American Motorists Insurance v. American Employers' Insurance

RULING ON MOTION FOR REHEARING

VERON, Judge:

As indicated in the joint stipulation of facts, this matter arises out of an injury to Jack Trahan who was paralyzed after being struck by a bullet fired by Donald W. Kelley, an employee of Lafayette Crewboats, Inc. (“Lafayette”). At the time of this incident, Lafayette was provided comprehensive general liability insurance with limits of $500,000.00 by American Employers’ Insurance Company (“American Employers’ ”), primary protection and indemnity insurance with limits of $100,000.00 by American Motorists Insurance Company (“American Motorists”), and excess protection and indemnity insurance with limits of $400,000.00 excess of primary by St. Paul Fire and Marine Insurance Company (“St. Paul”).

Suit was filed by Trahan against Lafayette in the Fourteenth Judicial District Court for the Parish of Cameron, State of Louisiana. Upon demand of Lafayette, American Employers’, American Motorists and St. Paul advanced funds totaling $525,-000.00 (American Employers’ contributed one-half this amount and the other two insurers combined to contribute the remaining one-half), on behalf of their insured Lafayette, to settle Trahan’s claim, reserving to each the right to later litigate the issue of the coverage of the aforementioned policies. Pursuant to this agreement, the insurers instituted a complaint for declaratory judgment to determine which insurer should bear the loss of the monies paid out in settlement.

In our opinion of March 24, 1978, we ruled that defendant/American Employers’ was to refund to plaintiffs the monies which they had contributed to the settlement. Our decision was based on several factors:

1. We refused to consider the question of whether Kelley had been acting “within the course and scope of his employment” at the time of the accident. Defendant’s “comprehensive general liability” policy was therefore found to be in force.
*13202. Further, an exclusion clause found in defendant’s policy did not operate to preclude American Employers’ liability.
3. Finally, plaintiffs’ “protection and indemnity” policies were not called into play since there was no “causal operational relationship between the vessel and the resulting injury.”

Defendant now moves for a rehearing, urging as a basis for its motion that the court erroneously relied on National Surety Corp. v. Western Fire § Indemnity Co., 318 F.2d 379 (5th Cir. 1963), in refusing to consider the question of “course and scope of employment.” Defendant cites Rouse v. Greyhound Rent-a-car, Inc., 506 F.2d 410 (5th Cir. 1975), in support of its contention.

Our original decision on this matter was predicated on the assumption that liability of Lafayette Crewboats, Inc. (Kelley’s employer) is to be taken as established as the result of the settlement paid to Trahan. We therefore concluded that evidence as to whether Kelley was acting within the “course and scope of his employment” would not be considered subsequent to the settlement. We believe that it is still an accurate statement of the law that an insurance company may not offer evidence for the purpose of proving that a plaintiff would or would not have prevailed in a cause of action had that cause gone to trial rather than being settled. For example, a motorist’s insurance company which has settled a claim with a plaintiff arising out of an automobile accident may not then be heard to urge, as part of a new action, that the injured plaintiff would not have prevailed against the defendant/insured in the original suit. The law enunciated in National Surety certainly remains the controlling rule with regard to this issue, and our previous opinion remains valid.

In the case at bar, however, certain evidence might be used to prove two distinct contentions. In the “insured motorist” hypothetical mentioned above the insurance company, in a suit involving several insurance companies which had contributed to the initial settlement, would certainly be entitled to offer evidence to show that its policy was not in effect at the time of the accident. (Such evidence might include expiration date, premium payments, specific exclusionary language, etc.) The instant case presents us with a set of facts which might serve as evidence both regarding the liability of the original defendant to the original plaintiff (before settlement of the claim) and regarding the applicability of the relevant insurance policies to the subject matter of the claim. To the extent that Rouse stands for the proposition that a court may consider the underlying facts to determine whether or not an insurance policy is in force subsequent to a settlement that case is accurate and controlling. Therefore, we now hold that the question of whether Kelley was acting “within the course and scope of his employment” must be answered for the limited purpose of deciding whether the American Employers’ policy covered his actions.

Though recent Louisiana decisions have indicated a progressive expansion of the definition of “course and scope” for the purpose of determining an employer’s vicarious liability (see, for example, Leger v. Southern Farm Bureau Casualty Insurance Co., 251 So.2d 801 (La.App., 1971); Jinks v. McClure, 344 So.2d 675 (La.App., 1977), the general rule with respect to this area was stated most succinctly in St. Paul Fire & Marine Insurance Co. v. Roberts, 331 So.2d 529 (La.App., 1976). The court stated at page 537:

“There is not, nor can there be, any hard and fast rule for determination of whether an employee is or is not acting within the scope and during the course of his employment. Each such instance must be determined in the light of its own peculiar facts and circumstances.”

Further, certain specific factors must be taken into account in determining the proper characterization of an employee’s actions.

“The factors considered in making such a determination include the time the act was committed meaning whether at a time the employee was obligated to perform a duty for his employer.' Also to be considered are the place, circumstances *1321and purpose of the act insofar as it may reasonably relate to or foster the employer’s business. Additionally, the motive of the employee in performing the act is of paramount importance, as also are the questions of whether the act is one usually performed by employees engaged in similar capacities and whether the employer had reason to expect such an act would be performed by the employee.” id.

In applying each one of these factors to the facts of the instant case it must be concluded that although Kelley’s acts were committed during a time when he was obligated to perform a duty for his employer, the circumstances and purposes of the acts did not reasonably foster the employer’s business. Also, despite Kelley’s protestations to the contrary, the evidence that his motive in shooting was to prepare himself to defend his employer’s vessel against sharks is unconvincing. Finally, it is clear that the specific acts involved are not usually performed by employees engaged in similar capacities, and the employer (Lafayette) certainly had no reason to expect that Kelley would act as he did. Indeed, the evidence is that Lafayette would have prohibited its employee from engaging in such activities had his actions been known. Taken as a whole, these factors lead inexorably to the conclusion that Kelley was in no way acting within the course and scope of his employment in accidentally shooting Trahan.

By holding that Kelley was acting outside the course and scope of his employment it is obvious that American Employers’ comprehensive general liability policy does not operate to insure Lafayette Crew-boats for these specific acts of its employee. At the same time, our earlier decision that the various “P & I” policies do not cover the accident is unaffected by our most recent examination of the facts. Therefore, upon reconsideration of the underlying circumstances, we now hold that since none of the relevant insurance policies is truly applicable to Kelley’s actions, all insurance companies must bear the losses resulting from their respective contributions to the settlement. There is to be no reimbursement or redistribution of funds among the various parties as the result of this litigation. Neither shall there be any attempt by the insurance companies to recover from their insured any of the money paid out in settlement.

JUDGMENT UPON REHEARING

This case having come before the court, Honorable Earl E. Veron, presiding, upon rehearing, on the basis of stipu1 ' ed facts, briefs presented by the parties and various other exhibits, and a decision having been rendered for the reasons set forth in a written opinion of April 17, 1978,

IT IS ORDERED, ADJUDGED AND DECREED that there be judgment in favor of defendant/American Employers’ Insurance Company and against plaintiffs/American Motorists Insurance Company and St. Paul Fire and Marine Insurance.