Eagle Water, LLC v. Arch Ins. Co.
| Decision Date | 28 December 2018 |
| Docket Number | CIVIL ACTION NO. 17-250 |
| Court | U.S. District Court — Western District of Louisiana |
| Parties | EAGLE WATER, LLC v. ARCH INSURANCE CO. |
James J. Bolner, Jr., Law Office of James Bolner, New Orleans, LA, for Eagle Water, LLC.
Shannon Howard-Eldridge, Milling Benson Woodward, Mandeville, LA, Christopher William Smith, McCranie Sistrunk et al., Covington, LA, for Arch Insurance Co.
MEMORANDUM RULING
Currently pending before the Court is a motion for summary judgment filed by the Defendant, Arch Insurance Company ("Arch"). [Record Document 30]. After a review of the motion, opposition, reply, and supplements thereto filed by the parties, and for the following reasons, Arch's motion for summary judgment shall be GRANTED .
The facts giving rise to this insurance dispute are fairly straightforward. Plaintiff, Eagle Water, LLC ("Eagle Water"), owns a sewer system that services the Kingston Plantation neighborhood in Bossier City, Louisiana. Record Document 1-2, p. 3. For that sewer system, Eagle Water secured insurance from Arch. Record Document 32, pp. 6-7.
On January 5, 2016, a localized sewer collapse occurred near a manhole in Kingston Plantation. Record Document 30-2, p. 1. In addition to the collapsed manhole, Eagle Water discovered a sinkhole in a homeowner's yard. Record Document 32, p. 4. Eagle Water hired Pulley Construction to repair the sewer system. Record Document 32-3, p. 1. It also notified Arch of the situation, and Arch sent an adjustor to the site. Record Document 32-1, p. 3. Over the following seven to eight months, Pulley Construction excavated streets, driveways, sidewalks, and yards in order to install a bypass pump system and prevent sewage backup into any of the residences in the neighborhood. Id. at pp. 2-3, 6. Pulley Construction's work also involved repairing sewer mains and excavating and replacing the sunken manhole. Record Document 30-1, pp. 10-11. Eagle Water paid Pulley Construction $ 608,952.19 to perform this work. Record Document 32-1, p. 1. An engineer hired by Eagle Water represented that if the bypass system had not been installed, "there may have been" (1) a backup of raw sewage into the homes served by the affected manhole; (2) a raw sewage spill onto lawns; and/or (3) raw sewage that spilled into the storm sewer system and consequently into Willow Chute Bayou. Id. at p. 6.
In August of 2016, Arch denied Eagle Water's claim for reimbursement, and this suit followed. Eagle Water seeks a declaratory judgment that coverage exists under the insurance contract; recovery of the $ 608,952.19 it paid Pulley Construction for measures that prevented and/or minimized the damages Arch would have had to pay otherwise; and attorney's fees, costs, and penalties. Arch filed the instant motion for summary judgment contending no coverage exists for Eagle Water's repair work in Kingston Plantation. Eagle Water opposes that motion, submitting that while coverage is not guaranteed under the plain language of the contract, persuasive jurisprudence compels the conclusion that coverage should not be barred under the circumstances of this case.
Based upon the briefing, it is clear to the Court that Arch does not necessarily dispute that Eagle Water's actions prevented the backup and/or spillage of sewage. Rather, as a factual matter, it disputes whether all of Pulley Construction's work was designed to address the initial manhole collapse or, instead, whether the scope of the project expanded over time to address other issues. The resolution of those factual disputes is not material, however, as this case turns on the legal question of whether coverage exists under the terms of the governing insurance contract.
Federal Rule of Civil Procedure 56(a) directs that a court "shall grant summary judgment if 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."1 Summary judgment is appropriate when the pleadings, answers to interrogatories, admissions, depositions and affidavits on file indicate that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When the burden at trial will rest on the non-moving party, the moving party need not produce evidence to negate the elements of the non-moving party's case; rather, it need only point out the absence of supporting evidence. See id. at 322-323, 106 S.Ct. 2548.
