author: | ¡¡CARTER, C. J. | tPARRO, J., b GUIDRY, J.,

text:
    Zander SUMRALL, III v. Cole BICKHAM, Continental Casualty Company, Ralph “Doc” Smith, Janice Smith Moak, Benjamin “Hut” Moak, Joetta Smith Stevens, ABC Insurance Company, and DEF Insurance Company.
    No. 2003 CW 1252R.
    Court of Appeal of Louisiana, First Circuit.
    Sept. 8, 2004.

      Tom W. Thornhill, Chadwick W. Coll-ings, Slidell, M. Reggie Simmons, Frank-linton, for Plaintiff-Respondent, Zander Sumrall, III.
    Andrew Blanchfield, Chad A. Sullivan, Baton Rouge, for Defendant-Relator, Continental Insurance Company.
    Charles M. Hughes, Jr., Cheryl I. Ma-gee, Mandeville, for Defendant, Ralph Smith.
    William J. Knight, Franklinton, for Defendant, William Cole Bickham.
    Before: CARTER, C.J., PARRO, and GUIDRY, JJ.
   | ¡¡CARTER, C. J.

The sole issue for our consideration in this writ action is whether the plaintiffs pretrial settlement and dismissal of all claims against the alleged tortfeasor automatically resulted in a release of the tort-feasor’s liability insurer from its contractual obligation.

FACTS AND PROCEDURAL HISTORY

This case arose out of a physical altercation shortly after midnight on December 5, 1999, between plaintiff-respondent, Zander Sumrall, III, and defendant, William Cole Bickham, who were both attending an outdoor party hosted by friends. It is alleged that alcoholic beverages were being consumed and illegal drugs were being used at the party. Sumrall was seriously injured when Bickham tackled him from behind as he attempted to leave the party after a fight broke out. At the time of the incident, Bickham, who was home on leave from the U.S. Army, believed that Sumrall was retrieving a gun from his vehicle. Bickham’s impact caused an injury to Sumrall’s left leg as well as a severe hip injury, resulting in a permanent limp and weakness.

Sumrall filed suit against Bickham and defendant-relator, Continental Insurance Company (Continental), the homeowner insurer for Bickham’s father. Bickham filed a motion requesting a stay of the proceedings against him pursuant to the Soldiers’ and Sailors’ Civil Relief Act of 1940. Sumrall later settled his claims against Bickham, releasing him from the Rsuit. In the receipt and release agreement (the release agreement), Sumrall expressly agreed, in exchange for the compensation he received, to:

RELEASE, ACQUIT, AND FOREVER DISCHARGE William Cole Bickham from any and all actions, claims, demands, damages, costs, loss of services, expenses, and compensation on account of, or in any way growing out of, any and all known and unknown personal injuries and property damage resulting or to result from an incident that occurred on or about the 5th day of December, 1999, ... reserving to said Zan-der Sumrall, III all rights as to all other parties, named or unnamed, including specifically, but without limitation, all rights as to Continental Insurance Company, the insurer of William Cole Bickham, ....
* * *
It is further understood and agreed that this settlement is the compromise of a doubtful and disputed claim, and that the payment is not to be construed as an admission of liability on the part of the payor or of the persons, firms, and corporations released hereby, by all of whom liability is expressly denied. (Italics added.)

The trial court signed a judgment of dismissal in accordance with the terms of the settlement agreement, dismissing Sumrall’s claim with prejudice as to Bick-ham “only,” and expressly reserving all rights as to Continental. Shortly thereafter, Continental filed a motion for summary judgment, based in part on the language of the release agreement and the judgment of dismissal. The trial court denied the motion, and Continental applied to this court for supervisory review.

In its writ application to this court, Continental raised two issues: (1) whether certain policy exclusions applied to deny coverage of the underlying claim, and (2) whether the dismissal of its insured, Bick-ham, resulted in the discharge of its obligation under the policy to provide coverage for |ñSumrall’s damages. Following our review of the application, we denied the writ. Sumrall v. Bickham, 03-1252 (La.App. 1 Cir. 9/22/03)(unpublished writ action).

Continental then applied to the Louisiana Supreme Court for supervisory and/or remedial review. The writ was granted and by per curiam order, the matter was remanded to this court for an “opinion solely on the issue of whether a plaintiffs settlement with an insured eliminates an insurer’s obligation to pay the plaintiff according to the terms that the policy would otherwise require.” Sumrall v. Bickham, 03-2965 (La.1/30/04), 865 So.2d 44 (emphasis added). It is in this procedural posture that the matter now comes before us.

LAW AND ANALYSIS

Continental asserts that its policy only obligates it to pay claims for which its insured is legally liable. Continental’s argument is that because Sumrall settled with and fully released Bickham from the lawsuit, a “natural consequence” of the release is that Bickham can no longer be found legally liable for Sumrall’s injuries, and therefore, Continental’s policy obligation cannot be triggered. Sumrall counters this argument by noting that Bick-ham’s release' and concomitant dismissal from the action was | ¿unambiguous and it affected only Bickham.. Sumrall points to the express and specific reservation of rights as to Continental in the release agreement, as well as the clear statement in the agreement that Sumrall’s settlement with Bickham was not to be construed as an admission of liability by Bickham, which was expressly denied.

Louisiana law provides that the scope of a compromise agreement extends to the differences clearly comprehended by the parties, not to differences that the parties never intended to include. See LSA-C.C. art. 3073. In the release agreement, Sum-rall unambiguously released Bickham from all “actions, claims, demands, damages, costs, loss of services, expenses, and compensation on account of, or in any way growing out of ... [the] incident ... reserving to ... Sumrall ... all rights as to all other parties, ... including specifically, but without limitation, all rights as to Continental ... the insurer of ... Bick-ham.” (Emphasis added.) The release language shows that the parties, Bickham and Sumrall, clearly comprehended and intended that Sumrall would maintain his rights to pursue Bickham’s liability insurer, Continental. The release agreement expressly provides that Bickham’s settlement with Sumrall “is not to be construed as an admission of liability” on the part of Bickham. The agreement goes on to clearly state that Bickham “expressly de-nie[s]” liability. Similarly, the judgment dismissing Bickham tracks the language of the release agreement, inserting the word “only” after Bickham, emphasizing the intent of the parties that only Bickham was released by the settlement.

There is no dispute concerning the facts. There is no evidence filed into the record substantiating any mistaken intent by either party to the release agreement. Therefore, the jurisprudence regarding cases where l7genuine issues of material fact were found to exist as to the intent of the parties in a release agreement are not helpful to our analysis in this case. Continental was not involved in the settlement between Sumrall and Bickham. Since Continental was not a party to the release agreement, it has no right to raise the issue of Sumrall and Bickham’s intent upon entering into their settlement. See Duet v. Lucky, 621 So.2d 168, 172 (La.App. 4 Cir.1993). Furthermore, Continental has not produced any evidence to prove that the intent of the parties to the compromise was anything other than what is portrayed by the clear language in the release agreement. Thus, our interpretation of the release agreement does not require an inquiry outside the four corners of the agreement to ascertain intent. See Gaubert v. Toyota Motor Sales U.S.A., Inc., 99-2569 (La.App. 1 Cir. 11/3/00), 770 So.2d 879, 882.

