St. Paul Fire v. Bd. of Com'Rs of New Orleans, Civil Action No. 07-3053.

• Decision Date: 11 August 2009
• Docket Number: Civil Action No. 07-3053.
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY, et al. v. BOARD OF COMMISSIONERS OF the PORT OF NEW ORLEANS.
• Court: U.S. District Court — Eastern District of Louisiana

646 F.Supp.2d 813

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, et al. v. BOARD OF COMMISSIONERS OF the PORT OF NEW ORLEANS.

Civil Action No. 07-3053.

United States District Court, E.D. Louisiana.

August 11, 2009.

Order Denying Reconsideration August 26, 2009.

COPYRIGHT MATERIAL OMITTED

Georges M. Legrand, Patrick E. Costello, Jacques P. Degruy, Mouledoux, Bland, Legrand & Brackett, LLC, New Orleans, LA, James W. Carbin, Duane Morris LLP, Newark, NY, for St. Paul Fire and Marine Insurance Company, et. al.

Edward Francis Lebreton, III, E. Stuart Ponder, Fowler Rodriguez, New Orleans, LA, for Board Of Commissioners of the Port of New Orleans.

ORDER AND REASONS

LANCE M. AFRICK, District Judge.

Before the Court is a motion for summary judgment filed by plaintiffs, St. Paul Fire and Marine Insurance Company, Insurance Company of North America and American Home Assurance Company (collectively "the Underwriters"). For the following reasons, the motion is GRANTED IN PART AND DENIED IN PART.¹

BACKGROUND

This action for declaratory judgment arises in connection with a state court judgment awarding John Morella ("Morella") and his wife damages for injuries sustained in a July, 2001 accident on property owned by defendant, the Board of Commissioners of the Port of New Orleans ("the Board"). In 2002, Morella filed a lawsuit against the Board in state court alleging that he was driving a top loader when his vehicle fell into a pothole, causing him injuries.² The state court tried the case without a jury on January 16, 2007, and on February 28, 2007, the state court entered a $2.6 million judgment in favor of Morella and a $50,000 judgment in favor of his wife on her loss of consortium claim.³ Following a motion for new trial, the state court entered an amended judgment on March 23, 2007, awarding interest at a rate of six percent from the date of judicial demand.⁴ The Louisiana Fourth Circuit Court of Appeals affirmed the judgment on May 14, 2008.⁵ Morella v. Bd. of Comm'rs of Port of New Orleans, 988 So.2d 266 (La.Ct.App. 4th Cir.2008).

At the time of Morella's injuries, the Underwriters had issued the Board an excess insurance policy, known as a "Bumbershoot" policy, which provided coverage above the $1 million limits of the Board's underlying policies. The policy was in effect from June 14, 2001 to June 14, 2002.⁶

On May 30, 2007, the Underwriters filed this lawsuit, seeking a declaratory judgment that the policy does not cover the Board's liability for Morella's injuries because the Board failed to timely notify the Underwriters of Morella's claim as required by the policy. The Board filed a third-party complaint against its insurance brokers, Aon Corporation, Aon Risk Services, Inc. of Texas and Aon Risk Services, Inc. of Louisiana (collectively "Aon"). The Board alleges that Aon assumed the duty of notifying the Board's insurers of claims against the Board which may involve the Board's insurance policies.⁷

On May 29, 2009, the Underwriters filed this motion for summary judgment, arguing that it is entitled to a declaratory judgment that the Board is not entitled to coverage based on a policy provision requiring that the insured send notice "as soon as practicable" whenever it "may reasonably conclude that an occurrence covered [under the policy] involves an event likely to involve [the] Policy."⁸ The Underwriters claim that they did not receive notice of Morella's claim until after the judgment had been entered and then amended.⁹

The Board does not claim that the Underwriters were put on notice before the amended judgment was issued, asserting only that it notified Aon and that the Board "is unaware of when Aon provided notice to Excess Insurers."¹⁰ Aon contends that it notified the Underwriters of the amended judgment on or about March 23, 2007.¹¹ Aon further argues that it submitted loss summaries to the Insurance Company of North America when it submitted policy renewal applications in 2003, 2004 and 2005 and that these summaries identified Morella's claim.

