Sensebe v. Canal Indemnity Co.
58 So. 3d 441
La.2011Background
- On November 14, 2006, Sensebe was rear-ended on the I-10 bridge by a Hyneman vehicle driven by Boudreaux, Top Hatch employee.
- Farm Bureau insured the Hyneman vehicle and asserted an automobile business exclusion; Canal Indemnity insured Top Hatch.
- District court granted Farm Bureau summary judgment, applying the exclusion against Boudreaux; Canal and Top Hatch countered for coverage and priority.
- Court of Appeal reversed, holding the exclusion did not apply contractually; the court did not reach public policy grounds.
- Louisiana Supreme Court held the automobile business exclusion conflicts with LSA-R.S. 32:900(B)(2) omnibus coverage for permissive drivers and must be struck; district court judgment reversed; case remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the automobile business exclusion conflict with LSA-R.S. 32:900(B)(2)? | Sensebe argues exclusion violates omnibus coverage for permissive drivers. | Farm Bureau argues exclusion properly limits coverage or applies to named insured’s usage. | Yes; exclusion conflicts with omnibus coverage and cannot be enforced. |
| Should the exclusion be struck based on public policy? | Sensebe contends public policy requires permissive-driver coverage; exclusion invalid under policy. | Farm Bureau contends policy terms govern and may be enforced contractually or limited to minimum coverage. | Exclusion cannot be enforced; public policy requires omnibus coverage for permissive drivers. |
| If exclusion is invalid, is the limits issue reached on remand? | Not applicable here; focus is on enforceability of exclusion. | If exclusion invalid, limits could be at statutory minimum; but not reached in this writ. | Limits issue not reached in this decision. |
Key Cases Cited
- Marcus v. Hanover Ins. Co., 740 So.2d 603 (La. 1999) (omnibus coverage; exclusion violates public policy)
- Burgos v. Star Auto Service, Inc., 973 So.2d 29 (La.App. 5 Cir. 2007) (garage- or road-testing exclusion; limited applicability to named insured)
- McCrossen v. Star Auto Service, Inc., 628 So.2d 1350 (La.App. 5 Cir. 1993) (business-use exclusions and omnibus coverage principles)
- Parks v. Hall, 181 So. 191 (La. 1938) (initial permission rule for omnibus clause)