Riverwood Intern. v. Employers Ins. of Wausau

• Citation: 420 F.3d 378
• Decision Date: 04 August 2005
• Docket Number: No. 04-30608.,04-30608.
• Parties: RIVERWOOD INTERNATIONAL CORP.; et al., Plaintiffs, Graphic Packaging International Inc., formerly known as Riverwood International Corp., Plaintiff-Appellant, v. EMPLOYERS INSURANCE OF WAUSAU; et al., Defendants, Employers Insurance of Wausau, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

420 F.3d 378

RIVERWOOD INTERNATIONAL CORP.; et al., Plaintiffs, Graphic Packaging International Inc., formerly known as Riverwood International Corp., Plaintiff-Appellant, v. EMPLOYERS INSURANCE OF WAUSAU; et al., Defendants, Employers Insurance of Wausau, Defendant-Appellee.

No. 04-30608.

United States Court of Appeals, Fifth Circuit.

August 4, 2005.

Gerald Lamar Mize (argued), Tiffany L. Powers, Alston & Bird, Atlanta, GA, C.A. Martin, III, Shotwell, Brown & Sperry, Monroe, LA, for Plaintiff-Appellant.

Judy Y. Barrasso (argued), H. Minor Pipes, III, Barrasso, Usdin, Kupperman, Freeman & Sarver, New Orleans, LA, for Defendant-Appellee.

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

Before KING, Chief Judge, and BENAVIDES and STEWART, Circuit Judges.

KING, Chief Judge:

This appeal concerns whether an asbestos-related disease is a "bodily injury by accident" as that term is interpreted under several workers' compensation and employers' liability insurance policies. Because we agree that the policies are subject to only one reasonable interpretation—that an asbestos-related injury is not a "bodily injury by accident" under the policies in question—we AFFIRM the district court's entry of summary judgment in favor of Defendant-Appellee Employers Insurance of Wausau.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff-Appellant Graphic Packaging International, Inc., formerly known as Riverwood International Corp. ("Riverwood"), owns and operates a paperboard manufacturing facility in West Monroe, Louisiana. Riverwood purchased a series of Excess Workers' Compensation and Employers' Liability policies (collectively, the "Policies") from Employers Insurance of Wausau ("Wausau"), which provided coverage from May 1974 to January 1984.¹ Beginning in early 2000, numerous present and former employees sued Riverwood, seeking damages for injuries, including asbestosis and other asbestos-related diseases, allegedly caused by exposure to asbestos while working at the West Monroe facility. Riverwood settled 260 employee claims for a lump sum of $1.513 million.

Riverwood sent notice letters to its multiple insurers, including Wausau, advising them of the asbestos-related claims. The notice letters identified the employees' claims as "bodily injury by disease" claims. Wausau denied coverage based on the thirty-six month exclusion provision in the Policies, which provides that "bodily injury by disease" claims are excluded from coverage if not brought within thirty-six months after the end of the policy period.² Wausau also denied coverage on the basis that Riverwood could not meet the self-insured retention ("SIR") requirements in the Policies.³ Accordingly, Wausau refused to contribute to the $1.513 million settlement.

On March 12, 2000, Riverwood filed a suit seeking indemnity from Wausau under, inter alia, the Policies for the underlying asbestos claims.⁴ On January 22, 2002, Wausau filed a motion for partial summary judgment, seeking enforcement of the thirty-six month exclusion provision. It is undisputed that none of the asbestos claims was asserted against Riverwood within thirty-six months of the Policies' expiration. The district court, however, denied the motion, relying on the recommendation of the magistrate judge, who reasoned that the Policies' language was ambiguous because an issue of fact existed regarding whether an asbestos-related disease is a "bodily injury by disease" or a "bodily injury by accident" under the Policies.

On October 14, 2003, Wausau filed another motion for summary judgment, arguing that: (1) the employees' claims were "bodily injury by disease" claims barred by the thirty-six month exclusion provision; and (2) Riverwood could not satisfy its SIR requirements as required to trigger coverage under the Policies regardless of whether the claims were treated as "bodily injury by disease" or "bodily injury by accident" claims. On February 13, 2004, based on the magistrate judge's recommendation, the court granted Wausau's motion.