We are called upon to examine and interpret the language of the release agreement, as well as the pertinent policy provision regarding Continental’s obligation to pay any claim for which Bickham becomes “legally liable.” Our interpretation involves the single issue surrounding the legal effect of Bickham’s release with respect to Sumrall’s rights against Continental. The issue presents a question of law, which is appropriate for decision by summary judgment; our review must be de novo. Smith v. Williams, 03-0433 (La. App. 1 Cir. 5/14/04), 879 So.2d 233, 235-36; Gaubert, 770 So.2d at 882. Appellate review of legal questions simply involves a determination as to whether the trial court’s decision was legally correct. 1 sSimmons v. Berry, 98-0660 (La.App. 1 Cir. 12/22/00), 779 So.2d 910, 913-914.

We disagree with Continental’s assertion that a liability insurer has no independent liability simply because its insured has been released pursuant to a pretrial settlement agreement with the plaintiff. Because Continental was not involved in negotiating the settlement agreement between Bickham and Sumrall, and was not a party to the compromise, Continental should not now be able to claim the benefit of the agreement by declaring that it should automatically be dismissed from the lawsuit as a natural consequence of the release of its insured. This is especially compelling in light of the clear language in the release agreement stating that Bick-ham was expressly denying all liability and that Sumrall was specifically reserving all rights “without limitation” as to Continental. See In re Combustion, Inc., 960 F.Supp. 1051,1054 (W-D.La.1997).

We have previously recognized in Rodriguez v. Louisiana Tank, Inc., 94-0200 (La.App. 1 Cir. 6/23/95), 657 So.2d 1363, 1367-1368, writ denied, 95-2268 (La.11/27/95), 663 So.2d 739, that the release of an insured does not release the liability insurer, particularly where the plaintiff clearly intends to reserve rights against the insurer. In so holding, we reasoned that voluntary settlement of disputes, even in part, are favored in the law and parties should be allowed to reserve rights not otherwise compromised. Similarly, the third circuit has recently held in Finnie v. LeBlanc, 03-1013 (La.App. 3 Cir. 3/10/04), 875 So.2d 71, 76-77, that a partial dismissal of a tortfeasor, reserving the right to proceed against him “to the extent that he was insured” by the liability insurer was sufficient to maintain the plaintiffs suit against the insurer. However, we do not believe that the limiting | (¡language in the Finnic release, “to the extent that he was insured,” is necessary for a plaintiff to properly reserve his rights against the liability insurer of a released tortfeasor. This is especially true in this case, because the settlement agreement did not acknowledge liability on the part of the tortfeasor, and legal liability has yet to be determined.

We recognize that Continental cannot be independently liable to Sumrall without the liability of Bickham first being found by the trial court or a jury or by an acknowledgment of liability on the part of its insured. See Mallet v. Credo Oil & Gas, Inc., 534 So.2d 126, 129-130, writ denied, 536 So.2d 1237 (La.1989). Settlement agreements are generally inadmissible to prove liability. See Wells v. Allstate Ins. Co., 510 So.2d 763, 766 (La.App. 1 Cir.), writ denied, 514 So.2d 463 (La. 1987). Delictual liability consists of fault, causation, and damage. To establish liability, a plaintiff must prove that the defendant’s fault caused some legally com-pensable damage. See Hall v. Brookshire Brothers, Ltd., 02-2404 (La.6/27/03), 848 So.2d 559, 567. “Liability” is defined in BLACK’S LAW DICTIONARY, 915 (6th ed.1990), as “[b]ound or obliged in law or equity; responsible; chargeable; answerable; compellable to make satisfaction, compensation, or restitution.” Similarly, “legally liable” is defined as “[l]iable under law as interpreted by courts.” Id. at 895. An insured-tortfeasor can be “legally liable” for the victim’s damages, even though he cannot be cast in judgment due to his release from liability.

The Direct Action Statute, LSA-R.S. 22:655, expressly states that a liability insurer and its insured are solidar-ily liable to the victim. However, |inthe solidarity between the insured and the insurer toward the victim is only within the policy limits and coverages. See William Shelby McKenzie & H. Alston Johnson, III, Insurance Law and Practice, § 28 in 15 Louisiana Civil Law Treatise (1996). Louisiana jurisprudence has consistently held that a liability insurer and its insured are co-debtors in solido. See Wertz v. Estes, 402 So.2d 166, 168 (La.App. 1 Cir. 1981). Yet it is clear that a liability insurer is not liable beyond its policy limits. The solidary obligation arises from different sources: it is delictual in nature for the insured and contractual in nature for the insurer. Therefore, the liability insurer and the insured-tortfeasor are solidarily liable to the victim, but possibly for different amounts. A tortfeasor may be found liable for an amount above and beyond the liability policy limits, potentially exposing an excess insurer’s liability.

We emphasize that in this particular instance, Bickham’s liability has yet to be determined and can only be determined by the trier of fact. Bickham expressly denied liability in the release agreement. The settlement, evidenced by the release agreement, did not determine Bickham’s or any other person’s legal liability. By entering into the settlement agreement and releasing Bickham, Sumrall simply waived his right to pursue Bickham for more damages regardless of how serious Sumrall’s injuries are eventually determined to be at trial. Sumrall waived his claim against Bickham, while | u specifically preserving his claim against the non-settling insurer, Continental.

The Direct Action Statute was passed for the purpose of protecting plaintiffs from insurers who attempt to avoid coverage after collecting premiums from insured-tortfeasors. LSA-R.S. 22:655D; see William Shelby McKenzie & H. Alston Johnson, III, Insurance Law and Practice, § 22 in 15 Louisiana Civil Law Treatise (1996). For all of these reasons, we hold that the settlement between Sum-rall and Bickham resulting in Bickham’s release did not bar Sumrall’s separate right to pursue Bickham’s non-settling insurer, Continental, through a direct action. We believe this view to be correct in this case, particularly in light of the additional facts that Sumrall specifically reserved his rights against Continental in the release agreement while simultaneously denying any admission of liability. See In re Combustion, 960 F.Supp. at 1054.

CONCLUSION

After considering the law and the contracts involved in this matter, we hereby deny defendant-relator’s writ, thereby affirming the trial court’s judgment denying the relator’s motion for summary judgment on the basis addressed in this opinion.

We hold as a matter of law, that absent a clear intent to release the non-settling insurer, the release of the insured-tortfea-sor pursuant to a compromise agreement between the insured-tortfeasor and the plaintiff, with an express reservation of rights as to the non-settling insurer, as well as an express denial of liability by the insured-tortfeasor, does not eliminate the | ^insurer’s responsibility for the tortfea-sor’s potential liability. Essentially, as long as it can be determined in a settlement agreement (such as the release agreement in the present case) that liability has not been acknowledged or determined, and the plaintiff did not intend to release its claims against the non-settling insurer, the non-settling insurer will still be responsible for its insured’s potential liability for damages at the contracted coverage level. The non-settling insurer in this case has not produced any evidence that the plaintiff intended to release it from liability. Thus, plaintiff-respondent’s direct action claim against the defendant-relator remains viable.

We also note that the decision reached in this opinion is in conformity with the general policy of promoting settlement of lawsuits. See Rodriguez, 657 So.2d at 1368. Were we to rule otherwise, the precedential impact of this case would only serve to discourage settlements in cases where some, but not all, of the parties wanted to compromise and settle the plaintiffs claims against them. GHR Energy Corp. v. Carboline Co., 744 F.Supp. 1408, 1411-1412. (E.D.La.1990).

All costs are assessed against defendant-relator, Continental Insurance Company. This matter is remanded to the trial court for further proceedings consistent with this opinion.

WRIT DENIED; TRIAL COURT JUDGMENT AFFIRMED; REMANDED.

