Opelousas Hotel Grp. v. DDG Constr.

• Decision Date: 02 February 2023
• Docket Number: 6:18-CV-01311
• Parties: OPELOUSAS HOTEL GROUP LLC v. DDG CONSTRUCTION INC.
• Court: U.S. District Court — Western District of Louisiana

OPELOUSAS HOTEL GROUP LLC v. DDG CONSTRUCTION INC.

No. 6:18-CV-01311

United States District Court, W.D. Louisiana, Lafayette Division

February 2, 2023

MAGISTRATE JUDGE CAROL B. WHITEHURST

MEMORANDUM RULING

TERRY A. DOUGHTY, UNITED STATES DISTRICT JUDGE

Pending before the Court are a Motion for Summary Judgment on the Crossclaim Against Admiral Insurance Company [Doc. No. 237] filed by First Mercury Insurance Company (“First Mercury”) and a Motion for Summary Judgment [Doc. No 240] filed by Admiral Insurance Company (“Admiral”). DDG Construction, Inc. (“DDG”) filed a response [Doc. No. 242] in support of First Mercury's Motion for Summary Judgment and Admiral filed a response in opposition [Doc. No. 254]. First Mercury, DDG, and Plaintiff Opelousas Hotel Group, LLC (“OHG”) filed responses in opposition [Doc. Nos 244, 246, and 250] to Admiral's Motion for Summary Judgment, and Admiral filed replies [Doc. Nos. 259, 261, and 263].

For the following reasons, First Mercury's Motion for Summary Judgment [Doc. No. 237] is GRANTED. Admiral's Motion for Summary Judgment [Doc. No. 240] is DENIED.

I. BACKGROUND

On December 5, 2018, OHG filed its Original Complaint for Damages.^[1] OHG subsequently filed several amended complaints.^[2] In its Fourth Amended Complaint (“Complaint”), OHG asserted causes of action for breach of contract, negligence, breach of implied warranty of workmanship, professional negligence, and redhibition against DDG, its insurers, and several subcontractors.^[3] First Mercury filed a Crossclaim against Admiral claiming that it is entitled to reimbursement from Admiral for its pro rata share of attorneys' fees and costs that First Mercury has paid to defend DDG.^[4] OHG settled its claims against DDG, Admiral, and First Mercury.^[5] The only remaining claim in the suit is First Mercury's Crossclaim against Admiral.

The events leading up to the suit are as follows. On August 12, 2014, OHG entered into a written contract (“Construction Contract”) with DDG.^[6] Under the Construction Contract, DDG agreed to construct as the “prime, general contractor,” a Hampton Inn in Opelousas, Louisiana (“the Project”) for the original sum of $4,668,330.00.^[7] Under the Construction Contract, DDG would construct the entire hotel. DDG does not employ laborers and did not provide any laborers for the Project.^[8] Rather, DDG's role was to hire and manage subcontractors who would be tasked with the actual construction of the hotel.^[9] The Construction Contract also provided that it was governed by Louisiana law.^[10]

According to OHG, on June 1, 2017, DDG was issued a written notice of default due to DDG's “lack of progress and finishing the hotel on time, [and] lack of manpower.”^[11] The written notice of default allegedly gave DDG seven days to remedy the default.^[12] OHG further alleged that after the expiration of the seven days, OHG terminated the Construction Contract.^[13] First Mercury issued various commercial general liability policies^[14] (“CGL”) to DDG and accepted DDG's defense of the lawsuit subject to a reservation of rights.^[15] This Court previously held that First Mercury did not have a duty to indemnify DDG.^[16] Admiral issued various CGLs to DDG and denied its duty to defend DDG.^[17]

Admiral issued the following CGLs (collectively, the “Policies”) to DDG: Commercial Lines Policy No. CA000027825-017 to DDG for the period July 27, 2017, to July 27, 2018, and three renewal policies to DDG for the periods July 27, 2018, to July 27, 2019; July 27, 2019, to July 27, 2020; and July 27, 2020, to July 27, 2021. Admiral also issued excess Policy No. GX000000667-0113, for the period July 27, 2017, to July 27, 2018. The Policy was renewed by Policy No. GX000000667-0214, for the period July 27, 2018, to July 27, 2019, and then renewed away by Policy No. GX000000667-03, for the period July 27, 2019, to July 27, 2020.^[18]

Admiral contends that the Policies provide neither coverage nor defense of DDG because the damages did not occur during the Policies' periods. In support of this argument, Admiral contends that all damages occurred before the Policies took effect because DDG stopped working on the project no later than June 8, 2017, forty-nine days before the first Policy took effect. In the alternative, Admiral argues that several exclusions contained within the Policies negate its duty to defend and indemnify DDG.^[19] First Mercury argues that Admiral had a duty to defend because the damages manifested after the Policies were in effect and because the Complaint is broadly drafted to include allegations beyond the scope of the Policies' exclusions.^[20]

The issues are briefed, and the Court is prepared to rule.

