Bayou Steel Corp.. v. Nat'l Union Fire Ins. Co. of Pittsburgh
| Decision Date | 31 May 2011 |
| Docket Number | No. 10–30678.,10–30678. |
| Citation | 642 F.3d 506,2011 A.M.C. 1491 |
| Court | U.S. Court of Appeals — Fifth Circuit |
| Parties | BAYOU STEEL CORPORATION; New York Marine & General Insurance Company, Plaintiffs–Appellees,v.NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Defendant–Appellant. |
OPINION TEXT STARTS HERE
James R. Sutterfield (argued), John Joseph Danna, Jr., Sutterfield & Webb, L.L.C., New Orleans, LA, for Plaintiffs–Appellees.Howard E. Sinor, Jr., Gordon, Arata, McCollam, Duplantis & Eagan, L.L.P., New Orleans, LA, for New York Marine & Gen. Ins. Co.Robert I. Siegel (argued), Gieger, Laborde & Laperouse, L.L.C., New Orleans, LA, for Defendant–Appellant National Union Fire Insurance Company of Pittsburgh, Pennsylvania.Appeal from the United States District Court for the Eastern District of Louisiana.Before SMITH, WIENER, and OWEN, Circuit Judges.WIENER, Circuit Judge:
This case is before us for a second time.1 At this juncture, it is a contest between two insurance companies: Plaintiff–Appellee New York Marine & General Insurance Company (“NYMAGIC”) and Defendant–Appellant National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“NUFIC–PA”). Both were insuring Plaintiff–Appellee Bayou Steel Corporation (“Bayou”) when Ryan Campbell, an employee of Bayou's Illinois stevedoring contractor, Kindra Marine Terminal (“Kindra”), was injured during Kindra's unloading of Bayou's steel bundles (“the cargo”) from a vessel belonging to Memco Barge Lines (“Memco”). Memco had contracted with Bayou to haul the cargo for Bayou by barge from Louisiana to Illinois. The ultimate issue to be determined in this appeal (“ Bayou II”) is whether Campbell's employer, Kindra, was Bayou's contractor or its sub-contractor for purposes of the provision in NYMAGIC's policy that excludes coverage of Bayou's liability for bodily injury incurred by “[e]mployees of ... [Bayou's] sub-contractors” but does not exclude coverage of such injuries incurred by employees of Bayou's contractors.
Following an extensive analysis of the meaning of “sub-contractor” in Louisiana law, the district court impliedly ruled that Kindra was Bayou's sub-contractor when it granted Bayou and NYMAGIC's motion for summary judgment excluding coverage under NYMAGIC's policy. For the reasons explained below, we disagree with that conclusion and hold that, for purposes of the sub-contractor exclusion in the NYMAGIC policy, Kindra was Bayou's contractor—not its sub-contractor—so that Campbell's injuries are not excluded from coverage under NYMAGIC's policy. We therefore reverse the district court's summary judgment and remand this case to that court for further proceedings consistent herewith.
Bayou entered into a contract of affreightment calling for Memco to transport the cargo from Louisiana to Illinois on one of Memco's barges.2 Under that contract, Bayou agreed to pay Memco for transporting the cargo; in return, Memco agreed to transport the cargo from Louisiana to Illinois on one of its barges. Memco's performance obligation did not include loading or unloading the cargo onto and off of its barge; its obligation was expressly limited to transporting the cargo by water from the loading point in Louisiana to the unloading point in Illinois. Bayou expressly retained responsibility for loading its cargo onto Memco's barge in Louisiana and offloading its cargo from Memco's barge after it arrived in Illinois.
The cargo was loaded onto Memco's barge in Louisiana without incident. Instead of unloading the cargo in Illinois itself, however, Bayou entered into an entirely separate contract with Kindra, a stevedoring company, for Kindra to offload Bayou's cargo in Illinois. It was during the course of Kindra's unloading of the cargo from Memco's barge that Kindra's employee, Campbell, was seriously injured.
Campbell sued Bayou in Illinois state court. The parties later settled for six million dollars, four million of which was paid either by or on behalf of Bayou. National Union Fire Insurance Co. of Louisiana (“NUFIC–LA”), 3 Bayou's primary wharfinger insurer, accepted responsibility for a portion of the coverage and for the defense of Bayou in Campbell's suit. By contrast, coverage was initially denied by (1) Bayou's excess wharfinger insurer, NYMAGIC; (2) Bayou's primary general-liability insurer, Evanston Insurance Co. (“Evanston”); and (3) Bayou's excess general-liability insurer, NUFIC–PA. Bayou sued those three coverage-denying insurers in district court.
