S. La. Ethanol, LLC v. Messer

• Decision Date: 18 March 2013
• Docket Number: Civil Action Nos. 11–2715,12–379.
• Citation: 932 F.Supp.2d 735
• Parties: SOUTH LOUISIANA ETHANOL, LLC v. Eric Jacob MESSER, et al.
• Court: U.S. District Court — Eastern District of Louisiana

932 F.Supp.2d 735

SOUTH LOUISIANA ETHANOL, LLC

v.Eric Jacob MESSER, et al.

Civil Action Nos. 11–2715, 12–379.

United States District Court, E.D. Louisiana.

March 18, 2013.

Emile Louis Turner, Jr., Leo David Congeni, Law Office of Emile L. Turner, Jr., LLC, New Orleans, LA, for South Louisiana Ethanol, LLC.

C. Parker Kilgore, Jones Walker, Baton Rouge, LA, Eric Jacob Messer, et al.

ORDER AND REASONS

LEMELLE, District Judge.

Before the Court are: Defendant 1 Fireman's Fund Insurance Company's (“Fireman's Fund”) first Motion for Summary Judgment against the claims of South Louisiana Ethanol, L.L.C. (“SLE”); Defendants Commerce & Industry Insurance Company and Chartis Speciality Insurance Company's (collectively, “C & I and Chartis”) Motion for Summary Judgment against the claims of SLE; Third-party Defendant ENGlobal U.S., Inc.'s (“ENGlobal”) Motion for Summary Judgment against the claims of Fireman's Fund; and Fireman's Fund's subsequent second Motion for Summary Judgment against both SLE's and Intervenor Whitney Bank's (“Whitney”) claims. (Rec. Docs. No. 30, 31, 53, & 64). Also before the Court are the Oppositions and Replies filed against and in support of the aforementioned motions. (Rec. Docs. No. 32, 33, 36, 69, 61, & 73). Also before the Court is Fireman's Fund's Motion to Strike exhibits attached to the opposition filed by SLE and Whitney regarding Fireman's Fund's first Motion for Summary Judgment, and the subsequent opposition to and reply in support of said motion. (Rec. Docs. No. 34, 35, & 68). Accordingly, and for the reasons articulated below,

IT IS ORDERED that C & I and Chartis' Motion for Summary Judgment (Rec. Doc. No. 31) is GRANTED.

IT IS FURTHER ORDERED that Fireman's Fund's Second Motion for Summary Judgment (Rec. Doc. No. 64) is GRANTED. Accordingly,

IT IS FURTHER ORDERED that Fireman's Fund's First Motion for Summary Judgment and Motion to Strike (Rec. Docs. No. 30 & 34) are DISMISSED as moot in light of the foregoing Orders.

IT IS FURTHER ORDERED that ENGlobal's Motion for Summary Judgment (Rec. Doc. No. 53) is GRANTED.

Procedural History and Facts of the Case:

The instant action arises out of alleged damage to property belonging to SLE, while said property was in the care of its subcontractor, Precision Combustion Technology, L.L.C. (“PCT”). (Rec. Docs. No. 33 & 64–1 at 2, referring to Rec. Doc. No. 30–2 at 2–4). Because PCT filed for bankruptcy, SLE seeks recovery from individual members of PCT and PCT's insurers, rather than from PCT itself. (Rec. Docs. No. 1–1 & 30–2 at 3). SLE initiated the action in state court, but the case was subsequently removed to federal court under 28 U.S.C. §§ 1452(a) and 1334(b), as it was related to the bankruptcy proceeding of SLE, already pending in federal Court.¹ (Rec. Doc. No. 1 at 2).

SLE entered into an engineering, procurement, and construction contract with ENGlobal in January 2007, for the retrofitting of an ethanol facility in Plaquemines Parish, within the Eastern District Louisiana. (Rec. Doc. No. 33 at 2). ENGlobal hired PCT as a subcontractor, and SLE sent several pieces of equipment to PCT's yard in Gonzales, Louisiana for repair. Id. at 3; (Rec. Doc. No. 30–2 at 3). SLE alleges that while its equipment was in the possession of PCT, PCT negligently caused certain SLE equipment to be damaged by exposure to the elements, PCT negligently failed to warn/advise SLE that its equipment was in danger of seizure in satisfaction of debts owed by PCT to a third party, and PCT wrongfully sold equipment belonging to SLE to Southern Scrap Materials, Co., L.L.C. (“Southern Scrap”). (Rec. Doc. No. 33 at 6–7). SLE now seeks recovery against the principals of PCT (Steven Zane Glaze, Cynthia Ann Glaze, and Eric Jacob Messer), Southern Scrap, and PCT's insurers, Fireman's Fund and C & I and Chartis. Id. at 8. Whitney intervened in the matter asserting a first-ranking security interest in SLE's property, having provided financing to SLE for its engineering work on the plant PCT was contracted to work on. (Rec. Doc. No. 33 at 8, n. 19).

At issue in the instant motions is the extent of coverage, if any, provided by Fireman's Fund and C & I and Chartis for the property of SLE while in the care of PCT. (Rec. Docs. No. 30, 31, & 64). Also in dispute is Fireman's Fund's right to bring ENGlobal into the action as a third-party defendant. (Rec. Doc. No. 53).

