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ASI Federal Credit Union v. Certain Underwriters at Lloyd's of London Syndicate 1414 Subscribing to Policy Finfr1503374

Court of Appeals of Louisiana, Fifth Circuit

November 7, 2018

ASI FEDERAL CREDIT UNION
v.
CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SYNDICATE 1414 SUBSCRIBING TO POLICY FINFR1503374

          ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 762-957, DIVISION "B" HONORABLE CORNELIUS E. REGAN, JUDGE PRESIDING

          FOR PLAINTIFF/APPELLEE, ASI FEDERAL CREDIT UNION Philip D. Nizialek Jacqueline M. Brettner Sarah E. Stogner

          FOR DEFENDANT/APPELLANT, CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SYNDICATE 1414 SUBSCRIBING TO POLICY FINFR1503374 Gary A. Hemphill Arthur R. Kraatz Justin C. Warner

          Panel composed of Judges Jude G. Gravois, Marc E. Johnson, and John J. Molaison, Jr.

          JOHN J. MOLAISON, JR. JUDGE

         In this declaratory judgment action involving an insurance coverage dispute under an Armored Car Cargo Liability Policy, defendants, Certain Underwriters at Lloyd's London Subscribing to Policy FINFR1503374 ("Underwriters"), appeal the trial court's December 14, 2017 judgment granting a motion for partial summary judgment filed by plaintiff, ASI Federal Credit Union ("ASI"), and denying a motion for summary judgment filed by Underwriters.[1] For the reasons that follow, finding the admissible evidence insufficient to resolve all genuine issues of material fact regarding whether Underwriters' policy provides or precludes coverage to ASI, we reverse the trial court's judgment in part, affirm in part, and remand the matter for further proceedings.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         On July 18, 2016, ASI filed suit against Underwriters seeking to have the court declare that the Armored Car Cargo Liability Policy issued by Underwriters to its insured, LeoTran Armored Security, LLC ("LeoTran"), affords coverage for a loss sustained by ASI as a result of LeoTran's tortious acts. According to ASI's petition, ASI is a not-for-profit local credit union headquartered in Jefferson Parish, and uses automated teller machines ("ATMs"), both at its branch offices and at several of its freestanding locations. In 2012, ASI outsourced the servicing of its ATMs to a third party contractor, Bank Equipment Solutions/ATM Worldwide, LLC ("ATMWW"), purportedly pursuant to a Brand ATM Agreement. In turn, ATMWW contracted with armored car carriers to service ASI's ATMs by transporting cash to and from ASI's ATMs. ATMWW entered into such a service agreement with LeoTran in August of 2013 to service ASI's ATMs, which LeoTran did until December 2015. Though no contractual privity existed between ASI and LeoTran, relying on La. C.C. arts. 1978 and 1982, ASI alleged that, pursuant to ASI's contract with ATMWW and ATMWW's contract with LeoTran, ASI was LeoTran's customer, and a third party beneficiary to the contract between ATMWW and LeoTran.[2]

         LeoTran, a Louisiana limited liability company that provides, among other things, armored car security services, is owned by its founder and principal, Leonard Tolleson. According to ASI, Mr. Tolleson-on behalf of the company, and in accordance with the licensing requirements for armored car carriers set forth in La. R.S. 37:3276(E), in addition to the obligations LeoTran assumed under its service agreement with ATMWW-purchased an Armored Car Cargo Liability Policy from Underwriters with an effective policy period of April 15, 2015 to April 15, 2016 (the "Policy"). ASI avers that Mr. Tolleson purchased the Policy to cover LeoTran's liability associated with servicing ATMs and other enumerated risks associated with its business operations.

         In its petition, ASI alleges that in December 2015, employees of LeoTran picked up $100, 000 of ASI cash from the Federal Reserve for which there has never been an accounting. Additionally, ASI avers that LeoTran employees removed approximately $593, 380 in cash from several ASI ATMs it serviced, and absconded with an additional $688, 820 in case reserves that LeoTran was holding in trust for future cash delivery to the ASI ATMs it serviced. In total, ASI contends that $1, 382, 200 of its money disappeared while in the care, custody, and control of LeoTran. ASI reported the missing funds to the Jefferson Parish Sheriff's Office after which an investigation ensued. To date, ASI claims that $34, 200 has been recovered and returned to ASI, but $1, 348, 000 remains missing.

