Gulf Island, IV v. Blue Streak Marine, Inc.

• Decision Date: 10 September 1991
• Docket Number: No. 90-3564,90-3564
• Citation: 940 F.2d 948
• Parties: GULF ISLAND, IV, a Louisiana Partnership, and Gulf Island, IV, Inc., Plaintiffs-Appellants, v. BLUE STREAK MARINE, INC., Blue Streak Offshore, Inc., and Blue Streak Operations, Inc., Defendants-Third Party Plaintiffs-Appellants, v. EMPLOYERS INSURANCE OF WAUSAU, Defendant-Appellee, and Underwriters at Lloyd's London subscribing to Policy # MC9792SAH, Defendant-Appellee-Third Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 948

940 F.2d 948

GULF ISLAND, IV, a Louisiana Partnership, and Gulf Island, IV, Inc., Plaintiffs-Appellants, v. BLUE STREAK MARINE, INC., Blue Streak Offshore, Inc., and Blue Streak Operations, Inc., Defendants-Third

Party Plaintiffs-Appellants, v. EMPLOYERS INSURANCE OF WAUSAU, Defendant-Appellee, and Underwriters at Lloyd's London subscribing to Policy #

MC9792SAH, Defendant-Appellee-Third Party

Defendant-Appellee.

No. 90-3564.

United States Court of Appeals, Fifth Circuit.

Sept. 10, 1991.

John T. Nesser, III, Liane C. King, Nesser, King & LeBlanc, New Orleans, La., for Gulf Island IV, etc.

Steven J. Koehler, Richard K. Leefe, Leefe, Donelon, Donelon & Koehler, Metairie, La., for Blue Streak, et al.

Charles M. Steen, James H. Roussel, Phelps, Dunbar, New Orleans, La., for Underwriters.

James M. Tompkins, Gerry Deegan, Galloway, Johnson, Tompkins & Burr, New Orleans, La., for employers.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before REAVLEY, POLITZ and JOLLY, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

Gulf Island IV is the owner of the vessel L/B GULF ISLAND IV. Blue Streak Marine, Inc., is the vessel's operator. Each appeal the district court's order granting summary judgment to Employers Insurance of Wausau and to Underwriters at Lloyd's, London. These insurance companies denied coverage for loss of use of, and unpaid property damage to, the GULF ISLAND IV after it capsized in the Gulf of Mexico. The district court entered separate judgment for each of the insurers, holding that the insurance policies did not cover the claims. Our review of the undisputed facts and the policies lead us to affirm as to Wausau. With respect to Lloyd's, however, we find that remand is necessary.

I

This appeal arises from the district court's separate orders granting summary judgment in favor of the two above-named insurance companies. The factual background is the same. On June 28, 1985, the GULF ISLAND IV suffered severe damage when one of its jackup legs collapsed, causing it to capsize off the coast of Texas in the Gulf of Mexico. ¹ At the time of the accident, the vessel was owned by Gulf Island IV, a Louisiana general partnership. ² The vessel, however, was being operated by another partnership collectively known as Blue Streak Gulf Island Operations ("BS-GIO"). ³ On the date of the loss, the vessel was covered by two insurance policies issued by Employers Insurance of Wausau. One was a Hull policy, and the other was a policy of Protection & Indemnity insurance ("P & I"). Both policies listed the named assured as: Gulf Island Marine, Blue Streak Gulf Island Marine Operations, Inc., Oceanic Fleet, Inc.; all were listed at a single Baton Rouge address. The policies also listed the GULF ISLAND IV on its schedule of covered vessels.

Finally, also in effect at the time of the accident was an umbrella policy issued by Underwriters at Lloyd's, London, through its local agent, Pateman's Underwriters.

Following the accident, by July 2, 1985, Gulf Island had promptly presented various claims to Wausau under the Hull policy, seeking payment for property damage and recompense for all personal injury claims. Wausau and American Marine Underwriters ⁴ participated actively in the investigation of the casualty. American Marine immediately appointed counsel and a marine surveyor to represent its interests during the investigation and vessel repair periods subsequent to the casualty. There was an extensive investigation by the interested parties (except for Lloyd's). Naval architects, mechanical engineers, and metallurgists were retained by and on behalf of Gulf Island, Wausau and American Marine to investigate scientifically the causes of the casualty. Ultimately, Wausau paid some of the claims, but, at least initially, denied or delayed paying others.

As a result of Wausau's partial non-payment, on December 16, 1985, Gulf Island sued Wausau and American Marine Underwriters, alleging that the damage was caused by the negligent loading or handling of cargo on the vessel and/or by negligence of its crew. That suit sought declaratory judgment that the damage was covered by the Hull policy; sought penalties under La.R.S. 22:658 for Wausau's arbitrary refusal to pay the claims within 60 days; and sought damages for loss of use of the vessel after the hurricane incident because of Wausau's refusal to pay for certain repairs in early October 1985.

