Lamar Advertising Co. v. Continental Cas. Co.

Citation396 F.3d 654
Decision Date07 January 2005
Docket NumberNo. 03-31075.,03-31075.
PartiesLAMAR ADVERTISING COMPANY, Plaintiff-Appellant, v. CONTINENTAL CASUALTY COMPANY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Mark D. Mese (argued), Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, LA, for Plaintiff-Appellant.

Paula M. Wellons (argued), Taylor, Wellons, Politz & Duhe, New Orleans, LA, for Defendant-Appellee.

Appeal from the United States District Court for the Middle District of Louisiana.

Before DeMOSS, STEWART and CLEMENT, Circuit Judges.

CARL E. STEWART, Circuit Judge:

The plaintiff-appellee, Lamar Advertising Company ("Lamar"), appeals from the grant of summary judgment in favor of Continental Casualty Company ("Continental"), the defendant-appellee, and the final judgment and order dismissing its claims against Continental.

The dispute arises after Continental, an Illinois-based insurance carrier, refused to indemnify and reimburse Lamar, a Louisiana-based advertising company, for litigation expenses and other costs Lamar suffered as a litigant in a California civil suit against RAL Construction & Maintenance, Inc. ("RAL"). RAL, the plaintiff in the California suit, was a California corporation that alleged in its pleadings, inter alia, that Lamar was liable for breach of contract because it failed to honor the terms of an agreement between it and two of Lamar's predecessors in interest. The California suit ultimately settled and resulted in Lamar incurring over $1.8 million dollars in defense costs and settlement payments. When Lamar sought coverage from its insurer, Continental, for the losses it incurred from the settlement agreement of the California suit, Continental refused to cover those losses on the basis that the injuries Lamar allegedly caused to RAL, as stated in RAL's second amended complaint, were not covered under Continental's policy. Lamar filed the instant suit against Continental seeking to obtain coverage. In refusing to extend coverage to Lamar, Continental looked to the language under RAL's second amended complaint, in the California suit, to determine whether Lamar was covered under Continental's policy ("the policy"). Continental's policy will cover Lamar only if Lamar causes property damage or bodily injury through negligent conduct, but will not provide coverage if Lamar causes damages by breaching a contractual obligation. The district court in this action subsequently analyzed the same language examined by Continental in RAL's second amended complaint. The court compared the language in the complaint with the language under the policy, and granted the motion for summary judgment in favor of Continental. The court reasoned that the allegations pleaded in RAL's complaint only suggest a claim for breach of contract. Because the pleadings did not demonstrate that Lamar had engaged in negligent conduct, the court concluded that Lamar's losses were not covered under the policy. In its final judgment and order, the district court dismissed Lamar's claims on the basis that the allegations pleaded in RAL's second amended complaint, contrary to Lamar's contentions, did not indicate facts sufficient to trigger Continental's coverage under its policy.

On appeal, Lamar argues that the district court erred in granting summary judgment in favor of Continental because (1) RAL alleged facts in its second amended complaint sufficient to demonstrate that RAL suffered property damage and personal injury as defined under the policy; and (2) there exists genuine issues of fact regarding Continental's obligation to indemnify Lamar, sufficient to preclude the district court's grant of the motion for summary judgment.

For the reasons herein, the district court's motion for summary judgment in favor of Continental and the final judgment and order dismissing Lamar's claims are AFFIRMED.

FACTUAL AND PROCEDURAL BACKGROUND

Lamar provides advertising displays throughout the United States on, among other things, municipal billboards, buses, bus shelters, and benches. Sometime in 1999, Continental issued a comprehensive general liability policy ("the policy") to Lamar. The policy afforded Lamar occurrence coverage for the period of January 1, 1999 through January 1, 2002. Under the terms of the policy, Continental agreed "to pay those sums that the insured becomes legally obligated to pay as damages [because of] property damage [or] personal injury to which this insurance applies (emphasis supplied)."

