Chet Morrison Contractors, LLC v. One Beacon Am. Ins. Co., Civil Action No. 14–1958.
| Decision Date | 18 September 2015 |
| Docket Number | Civil Action No. 14–1958. |
| Citation | 132 F.Supp.3d 825 |
| Parties | CHET MORRISON CONTRACTORS, LLC v. ONE BEACON AMERICAN INSURANCE COMPANY, Markel American Insurance Company; and Continental Insurance Company. |
| Court | U.S. District Court — Eastern District of Louisiana |
Robert Seth Reich, Michael T. Wawrzycki, Reich, Album & Plunkett, LLC, Metairie, LA, for Chet Morrison Contractors, LLC.
John F. Emmett, Mark Andrew Hill, Randolph J. Waits, Waits, Emmett & Popp, New Orleans, LA, for Continental Insurance Company.
SARAH S. VANCE
, District Judge.
This is an insurance dispute involving a commercial general liability policy issued to Offshore Marine Contractors, Inc. by defendant Continental Insurance Company. Plaintiff Chet Morrison Contractors, LLC incurred litigation costs and was cast in judgment in an underlying litigation. Chet Morrison now seeks payment from Continental of costs associated with defending the underlying suit, as well as the amount of the judgment against it. Both parties have filed cross motions for summary judgment. For the following reasons, the Court GRANTS Continental's motion for summary judgment and DENIES Chet Morrison's motion for summary judgment.
On October 29, 2010, Offshore Marine Contractors, Inc. filed suit, alleging that Palm Energy Offshore, LLC and Chet Morrison Well Services, LLC failed to pay for the charter of one of Offshore Marine's vessels, the L/B NICOLE EYMARD. Offshore Marine also claimed that Palm Energy and Chet Morrison breached a separate oral contract that the parties allegedly formed after the L/B NICOLE EYMARD's legs became stuck in the seabed. Under the terms of the alleged oral contract, Palm Energy and Chet Morrison promised to pay Offshore Marine for repair costs and lost charter fees if Offshore Marine freed the vessel by cutting its legs.1
Chet Morrison later sued Palm Energy and H.C. Resources, LLC ("HCR") alleging that if Chet Morrison were found to have chartered the L/B NICOLE EYMARD, Palm Energy and HCR were obligated to pay Chet Morrison the cost of the charter, plus a 15% markup and interest for untimely payments. On February 6, 2013, the Court consolidated the two cases for trial.2
On June 24, 2013, the Court conducted a two-day bench trial and summarized its findings as follows:
In addition to the judgment against it, Chet Morrison incurred attorneys' fees and costs in defense of the Offshore Marine Litigation.4
Here, neither Chet Morrison nor Continental dispute: (1) that Chet Morrison tendered its defense and requested coverage from Continental; (2) that Continental has had sufficient time and information to make defense and coverage decisions; and (3) that Continental denied Chet Morrison's request for defense and indemnification.5
After the Court's bench trial in the Offshore Marine Litigation, Chet Morrison sued defendants Onebeacon America Insurance Company, Markel American Insurance Company, and Continental Insurance Company alleging that all three insurance companies failed to undertake Chet Morrison's defense in the Offshore Marine Litigation despite Chet Morrison's status as an "additional insured" under the insurance policies underwritten by the defendants. Thus, Chet Morrison seeks to recover the amount it was cast in judgment, as well as defense costs associated with the Offshore Marine Litigation. Chet Morrison also asserts derivative statutory bad faith claims relating to the denial of those defense costs.
On October 14, 2014, defendants Onebeacon and Markel moved the Court to dismiss the claims against them for failure to state a claim.6 The Court concluded that the only policy underwritten by the moving defendants provided no defense coverage to Chet Morrison. Accordingly, the Court granted the motion and dismissed Chet Morrison's claims against Onebeacon and Markel.7 Chet Morrison's claims against defendant Continental are the only claims remaining in this litigation.
At issue in this case is a Marine Services Liability Policy, ML 0871842 (the "Policy"), which Continental issued to Offshore Marine as the named insured.8 The Policy does not specifically identify Chet Morrison as an additional insured. Instead, the Policy contains a blanket additional insured endorsement, which provides:
WHO IS AN INSURED (Section II) is amended to include any person or organization as an insured under this policy to the extent you are obligated by an "insured contract" to include them as Additional Insureds, but only with respect to "your work."9
Under the terms of the endorsement, the prerequisite to additional insured coverage is an "insured contract" between Offshore Marine and Chet Morrison. In relevant part, the Policy defines "insured contract" as:
That part of any other contract or agreement pertaining to your business (including an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.10
Under the Policy, Continental agreed to cover all claims involving liability incurred because of "bodily injury" or "property damage":
We will pay those sums, in excess of the deductible, that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.11
The Policy limits coverage to instances in which "[t]he ‘bodily injury’ or ‘property damage’ is caused by an ‘occurrence’ that takes place in the ‘coverage territory.’ " Thus, one trigger for coverage under the Policy is the existence of a claim for "property damage." The Policy defines that term as follows:
In addition, the Policy contains an exclusion stating coverage does not apply to: " ‘[p]roperty damage to ... property you own, rent, or occupy.’ "13 Under the Policy, the term "you" refers to the Policy's named insured.14
Chet Morrison and Continental now move for summary judgment. Chet Morrison argues that it is covered as an additional insured under the Policy because Offshore Marine agreed to indemnify and hold Chet Morrison harmless under no less than five "insured contracts." Chet Morrison further argues that the allegations in the Offshore Marine Litigation triggered Continental's duty to defend Chet Morrison and indemnify it against any loss. Specifically, Chet Morrison points to Offshore Marine's allegations that the L/B NICOLE EYMARD became stuck in the seabed and that the vessel sustained severe damage when Chet Morrison cut its legs to set it free. According to Chet Morrison, these allegations demonstrate that Chet Morrison faced the possibility of becoming obligated to pay damages "because of property damage." Thus, Chet Morrison concludes that Continental must pay for defense costs incurred and losses that Chet Morrison sustained in the underlying litigation.
Continental assumes for the purpose of its motion for summary judgment that Chet Morrison was an additional insured under the Policy. Thus, Continental states that "the duty to defend would exist unless the claims asserted by [Offshore Marine] are unambiguously excluded" from coverage.15 Nonetheless, Continental contends that it had no duty to defend Chet Morrison in the Offshore Marine Litigation because coverage was foreclosed by several policy exclusions.
Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a)
; Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994). When assessing whether a dispute as to any material fact exists, the Court considers "all of the evidence in the record but refrains from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398–99 (5th Cir.2008). The Court must draw reasonable inferences in favor of the nonmoving party, but "unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law’ are insufficient to either support or defeat a motion for summary judgment." Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir.1985) (quoting 10B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil § 2738 (2d...
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