Backhus v. Transit Cas. Co.

Decision Date12 September 1989
Docket NumberNo. 88-C-2722,88-C-2722
Citation549 So.2d 283
PartiesAlma Bennett BACKHUS and Lawrence H. Backhus v. TRANSIT CASUALTY COMPANY, Bruce Boat Rentals, Inc., Placid Oil Company, Greyship Corporation and Louisiana Insurance Guaranty Association. 549 So.2d 283, 1990 A.M.C. 417
CourtLouisiana Supreme Court

R. Scott Ramsey, Jr., Morgan City, for applicant.

David Barnett, Peter Hilbert, Jr., McGlinchey, Stafford & Mintz, New Orleans, Carey Guglielmo, Thomas E. Balhoff, Mathews, Atkinson, Guglielmo, Marks & Day, Baton Rouge, R.A. Redwine, Sessions, Fishman, Rosenson, Boisfontaine & Nathan, New Orleans, for respondents.

DIXON, Chief Justice.

The principal issue presented by this maritime personal injury suit is whether "protection and indemnity" insurance constitutes "ocean marine insurance" under the terms of the Louisiana Insurance Code and the Insurance Guaranty Association Law, R.S. 22:1375 to 22:1394. Under this law, the Louisiana Insurance Guaranty Association provides payment for "covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer...." R.S. 22:1376. Although the statute offers this protection for "direct insurance," it nevertheless excepts from protection certain types of direct insurance, among which is "ocean marine insurance." R.S. 22:1377.

The litigation now before this court arose out of an injury plaintiff Alma Backhus sustained while on board the M/V Patricia Bruce. On May 30, 1983, the M/V Patricia Bruce arrived at the Placid Oil Company dock in Morgan City, Louisiana, carrying Teascorp Energy Services' workover equipment, which it had transported from one of Placid's platforms in the Gulf of Mexico. While the equipment was being unloaded, Alma Backhus, the vessel's cook, left to purchase groceries. When Mrs. Backhus returned, she allegedly slipped and fell in a puddle of oil on the deck of the vessel where the workover equipment had rested. According to the vessel's captain, the oil was not on the deck prior to the equipment's having been placed there.

Mrs. Backhus and her husband Lawrence brought suit under the Jones Act, 46 U.S.C. App. sec. 688, and under the General Maritime Law against (1) Bruce Boat Rentals, Inc., her employer and the operator of the vessel via bareboat charter; (2) Greyship Corporation, the title owner of the M/V Patricia Bruce; (3) Placid Oil Company, the company for which the vessel was working at the time of the accident; and (4) Transit Casualty Company, an insurer of Bruce Boats under a protection and indemnity policy and under a Standard Workers' Compensation and Employers' Liability policy. Although both policies provided maintenance and cure coverage, the workers' compensation policy contained an escape clause making such coverage available only if a protection and indemnity policy were not in force.

Shortly after this suit was filed, Bruce Boats sought Chapter 11 protection. A few weeks later, the Missouri Insurance Commissioner declared Transit insolvent, placed it in receivership, and canceled all its policies of insurance effective December 20, 1985. The plaintiffs then amended their petition to add the Louisiana Insurance Guaranty Association and Angelina Casualty Company, an excess insurer of Bruce Boats on the Standard Workers' Compensation and Employers' Liability policy, as defendants. Plaintiffs later added Teascorp (now presumably called Energy Workover), the owner of the equipment that allegedly leaked, and the vessel itself, the M/V Patricia Bruce, as defendants.

Mrs. Backhus sought maintenance and cure from the Louisiana Insurance Guaranty Association and from Angelina, both of which denied they had any such obligation. The trial court agreed with Angelina that the protection and indemnity policy, not the workers' compensation policy, was the policy in force at the time of the accident and that, consequently, Angelina had no liability under the law. The court also ruled that protection and indemnity insurance is a type of "ocean marine insurance" and that under R.S. 22:1377, the Louisiana Insurance Guaranty Association had no liability to Mrs. Backhus.

Following denial of plaintiffs' motion for maintenance and cure, the Louisiana Insurance Guaranty Association and Angelina brought motions for summary judgment seeking dismissal of plaintiffs' claims against them. The trial court granted their motions. Later, Greyship brought a motion for summary judgment, which the court also granted.

