
    STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, as subrogee of William E. Franklin v. George BERTHELOT, et al.
    No. 97-CA-1945.
    Court of Appeal of Louisiana, Fourth Circuit.
    March 25, 1998.
    Charles S. Green, Jr., Ward, Nelson & Pelleteri, New Orleans, for Plaintiff-Appellee State Farm Mutual Automobile Ins. Co.
    Michael H. Hogg, Perlis & Hogg, Metairie, for Defendant-Appellant Southern United Fire Ins. Co.
    Before KLEES, BYRNES and PLOTKIN, JJ.
   JiKLEES, Judge.

Plaintiff/app elle e, State Farm Mutual Automobile Insurance Company (hereinafter “State Farm”), as insurer and subrogee of William E. Franklin, filed this lawsuit against defendant/appellants, George Berthelot and his insurer, Southern United Fire Insurance Company (hereinafter “Southern United”). In this petition, State Farm sought repayment in subrogation for the sales tax assessed on Franklin’s automobile, which was deemed a total loss after being involved in a collision caused by George Berthelot. State Farm tendered to Franklin the full value of the car, including sales tax. Southern United, in turn, compensated State Farm for the appraised value of Franklin’s automobile, but refused to pay the sales tax, an amount of $288.00. On cross Motions for Summary Judgment, the trial court granted State Farm’s motion, denied Southern Mutual’s motion, and mandated that Southern Mutual pay the sales tax. Southern Mutual appeals these determinations and has further applied for Supervisory Writs requesting the Court to grant their motion. After considering argument of counsel and reviewing the pleadings, we affirm the findings of the trial court.

FACTS OF THE CASE:

The facts of this case are quite simple. On April 13, 1995, George Berthelot crossed the dividing line on Jefferson Davis Parkway in New Orleans and collided with William Franklin, who was driving in the opposite direction. As a result, Mr. Franklin’s 1986 Toyota Corolla was deemed unrepairable. State Farm paid Mr. Franklin the cash value of the car, including the sales tax on the assessed worth of the car. Negotiations with Southern United for reimbursement of the car’s value, as insurer of Mr. Berthelot, were successful only to the extent that Southern United paid for the value of the car itself ($3245.00); it refused to |2pay the sales tax. As State Farm was the legal subrogee to Mr. William’s rights under the terms of the insurance contract, State Farm initiated this suit to collect the amount of sales tax.

The court faded to issue any reasons for its determination. The only issue on appeal is whether or not Southern United is liable to State Farm for the sales tax in the cited issue.

WHETHER THE JUDGE COMMITTED MANIFEST ERROR BY REQUIRING SOUTHERN UNITED TO PAY SALES TAX AS A MATTER OF LAW

Standard of Review

Initially, the standard of review for summary judgments must be applied to this action for procedural reliability. The law in Louisiana concerning summary judgments has recently been amended to allow more leniency in granting such motions. Walker v. Kroop, 96-0618, (La.App. 4th Cir. 7/24/96), 678 So.2d 580, stands for the interpretation that the recent amendment continues to require the mover to prove that the other party had not sufficiently shown that a genuine issue of material fact exists, and that summary judgment is required as a matter of law. See id. The legislative intent behind this amendment was to show that summary judgments are favored as a means of decreasing the number of cases burdening court dockets and to allow judges the discretion to appropriately determine cases that do not maintain a single genuine issue of material fact. See Oakley v. Thebault, 96-0937, (La.App. 4th Cir. 11/13/96); 684 So.2d 488. Essentially, the issue is whether the plaintiff has made “a showing to establish the existence of proof of an element essential to his claim, action, or defense on which he will bear the burden of proof at trial.” La.C.C.P. art. 966 C.

In this case, no genuine issues of fact remain. Judging from both parties’ briefs, they share the view that the issue concerning the sales tax should be immediately determined by this Court. Indeed, it does not seem that there will labe any new facts or circumstances that will arise at trial that would have any bearing on the fundamental issue in this case. Both parties have submitted almost every document conceivably relevant to this ease, less the ear itself and this court finds that the trial judge’s determination of the case as a matter of law was proper, as there was no genuine issue of material fact existing in the case.

