Orleans Parish Sch. Bd. v. Lexington Ins. Co.

Decision Date28 August 2013
Docket NumberNo. 2012–CA–0095.,2012–CA–0095.
Citation123 So.3d 787
PartiesORLEANS PARISH SCHOOL BOARD v. LEXINGTON INSURANCE COMPANY, AON Risk Services, Inc. of Louisiana, James Lawler, ABC Insurance Company, Clarendon America Insurance Company, Essex Insurance Company, Westhester Surplus Lines Insurance Company (An Ace USA Company) and RSUI Indemnity Company.
CourtCourt of Appeal of Louisiana — District of US

OPINION TEXT STARTS HERE

Kriste Talton Utley, Shaundra M. Westerhoff, Terrill W. Boykin, Boykin Ehret & Utley, Trevor G. Bryan, Bryan & Jupiter, James M. Garner, Debra J. Fischman Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC, New Orleans, LA, and Robert A. Kutcher, Nicole Tygier, Chopin, Wagar, Richard & Kutcher, LLP, Metairie, LA, for Plaintiffs/Appellants.

Robert I. Siegel, Gieger Laborde & Laperouse, LLC, Michael R. Fontham, Dana M. Shelton, Daria Burgess Diaz, Stone Pigman Walther Wittmann LLC, New Orleans, LA, Courtney E. Murphy, Clausen Miller PC, New York, NY, for Defendants/Appellees.

(Court composed of Chief Judge JAMES F. McKAY, III, Judge JOY COSSICH LOBRANO, and Judge SANDRA CABRINA JENKINS).

SANDRA CABRINA JENKINS, Judge.

[4 Cir. 1]The Plaintiff, Orleans Parish School Board (“OPSB”), and Intervenors, the Recovery School District, the Board of Elementary and Secondary Education, and the Louisiana Department of Education, appeal the trial court's grant of summary judgment on behalf of Clarendon American Insurance Company (“Clarendon”), Essex Insurance Company (“Essex”), and Westchester Surplus Lines Insurance Company (“Westchester”).1 At issue is the applicability of specific mold exclusions contained in excess insurance policies issued to OPSB. Based on our de novo review, we find that the trial court erred in its plain language analysis, interpretation, and conclusion that under the policy, “there is no coverage for damages due to mold, regardless of the potential source or initial contributing factor.” Additionally we find (1) material issues of fact exist regarding which damages can be said to have been caused by mold, and which damages can be considered otherwise-covered losses; (2) the only damages that would be excluded from coverage are consequential damages that occurred as a direct result of the presence of the mold; and (3) the anti-concurrent cause provisions cannot operate to exclude coverage for damages initially attributable to a covered loss. The judgment of the trial court granting summary judgment to Westchester, Clarendon, [4 Cir. 2]and Essex is therefore reversed, and this matter is remanded for further proceedings consistent with this opinion.

BACKGROUND AND PROCEDURAL HISTORY

Hurricane Katrina hit the New Orleans region on August 29, 2005, causing extensive damage to property owned and operated by OPSB. At the time of the storm, OPSB had four layers of property insurance coverage. Lexington Insurance Company (“Lexington”) provided the primary coverage of $50 million per occurrence; Clarendon and Essex shared the first layer of $25 million in excess coverage; Westchester provided the second layer of excess coverage of $25 million; and RSUI provided the final excess layer of $100 million. OPSB initially filed this lawsuit against Lexington, as its primary insurer, and against all four excess insurers. The case was removed to federal court, and then remanded back to state court.2The Recovery School District, the Board of Elementary and Secondary Education, and the Louisiana Department of Education intervened in the lawsuit.

The excess insurers, Clarendon, Essex, Westchester, and RSUI, filed partial motions for summary judgment arguing that their policies contain exclusions that deny coverage for mold. They argued that as a result, OPSB could not recover for loss or damage caused by, arising out of, or resulting from fungus, mold, or mold-related damages,3 regardless of the cause. They conceded that their excess policies generally followed the primary policy issued by Lexington, but argued that each excess policy was also subject to the terms, conditions, exclusions and limitations [4 Cir. 3]contained in the excess policies themselves.4 OPSB responded arguing that the policies excluded coverage for damage caused by mold, but did not exclude coverage for mold as the damage itself where the mold was caused by a covered event.