PARRO, J., concurs and assigns reasons.

| tPARRO, J.,

concurring in the result.

Former Louisiana Civil Code article 2203 (1870) stated that an obligee who remitted a debt in favor of one solidary obligor without expressly reserving his right against the others was deemed to have forfeited the entire obligation. According to the revision comments accompanying the 1984 amendments to the Civil Code provisions on obligations, this rule, whereby an express reservation was required to preserve a claim against a soli-dary obligor, was the subject of much criticism. LSA-C.C. art. 1803, Revision Comments — 1984, Comment (e). Accordingly, this rule was abandoned in favor of its converse, namely, that when partial payment is received, solidary liability is preserved unless it is expressly renounced. Article 1802 now states:

Renunciation of solidarity by the obli-gee in favor of one or more of his obli-gors must be express. An obligee who receives a partial performance from an obligor separately preserves the solidary obligation against all his obligors after deduction of that partial performance.

The revision comments accompanying Article 1802 state that it is a new provision and changes the law insofar as it eliminates the presumption of renunciation or waiver of solidarity in the absence of a reservation by the obligee. LSA-C.C. art. 1802, Revision Comments — 1984, Comment (a). Article 1803 makes it clear that this result also applies to the remission of a debt by the obligee in favor of one obligor or a transaction or compromise between the obligee and one obligor. As that is the precise situation ^before us in this writ action, I write to emphasize this change in the law and its impact on this case.

Therefore, I respectfully concur.

GUIDRY, J., dissents and assigns reasons.

b GUIDRY, J.,

dissenting.

The supreme court remanded this matter to our court to expressly consider “the issue of whether a plaintiffs settlement with an insured eliminates an insurer’s obligation to pay the plaintiff according to the terms that the policy would otherwise require.” Sumrall v. Bickham, 03-2965 (La.1/30/04), 865 So.2d 44 (emphasis added). In this case, Continental’s policy provided that coverage applies to an occurrence for which the insured is “legally liable, including prejudgment interest awarded.... ” Continental contends that there can be no finding of legal liability on the part of Bickham as a result of his full release from this legal action brought to determine his legal liability and thus coverage under the policy cannot be invoked. I agree.

The majority finds that Sumrall waived his claim against Bickham, while specifically preserving his claim against the non-settling insurer, Continental. I disagree. The release of Bickham from this suit, without limitation, destroyed the contractual prerequisite needed to pursue the insurer and rendered meaningless any reservation of rights against saidj^insurer. The majority gives an excellent example of sufficient limiting language, which would have properly reserved Sumrall’s rights against Continental, when it cites the “to the extent that he was insured” language of the release used in Finnie v. LeBlanc, 03-1013, pp. 5-6 (La.App. 3rd Cir.3/10/04), 875 So.2d 71, 76-77.

The language of the release in this case accomplished all that the parties to it intended and they both received what was specifically bargained for. It first fully released Bickham. Next, it reserved all remaining rights that Sumrall had against Continental after Bickham’s release. However, the consequence of the unlimited language releasing Bickham from the current legal action and agreeing not to pursue further action necessary to have Bick-ham determined legally liable, rendered meaningless the reservation of rights against Continental. The specific terms of Continental’s policy provided that its liability is contingent on Bickham being determined to be legally liable. Sumrall should have made as a part of his bargain that Bickham would be kept in the suit to determine the extent of his liability only for the purpose of pursuing Continental, but instead the bargain he struck let Bickham out completely.

I am of the humble opinion that some significance must be given to the insurer’s decision to qualify the term “liable” with the word “legally.” The majority would hold that the “legally liable” language of the Continental policy simply means “fault” or “negligence” and would judicially write out of the policy the modifying term “legally” and make the insurer liable in a manner not contemplated or bargained for in the insurance contract with its insured. Continental did not contract to be liable for Bickham’s negligence unless that negligence rendered him legally liable and Sumrall agreed in the release not to pursue that legal determination in this suit or any other action.

|3It is an established tenet of our law that it is not the province of the courts to relieve a party of a bad bargain, no matter how harsh. Sunrise Construction and Development Corporation v. Coast Waterworks, Inc., 00-0300 (La. App 1st Cir. 6/22/01), 806 So.2d 1, 5, writ denied, 01-2577 (La.1/11/02), 807 So.2d 235. To the extent that Sumrall failed to reserve his rights to pursue a determination of Bick-ham’s legal liability for the purpose of establishing coverage for the occurrence under the policy of insurance issued by Continental, the unqualified release of Bickham resulted in the discharge of any obligation by Continental to provide coverage for Sumrall’s claims herein. To hold otherwise amounts to a revision of the terms of the contract between Continental and its insured in order to relieve Sumrall of having to face the consequences of a bad bargain of his own making.

Based on the above stated reasons, I respectfully dissent from the majority opinion in this matter

      . Sumrall's petition named several additional defendants not relevant to this writ application. The petition also incorrectly referred to Continental as "Continental Casualty Company.”

      . See 50 U.S.C.App. § 521.

      .In his brief to this court, Sumrall explained that it was necessary to release Bickham, who is on active duty with the Army, in order to avoid a stay of the action.

      .Additionally, Continental sought dismissal of the suit based on a policy exclusion for intentional acts. Sumrall filed a cross-motion for summary judgment seeking a declaration of coverage under the Continental policy. The trial court rejected both bases for Continental's motion and also denied Sumrall's cross-motion for summary judgment, finding the existence of genuine issues of material fact.

      . Parro, J., dissented and would have granted the writ, finding that policy exclusions applied to deny coverage.

      . As directed, we only address Continental's second contention that after its insured was dismissed from the suit, Sumrall’s action against it could no longer be maintained because the sole basis for its coverage is the legal liability of its insured.

      .The pertinent policy provision is as follows:

        PERSONAL LIABILITY — INSURING AGREEMENT
      If a claim or suit is brought against you or any covered person for the following:

      2. Bodily Injury; ...

      caused by an occurrence to which this coverage applies, we will:
      1. Pay on your behalf- claims for which you or any covered person are legally liable, including prejudgment interest awarded against you or any covered person, up to our limit of liability; ....
      (Some emphasis added.)

      . For example, see Rollins v. Richardson, 02-0556 (La.12/4/02), 833 So.2d 921, 924-925.

      . In Hall, the supreme court discussed the meaning of ''liability” within the context of comparative fault under LSA-C.C. art. 2323 and the Medical Malpractice Act.

      . LSA-C.C. art. 1797 recognizes that a soli-dary obligation may derive from a different source for each obligor.

      . It is important to note that Continental is not an excess insurer in this case; therefore, the jurisprudence maintaining actions against excess and/or uninsured motorist insurers after the insured-tortfeasor has been released does not apply in this case. In reviewing this issue, we must first make a distinction as to the type of insurer involved.

      . See Garrett v. Safeco Ins. Co., 433 So.2d 209, 210 (La.App. 2 Cir.1983).

      . For a similar scenario, see In re Combustion, 960 F.Supp. at 1055.

