Hotard v. State Farm Fire & Casualty Co.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

_______________________________

No. 01-30683
_______________________________

CALVIN J. HOTARD, JR.; ET AL,

Plaintiffs,

STATE FARM FIRE AND CASUALTY COMPANY,

Plaintiff-Appellant,

versus

STATE FARM FIRE AND CASUALTY COMPANY; ET AL,

Defendants,

TRAVELERS INDEMNITY COMPANY,

Defendant-Appellee.

_________________________________________________

Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________________________________

April 4, 2002

Before JONES, WIENER, and PARKER, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant State Farm Fire and Casualty Company

(“State Farm”), proceeding pursuant to an assignment of claims from

one Calvin Hotard, appeals the district court’s summary dismissal

of defendant-appellee Travelers Indemnity Company (“Travelers”)

from the case, contending that the Uninsured/Underinsured Motorist

("UM") coverage waivers in the Travelers insurance policy are
invalid. Agreeing with the district court's conclusion that the

Travelers UM coverage waivers are valid, we affirm.

I.

FACTS AND PROCEEDINGS

Calvin Hotard sustained injuries in a motor vehicle accident.

He sued the driver of the other vehicle, who admitted total fault

for the accident. Hotard was paid the policy limit of $10,000 by

the tortfeasor’s insurer, as well as his own vehicle liability

insurance policy’s UM limit of $100,000 by his insurer, State Farm.

In addition to his basic motor vehicle liability policy, Hotard had

$1,000,000 in UM coverage under his umbrella policy that also was

issued by State Farm.

The car that Hotard was driving at the time of the accident

was not his own, but was one owned by his employer, Jefferson

Parish (the “Parish”). The Parish maintained a policy issued by

Travelers that provided both commercial automobile insurance and

excess automobile liability indemnity which, in combination,

covered the vehicle driven by Hotard for up to $4,500,000.1 The

Parish had purported to reject UM coverage for its vehicles by

marking a box on each of two UM coverage waiver forms, which were

1
By post-argument submissions, the parties jointly
represented that there is only one Travelers policy at issue. That
policy encompasses two different coverages, one for basic
commercial automobile liability and the other for excess automobile
liability. The UM waiver for excess coverage was executed on April
22, 1998; the UM waiver for basic coverage was executed on May 1,
1998.

2
integral parts of Travelers policy, one form for the basic coverage

and the other form for the excess coverage. The validity of the

Parish’s rejection of UM coverage is the central issue of this

case, and it turns on the legal sufficiency of the UM waiver forms

provided to the Parish by Travelers and used by the Parish in its

effort to reject UM coverage.

Hotard filed a claim for damages against his insurer, State

Farm, in Louisiana state court after State Farm denied UM coverage

under its Umbrella policy. State Farm removed the case to district

court based on diversity of citizenship. In its answer to Hotard’s

complaint, State Farm asserted an affirmative defense that the

Parish’s waivers of UM coverage under the Travelers policy were

invalid. Therefore, argued State Farm, Travelers was obligated to

provide UM coverage and, as the insurer of the vehicle in question,

Travelers had primary responsibility to pay UM coverage to Hotard.

In response, Hotard amended his complaint to add Travelers as

a defendant. He then moved for summary judgment against State

Farm, seeking a declaration that the UM waivers in the Travelers

policy were valid, leaving State Farm as the insurer with UM

coverage responsibility to him. The district court granted

Hotard’s motion, ruling that the Parish’s UM rejections in the

Travelers policy were valid and that State Farm was responsible for

Hotard’s UM claim.

A few months later, in November 2000, Travelers filed a

summary judgment motion seeking a declaration that, because there

3
were no longer any fact issues relating to it, Travelers should be

dismissed from the case. The district court granted that motion,

dismissing with prejudice all of Hotard’s claims against Travelers.

It then moved for entry of judgment pursuant to Rule 54(b), asking

the district court to certify as final its summary judgment of

dismissal, but the district court denied this motion.

The trial of Hotard’s suit against State Farm was scheduled to

commence at the end of January 2001, but the parties settled before

trial, and the settlement was approved by the district court.

