This is an action by the plaintiff-relator-beneficiary to recover insurance death benefits under a family combination automobile policy issued by the American Fire & Indemnity Company to Phillip L. Carney.
In lieu of trial of the matter, the facts of the case were stipulated between counsel as follows:
The issue presented is whether the plaintiff is entitled to recover death benefits pursuant to Part V of the policy of insurance filed into evidence. As a prerequisite for recovery, the policy provides that the insured's death result from injuries sustained in or by an automobile as defined in the policy. Therefore, in order to resolve the issue presented herein, our first inquiry is to review the definition of "automobile" as set forth in the policy.
Under Part V of the policy, "automobile" is defined as follows:
Whether the racing vehicle operated by Carney at the time of his death was an automobile within the meaning of the above definition is the matter for our decision.
The trial court concluded that the vehicle operated by Carney was not an "automobile" as defined by the policy provision. In Reasons for Judgment, the trial judge stated:
Plaintiff argues that the insurer by its definition of the word "automobile" clearly affords him coverage with the inclusive language defining "automobile" as a "land motor vehicle, trailer, or semitrailer not operated on rails or crawler-treads" but attempts by construing the language "or other equipment designed for use principally off public roads, except while actually upon public roads" to take coverage away.
While plaintiff does not contest that a racing vehicle such as that driven by the deceased was designed for use principally off public roads, she does insist that it is definitely not "other equipment" as used in the above definition. Judge Domengeaux, in his dissent, argued plaintiff's case when he found the exclusion ambiguous. Plaintiff fortifies this argument by stating that the word "equipment" is a word of broad meaning and must be modified by an adjective to assume significant meaning. Thus, "other equipment" immediately follows "a farm type tractor." Accordingly, it must relate to other equipment of that nature and not an automobile, albeit a racing one that is clearly a land motor vehicle.
Plaintiff otherwise argues that if the wording meant to exclude a racing vehicle, it should have said so and to this extent the language is ambiguous and should be construed against the insurer so as to afford coverage for this type of vehicle.
The Court of Appeal correctly observed that the issue of whether this language is ambiguous has not been resolved in an appellate opinion in this state. However, the Supreme Courts in four of our sister states —Kansas, Oregon, Nebraska and Texas—as well as an appellate court of Ohio, have held that this exact language in a policy is not ambiguous.
Both the trial court and the Court of Appeal were of the opinion that the exclusionary language was not ambiguous, both relying on decisions of our sister states. As noted by the Court of Appeal, we are not bound by these cases, but differently from the Court of Appeal, we do not find them as persuasive. Furthermore, we have no doubt that the insurer did not intend to insure racing vehicles used primarily off public roads. However, we do believe that the language relied on to exclude such vehicles is ambiguous and we construe it against the insurer.
As noted below, in our mind, it is indeed questionable whether such language excludes a racing vehicle. The Court of Appeal found "equipment" to be a broad term, the meaning of which depends on the context in which it is used. We agree, but do not agree that it means some type of a "vehicle" in the context in which it was used. As a vague or broad term, the word "equipment" used alone means nothing. It must be modified by some adjective to assume significant meaning. Thus, such words as "farm," "hunting" or "photographic" give the word "equipment" meaning.
We would have no trouble excluding from coverage cotton balers, bean pickers, corn pullers or like equipment, because they are farm type tractors and are used primarily off public roads. However, our difficulty is like that of our learned brother, Judge Domengeaux, who stated in his dissent:
While the insurer used the term "land motor vehicle" in its inclusionary language defining "automobile" and also in its exclusionary language under subdivision (2), would it not have been just as easy to exclude "land motor vehicles" used principally off public roads by using the word "vehicle" instead of "equipment." Why send the court to the dictionary to define "equipment" so as to opine that it includes a racing car as equipment used principally off public roads? Had the insurer desired to exclude racing cars from coverage, it seems to us this could have been more simply accomplished by using a "racing exclusion" as found in some policies.
Judge Paul B. Landry of the First Circuit Court of Appeal in Martin v. Phillips, 356 So.2d 1016 (La.App. 1st Cir. 1977), in denying coverage under an exclusionary provision of an insurance policy, appropriately stated the following legal precepts which are applicable to resolving the issue here:
Following these same rules, however, we do find ambiguity in the above policy provision.
Likewise in Bowab v. St. Paul Fire and Marine Insurance Company, 152 So.2d 66 (La.App. 3rd Cir. 1963), writ refused, 244 La. 664, 153 So.2d 881, Judge Tate (now Justice on our Court), in dissenting, stated:
Judge Tate further stated:
Having found that the decision of the Court of Appeal must be reversed as to liability, we next determine whether the statutory penalties and attorney's fees should be awarded for arbitrarily refusing payment of the claim.
An insurer's liability to pay penalties and attorney's fees is based on whether their action in denying coverage is arbitrary, capricious and without probable cause. LSA-R.S. 22:658. An insurer must take the risk of misinterpreting its policy provisions. If it errs in interpreting its own insurance contract, such error will not be considered as a reasonable ground for delaying the payment of benefits, and it will not relieve the insurer of the payment of penalties and attorney's fees. Albert v. Cuna Mutual Insurance Society, 255 So.2d 170 (La.App. 3rd Cir. 1971), and cases therein cited.
In other words, insurers should not have their policy provisions interpreted at the expense of the insured, especially when they are charged with knowledge of their policy's contents.
However, these legal principles have no application to the defendant, because their denial of coverage was not arbitrary and capricious.
As noted by learned counsel for defendant, the trial court, three judges from the Third Circuit Court of Appeal and numerous justices from the Supreme Courts of the States of Kansas, Oregon, Nebraska and Texas, as well as an Ohio appellate court, have all held that the provision here in question is not ambiguous and rejected recovery based upon the identical policy language. Thus, he concludes, "If this clause were indeed `ambiguous' as contended by applicant, it would seem reasonable that at least one of the many learned judicial minds in both trial and appellate courts of our sister states would have so commented."
In view of these considerations, we find that the defendant's refusal to pay was not arbitrary, capricious or without probable cause.
For the above reasons, the judgment of the Court of Appeal is reversed, and judgment is rendered herein in favor of plaintiff, Mrs. Jenny M. Carney, and against the defendant, American Fire & Indemnity Company, in the full sum of $5,000, together with legal interest thereon from date of judicial demand until paid, and for all costs of these proceedings.
REVERSED AND RENDERED.
MARCUS, J., dissents and assigns reasons.
I agree with the courts below that the racing vehicle operated by Carney at the time of his death was not an "automobile" as defined in the policy. Accordingly, I respectfully dissent.