      . This court’s only previous discussion of this change in the law occurred in the context of tortious activity that preceded the enactment of Article 1803, and Involved settlements not in the record that probably were confected after its enactment. Hebert v. ANCO Insulation, Inc., 00-1929 (La.App. 1st Cir.7/31/02), 835 So.2d 483, 494, writs denied, 02-2956 & 2959 (La.2/21/03), 837 So.2d 629. While we believe the dissenters’ position on this issue had merit, we are not faced with that factual situation, as both the tortious activity and settlement in this case occurred long after the enactment of Article 1803. Compare Lee v. Missouri Pacific R.R. Co., 540 So.2d 287, 294 (La.1989)(ruling on a prescription exception that because the settlement with the Missouri Pacific Railroad Company was made after the effective date of Article 1803, the remission of debt in favor of one obligor did not extinguish the solidary obligation). Therefore, the new provision is clearly applicable to the case we are reviewing. Cf. also Breaux v. Avondale Indus., Inc., 04-1138 (La.App. 4th Cir.7/14/04), 880 So.2d 36, 37 (citing Article 1803 and concluding that when the release at issue was confected in Texas in 2001, Louisiana law no longer required that a reservation of rights be included in the release to protect a settling plaintiff's right to pursue his or her claims against non-settling solidary obligors); King v. Doctor's Hosp. of Opelousas, 01-1534 (La.App. 3rd Cir.5/8/02), 817 So.2d 473, 478, writ denied, 02-1553 (La.9/30/02), 825 So.2d 1193; Cates v. Wausau Ins. Co., 508 So.2d 1031, 1032 n.1 (La.App. 5th Cir.1987).


source: Caselaw Access Project

author: I .GUIDRY, J. b CARTER, C.J., hDOWNING, J.,

license: Public Domain

text:
    Steven F. PRICE v. STRANCO, INC.
    No. 2003 CA 1762.
    Court of Appeal of Louisiana, First Circuit.
    Sept. 8, 2004.

      Ernest M. Forbes, Denham Springs, Counsel for Plaintiff-Appellant Steven F. Price.
    Tom W. Thornhill, Chadwick W. Coll-ings, Slidell, Counsel for Defendant-Appel-lee Stranco, Inc.
    Before: CARTER, C.J., WHIPPLE, PARRO, GUIDRY, and DOWNING, JJ.
   I .GUIDRY, J.

An independent contractor hired by defendant company appeals a judgment sustaining a peremptory exception raising the objection of prescription to the independent contractor’s claim for reimbursement of job-related expenses. Finding that the trial court erred in sustaining the exception relative to this claim, we reverse and remand.

FACTS AND PROCEDURAL HISTORY

By oral agreement, appellant, Steven F. Price, was hired as an independent contractor to perform consulting and supervisory work for Stranco, Inc., on or about May 20, 1996. According to the terms of the oral agreement, Mr. Price was to receive an hourly wage and reimbursement of any job-related expenses. In October 1998, Mr. Price ceased working for Stran-co, after which he demanded reimbursement for job-related expenses based on outstanding invoices he had previously submitted.

On December 3, 2001, Mr. Price filed a petition for breach of contract against Stranco, alleging that Stranco refused to reimburse him for the job-related expenses he had incurred while working for the company. He further asserted that Stran-co refused to pay him rental payments for a utility trailer he had provided for Stran-co’s use or to return the utility trailer to him. Stranco initially excepted to Mr. Price’s petition, raising the objections of improper venue, improper use of summary proceedings, and vagueness, with the last objection being sustained by the trial court. Mr. Price later amended his petition to allege the specific amounts owed by Stranco. Stranco answered Mr. Price’s amended petition, first excepting to his claims on the basis of prescription and, alternatively, denying liability for the debt | ^allegedly owed.

A hearing on the exception urging prescription was held, following which the trial court sustained the exception as it pertained to Mr. Price’s claim for reimbursement of job-related expenses. After the denial of his motion for new trial, Mr. Price moved for the present appeal.

ASSIGNMENT OF ERROR

In the sole assignment of error presented by Mr. Price for our review, he contends, “[t]he trial court erred in holding that the plaintiffs cause of action against the defendant for reimbursement of the plaintiffs job-related expenses is subject to the three-year prescriptive period of Civil Code Art. 3494, and therefore the trial court erred in holding that cause of action prescribed.”

DISCUSSION

At issue in this appeal is whether Mr. Price’s claim for reimbursement of job-related expenses is subject to the three-year prescriptive period mandated by La. C.C. art. 3494(1) or the longer ten-year prescriptive period of La. C.C. art. 3499. In pertinent part, those articles provide:

Art. 3494. Actions subject to a three-year prescription

The following actions are subject to a liberative prescription of three years:
(1) An action for the recovery of compensation for services rendered, including payment of salaries, wages, commissions, tuition fees, professional fees, fees and emoluments of public officials, freight, passage, money, lodging, and board;

Art. 3499. Personal action

Unless otherwise provided by legislation, a personal action is subject to a liberative prescription of ten years.

I/The trial court obviously found that Mr. Price’s claim for reimbursement of job-related expenses to essentially be a claim for compensation for services rendered, which would be subject to the three-year prescriptive period found in La. C.C. art. 3494(1). For the following reasons, we find that Mr. Price’s claim for reimbursement of job-related expenses differs from a claim for compensation for services rendered and thus is not subject to the three-year prescriptive period provided in La. C.C. art. 3494(1).

Statutes providing for prescriptive periods are to be strictly construed in favor of maintaining a cause of action. David v. Our Lady of the Lake Hosp., Inc., 02-2675, p. 12 (La.7/2/03), 849 So.2d 38, 47. Section one of La. C.C. art. 3494 expressly states that an action for the recovery of “compensation for services rendered” is subject to a liberative prescription of three years. Examples of such compensation are set forth in the article. All are in the nature of income items to the person or entity providing the service. The money that Price is seeking to recover in this case is of a different character. It is in the nature of an expense of his business. Further, our research has not revealed any statutes or jurisprudence classifying such expenses as compensation.

In reaching the conclusion that Mr. Price’s claim for reimbursement of job-related expenses is not in the nature of a claim for compensation for services rendered, we are guided by jurisprudence in which courts have been called on to determine the compensation or wages due a discharged laborer or employee for the purposes of La. R.S. 23:631-639, as well as jurisprudence relating to workers’ compensation law and tax assessments. Although inapplicable to claims of independent contractors, the jurisprudence is nevertheless helpful in defining “compensation” for the purpose of strictly interpreting La. C.C. art. 3494(1).

lKIn actions to recover unpaid wages pursuant to La. R.S. 23:631-639, jurisprudence has held that wages are any amount due under the terms of employment, which are earned during a pay period. Boudreaux v. Hamilton Medical Group, Inc., 94-0879, p. 5 (La.10/17/94), 644 So.2d 619, 622; Tran v. Petroleum Helicopters, 00-0051, p. 5 (La.App. 3rd Cir.6/28/00), 771 So.2d 673, 676, writ denied, 00-2886 (La.12/8/00), 776 So.2d 463. In contrast, the reimbursement sought by Mr. Price is not a sum “earned” but simply an expense incurred or expenditure made by Mr. Price as a result of his work duties. The word “earn” is defined as “[t]o acquire by labor, service, or performance.” Black’s Law Dictionary 525 (7th ed.1999). Some of the job-related expenses claimed by Mr. Price include the costs of lodging, meals, and mileage while working on out-of-town jobs. At trial, it was acknowledged by all witnesses that Mr. Price was paid all sums due him as hourly wages.

In Zanders v. Golden Age Home Care Center, 97-0218 (La.App. 1st Cir.12/29/97), 705 So.2d 296, to calculate the employee’s wages for assessment of workers’ compensation benefits, this court considered whether the amount paid to the employee as reimbursement of her mileage expenses could be included as part of her wages. In finding that the workers’ compensation judge erred in including the amount of reimbursement for mileage expenses as the employee’s wages, this court held “wages should include only the amount earned through her own labor.” Zanders, 97-0218 at 4, 705 So.2d at 298; see also Johnston v. K & T Manufacturing, Inc., 191 Mont. 458, 625 P.2d 66 (1981).

