Nucor Steel La., LLC v. HDI Glob. Ins. Co.

• Decision Date: 01 June 2022
• Docket Number: 21-1904
• Parties: NUCOR STEEL LOUISIANA, LLC ET AL. v. HDI GLOBAL INSURANCE CO.
• Court: U.S. District Court — Eastern District of Louisiana

NUCOR STEEL LOUISIANA, LLC ET AL. v. HDI GLOBAL INSURANCE CO.

No. 21-1904

United States District Court, E.D. Louisiana

June 1, 2022

SECTION I

ORDER & REASONS

LANCE M. AFRICK UNITED STATES DISTRICT JUDGE

Before the Court are two motions^[1] for judgment on the pleadings, filed by defendant, HDI Global Insurance Company (“HDI”). Plaintiffs, Nucor Steel Louisiana, LLC (“Nucor”) and Dynamic Environmental Services, LLC (“DES”) oppose^[2] the motions. HDI filed replies^[3] in support of the motions. For the reasons that follow, the Court will grant the motions.

I. BACKGROUND

The facts, as alleged in the complaint, are as follows: HDI issued a commercial general liability policy (“the HDI Policy” or “the Policy”) to DES, providing coverage between November 1, 2016 and November 1 2017.^[4] On October 10, 2016, Nucor and DES entered into an independent contractor agreement (“the ICA”), which required, among other things, that DES defend Nucor against, and indemnify Nucor for, claims asserted against Nucor by DES employees, and that DES name Nucor as an additional insured in the HDI Policy.^[5] An additional insured endorsement was incorporated into the HDI Policy, naming as “additional insureds” entities “as required by written contract.”^[6] The parties agree that this endorsement had the effect of adding Nucor as an additional insured under the HDI Policy.^[7]

On May 10, 2018, Bob Dale Comeaux II (“Comeaux”), a DES employee, filed a civil action (“the Comeaux litigation”) in the 23rd Judicial District Court for the Parish of St. James, alleging that he was exposed to hydrogen sulfide gas at Nucor's plant facility on May 15, 2017.^[8] Comeaux named as defendants Nucor, DES, and a third entity not a party to the instant action.^[9]

On May 10, 2019, one year after Comeaux filed suit, attorneys representing Nucor tendered Nucor's defense and indemnification to DES.^[10] On January 21, 2020, HDI sent correspondence to Nucor's counsel, agreeing to defend Nucor, but reserving rights as to indemnity.^[11] On July 2, 2021, Comeaux's claims as to all three defendants were settled through payment by HDI and the insurer for a third defendant.^[12] On August 4, 2021, HDI offered to reimburse Nucor's post-tender defense costs, totaling $37, 067.47.^[13] Nucor rejected HDI's offer, and requested that HDI reimburse all of Nucor's defense costs, including those costs incurred pre-tender, totaling $135, 950.75.^[14]

Nucor then approached DES directly, demanding reimbursement of pre- and post-tender defense costs pursuant to the indemnity provision in the ICA.^[15] Nucor stated that it would institute a suit against DES to recover these costs if DES did not voluntarily reimburse them.^[16] On August 9, 2021, DES sent a letter to HDI, requesting that HDI reconsider its position regarding the reimbursement of Nucor's pre-tender defense costs, and stating that DES would have no choice but to reimburse Nucor for its pre- and post-tender defense costs if HDI refused to do so.^[17] Ultimately, DES reimbursed Nucor for its pre- and post-tender defense costs, and Nucor assigned its claims, under the ICA and the HDI Policy, to DES.^[18]

In its first motion for judgment on the pleadings, HDI requests that judgment be entered in HDI's favor, limiting its obligations to the post-tender defense costs incurred by Nucor in the Comeaux litigation and dismissing the remainder of plaintiffs' claims with prejudice.^[19] Plaintiffs submit that they have two avenues supporting recovery of Nucor's pre-tender defense costs. First, Nucor is named as an additional insured under the HDI Policy, and plaintiffs submit that HDI is obligated to reimburse its insured's pre-and post-tender defense costs. Second, plaintiffs argue that HDI must reimburse DES for its voluntary settlement of Nucor's pre- and post-tender defense costs because the HDI Policy's contractual liability provision covers DES's obligation to indemnify Nucor pursuant to the ICA.^[20]