Pursuant to the settlement, Hotard assigned to State Farm any

rights that he might have to proceed against Travelers on the issue

of UM coverage. In May 2001, State Farm filed a motion to have all

the orders entered by the district court relating to the issue of

Travelers’s UM coverage certified as final judgments under Rule

54(b) or, in the alternative, under 28 U.S.C. § 1292(b), to permit

an immediate appeal of those orders. The district court granted

State Farm’s motion and certified the orders as final judgments

under Rule 54(b). Having thus decided, the court declined to

address State Farm’s alternative § 1292(b) motion. The next day,

State Farm filed its notice of appeal.

II.

ANALYSIS

A. Standard of Review

4
 Although a district court may not deem as final that which is

not final, certifications of judgments as final pursuant to Rule

54(b) are generally reviewed for abuse of discretion.2 The

underlying motions regarding Travelers’s UM coverage and the

dismissal of Travelers from the case were summary judgment motions,

which we review de novo.3 A motion for summary judgment is

properly granted only if there is no genuine issue as to any

material fact.4 An issue is material if its resolution could

affect the outcome of the action.5 In deciding whether a fact

issue has been created, we must view the facts and the inferences

to be drawn from them in the light most favorable to the nonmoving

party.6

The standard for summary judgment mirrors that for judgment as

a matter of law.7 Thus, we must review all of the evidence in the

record but make no credibility determinations or weigh any

2
See Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1
(1980); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427 (1956).
3
Fed. R. Civ. P. 56.
4
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
5
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
6
See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525
(5th Cir. 1999).
7
Celotex Corp., 477 U.S. at 323.

5
evidence.8 In reviewing the evidence, we must disregard everything

favorable to the moving party that the jury is not required to

believe, and should give credence to the evidence favoring the

nonmoving party as well as that evidence supporting the moving

party that is uncontradicted and unimpeached.9

The issue underlying the summary judgment in this case is the

correctness of the district court’s application of Louisiana

insurance law to the determine the validity of Traveler’s UM

coverage waiver forms. This presents a question of law, which we

review de novo, employing the principles of Louisiana insurance

contract construction.10

B. Timeliness of State Farm’s Appeal

As a threshold matter, Travelers contends that State Farm’s

notice of appeal, filed on May 22, 2001, violates the 30-day time

limit set by Fed. R. App. P. 4(a)(1)(A).11 Travelers notes that it

was dismissed as a party in November, leaving Hotard and State Farm

as the only remaining parties to the litigation. When State Farm

8
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133,
150 (2000).
9
Id. at 151.
10
Adams v. Unione Mediterranea Di Sicurta, 220 F.3d 659, 676
(5th Cir. 2000).
11
Fed. R. App. P. 4(a)(1)(A) (“In a civil case ... the notice
of appeal required by Rule 3 must be filed with the district clerk
within 30 days after the judgment or order appealed from is
entered.”).

6
and Hotard entered into a settlement agreement in January 2001, all

issues of liability between the relevant parties were resolved.

Consequently, reasons Travelers, the 30-day time period expired

well before May, when State Farm’s first and only Notice of Appeal

was filed.

State Farm counters by noting that the orders herein appealed

were not deemed final until May 21, only one day before State Farm

filed this appeal, when the district court certified them as such

under Rule 54(b). State Farm argues that the settlement agreement

between it and Hotard did not render past judgments from the

district court final retroactively. We agree with State Farm: As

the final —— and therefore appealable —— judgment in this case was

not entered until May 21, 2001, State Farm’s notice of appeal was

timely filed.

C. Hotard’s Assignment of Rights to State Farm

Travelers contends that State Farm cannot maintain this

litigation against Travelers because State Farm’s only basis for

proceeding against Travelers is Hotard’s assignment of claims to

State Farm. Even though Hotard was the party who had added

Travelers as a defendant, he argued on numerous occasions that the

Parish’s UM waivers were valid as to Travelers, so that State Farm

was the party solely liable for his damages. Relying on the fact

that Hotard advanced this position throughout the litigation,

Travelers asserts that, as Hotard’s subrogee, State Farm cannot now

7
advance an argument wholly inconsistent with its subrogor’s prior

consistent position in the litigation, namely, that Travelers’s UM

waivers —— which Hotard repeatedly insisted were valid —— are

invalid. In other words, Travelers contends that Hotard’s

subrogation cannot place State Farm in a better position than was

Hotard at the moment of the subrogation; and had subrogation not

occurred, Hotard could not have argued that Travelers’s UM waivers

were invalid, a direct contradiction of his previous position.