In Shotgun Delivery, Inc. v. United States, 269 F.3d 969 (9th Cir.2001), the appellate court affirmed, in part, a summary judgment granted in favor of the Internal Revenue Service (IRS). In that case, the court found | Bthat the IRS properly assessed the taxpayer more than $450,000 in delinquent employment taxes for failing to include sums paid to its employees in the form of mileage checks as wages. Shotgun, 269 F.3d at 970. The court held that to constitute nontaxable payments, the mileage reimbursements paid by the taxpayer to its employees had to be for expenses that the employee actually incurred or was reasonably expected to incur and could substantiate. Shotgun, 269 F.3d at 972. Because the mileage checks issued to the taxpayer’s employees were for sums equal to a set percentage of the total delivery charges for jobs the employees completed and were not directly or substantially related to the actual expenses incurred (i.e., the actual mileage driven by the employee drivers), the court concluded that mileage checks should have been treated as wages and thus subject to the assessment of employment taxes. Shotgun, 269 F.3d at 973.

As previously noted, in the case before us, Mr. Price was engaged by Stranco to provide supervisory and consulting services. He is seeking reimbursement for expenses he actually incurred while providing those services, which were substantiated by invoices submitted to Stranco. Mr. Price’s wage or compensation was only those sums earned through his own labor, namely, the hourly wage paid him for the consulting and supervisory services provided, not those sums he had previously incurred for expenses related to the performance of his job duties. Thus, we find that the trial court legally erred in finding that the three-year prescriptive period provided in La. C.C. art. 3494(1) applied to Mr. Price’s claim for reimbursement of his job-related expenses. Accordingly, we conclude the ten-year prescriptive period of La. C.C. art. 3499 is applicable to his claim.

^CONCLUSION

For the foregoing reasons, we reverse the judgment of the trial court finding Mr. Price’s claim for reimbursement of job-related expenses had prescribed and remand for further proceedings. All costs of this appeal are assessed to Stranco, Inc.

REVERSED AND REMANDED.

CARTER, C.J. and DOWNING, J., dissents and assigns reasons.

b CARTER, C.J.,

dissenting.

I respectfully dissent. Characterization of Mr. Price’s claim is essential to the prescription issue. Mr. Price is seeking to recover his job-related expenses, including lodging, meals, and mileage, all of which are a form of compensation for services rendered. The job-related expenses were incurred during Mr. Price’s employment and were related to the supervisory and consulting services he provided to Stranco. Therefore, I believe the job-related expenses constitute a claim for compensation in addition to his hourly wage. See Rice v. Felterman, 00-2525 (La.App. 1 Cir. 3/23/02), 814 So.2d 696, 698; Parry v. Administrators of Tulane Educational Fund, 02-2478 (La.12/19/02), 833 So.2d 346. The applicable prescriptive period for an action for the recovery of compensation is three years. LSA-C.C. art. 3494(1). Thus, I would affirm the trial court’s judgment finding that Mr. Price’s claim filed beyond the three-year period has prescribed.

hDOWNING, J.,

dissenting.

I dissent. An advance of expenses by an employee should be treated as a loan similar to advances by an attorney. See Lucas v. George M. Cox of Georgia, Inc., 187 La. 813, 175 So. 584 (1937). I agree that the claims for reimbursement of loans (advances) prescribes in three years and would, therefore, affirm the trial court.

      . At the hearing on the exception, Mr. Price testified that he began working for Stranco in August 1994.


author: I .DOWNING, J.

text:
    Christian J. AIKMAN v. Carlette J. THOMAS, Charles N. Thomas, Direct General Insurance Co. of La., John Doe Sturm, XYZ Insurance Company State Farm Mutual Automobile Insurance Company and Christian J. Aikman v. Charles N. Thomas, Carlette N. Thomas, David Lee Sturm, and Direct General Insurance Company of La
    Nos. 2003 CA 2241, 2003 CA 2242.
    Court of Appeal of Louisiana, First Circuit.
    Sept. 17, 2004.

      Donald G. Cave, Baton Rouge, Counsel for Plaintiff/Appellant Christian J. Aik-man.
    Pierce A. Hammond, II, New Orleans, Counsel for Charles N. Thomas and Car-lette Thomas and Charles Thomas.
    Kim Segura Landry, Gonzales, Counsel for Appellee Direct General Insurance Company of Louisiana.
    Frank J. Achary, Metairie, Counsel for David Lee Sturm.
    Dan Richard Dorsey, Patrick A. Par-ham, Covington, Counsel for State Farm and Christian Aikman.
    Before: WHIPPLE, FITZSIMMONS and DOWNING, JJ.
   I .DOWNING, J.

Plaintiff, Christian Aikman, filed the instant suit against defendants, Carlette and Charles Thomas and their insurer, Direct General Insurance Company, for damages arising from a May 7, 1999 automobile accident that was caused by Carlette’s minor son, David Sturm. Direct General issued a liability policy to Charles Thomas. On the application dated September 11, 1998, Charles Thomas, Carlette Thomas, David Thomas (born 1/22/82), Michael Thomas (born 2/26/83), and Jennifer Thomas (born 6/15/89), were listed as residents of the household. On the declaration page, Carlette was listed as a named driver and her three children, David, Michael and Jennifer, were listed as excluded drivers. The parties do not dispute that David Thomas’ legal name is David Sturm, because the boy was never officially adopted by Charles Thomas.

In response to this petition, Direct General filed a motion for summary judgment alleging that there was no coverage under the policy due to the driver exclusions. The policy was introduced into evidence along with the affidavit of Charles Thomas. Following a hearing, the trial court granted summary judgment dismissing Aikman’s claims against Direct General. Aikman appealed. The narrow issues presented for our review are (1) whether the document listing David Thomas as an excluded driver was a valid waiver of liability coverage for David Sturm, and (2) whether the trial court erred in finding that the policy in question was clear and unambiguous and thereby excluded David Sturm as a driver. For the following reasons, we affirm the judgment of the trial court granting summary judgment in Direct General’s favor.

In determining whether summary judgment is appropriate, appellate courts conduct a de novo review of the evidence employing the same criteria |4that govern the trial court’s determination of whether summary judgment is appropriate. Henderson v. Kingpin Development Co., 01-2115 p. 4 (La.App. 1 Cir. 8/6/03), 859 So.2d 122, 126. Summary judgment is appropriate only if the admissible pleadings, depositions, answers to interrogatories and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and that the mover is entitled to judgment as a matter of law. La.Code Civ. P. art. 966(B). When a motion for summary judgment is made and supported as provided by law, an adverse party may not rest on the mere allegations of his pleadings, and his response, by affidavits or as otherwise provided by law, must set forth specific facts showing that there is a genuine issue for trial. Robles v. Exxonmobile, 02-0854, p. 4 (La.App. 1 Cir. 3/28/03), 844 So.2d 339, 341. If the adverse party does not so respond, summary judgment, if appropriate, will be granted and rendered against him. Id.

Aikman first argues that David Sturm was not excluded from driving under the policy because the naming of a fictitious person, in this case, David Thomas, should have no effect on the omnibus coverage afforded to David Sturm.