Law & AnalysisA. Summary Judgment Standard

Summary judgment is proper if the pleadings, depositions, interrogatory answers, and admissions, together with any affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue exists if the evidence would allow a reasonable jury to return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Although the Court must consider the evidence with all reasonable inferences in the light most favorable to the nonmoving party, the nonmovant must produce specific facts to demonstrate that a genuine issue exists for trial. Webb v. Cardiothoracic Surgery Assocs. of N. Texas, 139 F.3d 532, 536 (5th Cir.1998). Because “only those disputes over facts that might affect the outcome of the lawsuit under governing substantive law will preclude summary judgment,” questions that are unnecessary to the resolution of a particular issue “will not be counted.” Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 272 (5th Cir.1987).

As to issues for which the non-moving party has the burden of proof at trial, the moving party may satisfy its burden by demonstrating the absence of evidence supporting the non-moving party's claim. Celotex v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant makes this showing, the burden shifts to the nonmovant to set forth specific facts showing that there is a genuine issue for trial. Rivera v. Houston Indep. Sch. Dist., 349 F.3d 244, 247 (5th Cir.2003). The nonmovant must go beyond the pleadings and use affidavits, depositions, interrogatory responses, admissions, or other evidence to establish a genuine issue. Id. Accordingly, conclusory rebuttals of the pleadings are insufficient to avoid summary judgment. Travelers Ins. Co. v. Liljeberg Enter., Inc., 7 F.3d 1203, 1207 (5th Cir.1993).B. SLE and Whitney's Cause of Action against Fireman's Fund

1. Louisiana law on insurance contracts

The first issue in dispute is whether SLE and Whitney have a cause of action against Fireman's Fund. SLE and Whitney claim that the facts give rise to a cause of action against Fireman's Fund either: (1) via statute, under Louisiana's Direct Action Statute against insurers; or (2) via contract, as either a loss-payee or third-party beneficiary to the policy Fireman's Fund issued to PCT. (Rec. Doc. No. 73). This Court recognizes that Louisiana substantive law applies to interpret the inland marine insurance contract issued by Fireman's Fund to PCT. See Dredging Supply Co., Inc. v. American First Ins. Co., Civ. A. No. 06–1744, 2008 WL 3851587, *3 (E.D.La. Aug. 13, 2008), citing Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955); Thanh Long Partnership v. Highlands Ins. Co., 32 F.3d 189 (5th Cir.1994). “Inland marine insurance” is a type of marine insurance. Tidelands Ltd. I. v. Louisiana Ins. Guar. Ass'n., 645 So.2d 1240, 1242 (La.App. 1 Cir. 11/10/94), citing La. Rev. Stat. Ann. § 22:6(13), predecessor to current Kinds of Insurance statute, La. Rev. Stat. Ann. § 22:47 (West 2013). “[S]tate law governs construction of marine insurance contracts except where it is displaced by admiralty law.” Bordelon Marine, Inc. v. F/V KENNY BOY, 780 F.Supp.2d 497, 501 (E.D.La.2011), citing Employers Ins. of Wausau v. Trotter Towing Corp., 834 F.2d 1206, 1210 (5th Cir.1988). Indeed, there is a presumption that state law applies to marine insurance contracts. Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 (5th Cir.1991) (“In Wilburn Boat Co. v. Fireman's Fund Insurance Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), the United States Supreme Court concluded that the regulation of marine insurance is, in most instances, properly left with the states. Id. at 321, 75 S.Ct. at 374–75.”). Further, all parties in the instant case rely on Louisiana law and raise no conflicts between Louisiana law and federal maritime law in interpreting the insurance contract at issue. ( See Rec. Docs. No. 30, 33, 64 & 73). Therefore, the Court applies Louisiana substantive law to the insurance dispute at issue.

“Construction of a marine insurance policy ‘usually involves a question of law which can be resolved properly in the framework of a motion for summary judgment.’ ” Dredging, 2008 WL 3851587 at *3, citing Bonin v. Westport Ins. Corp., 930 So.2d 906, 910 (La.2006). An insurance policy should be construed using the general rules of contract interpretation, as provided by the Louisiana Civil Code. Dredging, 2008 WL 3851587 at *3, citing Cadwallader v. Allstate Ins. Co., 848 So.2d 577, 580 (La.2003). The Court's role “ is to ascertain the common intent of the parties to the [insurance] contract.” Id., (emphasis added). An insurance contract should be enforced as written, and the Court should not use rules of contractual interpretation to alter unambiguous terms and policy provisions. Id.

2. Louisiana's Direct Action Statute

“The Louisiana Direct Action Statute generally allows an injured party to proceed directly against an insurance company which has issued a policy or contract of insurance against the liability of the insured tortfeasor.” Grubbs v. Gulf Int'l Marine, Inc., 625 So.2d 495, 497 (La.1993), citing La.Rev.Stat. Ann. § 22:655, (predecessor to current Direct Action Statute, La.Rev.Stat. Ann. § 22:1269 (West 2013)). “By its literal terms, the Direct...