In response, State Farm argues that it is entitled to appeal

the dismissal of Travelers even if so doing advances a position

inconsistent with Hotard’s prior arguments. State Farm offers two

supporting reasons: (1) Hotard is the one who impleaded Travelers

as a defendant; and (2) Hotard filed a motion opposing the

dismissal of Travelers from the case.12

Travelers’s position in this regard, although not articulated

in its brief as such, rings of res judicata or judicial estoppel.

12
Hotard’s Memorandum in Opposition to Travelers’s Motion for
Summary Judgment, however, appears to be a cursory and obligatory
filing. In this two-page Memorandum, Hotard supports the district
court’s conclusion that Travelers’s UM waiver was valid, but in a
single sentence maintains that he opposes the dismissal of
Travelers from the action:
This court, plaintiff believes correctly, found that the
waiver form used by Traveler’s [sic] made all statutory
options available to its insured, specifically the option
to choose a lower amount of uninsured motorist coverage.
Thus, this Court found Traveler’s not to have primary
coverage. Nevertheless, plaintiff opposes the dismissal
of Traveler’s by way of the instant motion. (emphasis
added).

8
Under general principles of judicial estoppel, a party cannot

advance one argument and then, for convenience or gamesmanship

after that argument has served its purpose, advance a different and

inconsistent argument. The doctrine of judicial estoppel is

recognized by both Louisiana state law13 and federal law.14

Under the circumstances presented here, however, we decline to

address whether State Farm's arguments on appeal are barred by the

doctrine of judicial estoppel. As we explain in detail below, the

applicability of judicial estoppel vel non is immaterial in this

case because, even when we assume arguendo that State Farm’s claims

are not barred, we conclude that the Travelers UM forms executed by

the Parish are valid as a matter of law. Therefore, when the Parish

executed those forms, it effectuated valid waivers of Travelers's

UM coverage.

13
See, e.g., Showboat Star Partnership v. Slaughter, 789
So.2d 554, 561 (La. 2001):
Judicial estoppel has been defined as “the effect of the
voluntary conduct of a party whereby he is precluded from
asserting rights against another who has justifiably
relied upon such conduct and changed his position so that
he will suffer injury if the former is allowed to
repudiate the conduct.” (citations omitted).
14
See, e.g., In re Coastal Plains, Inc., 179 F.3d 197, 205
(5th Cir. 1999) (“Judicial estoppel is ‘a common law doctrine by
which a party who has assumed one position in his pleadings may be
estopped from assuming an inconsistent position.’”) (citations
omitted).

9
D. The Validity of Travelers’s UM waiver

The Parish, when purchasing automobile insurance from

Travelers, purported to reject UM coverage by marking the box next

to the relevant clause on each of the waiver forms. State Farm

nevertheless contends that the forms provided by Travelers and

executed by the Parish are fatally defective as a matter of

Louisiana law, making absolutely null any use of those forms as

purported waivers. State Farm relies on § 22:1406(D) of the

Louisiana Revised Statutes, to insist that Travelers, as the UM

insurer of the vehicle involved in the accident, is liable to

Hotard.15

As an initial matter, we note that at issue here is a single

Travelers policy with both basic and excess or umbrella motor

vehicle coverage. Although not clearly explained in the briefs or

at oral argument, counsel have subsequently clarified that the

policy provides two kinds of coverage and contains two somewhat

different UM waiver forms, one for basic commercial automobile

15
La. Rev. Stat. 22:1406(D)(1)(c)(ii) provides in relevant
part:
(ii) With respect to bodily injury to an injured party
while occupying an automobile not owned by said injured
party, resident spouse, or resident relative, the
following priorities of recovery under uninsured motorist
coverage shall apply:
(aa) The uninsured motorist coverage on the vehicle
in which the injured party was an occupant is
primary.
(emphasis added).