II. LAW AND ANALYSIS

A. Summary Judgment Standard

Under Federal Rule of Civil Procedure 56(a), “[a] party may move for summary judgment, identifying each claim or defense--or the part of each claim or defense--on which summary judgment is sought. The 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. The court should state on the record the reasons for granting or denying the motion.”

“If the moving party meets the initial burden of showing there is no genuine issue of material fact, the burden shifts to the nonmoving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.” Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc., 738 F.3d 703, 706 (5th Cir. 2013) (internal quotation marks and citation omitted).; see also FED. R. CIV. P. 56(c)(1).

A fact is “material” if proof of its existence or nonexistence would affect the outcome of the lawsuit under applicable law in the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is “genuine” if the evidence is such that a reasonable fact finder could render a verdict for the nonmoving party. Id.

“[A] party cannot defeat summary judgment with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007) (citing Anderson, 477 U.S. at 248). However, in evaluating the evidence tendered by the parties, the Court must accept the evidence of the nonmovant as credible and draw all justifiable inferences in its favor. Anderson, 477 U.S. at 255. “A non-conclusory affidavit can create genuine issues of material fact that preclude summary judgment, even if the affidavit is self- serving and uncorroborated.” Lester v. Wells Fargo Bank, N.A., 805 Fed.Appx. 288, 291 (5th Cir. 2020) (citations omitted).

Note that “a district court has somewhat greater discretion to consider what weight it will accord the evidence in a bench trial than in a jury trial.” Matter of Placid Oil Co., 932 F.2d 394, 397 (5th Cir. 1991); see also Nunez v. Superior Oil Co., 572 F.2d 1119, 1124 (5th Cir. 1978) (“If decision is to be reached by the court, and there are no issues of witness credibility, the court may conclude on the basis of the affidavits, depositions, and stipulations before it, that there are no genuine issues of material fact, even though decision may depend on inferences to be drawn from what has been incontrovertibly proved .... The judge, as trier of fact, is in a position to and ought to draw his inferences without resort to the expense of trial.”).

B. Analysis

Admiral contends that First Mercury's Crossclaim should be dismissed for two chief reasons: (1) the Policies were not in effect because all of the work performed by DDG, which formed the basis of liability, occurred prior to the inception date of the Policies, and 2) the Policies contain exclusions barring any hypothetical recovery from Admiral as DDG's insurer. With respect to Admiral's first argument, First Mercury responds that damages caused by DDG's faulty work could have occurred during the policy periods because the Complaint alleges that they first became evident when the replacement contractors took over the Project. With respect to Admiral's second argument, First Mercury responds that the Complaint is broadly drafted to include allegations beyond the scope of the Policies' exclusions.

The parties do not dispute that the interpretation of the Policies is controlled by Louisiana law. The Court agrees and finds that Louisiana law applies to interpretation of the policies. See Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 512 (5th Cir. 2014) (Federal courts sitting in diversity apply the choice-of-law rules of the forum state.); see also Champagne v. Ward, 20033211 (La. 1/19/05), 893 So.2d 773 (In cases involving contractual interpretation of an insurance policy, Louisiana courts employ the law of the state whose policies would be most seriously impacted if its law was not applied.); see also La. C.C. Art. 3537.

1. Insurance Contract Interpretation

An insurance policy is a contract between the parties and should be construed using the general rules of interpretation set forth in the Louisiana Civil Code. See e.g. Cadwallader v. Allstate Ins. Co., 2002-1637 (La. 6/27/03), 848 So.2d 577, 580; Carbon v. Allstate Ins. Co., 973085, p. 4 (La.10/20/98); Carbon v. Allstate Ins. Co., 97-3085 (La. 10/20/98), 719 So.2d 437, 439. When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. Civ. Code Art. 2046. If the parties' intent can be “construed from the four corners of the instrument without looking to extrinsic evidence, the question of contractual interpretation is answered as a matter of law and summary judgment is appropriate.” See Sims v....