Deshotels v. SHRM Catering Services, Inc.
| Decision Date | 01 April 1988 |
| Docket Number | No. 87-4798,87-4798 |
| Citation | 842 F.2d 116 |
| Parties | Joseph Mike DESHOTELS, Plaintiff, v. SHRM CATERING SERVICES, INC., Defendant-Third-Party Plaintiff-Appellee, v. The LOUISIANA INSURANCE GUARANTY ASSOCIATION, Third-Party Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Judith R. Atkinson, Thomas E. Balhoff, Mathews, Atkinson, Guglielmo, Marks & Day, Baton Rouge, La., for third-party defendant-appellant.
Thomas G. O'Brien, Edwin C. Laizer, Adams & Reese, New Orleans, La., for defendant-third-party plaintiff-appellee.
Alex D. Chapman, Jr., J. Wendel Fusilier, VillePlatte, La., for amicus curiae Joseph Mike Deshotels.
Appeal from the United States District Court for the Western District of Louisiana.
Before GEE, RUBIN, and SMITH, Circuit Judges.
An employer whose insurer became insolvent settled its employee's claim for work-related maritime injuries and sought reimbursement from the Louisiana Insurance Guaranty Association. The case raises an important and unsettled issue of Louisiana law concerning the Association's obligation to pay a claim brought for maritime-related injuries under a general workers' compensation policy with an endorsement for an employer engaging in maritime operations, and the same issue is raised in many other appeals pending before us and in a number of other cases pending in federal district courts and in state courts. For these reasons, we have decided to certify the question to the Supreme Court of Louisiana. So that we may certify only a single dispositive question, however, we first determine that should the employer prevail against the Association, it will be entitled to reimbursement for attorney's fees and other costs it incurred in defending the employee's claim and in prosecuting its third-party demand against the Association, because the Association failed to challenge the request for attorney's fees in the district court.
Joseph Mike Deshotels was a night cook employed by SHRM Catering Services, Inc., aboard the MR. DEMP, a jack-up rig operating in the Gulf of Mexico. On September 26, 1984, while working on the vessel, Deshotels became ill with cellulitis and had to be transported by crewboat to a hospital on land. He alleges that, while he was in a personnel basket being transferred to the crewboat, the crane operator lowering the basket dropped or slammed it to the deck of the crewboat from a height of about 10 feet. As a result, Deshotels contends, he suffered injuries to his cervical and lumbar regions that necessitated two surgeries.
In May 1985, Deshotels sued SHRM and Magnum-Marine Drilling Corporation, which owned the jack-rig and employed the crane operator, for negligence under both general maritime law and the Jones Act. 1 He asserted a claim against SHRM for maintenance and cure and against Magnum-Marine for breach of its duty to maintain a seaworthy vessel.
At the time of the accident, SHRM was insured by a "Standard Workmen's Compensation and Employer's Liability Policy" issued by Transit Casualty Company, a Missouri insurer. The policy included a maritime endorsement, which applied to "masters or members of the crews of vessels," noted that SHRM was engaged in offshore catering operations in Louisiana, and insured SHRM for its liability to provide transportation, wages, maintenance, and cure to an employee who had suffered bodily injury by accident or disease.
In December 1985, however, Transit was declared insolvent, and the Louisiana Commissioner of Insurance cancelled all its policies. SHRM then filed a third-party demand for reimbursement from the Louisiana Insurance Guaranty Association (LIGA) pursuant to the State's Insurance Guaranty Association Law, passed in 1970. 2 That law created LIGA as a non-profit, unincorporated entity to pay valid claims, up to statutory limits, in the event an insurer who was a member of the Association became insolvent. 3 In addition, it set up a mechanism for assessing insurers covered by LIGA for the costs of maintaining the fund to pay such claims. 4 The law, however, excludes from LIGA coverage "ocean marine insurance," 5 and LIGA denied liability to SHRM on the ground that Deshotels's claim involved "ocean marine insurance" because it sought compensation under maritime laws for maritime-related injuries.