Sales Tax as an Element of Damages

This case presents an issue that has not yet been determined in the Fourth Circuit and has only been recently decided in another Louisiana Appellate Court. In summarizing Southern United’s argument on appeal, it contends that it has no obligation to pay sales tax on the automobile because sales tax is not an element of “market value” for measuring damages. In the alternative, Southern United argues that the policy between Mr. Williams and State Farm was ambiguous and did not require that the tax be paid. Conversely, State Farm argues that the general principles of tort law require the repayment of the sales tax and that public policy mandates this outcome.

General Principles of Tort Law Regarding the Determination of Damages

We are first guided by the Louisiana Civil Code in determining the proper measure of property damage on the Williams vehicle. “Every act of man that causes damage to another obliges him by whose fault it happened to repair it.” La. C.C. art. 2315. The primary objective behind awarding general damages is to attempt to restore the injured party to the state that party was in at the time immediately preceding the injury or accident. See Rhodes v. State, 94-1758 (La.App. 1st Cir. 12/20/96), 684 So.2d 1134, 1144, writ denied, 97-0242 (La.2/7/97); 688 So.2d 487. “One injured through the fault of another is entitled to full indemnification for the damages caused thereby.” Jordan v. Travelers Insurance Co., 257 La. 995, 245 So.2d 151 (1971). In other words, the defendant has an obligation to put the plaintiff in the position he would have occupied if the injury or accident has not occurred. See Roman Catholic Church of the Archdiocese of New Orleans v. Louisiana Gas Service Co., 618 So.2d 874, 876 (La.1993).

When Louisiana courts are asked to determine the appropriate amount of property damage, three general tests are employed depending on the circumstances of the case. They include “(1) cost of restoration, if the damaged item can be adequately repaired; (2)value differential, difference in value prior to and subsequent to the damage; (3) cost of replacement, less depreciation, if the value before and after the damage cannot be reasonably determined or if the cost of repair is more than the value.” Coleman, et al. v. Victor, 326 So.2d 344, 347, n. 4 (La.1976) (citations omitted). Furthermore, the trial court is afforded much discretion in assessing damages, and this determination should not be overturned on appellate review unless an abuse of discretion is apparent and glaring. See Davies v. Automotive Casualty Insurance Co., 26,112 (La.App. 2 Cir.12/7/94), 647 So.2d 419, 421. Moreover, appellate review should view the evidence in the light which most favors the judgment to determine whether the trier of fact was clearly wrong. See id. (citing Theriot v. Allstate Ins. Co., 625 So.2d 1337 (La.1993)).

In the case at bar, the Williams car was adjudged to be a total loss. Where a vehicle is totally destroyed or so badly damaged that the cost of repair exceeds its value, the measure of damages is the value of the vehicle less its salvage value. Giles Lafayette, Inc. v. State Farm Mutual Automobile Insurance Co., 467 So.2d 1309, 1310 (La.App. 3 Cir.1985); Bernard v. Fidelity & Casualty Company of New York, 186 So.2d 904 (La. App. 1 Cir.1966).

|5Public Policy Regarding Insurance Contracts

The policies supporting the tenets of insurance support the process of “making the insured whole” after that party incurs injury or property damage. “It is the intent of this Section that all liability policies written within their terms and limits are executed for the benefit of all injured persons and their survivors or heirs to whom the insured is liable; and, that it is the purpose of all liability policies to give protection and coverage to all insureds, ...” La. R.S. 22:655 D. Furthermore, liability insurance policies are issued not only for the protection of the insured, but also for the protection of the public. See Musmeci v. American Automobile Insurance Co., 146 So.2d 496 (La.App. 4 Cir.1962). The basic principle behind insurance is for an insured to guard against catastrophic or unplanned events by timely paying premiums and complying with policy requirements. We cannot see how Mr. Williams falls out of this favored public policy.