10
coverage and the other for excess coverage. That the Parish

intended to waive UM coverage entirely by executing both forms is

indisputable. Like the district court, we discern the language in

the basic UM coverage waiver form to be less problematic to

Travelers under State Farm’s attack than is the excess UM waiver

coverage form. For that reason, we address only the form more

vulnerable to State Farm’s argument ——— namely, the waiver of

excess UM coverage.16

Louisiana statutes and jurisprudence evince a strong public

policy in favor of UM coverage.17 The Supreme Court of Louisiana

instructs that § 22:1406(D), the statute embodying this public

policy, is to be liberally construed and that UM coverage will be

read into an insurance policy unless validly rejected.18 The court

directs that any waivers, rejections, or exclusions from UM

16
This does not mean that we have not read and analyzed the
other, basic UM coverage form; we have. Having carefully examined
that form, we are convinced that it clearly meets the requirements
of Louisiana insurance law as it stood at the time the waiver was
executed, and thus hold it valid as well. In addition, we reject
as meritless State Farm’s contention that the presence of two
separate UM coverage waiver forms creates an ambiguity in the terms
of the policy, requiring invalidation.
17
Roger v. Estate of Moulton, 513 So.2d 1126, 1130 (La. 1987)
(“In Louisiana, UM coverage is provided for by statute and embodies
a strong public policy.”).

18
Id. (commenting on La. Rev. Stat. 22:1406(D))

11
coverage must be “clear and unmistakable.”19 As stated by that

court in Tugwell v. State Farm Ins. Co., the form used by the

insurance company must give the applicant “the opportunity to make

a ‘meaningful selection’ from his options provided by the statute:

(1) UM coverage equal to bodily injury limits in the policy, (2) UM

coverage lower than bodily injury limits in the policy, or (3) no

UM coverage.”20 The insurer —— in this case, Travelers —— bears the

burden of proof that either a valid rejection of UM coverage or a

valid selection of coverage with lower limits has been legally

perfected.21

Well after the accident underlying this case had occurred, the

Louisiana legislature revised the applicable law to provide for a

simple, uniform UM election form. Thus the legal issue at the

heart of this case is obsolescent to say the least.22 For the time

frame of this case, however, neither the then-appealable statute

nor the Louisiana Supreme Court had mandated a specific manner or

particular form that the insurer had to employ to afford the

19
Id.
20
609 So.2d 195, 197 (La. 1993).
21
Daigle v. Authement, 691 So.2d 1213, 1214 (La. 1997).
22
La. Rev. Stat. Ann. 22:1406(D)(1)(a)(ii) (West 2001) (“Any
form executed prior to September 6, 1998 shall be valid only until
the policy renewal date; thereafter, the rejection, selection of
lower limits, or selection of economic-only coverage shall be on a
form prescribed by the commissioner as provided in this
Subsection.”).

12
insured a meaningful opportunity to select one of the three UM

options.23 On the contrary, in response to an insured’s argument

that the statute required that the form provide affirmative means

(by blanks or boxes) to choose any one of the three statutory

options, the Daigle court stated, “[w]hile such a format [three

boxes requiring an affirmative choice of one] may be desirable, it

is only one way of making sure the applicant is informed of the

available options and allowed to choose between them.”24 Still,

forms have been declared invalid —— resulting in default UM

coverage in the full amount of the bodily injury liability

coverage despite the obvious intention of the parties to the

contrary —— when the forms were deemed to foreclose an option

available to the insured or failed to make clear in writing that

23
Id. at 1215 (recognizing that the statute does not require
“sacrosanct” language or a particular design and that many
different variations of the UM coverage form may be used as long as
the forms adequately effectuate the intention of the law).
24
Id. at 1216; cf. Anderson v. Allstate Ins. Co., 642 So.2d
208, 211 and attached photocopy in opinion (La. App. 1994):
We find that under the facts of this case, the form used
provided the required three options for the insured. [The
insured] could simply sign the form, thus triggering
automatic uninsured coverage in the amount of the bodily
injury liability coverage; or check the first box,
selecting uninsured motorist coverage with lower limits,
filling in the blanks for the desired amount; or check
the second box, rejecting uninsured motorist coverage
completely. (emphasis added).

13
all three options existed.25

The Travelers excess UM coverage waiver form on which the

Parish indisputably intended to waive UM coverage reads in relevant

part:

In accordance with Louisiana Statutes, Uninsured
Motorists Insurance which provides coverage for damages
to bodily injury which the insured may be entitled to
recover from the owner or operator of an uninsured motor
vehicle, must be provided on your Excess or Umbrella
policy at limits equal to such policy’s bodily injury
liability limits. You do have the option to reject this
coverage or select limits which are lower than the Bodily
injury limits on such policy.