The court of appeal consolidated the plaintiffs' devolutive appeals from the grants of summary judgment and affirmed the trial court's decisions dismissing all three defendants. Backhus v. Transit Casualty Co. et al, 532 So.2d 447 (La.App. 1st Cir.1988), writ granted, 540 So.2d 322 (La.1989). Regarding the plaintiffs' claims against Greyship, the appellate court found that a valid bareboat charter existed; that Greyship did not create the condition causing the accident and thus was not negligent; and that Greyship was not liable under the law for the transient unseaworthy condition that occurred on board the bareboat chartered vessel.

The court also agreed with Angelina that the workers' compensation policy language restricting its application if a protection and indemnity policy were "in force" was unambiguous; that the date of the accident was the date on which the plaintiffs' claims arose; that a protection and indemnity policy was "in force" on that date; and that Angelina had no exposure as excess carrier because the workers' compensation policy was not the primary policy.

Concerning the claims against the Louisiana Insurance Guaranty Association, the court of appeal noted the lack of a statutory definition of "ocean marine insurance," as well as a dearth of state jurisprudence interpreting the scope of the term. The court focused instead on the definition in the legal literature of "ocean marine insurance," a definition that includes protection and indemnity insurance as a traditional type of marine insurance indemnifying a shipowner or operator against liability for damage to property, to cargo, and to crew members for personal injury or loss of life.

This court granted writs to consider whether the lower courts properly granted the motions for summary judgment in favor of the Louisiana Insurance Guaranty Association, Angelina, and Greyship. For the reasons set out below, we affirm.

LIABILITY OF LOUISIANA INSURANCE GUARANTY ASSOCIATION

Mrs. Backhus seeks compensation from the Louisiana Insurance Guaranty Association for the maintenance and cure payments due her under the Transit protection and indemnity policy. R.S. 22:1377, however, excludes from Louisiana Insurance Guaranty Association coverage "ocean marine insurance." Accordingly, this court must first determine whether the protection and indemnity policy or the workers' compensation policy was in effect. If the workers' compensation policy was in effect, then under this court's reasoning in Deshotels v. SHRM Catering Services, Inc., 538 So.2d 988 (La.1989), the Louisiana Insurance Guaranty Association must stand in the shoes of the insolvent insurer and must assume Transit's liability for maintenance and cure payments to Mrs. Backhus. If, however, as the Louisiana Insurance Guaranty Association contends, the protection and indemnity policy and not the workers' compensation policy was in effect, then the Louisiana Insurance Guaranty Association has no liability under the statute because R.S. 22:1377 exempts from Louisiana Insurance Guaranty Association coverage "ocean marine insurance," which, argues the Louisiana Insurance Guaranty Association, encompasses Protection and Indemnity insurance.

1. The policy "in force" at the time of the accident

At the time of Mrs. Backhus' accident, Bruce Boats was covered by several policies, two of which are important in this litigation. The protection and indemnity policy issued by Transit provided coverage in lines 10-16 of the policy for personal injury claims. The policy further provided in endorsement number six that the policy's coverage of additional assureds was identical to that of the vessel's owner and that the policy provided primary coverage:

"It is expressly agreed that the insurance afforded by this policy is, and for all purposes shall be deemed to be primary of all other insurance, and any 'other insurance clause' contained in this policy is hereby deleted." 1

The workers' compensation policy Bruce Boats held with Transit also provided coverage for maintenance and cure:

"To pay on or behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease...." Coverage B, Maritime Endorsement to Standard Workers' Compensation and Employers' Liability policy.

The workers' compensation policy did contain, however, an escape clause that prevented its coverage from attaching "with respect to any liability of the insured if there is in force for the insured or for his benefit a protection and indemnity or similar policy which would cover any part of such liability except for an "other insurance clause, deductible or limitation of liability clause or similar clauses."

The plaintiffs urge this court to adopt the position that this exclusion became inapplicable when the Missouri Commissioner of Insurance canceled all Transit policies. Since the protection and indemnity policy was no longer in effect, plaintiffs reason that the coverage they seek was available under the workers' compensation policy. Such a result assumes that when the Missouri Commissioner of Insurance ordered all Transit policies canceled, the workers' compensation policy remained in force longer than the protection and indemnity policy and that all personal injury coverages under the protection and indemnity policy defaulted to the workers'...

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