Analysis

As stated above, this court has found no direct case support or discussion on this issue in the Fourth Circuit. The precedent cited by the parties is rather weak. Southern Mutual quotes the language of Falgout v. Wilson, 531 So.2d 492, 493 (La.App. 1 Cir.1988), for the proposition that the First Circuit held sales tax to be outside the definition of “market value” for vehicles deemed to be a total loss. However, this case is inapposite because the question in Falgout was whether an insurance company was liable for exemplary damages. In holding that the insurance company was obligated to pay exemplary damages, the court stressed that the broad terms of the liability policy required this finding. See id. However, Southern United contends that specific language in the ease supports their argument that sales tax should not be awarded; however, this language is merely dicta that was included because the |6First Circuit chose to superimposed the entire trial court opinion into its opinion. The trial court judge’s discussion only gave fleeting notice to sales tax as an award for damages, yet he summarily rejected it as an element of damages because he saw the tax as a “transaction tax.” See id. at 493. No other rationale or case law was given to support the court’s determination.

Southern Mutual also discuses State Farm Insurance Co. v. Midland Risk Insurance Co., 96-CA-1281 (La.App. 1 Cir. 6/20/97), 697 So.2d 293, which holds that sales tax is not. an element of market value. Although the case is directly on point, the First Circuit failed to discuss the law behind their holding. The court briefly stated,

“Surprisingly, our research has disclosed no case directly on point. The jurisprudence simply reflects that the measure of damages for the value of an automobile is the pre-accident market value, less salvage value. Rhodes v. State, Department of Transportation and Development, 94-1758 (La.App. 1 Cir. 12/20/96); 684 So.2d 1134, 1149, writ denied, 97-0242 (La.2/7/97); 688 So.2d 487. We agree, however, with Midland Risk that Market value does not encompass an amount for sales tax.” Id.

Moreover, two of the five judges hearing Midland Risk dissented and assigned reasons which echo the belief that inclusion of the sales tax is required to put the injured person in his/her former position. This Court agrees with the dissenters’ determination of damages. Furthermore, we see no reason why an insured, who has a reasonable expectation of being compensated for the entire value of a totaled car, should be left in a monetarily worse position than before the accident. If Mr. Williams Toyota had only had minor damages, he would have received the entire amount stated on the estimate received from the repair shop or adjuster. These itemized listings normally include sales tax and are paid without debate. Mr. Williams suffered much more than just the monetary loss of his automobile; he underwent the trauma of the initial collision, the inconvenience of being without his automobile, and the burden of having to |7locate and finance a new vehicle. To refuse to allow sales tax as an element of value would add insult to injury to Mr. Williams and many others in his same position. The fact that State Farm is subrogee to the rights of Mr. Williams does not change the holding in this case because a subrogee legally stands in the shoes of the injured party. Therefore, Southern United is obligated to pay State Farm the $288.00 in sales tax as a matter or law.

State Farm Insurance Policy Language

This Court finds that State Farm had a legal obligation to pay its insured, Mr. Williams, the amount of sales tax on his vehicle. Because State farm had subrogation rights under the policy, it enjoys all the rights that Mr. Williams would have had, including the right to sue for full indemnification of loss. Southern United contends that the policy between Mr. Williams and State Farm was ambiguous because State Farm never explicitly stipulated that sales tax was a cost to be compensated to its insureds. However, our holding that Mr. Williams had a legal right to the sales tax compels the same right to flow to State Farm, regardless of any person’s interpretation of the policy. For these reasons, we affirm the trial court’s granting of Summary Judgment to State Farm in this matter.

AFFIRMED.

BYRNES, J., dissents with reasons.

| iBYRNES, Judge,

dissenting with reasons.

The tortfeasor’s obligation to put the injured party in the position he would have occupied if the injury or accident had not occurred is a measure of damages; it is not a measure of insurance coverage. Therefore, cases cited for this and similar propositions have little bearing on whether the State Farm policy coverage included sales taxes. Although the insured may be obligated to make his tort victim whole, his insurance company need only do so to the extent required by contract (the policy) or by the law/publie policy.