Please indicate your desired options by checking the
appropriate box and signing the form below:

~ 1.Uninsured Motorists coverage at limits
other than the Bodily Injury Liability
limits of my Excess or Umbrella policy:
$ _______ each accident; or
$ _______ each person, $ _______ each
accident.

~ 2. I hereby reject Uninsured Motorists
Bodily Injury coverage on my Excess or

25
See Tugwell, 609 So.2d at 198 (form invalid because it did
not afford the insured the option of selecting UM coverage with
limits below liability amount); Roger, 513 So.2d at 1131-32
(finding that a letter from the insured to the insurer rejecting UM
coverage was insufficient, stating “to effect a valid rejection of
UM coverage ... [the insured] must expressly set forth in a single
document that UM coverage is rejected ... as of a specific date in
a particular policy .... A writing, regardless of the intention of
the insured, of a less precise nature is insufficient to effect a
valid rejection.”); Sutherland v. Babin, 735 So.2d 881, 886 (La.
App. 1999) (“Nowhere in [the policy]... is there a statement to
inform the insured that failure to reject coverage equal to the
bodily limits will result in UM coverage equal to the bodily injury
liability limits. We deem this form facially insufficient to
comply with the requirements of the statute and jurisprudence.”).

14
 Umbrella policy.26

The Parish marked the box immediately to the left of choice 2. The

district court, relying largely on the Louisiana Supreme Court’s

language in Tugwell and Daigle, found that the form adequately

informed the Parish of all three of its options. We agree.

Tugwell teaches that the UM waiver form must be set up in such

a way “that it is apparent to the reasonable person” that all the

statutory options are available.27 This was clarified in Daigle:

[T]he statute does not require an affirmative act to
choose coverage [up to the liability limit].... The
statute requires an affirmative act only if UM coverage
is rejected altogether or ... where lower limits are
statutorily permitted and desired. Accordingly, we
cannot conclude that [the insurer’s] failure to set up
its form so as to require a penstroke in favor of
coverage renders the form defective.28

Here, the Travelers policy ineluctably allows the insured to select

UM coverage at limits equal to the policy’s bodily injury limits

—— by doing nothing —— or to select limits lower than those in the

policy or to reject UM coverage altogether —— by checking the

applicable box.

State Farm nevertheless insists that the form is defective

because it fails adequately to provide for the insured

26
Travelers Excess or Umbrella Policy UM Coverage Form,
(emphasis added).
27
Tugwell, 609 So.2d at 199 (emphasis added).
28
Daigle, 691 So.2d at 1216.

15
affirmatively to chose —— presumably by checking a third box ——

coverage equal to the full policy limit for bodily injury

liability. State Farm would have us adopt the proposition that the

statement in the Travelers UM form to the effect that the carrier

is bound to provide UM coverage equal to the policy limits, coupled

with the obvious implication that checking no box constitutes an

election to accept such full UM coverage, is not sufficient.

We decline State Farm’s invitation. Both Daigle and a

Louisiana Court of Appeal case, Anderson, unequivocally state that

because the option of coverage in the full amount of the policy’s

bodily injury liability limit is the statutory default, that option

need not be affirmatively selected.29

The foundational inquiry here is whether a reasonable person

would understand, from reading the Travelers policy, that doing

nothing —— marking neither the box for option 1 nor the box for

option 2 —— constitutes his election to receive full or maximum UM

coverage. We are convinced beyond peradventure that the answer to

that core question is an unequivocal and unconditional “yes.” The

emphasized portions of the above-quoted paragraph from the UM

waiver form here at issue more than adequately inform the average

reasonable person that he or she will be covered to the maximum

unless some other option —— lesser coverage or no coverage —— is

29
Id.; Anderson, 642 So.2d at 211.

16
affirmatively exercised by checking one of the boxes. That

language in the Travelers form distinguishes it from those policy

provisions that were held invalid in the cases relied on by State

Farm.30 We hold that the UM coverage waiver forms furnished to the

Parish by Travelers were not deficient or invalid, and that the

Parish’s waiver of UM coverage was therefore valid, justifying the

district court’s dismissal of Travelers from this case.

III.

CONCLUSION

For the foregoing reasons, the district court's dismissal of

Travelers is

AFFIRMED.

30
See, e.g., Sutherland, 735 So.2d 881 (UM waiver form held
invalid because the form explained the statutory requirement, but
did not indicate that non-selection of the other two options would
result in the default of full UM coverage).

17