We disagree. The law is well settled that when both the insured and the insurer intended to exclude liability coverage on a particular person, the technicality of a mistakenly written name will not void the exclusion. Baker v. Fireman’s Fund Insurance Company, 309 So.2d 362, 363 (La.App. 2 Cir.1975). In this case, Charles Thomas testified by deposition that he signed the exclusion and intended to exclude the children residing in the household, and that David Sturm was one of those children. He also testified that although David Sturm had never been adopted, he went to school under the name of David Thomas. Accordingly, no genuine issue of | .¡material fact exists whether this insurer and this insured intended to exclude David Sturm from coverage under the policy.

Aikman next argues that summary judgment was not appropriate because of an ambiguity in the policy. The Direct General liability policy promises to pay damages “for bodily injury or property damages for which the law holds you responsible because of a car accident involving a car we insure.” Under the “definitions” section of the policy, “you” is defined to include “a member of the family who is a resident of the household shown on the application for coverage and holds a valid driver’s license.” Aik-man contends, that this policy, on its face, affords coverage to Charles and Carlette as well as any member of their family residing at their residence who holds a valid driver’s license. And since this policy does not include the term, “unless otherwise excluded,” he argues that a conflict is created with the named driver exclusion endorsement, and thus, the contract must be resolved in favor of coverage.

Aikman urges this court to follow the Third Circuit’s decision in Levy v. Vincent, 02-0277, p. 5 (La.App. 3 Cir. 7/18/01), 796 So.2d 34, 38, involving similar language. That court concluded that because similar conflicting language flowed from the insurer’s own actions in drafting the policy, the language must be construed against the insurer.

The rules concerning the interpretation of insurance contracts are set forth by the Louisiana Supreme Court in the case of Crabtree v. State Farm Insurance Co., 93-0509 (La.2/28/94), 632 So.2d 736, 741. An insurance policy is a contract between the parties and should be construed using the general rules of interpretation of contracts set forth in the Civil Code. Id. If the words of the policy are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ | fintent and the agreement must be enforced as written. Id. Insurance policies should not be interpreted in an unreasonable or strained manner so as to enlarge or restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion. Id. The policy should be construed as a whole and one portion thereof should not be construed separately at the expense of disregarding another. Id. If after applying the general rules of construction an ambiguity exits, the ambiguous contractual provision is to be construed against the insurer who issued the policy in favor of the insured. Id. An insurance policy must be construed as a whole. LSA-C.C. art.2050. Further, in the interpretation of statutes and contracts, the specific controls the general. Mixon v. St. Paul Fire & Marine Ins. Co. of St. Paul, Minn., 147 La. 302, 305-306, 84 So. 790, 791 (La.1920). Documents evidencing the complete contract, such as binders, riders and in this case, driver exclusions, when executed together for that purpose, must be read together. Id.

Applying the foregoing principles of contract interpretation to the policy language at issue, we conclude that there are no contradictions or ambiguity in this policy. One cannot simply read the definition section for a determination of who is insured in the agreement; one must look to the entire policy as a whole. The section entitled “Insuring Agreement” makes it clear that the declaration page is specifically incorporated into the policy; it reads as follows:

Upon your payment of the premiums, we agree that this policy provides the kinds of insurance you have selected from the list of available coverages and which are shown on the declaration page. The declaration page is a part of this policy. (Emphasis added.)

The success of Aikman’s argument is dependent upon the policy being read without the declaration page. When read without the declaration |7page, the word “you” could be construed together with the definition section to cover all family members living in the household with a valid drivers license. Unlike the facts in the Levy case, however, the Insuring Agreement section before us clearly includes the declaration page as part of the policy.

The declaration page was obviously added for specificity. Therefore, construing the policy provisions in light of each other so that each is given the meaning suggested by the policy as a whole, the clear and unambiguous language of the “Insuring Agreement” incorporates the specific exclusion of three named family members including David Thomas, a/k/a David Sturm.

Moreover, the form entitled “Driver Restriction” states in bold letters that “this endorsement forms part of the policy to which attached” and “is subject to the declarations, conditions and other terms of the policy.” Here David Thomas is shown as an “excluded driver” on the driver restriction endorsement. The endorsement would not have been added if not for the purpose of specificity.

Because, in the interpretation of contracts the specific controls the general, the specific exclusion of the driver restriction endorsement and the declaration page must therefore control over the general inclusion of the definition of “you.” See Mixon, 147 La. at 306, 84 So. at 791.

The policy taken as a whole, including the “Insuring Agreement,” specifically incorporating the “Declaration Page,” and the “Driver Restriction” endorsement, shows that Charles and Carlette Thomas are principal drivers and that David is specifically excluded under the policy. Without the drivers’ exclusions, perhaps the policy could be interpreted together with the definition of “you” to construe coverage for David Sturm. However, in the policy before us, no ambiguity exists that David Sturm is excluded from coverage.

| sAccordingIy, the exclusion of David Thomas as a driver on the policy is valid and summary judgment was appropriate.

DECREE

For the above reasons, we affirm the trial court’s judgment and assess all appeal costs to Christian J. Aikman.

AFFIRMED.


author: | aPARRO, J.

text:
    Tammy SEALS v. Larry C. SUMRALL, Cheryl Lee Sumrall, and L. & C. Sumrall Revocable Trust.
    No. 2003 CA 0873.
    Court of Appeal of Louisiana, First Circuit.
    Sept. 17, 2004.

      Richard W. Watts, Franklinton, for Plaintiff-Appellee Tammy Seals.
    Charles M. Stevenson, Covington, for Defendants-Appellants Larry C. Sumrall, Cheryl Lee Sumrall, and L. & C. Sumrall Revocable Trust.
    Before: CARTER, C.J., PARRO, and GUIDRY, JJ.
   | aPARRO, J.

The buyer in a bond for deed contract sued the sellers for specific performance of the contract and for damages in an amount to which her payments allegedly exceeded the- purchase price. The trial court granted judgment in her favor, and the sellers appeal. For the following reasons, we reverse and render.

Facts and Procedural History

On December 2, 1993, by an act under private signature, Larry C. Sumrall and Cheryl Lee Sumrall entered into a bond for deed contract with Chad Harris (Harris) and Tammy Seals (Seals) relative to immovable property located next door to property belonging to Seals’ parents. In pertinent part, the contract provided that Harris and Seals were obligated:

to pay unto Vendors the sum of FORTY THOUSAND DOLLARS, payable at the rate of FOUR HUNDRED FORTY SIX AND 35/100 ($446.35) DOLLARS, per month, until a total of THIRTY SIX THOUSAND ($36,000.00) DOLLARS is paid in full. Said payments are to be made commencing on the 1st day of June, 1994, and thereafter on the 1st day of each month until the full sum of THIRTY SIX THOUSAND ($36,000.00) DOLLARS has been paid in full to Vendors. If, and only, Vendees promptly pay the full obligation outlined above, and further pay all tax assessments and insurance, as set forth hereafter, Vendor will, at that time, execute a sufficient deed, selling and conveying unto [Vend-ees] the following described real estate

On July 19, 1995, the Sumralls and Seals entered into a second bond for deed contract via authentic act relative to the same immovable property. In pertinent part, that document provided that Seals was obligated:

to pay unto Vendors the sum of THIRTY THREE THOUSAND EIGHT HUNDRED NINETY SEVEN AND 78/100 ($38,897.78) DOLLARS, payable at the rate of FOUR HUNDRED FORTY SIX AND 35/100 ($446.35) DOLLARS, per month, commencing on the 1st day of August, 1995, and thereafter on the 1st day of each month until the full sum of THIRTY THREE THOUSAND EIGHT HUNDRED NINETY SEVEN AND 78/100 ($33,897.78) DOLLARS has been paid in full to Vendors. If, and only [if], Vendees promptly pay the full obligation outlined above, and further pay all tax assessments and insurance, as set forth hereafter, Vendor will, at that time, execute a sufficient deed, selling and conveying unto [Vend-ee] the following described real estate

|3On January 15, 2002, a petition for specific performance and for recovery of overpayments was filed by Seals against the Sumralls and L. & C. Sumrall Revocable Trust (collectively defendants). In her petition, Seals alleged that she had made 91 payments of $446.35 totaling $40,617.85 resulting in an overpayment in the installment portion of the 1993 contract price by $6,720.07. Having allegedly paid the purchase price in full, Seals sought specific performance of the issuance of a warranty deed by the defendants conveying the property described in the bond for deed contract.