There are many instances in which coverage applies, but the insurance company is not required to make the victim whole. The most common of these is where the policy limits are insufficient to make the victim whole. Therefore, the issue in this case is the extent of State Farm’s coverage, not the extent of Mr. Franklin’s damage.

The collision coverage section of Franklin’s State Farm policy provided that:

The limit of our liability for loss [Emphasis original] to property or any part of it is the lower of:
1. the actual cash value; or
|22. the cost of repair or replacement.
Actual cash value is determined by the market value, age and condition at the same time the loss [Emphasis original] occurred. Any deductible amount that applies is then subtracted.

The first question this court must answer is, “Does this reference to ‘actual cash value’ in the policy include sales tax?” If the answer to this question is, “No,” then we must next ask whether as a matter of law/public policy the insurance company should be required to pay for sales tax regardless of the fact that it is not required to do so by the policy language.

In attempting to answer the first question State Farm attempts to distinguish Falgout v. Wilson, 531 So.2d 492 (La.App. 1 Cir.1988), unit denied 532 So.2d 154 (La.1988) by arguing:

State Farm’s assertion is not that [Southern United] owes sales tax on a new vehicle, but on the vehicle Mr. Franklin lost. Accordingly, [Falgout v. Wilson ] does not apply since it was not faced with and did not address the issue of sales tax as an item of damages on the lost vehicle.

This argument is inconsistent with the other argument State Farm made in favor of the proposition that taxes should be awarded because they are an essential component of the purchase price of any replacement vehicle:

Consider the following hypothetical. After the accident at bar, Mr. Franklin, through some miracle discovered a vehicle for sale that was an exact duplicate of the totaled vehicle.... Amazingly enough, the price of the vehicle was the same exact amount that he received from [southern United], Not believing his luck, Mr. Franklin goes to purchase the vehicle with the money [Southern United] paid him. Unfortunately, Mr. Franklin is not Rabie to purchase the vehicle worth exactly the same as his previous vehicle, because he does not have the money for the sales tax.

This last argument by State Farm has a certain appeal because it is consistent with the principle of putting Mr. Franklin back in the position he was in prior to the time his car was damaged by enabling him to acquire an identical replacement vehicle. However, it cannot be reconciled with State Farm’s attempt to distinguish Falgout v. Wilson (quoted earlier) on the basis that Mr. Franklin was entitled to the sales tax, not on the replacement vehicle, but on the destroyed vehicle.

State Farm would also have this Court ignore State Farm Automobile Insurance Company v. Midland Risk Insurance Company, 96-1281 (La.App. 1 Cir. 6/20/97); 697 So.2d 293, because it “was decided by a mere 3-2 majority.” Regardless, it expresses the opinion of the First Circuit on this issue. Although not binding on this Court, as the opinion of a Court of equal rank that is directly on point, we should consider it eare-fully in reaching our decision. Other than its holding, State Farm v. Midland Risk offers little depth of discussion of the issue. The majority notes that its research “disclosed no case directly on point” and simply held that “market value does not encompass an amount for sales tax.” But the two dissenting judges did no more than espouse the general damage theory of making the victim whole, which as I have already indicated addresses only the question of damages, not that of coverage.

I instinctively believe that the majority in State Farm v. Midland Risk was correct in concluding that “market value does not encompass an amount for sales tax.” I confess that like that majority in that case, I find no case outside of Falgout v. Wilson, supra, that discusses the issue in a way that is anything more than suggestive. Moreover, I believe that the clear language of the policy indicates that the insurer is not required to replace the vehicle. The policy specifically indicates that coverage is the lesser of actual cash value or cost of replacement. Sales tax, a classic “transaction tax”, is due only at the time of a sale transaction. Such a sale transaction only occurs in this case in the event Mr. Franklin purchases a replacement vehicle. State Farm’s argument as well as that of the two dissenting judges in State Farm v. Midland Risk would be much stronger had the insurance policy mandated that State Farm cover the cost of replacement, which arguably could include sales tax as a part of the cost of the purchase of the replacement. But the policy clearly and unambiguously limits the coverage to the lesser of actual cash value or replacement cost. In language that is -unambiguous the policy makes it clear that when actual cash value is used, full physical replacement is not intended because actual cash value is paid according to the policy only when it is less than replacement cost. Therefore, regardless of the merits of arguing that sales tax is a component of buying a replacement vehicle, sales tax clearly is not a component of actual cash value.