Magnum-Marine filed for bankruptcy in Texas, and all proceedings against it were stayed. Prior to trial, Deshotels settled his claim with SHRM for $75,000, so the case proceeded solely on SHRM's third-party demand against LIGA. SHRM filed a motion for summary judgment, which the parties agreed to convert to a submission for purposes of a final judgment. The parties filed briefs, submitted depositions and affidavits, and stipulated, among other facts, that the premiums SHRM had paid to Transit on the category of policies at issue here had been included in calculating the assessments that Transit, a member of LIGA, was required to pay yearly to LIGA to maintain the Insurance Guaranty Fund. The parties also agreed that LIGA would introduce testimony given in two other cases 6 by marine insurance industry experts concerning the meaning the industry generally attached to "ocean marine insurance."
The district court ruled that the policy was not "ocean marine insurance" and LIGA was therefore obligated to pay the amount of Deshotels's claim, as well as the expenses SHRM had incurred in the defending and prosecuting the action. The court noted that policies of this type had been figured in calculating the assessments that Transit would pay to LIGA and it would be "incongruous" to exclude it from the coverage provided by LIGA. The court therefore entered a judgment awarding SHRM $75,000 for the amount it had paid Deshotels to settle his claim; $24,143.79 in maintenance and cure benefits it had paid him between December 1985 and August 1987; and $26,606.84 in attorney's fees it had incurred through July 31, 1987, in defense of Deshotels's claim and prosecution of its third-party demand. The court also ruled that SHRM would be entitled to attorney's fees, costs, and expenses it had incurred after July 31, 1987, these to be LIGA did not ask the district court to reconsider its judgment, but appealed to this court. Its appeal was consolidated with seven others raising identical or closely-related issues, to await resolution by the Louisiana courts of the same question in a state case, Boudreaux v. LeBlanc Welding & Construction, Inc. In October 1987, the Louisiana First Circuit Court of Appeals held in Boudreaux that a worker's compensation policy with a marine endorsement similar to the SHRM policy was not "ocean marine insurance" and LIGA therefore was liable. 7 In February 1988, however, the Louisiana Supreme Court vacated the decision and remanded "for trial on the merits and full development of the facts concerning liability, the lower courts thereafter to rule on questions and extent of coverage." 8 It appearing that the Louisiana courts would not soon have opportunity to resolve the coverage issue, we proceeded with this appeal.
determined after the disposition of any appeal.
The dispositive issue is whether this claim for maritime-related injuries, brought on the Standard Worker's Compensation and Employer's Liability Policy with a marine endorsement, involves "ocean marine insurance" and is therefore excluded, by virtue of La.Rev.Stat.Ann. 22:1377, from the coverage of the Insurance Guaranty Association Fund.
We believe this issue is appropriate for certification to the Louisiana Supreme Court. This issue or closely-related ones are raised in eight cases pending in this court, 43 cases in the federal district courts of Louisiana, and 22 cases in the state courts of Louisiana. 9 Some of these cases have been under submission in this court for more than a year; and in view of the Louisiana Supreme Court's remand for a trial in the Boudreaux state court action, it appears unlikely that the Louisiana appellate courts will have opportunity to resolve the question soon. The federal district courts have reached conflicting conclusions, 10 and after Boudreaux, no state precedents provide clear guidance. 11 Because this issue of Louisiana law is both important and unsettled, and because our resolution of it might conflict with the conclusion reached by state courts, which indeed are the final authority on state law, the question is most appropriately decided by the state courts.
We may certify a question, however, only if it controls the outcome of the case. 12 Therefore, as we did recently in Petroleum Helicopters, Inc. v. Avco Corp., 13 we will first decide the question concerning SHRM's entitlement to attorney's fees it incurred in prosecuting the third party claim, although that question might be mooted by resolution of the issue concerning "ocean marine insurance."
Concerning whether SHRM is entitled to attorney's fees, LIGA argues that a party seeking coverage generally bears its own fees and that public policy reinforces this general rule when the claimant seeks reimbursement from a fund, such as LIGA, that must remain available to cover valid claims. LIGA does not here challenge that part of the district court's ruling that held it liable for expenses SHRM incurred in defending SHRM argues that we should refuse to consider LIGA's challenge to the award of attorney's fees because LIGA failed to object to the fee request in the district court. This court generally declines to address issues not raised below unless the issue presents a pure question of law and to ignore it would result in a miscarriage of justice. 14 If resolution of the new issue turns on facts that would have been developed in the district court had the issue been raised there, this court will refuse to consider the issue. 15
against Deshotels's claim; its complaint is with the award of fees connected with the litigation between SHRM and LIGA.
To the extent LIGA argues...
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