An-Son Corp. v. Holland-America Ins. Co., AN-SON
| Decision Date | 11 July 1985 |
| Docket Number | HOLLAND-AMERICA,AN-SON,No. 83-1858,83-1858 |
| Citation | 767 F.2d 700 |
| Parties | CORPORATION, Plaintiff-Appellee, v.INSURANCE COMPANY, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Tenth Circuit |
T. Mark Blakemore, of Royston, Rayzor, Vickery & Williams, Brownsville, Tex. (James Patrick Cooney, of Royston, Rayzor, Vickery & Williams, Brownsville, Tex., and Robert D. Looney, Sr., of Looney, Nichols, Johnson & Hayes, Oklahoma City, Okl., with him on the briefs), for Defendant-Appellant.
Ben L. Burdick, Crowe & Dunlevy, Oklahoma City, Okl. (H. Leonard Court, with him on the brief), for Plaintiff-Appellee.
Before BARRETT, BREITENSTEIN and TIMBERS *, Circuit Judges.
Holland-America Insurance Company (Holland-America) appeals from a judgment entered June 8, 1983, in the Western District of Oklahoma, David L. Russell, District Judge, awarding An-Son Corporation (An-Son) its costs and attorneys fees in defending against a personal injury action brought by an An-Son employee injured as a result of an accident on Lake Maracaibo, Venezuela. Holland-America refused to defend An-Son in that action, relying on language in its contract of insurance with An-Son which excluded coverage for operations performed on "oceans, gulfs or bays". Holland-America believed that Lake Maracaibo, despite its official designation as a lake, fell within that exclusionary clause. Holland-America also appeals from the district court's order entered May 11, 1983 granting An-Son's post-judgment motion for attorneys fees and expenses incurred in litigating this action. We affirm.
We shall summarize only those facts believed necessary to an understanding of the issues raised on this appeal.
In January 1973, Holland-America issued a $1,000,000 policy of umbrella liability insurance to An-Son. The policy had a $25,000 deductible. Although the policy covered liability for most of An-Son's drilling operations, it had a clause identified as "Endorsement C" which excluded "liability arising out of work or operations performed on any oil or gas lease in oceans, gulfs or bays".
In February 1974, while the policy was in effect, one of An-Son's employees was injured in an accident on a tender barge operating on Lake Maracaibo, Venezuela. The employee subsequently commenced an action against An-Son seeking $1,000,000 damages. An-Son thereupon requested Holland-America to come in and defend it in this action pursuant to the liability insurance policy. Holland-America refused to do so. It relied principally on Endorsement C, since it was of the belief that Lake Maracaibo was a bay rather than a lake and therefore came within the exclusionary language of that clause endorsement. An-Son provided its own representation and the action eventually was settled. An-Son's contribution to the settlement was $25,000. An-Son also expended $1,652.21 in court costs and $88,205.85 in attorneys fees. The reasonableness of these amounts is not in dispute.
In May 1980, An-Son commenced the instant action in an effort to recover these expenditures, alleging that Holland-America had breached its duty to defend An-Son in the earlier action. In order to determine whether there had been a breach of Holland-America's duty under its contract of insurance with An-Son, it was necessary to answer the essential question of whether Lake Maracaibo was a lake or a bay.
At trial both sides presented expert witnesses to support their respective positions. An-Son's expert, Dr. Marvin Baker, Jr., an Associate Professor of Geography at the University of Oklahoma, testified that Lake Maracaibo opens through the Straits of Maracaibo to Tablazo Bay, which opens to the Gulf of Venezuela, which opens to the Carribean Sea. He testified that, although Lake Maracaibo is not land-locked as most lakes are, its predominant characteristics are those of a lake. Specifically, he testified that ninety-five percent of the water in Lake Maracaibo is fresh water which flows down from the various streams and rivers which surround it. It is this feature, in Baker's opinion, which is the essential characteristic of all lakes. Conversely, he testified that Tablazo Bay and the Gulf of Venezuela were predominantly sea water and depended for their existence on a water supply eminating from the Carribean Sea and the Atlantic Ocean. Baker also produced several standard reference works in the field of geography which supported his opinion that historically Lake Maracaibo has been considered a lake.
Holland-America's expert was Dr. William Merrill, Jr., an Associate Professor of Oceanography at Texas A & M University. He testified that Lake Maracaibo does not contain standing water--a general characteristic of most lakes; rather, it is subject to tidal action coming from the Gulf of Venezuela through Tablazo Bay. He also testified that changes in the height of the water in the Gulf of Venezuela are transferred immediately to Lake Maracaibo, and that there are sea water creatures in both.
Based on this expert testimony, and the various maps, charts, encyclopedias, dictionaries and other reference works admitted in evidence, the court concluded that the overwhelming consensus of authority supported An-Son's belief that Lake Maracaibo indeed is a lake. The court also stated that, without first hiring an oceanographer and a geographer, An-Son would have been unable to discern anything else, since the maps, charts, and most reference works refer to Maracaibo as a lake. An-Son reasonably could believe that its operations on Lake Maracaibo were not excluded from coverage under the policy. Since Lake Maracaibo did not fall within the exclusionary language of Endorsement C, the court held that Holland-America had breached its duty to defend An-Son in the earlier action.
Initially, it should be borne in mind that the status of Lake Maracaibo is a factual question. As such, the finding of the district court that it is a lake will not be disturbed unless it is clearly erroneous. Fed.R.Civ.P. 52(a). It is not necessary for us to decide whether the court reached the correct conclusion, but only whether it reached a permissible conclusion in light of the evidence. Volis v. Puritan Life Insurance Co., 548 F.2d 895, 901 (10th Cir.1977). Having carefully reviewed the record, we cannot say that the court's finding was clearly erroneous. The evidence consisted primarily of a "battle of experts". The resolution of such conflicting evidence is appropriately the province of the trial court. We are loath to disturb a finding based upon such conflicting evidence. Id.; United States v. 79.95 Acres of Land, etc., Rogers County, State of Oklahoma, 459 F.2d 185, 187 (10th Cir.1972).
We agree with the court's statement that, in determining the status of Lake Maracaibo for the purpose of defining coverage under the policy, "[p]erhaps how it is known is more important than what it actually is." Under Oklahoma law, a contract of insurance ordinarily must be construed liberally in favor of the insured and strictly against the insurer where there exists any ambiguity, doubt or uncertainty as to its meaning. Continental Casualty Co. v. Beaty, 455 P.2d 684, 688 (Okla.1969). An insurance policy's words of exclusion are to be narrowly viewed. Conner v. Transamerica Insurance Co., 496 P.2d 770, 774 (Okla.1972).
The ambiguity in the instant policy was created by Holland-America's failure to specify the types of hazardous conditions against which it was unwilling to insure. Endorsement C specifically refers only to operations on "oceans, gulfs or bays". Assuming arguendo that Lake Maracaibo reasonably could be considered either a lake or a bay, we agree with the district court's construction of the policy language which is most favorable to An-Son. Holland-America drafted the policy. It could have included "lakes" within the exclusionary clause. It did not. It therefore must suffer the consequences.
The remaining question is whether it was proper for the district court to permit An-Son to recover its...
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