Smith v. Reliance Ins. Co. of Illinois

• Citation: 807 So.2d 1010
• Decision Date: 15 January 2002
• Docket Number: No. 01-387., No. 01-CA-889 to 01-CA-898, No. 01-CA-888
• Parties: Joseph SMITH, et al. v. RELIANCE INSURANCE CO. OF ILLINOIS, South Louisiana Port Commission, et al.
• Court: Court of Appeal of Louisiana (US)

807 So.2d 1010

Joseph SMITH, et al. v. RELIANCE INSURANCE CO. OF ILLINOIS, South Louisiana Port Commission, et al.

Nos. 01-CA-888, 01-CA--CA-898, 01-387.

Court of Appeal of Louisiana, Fifth Circuit.

January 15, 2002.

Robert S. Abdalian, Metairie, LA, Counsel for Plaintiffs and Interim Plaintiff's Liaison.

James R. Sutterfield, Gordon P. Serou, Jr., New Orleans, LA, Counsel for Reliance Insurance Company of Illinois, Defendant-Appellant.

S. Gene Fendler, Robert E. Holden, G.C. Slawson, Jr., Michael A. Golemi, Liskow & Lewis, New Orleans, LA, Joel T. Chaisson, Destrehan, LA, Counsel for South Louisiana Port Commission, Defendant-Appellee.

James R. Carter, John A. Womble, Porteous, Hainkel, Johnson & Sarpy, New Orleans, LA, Counsel for Alvarez Donnaway Passons, Inc., Third Party Defendant-Appellee.

Panel composed of Judges THOMAS F. DALEY, MARION F. EDWARDS and WALTER J. ROTHSCHILD.

WALTER J. ROTHSCHILD, Judge.

In these consolidated appeals, defendant Reliance Insurance Company of Illinois seeks review of a partial summary judgment rendered in favor of the Port of South Louisiana. The primary issue presented for our review is whether Reliance has a duty to defend the Port for allegations made by plaintiffs in this case. For the reasons more fully stated herein, we affirm the judgment of the trial court requiring Reliance to provide a defense to the Port.

FACTUAL AND PROCEDURAL HISTORY

According to the allegations of plaintiffs' petitions, the South Louisiana Port Commission, operating as the Port of South Louisiana, owns and operates waste water treatment impoundments located at its Globalplex facility in Reserve, Louisiana. In April of 1999, high amounts of sugar in the waste water and the failure of a mechanical aerating pump caused one of the ponds at the facility to overload. The overload made the pond anaerobic or septic, resulting in the release of substances, including hydrogen sulfide. The release of these substances caused noxious odors which the wind carried to the location of plaintiffs' homes and property, causing the alleged damages. The odors began on or about April 17, 1999.

As a result of this incident, eleven suits for personal injury on behalf of over five thousand named plaintiffs, have been filed against the Port. The first suit on behalf of Joseph Smith, et al was filed on June 16, 1999, and the following ten lawsuits asserted similar allegations. Plaintiffs subsequently filed supplemental and amending petitions to include as defendants Delta Beverage Group, Inc. and others on the basis that these companies contracted with the Port for the treatment of waste water. All of the suits were consolidated in the trial court, and eight of the lawsuits seek to be certified as class actions.

On October 29, 1999, the Port filed a third party demand against Reliance seeking a defense of plaintiffs' allegations under a policy of insurance issued by Reliance to the Port. Reliance answered this demand and moved for summary judgment, contending that there is no coverage for plaintiffs' claims under the policy, and there is thus no duty to defend.

In response, the Port filed a cross-motion for partial summary judgment, seeking a declaration that Reliance owed it a defense. Further, the Port moved that Reliance be ordered to pay its defense costs incurred to date and all costs of defense until the conclusion of the litigation.

Both motions for summary judgment were heard by the trial court on February 12, 2001. On that date, the trial court granted the Port's motion for partial summary judgment and denied the motion of Reliance, assigning oral reasons therefor. The trial court initially rendered an order to this effect on March 5, 2001.¹ Reliance moved for a new trial, which was denied, and the trial court rendered a final partial judgment against Reliance on April 16, 2001. Reliance now appeals from this judgment on the basis of numerous assignments of error.

APPLICABLE LAW

Summary judgment shall be rendered if there is no genuine issue as to material fact and the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B). The burden of proof on a motion for summary judgment is on the movant to establish that no material factual issues exist. La. C.C.P. art. 966(C)(2); Schroeder v. Board of Supervisors of La. State Univ., 591 So.2d 342, 345 (La.1991). Only when reasonable minds must inevitably conclude that the mover is entitled to judgment as a matter of law on the facts before the court is a summary judgment warranted. Chaisson v. Domingue, 372 So.2d 1225, 1227 (La.1979). Summary judgment declaring a lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence supporting the motion, under which coverage could be afforded. Westerfield v. LaFleur, 493 So.2d 600, 605 (La.1986). An insurer seeking to avoid coverage through summary judgment must prove that some exclusion applies to preclude coverage. Jackson v. Frisard, 96-0547 (La.App. 1st Cir.12/20/96), 685 So.2d 622, 629, writs denied, 97-0193 and 97-0201 (La.3/14/97), 689 So.2d 1386 and 1387. Appellate review of summary judgment is de novo, utilizing the same criteria that guide the trial court's grant of the judgment. Guillory v. Interstate Gas Station, 94-1767 (La.3/30/95), 653 So.2d 1152.

