add as defendants Doug Jackson the owner of the vehicle in which she was riding as a guest passenger and the owner uninsured motorist insurer USAgencies s Thereafter the plaintiff dismissed Gorman and State Farm with prejudice and reserved all rights against USAgencies and all parties whether named or unnamed Finally the plaintiff filed a third amended petition naming USAgencies as the insurer of Rivere pursuant to the Direct Action Statute USAgencies filed an exception of no right of action which was overruled by the trial court after considering the exception within the confines of Sumrall This court reversed holding that under the circumstances of that case once the insured Rivere had been released there was no cause of action against him or his insurer under the express terms of the release In so doing this court noted that the insured was not mentioned in the motion to dismiss filed in the litigation was never named in the petition and had been released in the settlement documents without any 10 reservation of rights against his insurer Boatman 2005 1369 at p 2 935 So at 2d We find Boatman to be distinguishable from the case before us In Boatman the plaintiff released the insured without any reservation of rights against his insurer and did not name the insured as a party to the action Under these circumstances this court held that the plaintiff had no cause of action to proceed directly against the insurer However in this case plaintiffs joined the insured as a party to the litigation and when dismissing the insured specifically reserved rights against all other parties in the litigation Under these circumstances plaintiffs procedurally preserved their right to proceed against Imperial Fire following the dismissal of its insured from the litigation While Sumrall is distinguishable from this case in some respects we find that the pronouncements of this court in Sumrall apply with equal force to the instant case Although plaintiffs did not specifically reserve the right to proceed against Imperial Fire in the settlement it is evident that they intended to release Direct General and Declouette in his capacity as an insured under that policy of insurance in consideration of the sums paid by Direct General Imperial Fire was in no way involved in negotiating the settlement agreement between plaintiffs and Declouette and was not a party to the compromise It should not now be able to claim the benefit of the agreement by claiming that the absence of a specific reservation of rights automatically entitles it to a dismissal from the lawsuit as a natural consequence of the release of its insured Additionally Louisiana law no longer requires that a reservation of rights be included in a release to protect a settling plaintiff right to pursue his or her claims against non settling obligors s Sumrall 2003 1252 at pp 1 2 887 So at 81 Parro J concurring 2d Furthermore this court squarely rejected the argument that the release of an insured automatically extinguishes the insurer contractual obligation to pay s 11 damages caused by the insured conduct in Sumrall s In so doing this court observed that the term legally liable means ljiable under law as interpreted by courts Sumrall 2003 1252 at p 9 887 So at 79 Similarly the Imperial Fire 2d policy imposes liability on Imperial Fire for the damages for which its insured become legally responsible The release document does not acknowledge liability on Declouette spart We decline to construe the absence of language regarding liability in the release document to constitute a legal admission of liability as Imperial Fire suggests For all these reasons we conclude that by entering into the settlement agreement and releasing Declouette and Direct General plaintiffs waived their right to pursue Declouette personally and his settling insurer for a money judgment in a judicial proceeding but did not waive the right to have Declouette liability s judicially adjudicated for the purpose of pursuing a claim against Declouette non s settling insurer We hold that the settlement agreement between plaintiffs and Declouette did not bar plaintiffs separate right to pursue Declouette non settling s insurer Imperial Fire Therefore we find that the trial court erred in granting Imperial Fire motion for summary judgment s CONCLUSION For the foregoing reasons that portion of the judgment sustaining the peremptory exception of res judicata is reversed as moot The summary judgment rendered in favor of Imperial Fire Casualty Insurance Company is hereby reversed and the case is remanded for proceedings consistent with this opinion All costs of this appeal are assessed to appellee Imperial Fire and Casualty Insurance Company REVERSED AND REMANDED 12

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