On October 18, 2011, the trial court granted summary judgment in favor of Clarendon, Essex, and Westchester, but denied summary judgment as to RSUI. In its Reasons for Judgment, the trial court stated that the Clarendon, Essex, and Westchester policies were “clear and unambiguous” and “expressly exclude coverage for mold.” Based on its interpretation of the plain language of those policies, the trial court found that there was “a lack of coverage for damages due to, caused by, or consisting [of] mold.” It also rejected OPSB's argument that the mold exclusions do not apply to mold caused by perils otherwise covered under the policies. Using a plain language analysis, the trial court stated, [s]imply put, there is no coverage for damages due to mold, regardless of the potential source or initial contributing factor.” The following rationale was given in support of the trial court's findings:

If the excess insurers wanted to provide coverage for mold damages due to a covered peril, they would have indicated that in the plain language of their respective policies; but they did not. Instead, they said things such as [t]his exclusion applies regardless whether there is (b) any insured peril or cause, whether or not contributing concurrently or in any sequence,” and [a]ny such loss described above is excluded, regardless of any other cause or event that contributed concurrently or in any sequence to the loss”. [Emphasis in original].

[4 Cir. 4]As to RSUI, the trial court found that while the language in the RSUI exclusion was also clear, its liability for mold/fungus damages would be triggered only after certain conditions were satisfied, including a finding that the mold resulted from a covered loss.5 The trial court found that determining whether or not mold resulted from a covered loss presented a genuine issue of material fact, and denied RSUI's summary judgment. This timely appeal follows.6

We will summarily address the issues raised by OPSB by first examining the scope of the mold exclusions, and in particular, whether there is a distinction between damage caused by mold, and mold as the damage. We will then examine the proper application of the anti-concurrent cause provisions within the mold exclusions which state that there is no coverage for mold, regardless of any other cause or event contributing concurrently or any sequence to the loss.

STANDARD OF REVIEW

The motion for summary judgment is a procedural device “designed to secure the just, speedy, and inexpensive determination of every action” where there is no genuine issue of material fact regarding all or part of the relief prayed for. La. C.C.P. art. 966(A)(2); Samaha v. Rau, 2007–1726, pp. 3–4 (La.2/26/08), 977 So.2d 880, 882–83. While courts may grant summary judgment solely on the issue of insurance coverage, summary judgment declaring a lack of insurance coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed facts shown by the [4 Cir. 5]evidence supporting the motion, under which coverage could be afforded. Reynolds v. Select Properties, Ltd., 93–1480 (La.4/11/94), 634 So.2d 1180, 1183;Westerfield v. LaFleur, 493 So.2d 600, 605 (La.1986). In addition, if a genuine issue of material fact exists, then summary judgment must be rejected. Oakley v. Thebault, 96–0937, p. 3 (La.App. 4 Cir. 11/13/96), 684 So.2d 488, 490. A material fact is generally one that can “potentially ensure or preclude recovery, affect the litigant's ultimate success, or determine the outcome of a legal dispute.” Prado v. Sloman Neptun Schiffahrts, A.G., 611 So.2d 691, 699 (La.App. 4 Cir.1992).

Appellate courts review summary judgments under the de novo standard of review, using the same standard applied by the trial court in deciding the motion for summary judgment; as a result, we are not required to analyze the facts and evidence with deference to the judgment of the trial court or its reasons for judgment. Cusimano v. Port Esplanade Condominium Ass'n, Inc. 10–0477, p. 4 (La.App. 4 Cir. 1/12/11), 55 So.3d 931, 934;Lingoni v. Hibernia Nat'l Bank, 09–0737, p. 3 (La.App. 4 Cir. 3/3/10), 33 So.3d 372, 375;Hutchinson v. Knights of Columbus, Council No. 5747, 03–1533, p. 5 (La.2/20/04), 866 So.2d 228, 232, n. 2. “While a trial court's reasoning for granting a summary judgment may well be informative, it is not determinative of the legal issues to be resolved by the appellate court.” Cusimano, pp. 4–5, 55 So.3d at 934. We therefore look at the record before us and make an independent determination regarding whether there are genuine issues of material fact that would preclude granting the summary judgment. Marigny v. Allstate Ins. Co., 1995–0952 (La.App. 4 Cir. 1/31/96), 667 So.2d 1229.

[4 Cir. 6]Moreover, in reviewing summary judgments, we remain mindful of which party bears the burden of proof. “Although the burden of proof on a motion for summary judgment remains with the moving party, the mover's burden changes depending upon whether he or she will bear the burden of proof at trial on the matter that is the subject of the motion for summary judgment.” Johnson v. State Farm Ins., p. 2, 08–1250 (La.App. 3 Cir. 4/1/09), 8 So.3d 808, 810.Article 966(C)(2) provides:

The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for...

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