Settoon Towing, L.L.C. v. St. Paul Surplus Lines Ins. Co.
| Decision Date | 18 June 2013 |
| Docket Number | No. 11–31030.,11–31030. |
| Citation | 720 F.3d 268 |
| Court | U.S. Court of Appeals — Fifth Circuit |
| Parties | In re In the MATTER OF the COMPLAINT OF SETTOON TOWING, L.L.C., as owner of M/V Cathy M. Settoon, and Barge CTCO 202, their engines, tackle, appurtenances, furniture, etc., for Exoneration from or Limitation of Liability. Settoon Towing, L.L.C., as owner of M/V Cathy M. Settoon, and Barge CTCO 202, their engines, tackle, appurtenances, furniture, etc., Petitioner v. St. Paul Surplus Lines Insurance Company, et al, Claimants. State National Insurance Company, Plaintiff–Appellant New York Marine & General Insurance Company; Federal Insurance Company, Plaintiffs–Appellees v. Settoon Towing, L.L.C., a Delaware Limited Liability Company, Defendant–Third Party Claimant–Appellant–Appellee v. St. Paul Fire & Marine Insurance Company, Third Party Defendant–Appellee. |
OPINION TEXT STARTS HERE
Harry Alston Johnson, III, Phelps Dunbar, L.L.P., Baton Rouge, LA, Sidney Daniel Meeks, Meeks & Associates, L.L.C., Metairie, LA, Thomas Kent Morrison, Esq., Phelps Dunbar, L.L.P., James R. Sutterfield, Candace Rachelle Leblanc, Sutterfield & Webb, L.L.C., New Orleans, LA, for Plaintiffs–Appellees.
Thomas Gordon O'Brien, Esq., Attorney, Johnny L. Domiano, Jr., Esq., Louis C. LaCour, Jr., Edwin Christian Laizer, Gregory Fortier Rouchell, Adams & Reese, L.L.P., New Orleans, LA, for Defendant–Appellant.
Celeste Darmstadter Elliott, Anne Elizabeth Briard, Esq., Ralph S. Hubbard, III, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, New Orleans, LA, for Third Party Defendant–Appellee.
Appeals from the United States District Court for the Eastern District of Louisiana.
Before STEWART, Chief Judge, and GARZA and ELROD, Circuit Judges.
This appeal arises out of an allision between the M/V CATHY M. SETTOON (the “CATHY”), a vessel owned by Settoon Towing, L.L.C. (“Settoon”), and an oil well. Settoon appeals the district court's grant of summary judgment in favor of New York Marine and General Insurance Company (“NYMAGIC”), Federal Insurance Company (“Federal”), and St. Paul Fire & Marine Insurance Company (“St. Paul”) (together, the “umbrella insurers”), concluding the umbrella insurers are not liable to Settoon for damages resulting from the allision. State National Insurance Company (“SNIC”) cross-appeals the district court's grant of summary judgment in favor of Settoon, finding SNIC liable to Settoon for damages and prejudgment interest resulting from the allision. We AFFIRM the district court's judgment in all respects except for the calculation of prejudgment interest. We REVERSE and REMAND for calculation of prejudgment interest in a manner consistent with this opinion.
On January, 20, 2007, the CATHY struck an oil well in Bayou Perot, Louisiana, causing damage to the wellhead and uncontrolled discharge of oil into the water. The captain of the CATHY did not report the allision to the United States Coast Guard or to Settoon. The next day, the captain of the M/V CHERYL SETTOON, another vessel owned by Settoon, saw the oil spill as it passed by the allision site and reported the spill to the Coast Guard and Settoon's management. The Coast Guard conducted an investigation, and the captain of the CATHY initially denied involvement. When the Coast Guard confronted him with a reconstruction of the allision from the CATHY's tracking system on February 23, 2007, thirty-four days after the allision, the captain of the CATHY admitted involvement. Settoon notified its insurers of the event on February 26, 2007, thirty-seven days after the allision.
Three insurance policies belonging to Settoon are at issue in this litigation, all of which provide excess insurance coverage over Settoon's underlying primary policies. SNIC insures the first layer bumbershoot policy (“Bumbershoot 1”), which provides the first $4,000,000 of excess coverage. SNIC sent Settoon a binder for this policy on November 8, 2006, listing the underlying insurance policies and indicating the policy included a “Pollution Liability” endorsement. The binder included a “Conditions” section that stated, “Warranted copies of all underlying policies scheduled in item 5, received within 60 days of attachment.” We interpret this as a requirement that Settoon send SNIC the full texts of its underlying policies. The “Conditions” section also stated, “All coverages scheduled to remain in force for the entire term....” The binder stated the insurance policy was effective from November 2, 2006 to November 2, 2007.