With respect to the thirty-six month exclusion provision, the court reconsidered its determination of ambiguity and concluded that, based on the evidence, "[t]he only reasonable conclusion is that the underlying claims in question in this lawsuit involve bodily injury by disease. Therefore, the 36-month exclusion applies and should be enforced as written." The court reasoned, inter alia, that the "vast majority of courts considering the issue have also treated asbestos-related claims as injury by disease under excess [w]orker's [c]ompensation/[e]mployer [l]iability policies with the same or nearly the same policy definitions." (citing Hamilton v. Anco Insulation, Inc., 844 So.2d 893 (La.App. 1st Cir.2003), Hubbs v. Anco Insulations, Inc., 747 So.2d 804 (La.App. 1st Cir.1999), Rareshide v. Mobil Oil Corp., 719 So.2d 494 (La.App. 4th Cir.1998), Laurendine v. Fischbach & Moore, Inc., 398 So.2d 1220 (La.App. 4th Cir.1981), and Froust v. Coating Specialists, Inc., 364 F.Supp. 1154 (E.D.La.1973)).

With respect to the SIR issue, the court noted that because the claims were "bodily injury by disease" claims, a separate SIR had to be met for each claim. However, no individual claim exceeded the smallest per-employee SIR ($100,000), much less the $500,000 SIR on the later policies.⁵ The court also noted that even if the claims were "bodily injury by accident" claims, Riverwood would have to meet its SIR requirement for each accident. However, Riverwood failed to present any evidence to show it could meet its SIR requirement for each accident. In addition, the court stated that because Riverwood was seeking to trigger coverage under multiple policies for damages stemming from multiple years of exposure, the plaintiffs' losses had to be allocated on a pro rata basis across all the years of exposure. Under this method, the court concluded that Riverwood could not satisfy a single SIR for any employee in any policy year. The court rejected Riverwood's argument that all the claims should be construed as arising out of a single accident because Riverwood did not present any evidence that all of the claimants were exposed by one specific accident at the same time and at a common location.

On appeal, Riverwood argues that a genuine issue of fact remains as to whether it is entitled to coverage under the Policies. Specifically, Riverwood argues that the language of the Policies at issue is ambiguous. With regard to the SIR issue, Riverwood argues that there is sufficient evidence to support a jury finding that it could satisfy at least one SIR under the Policies. Riverwood further argues that under Fifth Circuit precedent, its SIRs should be apportioned pro rata.

II. STANDARD OF REVIEW

This court reviews a grant of summary judgment de novo, applying the same standards as the district court. Burch v. City of Nacogdoches, 174 F.3d 615, 618 (5th Cir.1999). Summary judgment is proper if the record, taken as a whole, shows that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). To overcome summary judgment, "the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (internal quotation marks and emphasis omitted). The court must view the evidence in the light most favorable to the nonmovant, drawing all reasonable inferences in the nonmovant's favor. King v. Chide, 974 F.2d 653, 656 (5th Cir.1992).

III. ANALYSIS

Riverwood argues that a genuine issue of material fact exists as to whether the underlying asbestos claims are "bodily injury by disease" or "bodily injury by accident" claims under the Policies.

Under Louisiana law, an insurance policy is a contract between the parties, and it should be construed according to the general rules of contract interpretation set forth in the Civil Code. La. Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So.2d 759, 763 (La.1994). A contract is ambiguous if, after applying the established rules of contract interpretation, the contract is uncertain as to the parties' intent and susceptible to more than one reasonable interpretation under the circumstances. Shocklee v. Mass. Mut. Life Ins. Co., 369 F.3d 437, 440 (5th Cir.2004) (quoting In re Liljeberg Enters., Inc., 304 F.3d 410, 440 (5th Cir.2002)). Applying the rules of contract interpretation, we conclude that the district court properly determined that the Policies are subject to only one reasonable interpretation—that an asbestos-related injury is not a "bodily injury by accident" under the policies in question.

The Policies provide:

I. COVERAGE. This policy applies to loss sustained by the insured on account of ...

B. sums which the insured shall become legally obligated to pay as damages because of bodily injury by accident or disease....

II. APPLICATION OF POLICY. This policy applies only to injury

(1) by accident occurring during the policy period, or

(2) by disease caused or aggravated by exposure of which the last day of the last exposure, in the employment of the insured, to conditions causing the disease occurs during the policy period....

V. DEFINITIONS....

(C) Bodily Injury by Accident; Bodily Injury by Disease. The contraction of disease is not an accident within the meaning of the word "accident" in the term "bodily injury by accident" and only such disease as results directly from a bodily injury by accident is included within the term "bodily injury by accident." The term "bodily injury by disease" includes only such disease as is not included within the term "bodily injury by accident."

Riverwood asserts that the language is ambiguous because the policy itself does not define the word "accident." The fact that a...