Babcock Business Advisor
April 26, 2005 - Vol. 2 No. 003

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Your UM or Theirs?

In determining whether your UM policy or an UM issued in another state is applicable when the accident occurs in Louisiana, courts must determine which state’s policies would most seriously be impaired if its laws were not applied to the policy. Two Louisiana appellate courts and the Louisiana Supreme Court recently visited this issue. The effect of these decisions is that Louisiana’s UM insurance policy goal of promoting full recovery for innocent automobile accident victims by making UM coverage available as either primary when the negligent party is without insurance or as additional insurance when he is inadequately insured, must now take a back seat to a choice of law analysis. Thus, the court must first determine which state’s policies would be most affected by allowing recovery.

Choice of law provisions guide the courts in deciding which state’s laws to apply when cases have contacts with other states. In such a case, the governing law is decided by determining the state "whose policies would be most seriously impaired if its laws were not applied to that issue." The state is determined by evaluating the strength and pertinence of the relevant policies of all involved states in light of the relationship of each state to the parties and the dispute, and the policies and needs of the interstate and international systems, including the policies of upholding the justified expectation of parties and of maintaining the adverse consequences that might follow from subjecting a party to the law of more than one state.

In deciding which law to apply in situations like motor vehicle accidents, the court must evaluate the strength and pertinence of the relevant policies of the involved states in light of the pertinent contacts of each state to the parties and to the controversy, including the place of domicile, resident or business place of the parties, the nature and type of contract and the policies of facilitating orderly transactions and in promoting multi-state commerce.

January of this year, in Champagne v. Ward, 2003-3211 (La. 1/19/05), the Louisiana Supreme Court determined these policies needed to be addressed before automatically applying Louisiana uninsured motorist law under a policy issued in another state when a Louisiana resident is involved in the accident. In this case, the plaintiff, a resident of Mississippi, covered by a policy of insurance negotiated and issued in Mississippi was involved in an accident in New Orleans with a Louisiana resident who was driving a vehicle covered by a policy of insurance negotiated and issued in Louisiana. If Mississippi law applied, the plaintiff could not recover against his UM insurance policy which provided for a “dollar for dollar” basis by the amount of liability coverage available from the negligent driver. If Louisiana law applied, then under Louisiana’s UM policies, which favor recovery, the plaintiff could recover against his uninsured motorist insurance policy.

The Champagne court found that Mississippi had a more substantial interest in the application of its laws then Louisiana had in providing an insurance remedy to an out-of-state resident injured while transitorily within the borders of Louisiana. The plaintiff resided in Mississippi, negotiated and purchased his insurance in Mississippi, and kept his vehicle in Mississippi.

Last week, in Weldon v. Curry, 2004-1389 (La. App. 3 Cir. 3/23/05), the Louisiana third circuit decided a case in which the plaintiff, a Georgia resident was driving his vehicle when he was struck by the defendant, a Louisiana resident insured by Progressive Security Insurance Company. Plaintiff also filed suit against GEICO, who issued Weldon a policy in Georgia for a vehicle that was registered and principally garaged in Georgia. GEICO contended that under Georgia law and its policy language, UM and medical payment coverage under the policy was not available in this case because the amount of the Progressive Security policy was greater than the UM coverage in its policy. If Louisiana law applied, UM coverage would be available to the plaintiff.

After conducting a choice of law analysis, the court found the UM and medical payments coverage under the Georgia policy of insurance was not available to the plaintiff, since the policy was issued and written in Georgia to a Georgia resident who was transitorily within the borders of Louisiana. Georgia, the court concluded, had a more substantial interest.

Last week, the Louisiana first circuit reached the conclusion that Louisiana’s interest in applying its UM laws to an accident which involved a Louisiana driver and occurred in Louisiana outweighed the interests of Michigan, the state in which the insurance policy was issued and where the plaintiff’s employer, who carried the insurance coverage, was located. In Dunlap v. Hartford Insurance Company of the Midwest and Zurich American Insurance Company, 2004-0725 (La. App. 1 Cir. 3/24/05), the plaintiff was injured in an automobile accident when he was run off the road by an unidentified “phantom” vehicle which in the course and scope of his employment with Angelo Iafrate Construction, L.L.C., who was domiciled in Michigan and there acquired a business automobile liability and uninsured/underinsured motorist policy with Zurich American.

The court determined that Michigan’s interest was not directly involved since the accident happened in Louisiana, a Louisiana resident was the only accident victim, the vehicle owner maintained offices and conducted extensive business operations in Louisiana and the insured vehicle was registered, licensed and garaged in Louisiana. Michigan’s only interest, the court found, is to ensure the insurance company fulfills its contractual obligations to the insured, whatever the obligation.

As a result, in a motor vehicle accident involving either out-of-state parties or an out-of-state issued UM policy, the claimant must show Louisiana’s interest is greater than the competing state in order for your UM provisions to allow recovery.

Babcock Law Firm is primarily a litigation and appellate firm with an emphasis on  insurance litigation.  We have offices in Baton Rouge and Ruston, Louisiana. We represent insurance and surety companies in nearly every parish in the state.  We also assist other law firms seeking assistance with their complex cases, writs, motions or appeals.  For more information, visit www.babcockfirm.com.  If you ever have a legal question on a case that you are not yet ready to refer to counsel, please don't hesitate to call us.  We are always glad to help.

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