On December 13, 2006, SNIC contacted Settoon stating several items were needed to issue the policy, including copies of the underlying policies and the premium payment. On December 28, 2006, SNIC contacted Settoon stating SNIC received the premium payment but still required the underlying policies, among other items. On January 10, 2007, SNIC contacted Settoon again stating it required the underlying policies to issue the insurance policy. On January 23, 2007, three days after the allision, SNIC contacted Settoon again stating it needed the underlying policies to issue the insurance policy. On February 7, 2007, SNIC contacted Settoon again stating it needed the underlying policies to issue the policy. SNIC received all the underlying policies by March 1, 2007, and sent Settoon the Bumbershoot 1 policy on March 2, 2007.
Bumbershoot 1 begins by defining the general scope of the agreement in Section I–A, titled “Coverage.” In relevant part, the Coverage section reads:
The Policy shall indemnify the Insured ... for the following ...:
1) All Protection and Indemnity risks covered by the underlying Protection and Indemnity Insurance....
2) ... marine collision liabilities....
3) All other sums which the Insured shall become legally liable to pay as damages on account of ... b. property damage....
Section III of Bumbershoot 1 is titled “Exclusions.” In relevant part, the Exclusions section reads: One of the endorsements attached to the policy is titled “Pollution Liability,” which reads:
This endorsement forms a part of the policy to which it is attached.
...
Exclusion xi.f. “Pollution Liability” of this policy shall not apply, however, provided that the Insured establishes that all of the following conditions have been met:
...
C) The discharge, dispersal, release or escape became known to the Insured within 72 hours after its commencement.
D) The discharge, dispersal, release or escape was reported in writing to these underwriters within 21 days after having become known to the Insured.
...
Coverage, if any, provided by the endorsement will:
A) Apply only if such coverage is also provided in the underlying insurance(s)....
...
Such coverage, however, shall only apply excess of valid and collectible underlying insurance.
All other terms and conditions remaining unaltered.
NYMAGIC insures the second bumbershoot policy (“Bumbershoot 2”), which provides $5,000,000 over Bumbershoot 1. The first section under the heading “Insuring Agreement” in Bumbershoot 2 is titled “Coverage” and reads in pertinent part:
This Policy is to indemnify the “Assured” in respect of the following ...
(a) All Protection and Indemnity risks....
(b) ... Collision ... Liabilit[y]....
(c) All other sums which the “Assured” shall become legally liable to pay ... in respect of claims made against the “Assured” for damages ... on account of ... “Property Damage”....
Under the heading “Exclusions” Bumbershoot 2 states:
This Policy Shall Not Apply:—
1. To any claim directly or indirectly in consequence of the actual or potential discharge, dispersal, release, or escape of smoke, vapors, soot, fumes, acids, alkalis, petroleum products or derivatives, liquids or gases, waste materials, sewerage or other toxic chemicals, irritants, contaminants or pollutants into or upon land, atmosphere or any watercourse or body of water.
Under the heading “Conditions” Bumbershoot 2 lists, among other conditions, the following:
9. NOTICE OF OCCURRENCE: Whenever the “Assured” has information from which the “Assured” may reasonably conclude that an “occurrence” covered hereunder involved injuries or damages which, in the event that the “Assured” should be held liable, is likely to involve this policy, notice shall be sent as soon as practicable to the Company, provided, however, that failure to notify the Company of any “occurrence” which at the time of its happening did not appear to involve this Policy, but which, at a later date, would appear to give rise to claims hereunder, shall not prejudice such claims.
Endorsement # 8, attached to Bumbershoot 2 and titled “Follow–Form Pollution Endorsement (Sudden & Accidental Limitation),” further explains the pollution exclusion and provides a buyback. The endorsement states in relevant part:
I. ABSOLUTE POLLUTION EXCLUSION
(A) In consideration of the premium charged, it is hereby agreed that this policy shall not apply to any liability for ... “property damage” ... arising out of the ... “release” of “pollutants” into ... any watercourse, water supply, reservoir or body of water.
It is further agreed that the intent and effect of this exclusion is to delete from any and all coverage's afforded by this policy any “occurrence”, claim, suit, cause of action, liability, settlement, judgement, defense costs or expenses in any way arising out of such “release”....
...
(A) It is hereby agreed that the above Absolute Exclusion shall not apply provided that the Named Assured establishes that all of the following conditions have been met:
...
(4) The occurrence became known to the assured within 72 hours after its commencement.
(5) The occurrence was reported in writing to those underwriters within 30 days after having become known to the assured.
...
ALL OTHER TERMS AND CONDITIONS REMAINING...
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