After Bayou sued those insurance carriers, NYMAGIC agreed to fund a substantial portion of the settlement between Campbell and Bayou. NYMAGIC conditioned its agreement on Bayou's dismissing all of its claims against NYMAGIC and assigning its claims against its other insurers to NYMAGIC. After Bayou agreed to those conditions, the parties were realigned, with NYMAGIC joining Bayou as a plaintiff (NYMAGIC and Bayou are currently the Plaintiffs–Appellees herein).
In Bayou I, we disposed of issues relating to coverage under Evanston's primary general liability policy.4 On remand, Bayou and NYMAGIC filed a motion for summary judgment, contending that NYMAGIC's excess wharfinger policy did not provide coverage for Campbell's injuries, thereby implicating NUFIC–PA's excess general-liability policy. The district court granted summary judgment in favor of Bayou and NYMAGIC, concluding that Campbell's injuries were excluded from coverage under NYMAGIC's policy. NUFIC–PA timely filed a notice of appeal.
We review a district court's summary judgment de novo.5 We also review issues of contract interpretation de novo.6 In doing so, we afford no deference to the district court's determinations of issues of law of the state in which that court's chambers are located.7 Summary judgment is frequently an appropriate vehicle for resolving questions of contract interpretation.8
NYMAGIC's excess wharfinger policy was written as a “following form” to Bayou's primary wharfinger policy issued by NUFIC–LA. A “following form” excess policy incorporates by reference all terms and conditions of the primary insurance policy.9 The NYMAGIC excess policy's exclusion at the core of this dispute, as thus incorporated from NUFIC–LA's primary policy, states:
In consideration of an additional premium ... this policy is extended to cover the liability imposed by law for loss of life, or personal injury arising out of the custodianship of the barges described ... hereunder but always excluding liability for:
...
(2) Employees of ... [Bayou's] sub-contractors.
This appeal turns on whether Campbell's employer, Kindra, was a sub-contractor of Bayou for purposes of this NYMAGIC policy exclusion. There are two possible alternatives: (1) Kindra was a sub-contractor of Bayou, so NYMAGIC is off the hook for coverage of Campbell's injuries, and NUFIC–PA is on the hook; or (2) Kindra was not a sub-contractor of Bayou, so NYMAGIC is on the hook, and NUFIC–PA is off.
As Louisiana law controls in this diversity case,10 we apply that state's substantive law, including its principles of contract construction and its classification of contracting parties, e.g., contractors and sub-contractors.11 In construing insurance policies, Louisiana courts apply its general rules of contract interpretation, beginning with the applicable articles of the Louisiana Civil Code.12 The interpreting court construes the words and phrases of the agreement according to their plain, ordinary, and generally prevailing meanings, unless they have acquired some technical meaning.13 Only if the words of a contract are not clear and explicit or lead to absurd consequences,14 may the interpreting court seek to determine the common intent of contracting parties. 15 Furthermore, “[e]xclusionary provisions in insurance contracts are strictly construed against the insurer.”16
As noted by the district court, NYMAGIC's policy does not expressly define “sub-contractor.” An undefined term is not necessarily ambiguous, however; such a term is to be given its “generally prevailing meaning.” 17 The district court defined sub-contractor after examining that word's generally prevailing meaning, including in Louisiana's applicable statutes, various dictionaries, and two of our opinions. The district court succinctly summarized those definitions as “a subcontractor is simply some person hired to do part of another person's work.” The court apparently concluded that Kindra met that definition because it held that Campbell's injuries were excluded from coverage under NYMAGIC's policy.
We agree with that definition as far as it goes, but here it begs the question, “ which other person's work?” To hold that Campbell's injuries were excluded from coverage under the policy, the court had to have found that his employer, Kindra, was a sub-contractor of Bayou, “hired to do part of” Bayou's “work.” Despite our respect for the district court, we must disagree with it in this instance. Our non-deferential de novo review18 convinces us that Kindra was Bayou's contractor, not its sub-contractor.
We begin our analysis with a review of the definitions of “sub-contractor” that the district court considered:
• One who is awarded a portion of an existing contract
by a contractor.19
• [O]ne who takes portion of a contract from principal contractor or another subcontractor .... [or] one who takes from the principal or prime contractor a specific part of the work undertaken by the principal contractor.20
• [One] who has entered into a contract, express or implied, for the performance of an act with the person who has already contracted for its performance.21
• [A]n individual or business firm contracting to perform part or all of another's contract.22
• [A] person or company that assumes by secondary contract some or all of the obligations of the original contractor.23
• A subcontractor is one who, by contract made directly with a contractor,...
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