In their answer and reconventional demand, the defendants denied that Seals was entitled to specific performance because she had not paid the entire contract price. The defendants further urged that Seals should be estopped from denying that the contracts, by the true intent of the parties, contemplated payment by Seals of interest and principal for a term of 10 years. In their reconventional demand, the defendants alleged that the 1993 contract contemplated a purchase price of $40,000, with a down payment of $4,000 and the balance of $36,000 being paid at a rate of $446.35 per month commencing on June 1,1994, for ten years, with interest of 8/é percent. Based on Seals’ default by discontinuing payment in January 2002, with 30 payments still owed, the defendants sought to have the bond for deed contract judicially dissolved, to retain all amounts previously paid by Seals, and to be placed in possession of the property.

After a trial on the merits, the trial court found that the defendants intended in good faith to include, and presumed the existence of, an interest component in the bond for deed contract, in addition to the sum stated as the amount which Seals was obligated to pay under the contract. However, the court noted the express terms of the | ¿contract did not include an interest rate or a number of payments. The trial court found the omission of such terms did not constitute an ambiguity or vagueness in the contract and the written contract was presumed to be complete on its face. Nonetheless, the trial court implied that any ambiguity or vagueness created by the omission of these terms was imputed to the defendants, whom the trial court found to be responsible for the drafting of the contracts.

Finding that the July 1995 contract su-perceded the 1993 contract, the trial court found that Seals was indebted to the defendants for a balance of $33,897.78, payable at a rate of $446.35 per month commencing August 1, 1995. Based on its belief that Seals had paid this indebtedness, the trial court signed a judgment ordering the transfer of title to the immovable property, as well as a mobile home located thereon, from the defendants to Seals. Additionally, the trial court awarded Seals $471.17, the amount by which her payments since August 1, 1995, exceeded $33,897.78. From this judgment, the defendants appealed.

Price

The Louisiana Civil Code has been construed to prohibit conditional sales under which passage of title is postponed until payment of the price. An exception to the rule against conditional sales with respect to immovables was adopted in LSA-R.S. 9:2941, the “bond for deed” legislation. A bond for deed is a contract to sell real property, in which the purchase price is to be paid by the buyer to the seller in installments and in which the seller, after payment of a stipulated sum, agrees to deliver title to the buyer. LSA-R.S. 9:2941. Because a bond for deed is a “contract to sell,” we look to the Civil Code articles for the law applicable to such contract. In particular, Article 2623 provides that a contract to sell must set forth the thing and the price. With respect to the price, Article 2464 states that the price must be fixed by the parties in a sum certain or determinable through a method agreed by them.

The primary issue in this case is the price fixed by the parties. In deciding this issue, we must first look to the terms of the contract. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent. LSA-C.C. art.2046. However, a doubtful | fiprovision must be interpreted in light of the nature of the contract, equity, usages, the conduct of the parties before and after the formation of the contract, and of other contracts of a like nature between the same parties. LSA-C.C. art.2053; see LSA-C.C. art. 2055. Whether the terms of a contract are doubtful or ambiguous is a question of law. Appellate review of questions of law is simply to discern whether the trial court’s interpretive decision is legally correct. Busby v. Cappaert Manufactured Housing, Inc., 01—496 (La.App. 3rd Cir.10/3/01), 799 So.2d 608, 610. If legal error is found, an appellate court is to make a de novo review. See Gonzales v. Xerox Corp., 320 So.2d 163, 165-166 (La.1975).

Focusing on the terms of the 1995 contract and without considering the 1993 contract, the trial court found that the terms relating to price were not ambiguous. In ascertaining whether the trial court was legally correct in so ruling, we note at the outset that the 1995 contract contains no language evidencing an intent by the parties to set aside the 1993 contract or to declare it to be of no effect; therefore, we deem it necessary, equitable, and appropriate under the facts of this case to examine the terms of the 1993 contract, as well as the 1995 contract, to determine the intent of all the parties. The 1993 contract reflects a purchase price of $40,000; however, it seemingly provides only for the payment on an installment basis of a total of $36,000. The monthly installment payments in the amount of $446.35 were to commence on June 1,1994. The contract did not specify the number of months for which an installment would be owing. It simply stated that monthly payments would continue until a total of $36,000 had been paid, without reference to the payment of interest or a rate of interest.

Absent the consideration of parol evidence, we find the fact that the 1993 contract did not expressly provide for the payment of the entire purchase price of $40,000 constitutes an ambiguity as to the price agreed to by the parties. For that reason, we conclude that the words of the 1993 contract relative to price are not clear and explicit. Further, ambiguity is presented by the absence of a rate of interest and/or a term for the payment of monthly installments, especially when considering the terms of the 1995 contract that was executed approximately 19 months later. Without preferring to the purchase price as stated in the 1993 contract or the amounts paid in connection with their original agreement, the 1995 contract reflects a purchase price of $33,897.78 to be paid in installments at the same monthly rate provided for in the original contract. Such payments under the 1995 contract were scheduled to commence on August 1, 1995. Again, the contract did not specify the number of months for which an installment would be owing. It simply stated that monthly payments would continue until a total of $33,897.78 had been paid, without reference to the payment of interest or a rate of interest.

Based on the uncertainty in price posed by the original contract, as compounded by the 1995 contract, we conclude that the trial court was legally incorrect in finding that the terms relating to price were not ambiguous. In light of this ambiguity in the price presented by the bond for deed contracts, we find it appropriate to consider the parol evidence offered to prove the price intended by the parties. See Schroeter v. Holden, 499 So.2d 309, 311-312 (La.App. 1st Cir.1986). We are mindful that any ambiguity in this case is to be construed against the party who furnished the text, which the trial court determined to be the Sumralls. However, the testimony submitted at the trial of this matter shows overwhelmingly that, at the time the parties entered into the original bond for deed contract, they intended a total purchase price of $40,000 with a down payment of $4,000. The remaining $36,000 was to be financed by the Sumralls and was to be paid at a monthly rate of $446.35 for a period of 10 years, with the first installment payment being due on June 1, 1994. Seals’ testimony confirmed that the contract contemplated a down payment of $4,000 and monthly installment payments of $446.35 for a period of 10 years. Such a financing arrangement contemplated an 8.5 percent rate of interest as asserted by the Sumralls and would be consistent with a principal balance of $33,897.78 as of August 1, 1995, as suggested by the 1995 contract. Accordingly, we conclude the trial court erred in ordering specific | performance of the 1995 bond for deed contract and in making an award in favor of Seals.