In addition to arguing that actual cash value should include sales tax because it is a necessary expense in purchasing a replacement vehicle, State Farm also argued that actual cash value should include sales tax as part of the damages to the old vehicle because sales tax was part of the original purchase price and when the vehicle was totally destroyed the sales tax is part of Mr. Franklin’s loss: “State Farm’s assertion is not that [Southern United] owes sales tax on a new vehicle, but on the vehicle Mr. Franklin lost.” But market or actual cash value of a destroyed |5vehicle is not based on its original cost (which arguably could include sales tax), but is based instead on what it will bring in the market immediately prior to the time of loss. It is common knowledge that some vehicles are known to “hold their value” or have a better “resale value” than others, although the original cost may be the same. When seen in this light State Farm’s argument collapses as even State Farm would not directly argue that original purchase price is determinative of current market or actual cash value; but that is the inevitable, although unintended, effect of State Farm’s argument. The purchaser of a used vehicle is not so much interested in the original price as he would be interested in the age, condition and what such a vehicle would generally fetch in the market place. The purchaser of a used vehicle would have even less interest in the amount of sales tax paid by the seller of the used vehicle at the time of original purchase. I can’t imagine the purchaser of a used vehicle even asking such a question. I find it even harder to imagine that even if the purchaser would make such an inquiry, that the answer would figure in any way in determining the purchase price of the used vehicle, i.e., it would not be a factor in determining market value.

Moreover, from a value perspective it is not necessary to pay Mr. Franklin the sales tax in order to restore him to his pre-acci-dent state. Had he elected to sell his vehicle immediately prior to the collision, he would not have received sales tax on the transaction. He would have received only market value, i.e., “actual cash value.” Therefore, when cash or market value is the measure of damages, it was not necessary to pay Mr. Franklin the sales tax in order to restore him to “the position he would have occupied if the injury or accident had not occurred” as suggested as a general principle in such cases as Roman Catholic Church v. Louisiana Gas, 618 So.2d 874, 876 (La.1993).

State Farm’s policy does not give it the option of which coverage to provide. When “actual cash value” is less than replacement cost, the policy expressly limits State Farm’s liability to the lesser amount. Therefore, if State Farm is to recover it must be as a matter of law or public policy as the language of the policy provides no basis for the recovery of sales tax and a component of actual cash value.

As no one has found any statute or case law mandating the payment of sales tax as a component of actual cash or market value, State Farm’s claim is not a matter of law.

As I have demonstrated that the payment of actual cash or market value without sales tax is sufficient to make Mr. Franklin whole from a value perspective, I find no public policy reason to grant State Farm’s claim.

Southern United can be required to pay no more than what State Farm was required to pay. State Farm was not required by contract, law, or public policy to pay the sales tax as part of the cash or market value of the destroyed vehicle. Therefore, Southern United is not required to pay it.

For the foregoing reasons, I would reverse the judgment of the trial court and dismiss State Farm’s claim for sales taxes. Accordingly, I must respectfully dissent. 
      
      . "Ordinarily, 'actual cash value’, 'fair market value’, and 'market value’ are synonymous terms." Black’s Law Dictionary, Sixth Edition, in defining “actual cash value." Therefore, the terms will be used interchangeably throughout this dissent. Cf. Kaiser v. Garrus, 617 So.2d 107, 109 (La.App. 4 Cir. 1993), where "actual cash value” and "market value” are used interchangeably.
     