LAW AND ANALYSIS

I. STANDARD OF LAW

Summary judgment is proper when, after reviewing "the pleadings, the discovery and disclosure materials on file, and any affidavits," the court determines there is no genuine issue of material fact. Fed. R.Civ.P. 56(c). The party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265, 274 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party's case. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553, 91 L.Ed.2d at 274; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir.1986).

Once the party seeking summary judgment carries its burden pursuant to Rule 56(c), the other party must come forward with specific facts showing that there is a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538, 552 (1986). The showing of a genuine issue is not satisfied by creating "`some metaphysical doubt as to the material facts,' by `conclusory allegations,' `unsubstantiated assertions,' or by only a `scintilla' of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (citations omitted). Instead, a genuine issue, of material fact exists when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202, 211-12 (1986). The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The nonmoving party's evidence, however, "is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor." Id. at 255, 106 S.Ct. at 2513, 91 L.Ed.2d at 216; see Hunt v. Cromartie, 526 U.S. 541, 552, 119 S.Ct. 1545, 1551-52, 143 L.Ed.2d 731, 741 (1999).

II. CHOICE OF LAW

The Board's bumbershoot policy provides that it "shall be governed by the internal laws of the State of New York in all respects, including matters of interpretation and performance ..."¹² Given the choice-of-law clause, the Underwriters contend that New York law governs this dispute. On the other hand, the Board and Aon contend that Louisiana law applies because Louisiana has a more significant interest than New York and because application of New York law is contrary to Louisiana policies.

In order to apply the appropriate choice-of-law rules, the Court must first determine whether it has admiralty jurisdiction or whether its jurisdiction is based solely upon the parties' diversity of citizenship. Within the Fifth Circuit, "it is well-settled that a marine insurance policy is a maritime contract within federal admiralty jurisdiction." Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 n. 2 (5th Cir.1991). The parties, however, dispute whether the insurance policy at issue is a marine insurance policy and, therefore, a maritime contract giving rise to admiralty jurisdiction.¹³

Notwithstanding Aon's and the Board's arguments, the Court must look beyond the facts that Morella's accident occurred on land and that the bumbershoot policy covered some non-marine risks. Indeed, the United States Supreme Court has held that whether a contract is maritime "`depends upon ... the nature and character of the contract' and the true criterion is whether it has `reference to maritime service or maritime transactions'" rather than "whether a ship or vessel was involved" or where the work was performed. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 23-24, 125 S.Ct. 385, 393, 160 L.Ed.2d 283 (2004) (citations omitted); see also Alleman v. Omni Energy Servs. Corp., 570 F.3d 680, 684 (5th Cir. 2009) ("[M]aritime contract law applies based on the nature and character of the contract, rather than looking to where it occurred."). Given that the "fundamental interest giving rise to maritime jurisdiction is the protection of maritime commerce," the inquiry focuses on "whether the principal objective of a contract is maritime commerce." Kirby, 543 U.S. at 24, 125 S.Ct. 385 (internal quotations omitted). The Court's focus is no longer on "whether the non-maritime components are properly characterized as more than `incidental' or `merely incidental' to the contract." Folksamerica Reinsurance. Co. v. Clean Water of N.Y., Inc., 413 F.3d 307, 315 (2d Cir. 2005) (citing Kirby, 543 U.S. at 25-26, 125 S.Ct. 385).

The United States Court of Appeals for the Second Circuit applied Kirby when wrestling with the issue of whether it lacked admiralty jurisdiction due to a comprehensive general liability ("CGL") section of a reinsurance policy. Id. In doing so, the court examined whether the policy assumed marine risks. Id. at 316 ("Whether an insurance policy is marine insurance depends on `whether the insurer assumes risks which are marine risks.'" (quoting Jeffcott v. Aetna Ins. Co., 129 F.2d 582, 585 (2d Cir.1942))). The court noted that CGL policies generally cover liabilities arising from bodily injuries and property damage and that the policy at issue excluded certain traditional marine risks, such as Protection and Indemnity ("P & I") risks and Collision and Tower's liability. Id. at 317-18. The court found, however, that the policy did contain four aspects that it considered marine in nature, including pollution coverage, completed operations hazard coverage, products hazards coverage, and a portion of the policy's premises and operations coverage. Id. at 319-21 ("Pollution coverage is widely recognized as marine in nature."). Finding that the primary objective of the...