Thereafter, a settlement of all claims involved was apparently reached in consideration of substantial payments by Wausau to Gulf Island under the Hull policy and to third parties under the P & I policy. Accordingly, on September 26, 1986, the district court entered a sixty-day order of dismissal. ⁵ On October 6, 1986, counsel for Gulf Island wrote Wausau's counsel:

This confirms that the referenced suit has been settled, and we have agreed to a dismissal in exchange for a payment in the amount of $1,000.00.

I assume that you will prepare the necessary settlement papers and forward them to me along with the necessary settlement draft.

On November 10, 1986, Wausau cut a check to Gulf Island in the sum of $1,000.00 and sent the check and a receipt-and-release to same. Gulf Island, however, failed to sign the release or to return the check and the instant litigation followed.

II

On June 27, 1988, Gulf Island filed the present suit for loss of use of the GULF ISLAND IV and for property damage not reimbursed by the other insurance. ⁶ Blue Streak, in turn, filed a cross-claim against Wausau for indemnity of any judgment Gulf Island may obtain against any of them, and a third party complaint against Lloyd's, as its alleged excess insurer.

Wausau thereafter filed a motion for summary judgment, asserting a number of reasons why its P & I policy did not provide coverage. The district court granted the motion, holding that the GULF ISLAND IV was a "scheduled vessel" in the P & I policy.

Subsequently, Lloyd's also filed a motion for summary judgment, asserting numerous reasons why its umbrella policy did not provide coverage, and arguing that the claims and third-party claims were barred by the doctrine of laches. The district court found that, although Gulf Island gave prompt notice of the June 1985 accident to Wausau and American Marine Underwriters, ⁷ Pateman's Underwriters (Lloyd's) did not receive any notice of the accident, or of any potential claims from the accident, until service was made of the Louisiana Secretary of State on November 28, 1989. At the earliest, therefore, the district court concluded that Lloyd's did not receive notice until over four and one-half years after the accident. The district court granted Lloyd's motion for summary judgment, holding that a failure to comply with the notice provision of the policy barred all claims.

The district court, pursuant to Fed.R.Civ.P. 54(b), entered a partial final judgment in favor of Wausau and Lloyd's. Gulf Island and Blue Streak appeal.

III

A

Our review of the district court's decision granting summary judgment is de novo. Amoco Prod. Co. v. Lujan, 877 F.2d 1243 (5th Cir.1989); Degan v. Ford Motor Co., 869 F.2d 889 (5th Cir.1989). We must determine whether the evidence, viewed in the light most favorable to Gulf Island and Blue Streak, shows that there is no genuine issue of material fact, and that Wausau and Lloyd's are entitled to judgment as a matter of law. Brock v. Republic Airlines, Inc., 776 F.2d 523, 527 (5th Cir.1985); John v. State of Louisiana (Bd. of Trustees for State Colleges and Univ.), 757 F.2d 698 (5th Cir.1985). In reviewing the summary judgment award, however, we are free to affirm the dismissal on any ground presented to the district court for consideration, even though it may not have formed the basis for the district court's decision. Riley Inv. Co. v. Commissioner, 311 U.S. 55, 59, 61 S.Ct. 95, 97, 85 L.Ed. 36 (1940); Church of Scientology v. Cazares, 638 F.2d 1272, 1281 (5th Cir.1981).

Moreover, in construing the marine insurance policies at issue, Louisiana rules of construction are applicable. See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955); Truehart v. Blandon, 884 F.2d 223, 226 (5th Cir.1989); Transco Exploration Co. v. Pacific Employers Ins., 869 F.2d 862, 863 (5th Cir.1989). Louisiana law provides that insurance contracts are to be construed "as a whole, and one portion thereof should not be construed separately at the expense of disregarding another." Pareti v. Sentry Indemnity Co., 536 So.2d 417, 420 (La.1988). Further, the terms of insurance contracts must be construed in their usual and ordinary sense. Calcasieu-Marine National Bank of Lake Charles v. American Employers' Insurance Co., 533 F.2d 290, 295 (5th Cir.1976). Finally, if an ambiguity exists in the policy, then the ambiguous policy provision is to be construed against the insurer. La.Civ.Code art. 2056; Breland v. Schilling, 550 So.2d 609, 910 (La.1989).

B

We first address whether the district court erred in granting Wausau's motion for summary judgment. All parties agree that, because the collapse of the GULF ISLAND IV was not caused by a collision, Article (5) of the Wausau P & I policy governs the coverage issues. The parties, however, offer differing interpretations of that provision. The relevant terms of the policy are as follows:

The Assurer herby [sic] undertakes to make good to the Assured or the Assured's executors, administrators and/or successors, all such loss and/or damage and/or expense as the Assured shall as owners of the vessel named herein have become liable to pay and shall pay on-account of the liabilities, risks, events and/or happening herein set forth:

* * * * * *

(5) Liability for loss of or damage to any other vessel or craft, or to property on such other vessel or craft, not caused by collision, provided such liability does not arise by reason of a contract made by the assured.

Where there...