Once the movant carries its initial burden, it is incumbent upon the non-moving party to demonstrate the existence of a genuine dispute as to a material fact. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Wallace v. Texas Tech. Univ., 80 F.3d 1042, 1047 (5th Cir. 1996) (citations omitted). If the motion is properly made, however, Rule 56(c) requires the nonmovant to go "beyond the pleadings and designate specific facts in the record showing that there is a genuine issue for trial." Wallace, 80 F.3d at 1047 (citations omitted). This burden is not satisfied with some metaphysical doubt as to the material facts, by conclusory or unsubstantiated allegations, or by a mere scintilla of evidence. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). However, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1985) (citations omitted); Reid v. State Farm Mut. Auto Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986) ().
Additionally, Local Rule 56.1 requires the moving party to file a statement of material facts as to which it contends there is no genuine issue to be tried. Pursuant to Local Rule 56.2, the party opposing the motion for summary judgment must set forth a "short and concise statement of the material facts as to which there exists a genuine issue to be tried." All material facts set forth in the statement required to be served by the moving party "will be deemed admitted, for purposes of the motion, unless controverted as required by this rule." Local Rule 56.2.
Under the Erie doctrine, federal courts sitting in diversity apply the substantive law of the forum state and federal procedural law. See Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In the instant case, it is undisputed that Louisiana law applies to Eagle Water's cause of action.
Before turning to a consideration of the policy language in this case, the Court will examine Louisiana law as to the interpretation of insurance policies. An insurance policy is a contract between the parties, and it is thus construed using the rules of contract interpretation found in the Civil Code. La. Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So.2d 759, 763 (La. 1994). Individual words and phrases used in an insurance policy are to be construed using their plain, "generally prevailing meaning," La. Civ. Code art. 2047, and the insurance policy as a whole must be construed "according to the entirety of its terms and conditions." La. R.S. § 22:881 ; see also La. Civ. Code art. 2050 (). When the words of an insurance contract are clear and explicit and lead to no absurd consequences, the contract must be enforced as written and no further interpretation may be made in search of the parties' intent. La. Civ. Code art. 2046 ; Peterson v. Schimek, 98-1712 (La. 3/2/99), 729 So.2d 1024, 1028. The plaintiff bears the ultimate burden of proving that the claim in question falls within the policy's coverage. Doerr v. Mobil Oil Corp., 2000-0947 (La. 12/19/00), 774 So.2d 119, 124. The insurer, however, bears the burden of proving that policy limits or exclusions apply. Tunstall v. Stierwald, 2001-1765 (La. 2/26/02), 809 So.2d 916, 921. The purpose of liability insurance is to afford the insured protection from damage; therefore, claims and policies should be construed to effect, and not to deny, coverage. Reynolds v. Select Props, Ltd., 93-C-1480 (La. 4/11/94), 634 So.2d 1180, 1183.
In the event an insurance clause is found to be ambiguous, it must be construed against the insurer. Breland v. Schilling, 550 So.2d 609, 610 (La. 1989) (citing La. Civ. Code art. 2056 ). "Ambiguity will also be resolved by ascertaining how a reasonable insurance policy purchaser would construe the clause at the time the insurance contract was entered." Id. at 610-11 (citing La Civ. Code art. 2045 ). Summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts, under which coverage could be afforded. Jones v. Estate of Santiago, 2003-1424 (La. 4/14/04), 870 So.2d 1002, 1010 (citing Reynolds, 634 So.2d at 1183 ).
In the instant case, Eagle Water seeks coverage only under the liability portion of the Arch policy. Record Document 46, p. 1. Thus, the Court will disregard the policy language concerning first-party coverage, as well as counsels' arguments related thereto. Section I of Arch's liability policy provides:
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