The resolution of this case turns on the provisions and exclusions contained in the subject insurance policy. A succinct statement of the law pertaining to insurance agreements has been recently set forth by the Supreme Court in Doerr v. Mobil Oil Corp., 00-0947 (La.12/19/00), 774 So.2d 119, 124:

An insurance policy is an aleatory contract subject to the same basic interpretive rules as any other contract. See La. Civ.Code art.1912, cmt. e; Magnon v. Collins, 98-2822 (La.7/7/99), 739 So.2d 191, 196; Peterson v. Schimek, 98-1712 (La.3/2/99), 729 So.2d 1024, 1028; Smith v. Matthews, 611 So.2d 1377, 1379 (La. 1993). The interpretation of an insurance contract is nothing more than a determination of the common intent of the parties. See La. Civ.Code art.2045; Magnon, 98-2822, 739 So.2d at 196; Ledbetter v. Concord Gen. Corp., 95-0809 (La.1/6/96), 665 So.2d 1166, 1169. Obviously, the initial determination of the parties' intent is found in the insurance policy itself. See La. Civ.Code art. 2046. In analyzing a policy provision, the words, often being terms of art, must be given their technical meaning. See id. at art.2047. When those technical words are unambiguous and the parties' intent is clear, the insurance contract will be enforced as written. See La. Civ.Code art.2046; Magnon, 739 So.2d at 197. If, on the other hand, the contract cannot be construed simply, based on its language, because of an ambiguity, the court may look to extrinsic evidence to determine the parties' intent. See Peterson, 729 So.2d at 1029.

When determining whether or not a policy affords coverage for an incident, it is the burden of the insured to prove the incident falls within the policy's terms. See Barber v. Best, 394 So.2d 779, 781 (La.App. 4th Cir.1981). On the other hand, the insurer bears the burden of proving the applicability of an exclusionary clause within a policy. See Dubois v. Parish Gov't Risk Mgmt. Agency Group Health, 95-546 (La.App. 3 Cir. 1/24/96), 670 So.2d 258, 260; Shaw v. Fidelity & Cas. Ins. Co., 582 So.2d 919, 925 (La.App. 2nd Cir.1991); Landry v. Louisiana Hosp. Serv., Inc., 449 So.2d 584, 586 (La.App. 1st Cir.1984); Barber, 394 So.2d at 781. Importantly, when making this determination, any ambiguities within the policy must be construed in favor of the insured to effect, not deny, coverage. See Yount v. Maisano, 627 So.2d 148, 151 (La.1993); Garcia v. St. Bernard Parish Sch. Bd., 576 So.2d 975, 976 (La.1991); Breland v. Schilling, 550 So.2d 609, 610 (La.1989); Sherwood v. Stein, 261 La. 358, 362, 259 So.2d 876, 878 (1972).

Moreover, it is well settled law that the insurer's obligation to defend suits against its insured is generally broader than its liability for damage claims. Steptore v. Masco Const. Co., 93-2064 (La.8/18/94), 643 So.2d 1213. This duty to defend is determined by the allegations of the plaintiff's petition, with the insurer being obligated to furnish a defense unless the petition unambiguously excludes coverage. Id. Thus, assuming all the facts of the petition to be true, if there would be coverage under the policy and liability to the plaintiff, the insurer must defend the insured regardless of the outcome of the suit or the eventual determination of actual coverage. The allegations of the petition are liberally interpreted in determining whether they set forth grounds which bring the claims within the scope of the insurer's duty to defend the suit brought against its insured. Yount v. Maisano, 627 So.2d 148 (La.1993).

With these guiding principles in mind, we proceed to the interpretation of the insurance policy at issue. Our immediate task is to compare the allegations of plaintiffs' petitions with the terms of the policy to determine whether the claims fall within the scope of the insurer's duty to defend.

The allegations of plaintiffs' petitions

The specific allegations of plaintiffs' petitions include the following facts:

Plaintiffs allege that as a result of the noxious odors from defendant's facility, they and others in the vicinity sustained damages including, but not limited to, personal injury, mental and economic damages and/or inconvenience. Specifically, plaintiffs allege they suffered from ailments including but not limited to respiratory and eye problems, headaches, nausea, sleeplessness, diarrhea and rashes. Further, plaintiffs allege they underwent "great inconvenience as a result of the fault of defendant including, but not limited to being confined inside their homes, having to leave their homes, interference with school and work and interference with...