Defendants’ Reconventional Demand

In their appeal, the defendants have asked that their reconventional demand be granted as a result of Seals’ failure to continue to make monthly installments in 2002. Initially, we note that the 1993 bond for deed contract provided:

Appearers further declare that the payment of each monthly installment of FOUR HUNDRED FORTY SIX AND 35/100 ($446.35) DOLLARS by Vendees, and the payment of each tax installment, and of all insurance premiums by Vend-ees, is of the essence of this agreement, and that if any of the said installments, taxes or insurance premiums are not paid when due, or if Vendees shall, in any other manner, violate , their eonven-ants hereunder, then all Vendee’s right under this contract shall be forfeited by them, and Vendor shall be entitled to retain all payments heretofore made by Vendees, retain all improvements placed upon the said premises without reimbursing Vendees therefor ....

In case of a default by the buyer, the seller in a bond for deed contract is not entitled to retain all monies paid by the buyer as liquidated damages, despite contract provisions to that effect. Scott v. Apgar, 238 La. 29, 113 So.2d 457, 460 (1959). The reason is that such a penal clause is regarded as null and void since it is inequitable and unreasonable, and an illegal attempt to recover punitive rather than merely compensatory damages. Montz v. Theard, 01-0768 (La.App. 1st Cir.2/27/02), 818 So.2d 181, 187; Thompson v. Bullock, 236 So.2d 892, 898 (La.App. 3rd Cir.), writ refused, 256 La. 894, 240 So.2d 231 (1970). On the other hand, where the buyer has gone into possession, the seller is generally entitled to recover the fair rental value of the premises. Scott, 113 So.2d at 461; see Ekman v. Vallery, 185 La. 488, 169 So. 521, 522 (1936); Farthing v. Neely, 129 So.2d 224, 238 (La.App. 3rd Cir.1961) (on rehearing). If the contract expressly provides for the forfeited payments to be considered as rental, such a provision will be enforced when the evidence reflects such payments are not in excess of the fair rental value of the property. Pruyn v. Gay, 159 La. 981, 106 So. 536, 538 (1925). However, the contract did not provide for retention |sof these amounts as rental, nor does the record reflect the fair rental value of the property in question. Furthermore, the defendants have not sought recovery in their reconventional demand of the fair rental value of the premises.

Moreover, we note that in their brief to this court, the defendants based their right to judicial dissolution on LSA-C.C. art. 2013. Article 2013 provides:

When the obligor fails to perform, the obligee has a right to the judicial dissolution of the contract or, according to the circumstances, to regard the contract as dissolved. In either case, the obligee may recover damages.
In an action involving judicial dissolution, the obligor who failed to perform may be granted, according to the circumstances, an additional time to perform.

Under the provisions of LSA-C.C. art. 2013, the decision to allow the dissolution or not, or of granting further time or not, is left to the court, so that the dissolution of the contract never does become a matter of absolute right on the part of the obligee. See Watson v. Feibel, 139 La. 375, 71 So. 585, 591 (1916). In any action involving judicial dissolution, whether brought by an obligee or by an obligor who complains that the obligee has wrongly declared the contract dissolved, the obligor who has failed to perform may be granted additional time to do so. Whether to grant such additional time is a matter for the court to determine in light of the circumstances of the individual case, including the good faith vel non of the obligor, and whether the obligor has a valid excuse for his failure. LSA-C.C. art.2013, Revision Comment — 1984, comment (e).

The defendants conceded that Seals continuously made payments on the contracts through the end of 2001 and then stopped (with two-and-a-half years of payments remaining under the contracts) only in connection with the filing of this suit to have her contractual obligations defined by the court. Considering the ambiguity found in the price of these bond for deed contracts and based on the power given to this court under Article 2013, we decline to allow dissolution of the contracts in question in favor of the defendants and instead afford Seals additional time to perform.

lain particular, we feel constrained to follow the mandate of LSA-R.S. 9:2945, which provides in pertinent part:

A. If the buyer under a bond for deed contract shall fail to make the payments in accordance with its terms and conditions, the seller, at his option, may have the bond for deed cancelled by proper registry in the conveyance records, provided he has first caused the escrow agent to serve notice upon the buyer, by registered or certified mail, return receipt requested, at his last known address, that unless payment is made as provided in the bond for deed within forty-five days from the mailing date of the notice, the bond for deed shall be cancelled.
B. Where there is no mortgage or privilege existing upon the property, and the buyer shall be in default, the seller shall exercise the right of cancellation in the same manner.

Pursuant to the provisions of LSA-R.S. 9:2945, the proper method of canceling a bond for deed contract, upon nonpayment in accordance with its terms and conditions, is by initially serving proper notice on the buyer that unless payment is made as provided in the bond for deed within forty-five days from the mailing date of the notice, the bond for deed shall be can-celled. See Gande v. Edwards, 360 So.2d 247, 250 (La.App. 1st Cir.1978). According to the jurisprudence, the provisions respecting the forty-five day notice are mandatory. Williams v. Dixie Land Co., 231 La. 834, 93 So.2d 185, 186 (1956); Farthing v. Neely, 129 So.2d 224, 230 (La.App. 3rd Cir.1961). The record contains no evidence that any such notice was given. Therefore, we deny the reconventional demand of the defendants.

We realize that our action puts the parties in a status quo position. However, we have addressed the prayers of the parties’ pleadings, and we have no authority to take any further action based on the record before us. Further resolution of the legal issues remaining is dependant on the future legal steps taken by the parties.

Decree

For the foregoing reasons, the judgment of the trial court is reversed, and Tammy Seals’ claims are dismissed. Because the defendants’ reconventional demand for judicial dissolution of the bond for deed contract, damages, and possession lacks merit, it is also dismissed. Costs of this appeal are assessed to Tammy Seals.

REVERSED AND RENDERED.

      . By this time, Seals and Harris had wed, but were living separate and apart. For purposes of this opinion, we will use her maiden name, Seals.

      . Harris conveyed any and all interest he had in the property to Seals via agreement executed on August 14, 1995.

      . L. & C. Sumrall Revocable Trust was named as a defendant based on Seals' belief that the Sumralls' Interest in the bond for deed contract had been assigned to it. The petition alleges that the bond for deed contract also contemplated the sale of a mobile home.

      . This allegation is obviously in error because $40,617.85 less $36,000 equals $4,617.85. The alleged overpayment of $6,720.07 was derived by subtracting the principal of $33,897.78 in the 1995 contract from the total payments of $40,617.85.

      . Relative to the July 1995 contract, Seals alleged that she was induced into signing this document based on representations that it was necessary to remove Harris’ name from the transaction. She further asserted that the total shown as being owed in that contract was erroneous in that it did not give her credit for all of her prior payments.

      . According to the defendants, in July 1995, Seals requested and arranged for the execution of a new contract that would exclude her husband from the transaction.

      . See LSA-C.C. arts.2056 and 2057; Reynolds v. Select Properties, Ltd., 93-1480 (La.4/11/94), 634 So.2d 1180, 1183.

      . Notedly, monthly and yearly "interest paid” statements were furnished to Seals.

        .Cf. Monsur v. Thompson, 300 So.2d 655, 658-659 (La.App. 3rd Cir.), writ denied, 303 So.2d 187 (La.1974).

      . The 1995 contract contains the same provision.

      . Amounts paid by the buyer on the contract, as well as for taxes and insurance, together with improvements placed on the premises by the buyer, must be considered. Ekman, 169 So. at 522; Scott, 113 So.2d at 461; Thompson, 236 So.2d at 898-899.

      .LSA-C.C. art.2013, effective January 1, 1985, reproduces the substance of LSA-C.C. arts.2046 and 2047 (1870).