In reliance on the above language, Lamar sought coverage under the policy after becoming embroiled in a lawsuit before the United States District Court for the Southern District of California. The suit occurred shortly after Lamar, in the process of expanding its advertising business, acquired two other companies, Triumph Outdoor Holdings, L.L.C. ("Triumph"), and Transit America Las Vegas, L.L.C. ("Transit"). Lamar was named as one of the defendants, along with its predecessors in interest, Triumph and Transit, in a suit styled RAL Construction v. Lamar Advertising Co., et al., ("California litigation" or "California suit"). The California litigation ultimately settled and resulted in Lamar's losses.

According to the district court, the California suit arose as a result of a contract dispute between RAL and Lamar's predecessors in interest. The record indicates that as Triumph and Transit's successors in interest, Lamar assumed all obligations owed to RAL under a contract agreement entitled the Transit Shelter Maintenance and Construction Agreement ("the agreement"). RAL entered the agreement with Triumph and Transit to be the exclusive provider of maintenance and construction services to bus shelters owned or leased by Triumph and Transit. The agreement was to last for no less than ten years. RAL alleged Lamar breached the agreement by entering into new municipal contracts without using RAL's services and by ceasing to use RAL's services on existing contracts, after its acquisition of Triumph and Transit.

RAL's original complaint only sought damages for breach of contract; it did not assert any claims for tort liability. RAL filed a first amended complaint, but only named additional defendants; the substantive assertions merely re-alleged the breach of contract claim.1 Less than a year after filing the original complaint, RAL filed a second amended complaint. That complaint reasserted the breach of contract claim and included the following other claims: (1) interference with contractual relations, (2) intentional interference with prospective economic advantage, and (3) negligent interference with prospective advantage (collectively RAL's "three tort claims"). The three tort claims all appear to have been alternatives to the breach of contract claim.2 RAL's three tort claims are the essence of Lamar's suit against Continental seeking coverage from Continental's policy.

Through letters dated August 16, 2000 and February 1, 2001, Lamar notified Continental of the California litigation and provided the insurance carrier with copies of the original and amended complaints. Based on the language in the complaints, Continental denied Lamar's claims for defense and indemnification under the policy. In response, Lamar filed a declaratory action against Continental in a Louisiana state court, requesting a declaration of Continental's coverage liability, as well as reimbursement for the defense costs and settlement payments that resulted from the California litigation. Continental removed the suit to the United States District Court for the Middle District of Louisiana on the basis of diversity. Lamar filed a motion for partial summary judgment seeking a ruling that Continental owed a duty to provide Lamar a defense in the California litigation. Continental filed a cross-motion for summary judgment contending it had no duty to defend or indemnify Lamar in the California litigation. Citing specific provisions under the policy, Coverage A and Coverage B, Lamar argued in its motion for summary judgment that there existed allegations of property damage and/or personal injury in RAL's second amended complaint sufficient to trigger Continental's duty to defend Lamar. Lamar further argued that under the terms of the policy, Continental was obligated to indemnify Lamar for the defense and settlement costs it incurred from the California litigation.

Under Coverage A of the policy, Continental agrees "to pay those sums that the insured becomes legally obligated to pay as damages of `bodily injury' or `property damage'...."3 Under Coverage B, Continental agrees "to pay those sums that the insured becomes legally obligated to pay as damages because of `personal injury'...."4

Lamar argued in its motion that the pleadings under RAL's three tort claims alleged facts sufficient to trigger coverage under the policy.5 Lamar argued that RAL's pleadings asserted in RAL's interference with contractual relations claim alleged that Lamar knew of RAL's prior contractual relationship with Triumph and Transit, but nevertheless interfered with that relationship by persuading Triumph and Transit to terminate its relationship with RAL. Lamar contends that these allegations clearly demonstrate a tort claim for interference with contractual relations, sufficient to trigger the policy's coverage. Lamar additionally argued that RAL asserted allegations demonstrating that Lamar was liable under the interference with contractual relations claim because the pleadings asserted allegations to indicate that Lamar improperly solicited and hired RAL's employee and thereby caused RAL consequential loss of money and employees. As to the negligent interference with prospective advantage claim, Lamar argued that RAL's pleadings asserted allegations to indicate that Lamar negligently caused the termination of RAL's relationship with Triumph and Transit based on the allegations in the pleadings that stated that Lamar improperly solicited and...

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