First, HDI does not dispute that Nucor is an additional insured under the HDI Policy and HDI acknowledges that it is obligated to reimburse Nucor's post-tender costs accordingly. However, HDI submits that it is not obligated to reimburse its insured's pre-tender defense costs. Second, HDI acknowledges that the ICA is an “insured contract” for the purposes of the contractual liability provision of the HDI Policy, but it argues that the language of the provision precludes plaintiffs from seeking defense costs incurred by Nucor in the Comeaux action.^[21]

Plaintiffs also argue that Nucor is entitled to recover attorney's fees and costs incurred in prosecuting this action, and that plaintiffs are entitled to recover statutory penalties due to HDI's “arbitrary and capricious conduct and/or breach of duties, ” pursuant to Louisiana Revised Statutes 22:1973 and 22:1892.^[22]

Finally, in its second motion for judgment on the pleadings, HDI requests that Nucor be dismissed with prejudice from the instant action, because the complaint states that Nucor assigned “Nucor's claims under the ICA and pursuant to the HDI Policy against HDI.”^[23]

II. STANDARD OF LAW

Pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, a party may move for judgment on the pleadings once the pleadings are closed, as long as the party moves “early enough not to delay trial.” “The standard for Rule 12(c) motions is identical to the standard for Rule 12(b)(6) motions to dismiss for failure to state a claim.” Waller v. Hanlon, 922 F.3d 590, 599 (5th Cir. 2019) (citing Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir. 2008)).

Thus, Rule 12(c)-like Rule 12(b)(6)-permits a court to dismiss a complaint, or any part of it, where a plaintiff has not set forth well-pleaded factual allegations that would entitle him to relief. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007). A plaintiff's factual allegations must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In other words, a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).

A facially plausible claim is one where “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. If the well-pleaded factual allegations “do not permit the court to infer more than the mere possibility of misconduct, ” then “the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)) (alteration in original).

In assessing the complaint, the Court must accept all well-pleaded factual allegations as true and liberally construe all such allegations in the light most favorable to the plaintiff. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999); Lowrey v. Tex. A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). Where “the complaint ‘on its face show[s] a bar to relief, '” then dismissal is the appropriate course. Cutrer v. McMillan, 308 Fed.Appx. 819, 820 (5th Cir. 2009) (quoting Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986)).

In addition to the complaint, the court may consider “any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), LP v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). If matters beyond these documents are presented, “the court has ‘complete discretion' to exclude them.” Great Lakes Ins., S.E. v. Gray Grp. Invs., LLC, 550 F.Supp.3d 364, 369-70 (E.D. La. 2021) (Vance, J.) (quoting Allen v. Hays, 812 Fed.Appx. 185, 189 (5th Cir. 2020)). If, however, such documents are presented and not excluded by the court, “the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d).

III. LAW AND ANALYSIS

A. Assignment of Nucor's Rights against HDI

In HDI's second motion for judgment on the pleadings, HDI submits that Nucor should be dismissed with prejudice from this action because the complaint states that DES “[took] an assignment from Nucor of Nucor's claims under the ICA and pursuant to the HDI Policy against HDI.”^[24]

Assignments of right are governed by Article 698 of the Louisiana Code of Civil Procedure, which provides:

An incorporeal right which has been assigned, whether unconditionally or conditionally for purposes of collection or security, shall be enforced judicially by:

(1) The assignor and the assignee, when the assignment is partial; or

(2) The assignee, when the entire right is assigned.

The Court, taking the complaint's allegation as true as it must for the purpose of this motion, concludes that Nucor completely assigned its rights under the HDI Policy and against HDI to DES. Accordingly, the Court will grant defendant's motion and dismiss all of Nucor's claims as to HDI with prejudice.^[25]

B. Nucor as an Additional Insured

HDI recognizes that it is required to pay Nucor's post-tender defense costs because Nucor is an additional insured under the HDI Policy.^[26] HDI states that it remains willing to reimburse Nucor's post-tender defense costs, and its requested relief in the instant motion reflects its continued willingness to cover these costs.^[27]However, HDI argues that it is not required to pay Nucor's pre-tender defense costs.^[28](As noted above, Nucor assigned its rights against HDI to DES. Accordingly, to the extent that the Court refers to any sum that HDI may owe to Nucor as an additional insured, it is with the understanding that DES now has the exclusive right to recover such a...