         On December 22, 2015, ATMWW submitted a claim to Underwriters on behalf of ASI under the Policy seeking recovery of any and all monies that were missing while in LeoTran's care. In response to ASI's claim under the Policy, Underwriters stated that "there is no relief that [Underwriters] can provide [to ASI] at this stage." When Underwriters refused to make payment to ASI under the Policy, ASI filed the instant action seeking a declaratory judgment that Underwriters has an obligation to provide insurance coverage to ASI under the Policy for the loss of $1, 348, 000 of ASI's money that purportedly went missing while in LeoTran's care that has not been recovered or returned to ASI.

         On August 23, 2016, Underwriters filed an answer to ASI's petition denying coverage and asserting various coverage defenses. Before discovery had commenced, ASI moved for partial summary judgment seeking a declaration that Underwriters' policy provided coverage for its claims against LeoTran. In response, Underwriters filed a cross-motion for summary judgment, seeking dismissal of ASI's claim. The parties' competing motions came for hearing on October 19, 2017, after which the matter was taken under advisement. Thereafter, on December 14, 2017, the trial court issued judgment granting ASI's motion for partial summary judgment finding the Policy provided coverage for ASI's claim against Leotran; Underwriters' cross-motion was denied. Incorporated in the December 14, 2017 judgment, without accompanying written reasons, the trial court stated:

[T]he Court finds that property of ASI Federal Credit Union was lost or damaged while in the care, custody, and control of LeoTran, and that ASI Federal Credit Union was a customer of LeoTran. Further, the Court finds that the Directors and Officers Exclusion Clause is inapplicable to this matter.

         Underwriters now appeals the trial court's granting of ASI's motion for partial summary judgment and denying its motion for summary judgment.[3] In particular, Underwriters argues that the trial court erred by improperly admitting the affidavits submitted by ASI to support its partial motion for summary judgment when those affidavits were not based on the affiants' personal knowledge; that the trial court erred in finding that ASI met its threshold burden of establishing that LeoTran is liable to it; and, that the trial court erred in denying Underwriter's motion for summary judgment and finding the Policy provides coverage for ASI's alleged loss. For the following reasons, finding the admissible summary judgment evidence insufficient to resolve all genuine issues of material fact regarding whether the Policy either provides or precludes coverage to ASI for its alleged loss, we reverse the trial court's granting of ASI's motion for partial summary judgment, affirm the trial court's denial of Underwriters' motion for summary judgment, and remand the matter for further proceedings.

         STANDARD OF REVIEW

         Appellate courts review the granting of summary judgment de novo using the same criteria governing the trial court's consideration of whether summary judgment is appropriate. Hogg v. Chevron USA, Inc., 09-2632 (La. 7/06/10), 45 So.3d 991, 996.

         LAW AND DISCUSSION

         Applicable Law

         A motion for summary judgment is a procedural device used to avoid a full-scale trial where there is no genuine issue of material fact. Bell v. Parry, 10-369 (La.App. 5 Cir. 11/23/10), 61 So.3d 1, 2. The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action. La. C.C.P. art. 966(A)(2). The motion "shall be granted if the motion, memorandum, and supporting documents show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law." La. C.C.P. art. 966(A)(3). "The court may consider only those documents filed in support of or in opposition to the motion for summary judgment and shall consider any documents to which no objection has been made." [Emphasis supplied.] La. C.C.P. art. 966(D)(2).

         The affidavits submitted by the mover must be scrutinized closely. Myers v. Omni Hotel, Inc., 94-2004 (La.App. 4 Cir. 4/13/95), 654 So.2d 771, 774. Moreover, supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein and the basis of affiant's knowledge. La. C.C.P. art. 967(A). It is not sufficient for an affiant to merely declare that he has personal knowledge of a fact. South Central Bell Tel. Co. v. Rouse Co. of Louisiana, 590 So.2d 801, 803 (La.App. 4th Cir. 1991).

         The party moving for summary judgment bears the burden of proof. La. C.C.P. art. 966(D)(1). However, if the movant will not bear the burden of proof at trial, the movant's burden on a motion for summary judgment does not require him to negate all essential elements of the adverse party's claim, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Id.; Patrick v. Iberia Bank, 05-783 (La.App. 5 Cir. 3/14/06), 926 So.2d 632, 634. If the adverse party fails to produce factual support sufficient to establish a genuine issue of material fact, summary judgment should be granted. La. C.C.P. art. 966(D)(1).

         The issue of whether an insurance policy, as a matter of law, provides or precludes coverage is a dispute that can be resolved properly within the framework of a motion for summary judgment. Robinson v. Rockhill Ins. Co., 13-860 (La.App. 5 Cir. 4/23/14), 139 So.3d 1031, 1032-1033. Summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage should be afforded. Id., 139 So.3d at 1033. ...


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