Steel v. Evanston Ins. Co.
| Decision Date | 07 December 2011 |
| Docket Number | Civil Action No. 07–1034. |
| Citation | 835 F.Supp.2d 161 |
| Parties | BAYOU STEEL, et al. v. EVANSTON INSURANCE CO., et al. |
| Court | U.S. District Court — Eastern District of Louisiana |
OPINION TEXT STARTS HERE
Howard Earl Sinor, Jr., A. Gregory Grimsal, Nina Wessel English, Gordon, Arata, McCollam, Duplantis & Eagan, James R. Sutterfield, Sutterfield & Webb, LLC, New Orleans, LA, for Plaintiff.
Robert I. Siegel, Alistair Ward, Gieger, Laborde & Laperouse, LLC, New Orleans, LA, Kelley Strain Mackenroth, Allen & Gooch, Metairie, LA, for Defendant.
ORDER AND REASONS
MARTIN L.C. FELDMAN, District Judge.
Before the Court are cross-motions for summary judgment. For the reasons that follow, the plaintiffs' motion is DENIED and the defendant's motion is GRANTED.
The facts underlying this coverage dispute are familiar, indeed, stipulated and otherwise outlined in the U.S. Fifth Circuit's most recent iteration, Bayou Steel Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA., 642 F.3d 506 (5th Cir.2011); nonetheless, a brief summary to contextualize the present cross-motions is appropriate.
Ryan Campbell was injured on October 2, 2002 while he was unloading steel bundles owned by Bayou Steel Corporation from a barge owned by Memco Barge Lines, Inc. Bayou Steel, a steel manufacturer, contracted with Memco in January 2002 whereby Memco agreed to transport steel cargo from Bayou Steel's facility in LaPlace, Louisiana, to certain destinations including Bayou Steel's Calumet River facility in Chicago, Illinois. Pursuant to this freight contract, Memco was not responsible for loading or unloading the cargo; Bayou Steel was.
In August 2002 Bayou Steel loaded a Memco barge in LaPlace, Louisiana with steel angle iron bundles, separated by dunnage. After the Memco barge was loaded, Memco towed the barge to Bayou's facility on the Calumet River. Once the barge reached Chicago, Kindra Marine, a stevedoring company, unloaded the barge, pursuant to a contract it entered into with Bayou Steel.
On October 2, 2002, Campbell was employed by Kindra Marine as a longshoreman to assist in unloading the angle steel cargo from the Memco barge and onto a truck. Campbell was injured when he stepped on a piece of dunnage separating bundles of steel in the hold of the barge in an attempt to place the cable necessary to crane lift the bundles of steel out of the barge. The dunnage apparently cracked and broke, causing the steel to fall on Campbell, who sustained serious injuries to his legs.
On November 26, 2002 Campbell sued Bayou Steel in Illinois state court. National Union Fire Insurance Company of Louisiana (NUFIC–LA), which issued a $1,000,000 primary wharfinger policy to Bayou Steel, accepted coverage and defense for Campbell's claim against Bayou Steel. New York Marine and General Insurance Company (NYMAGIC), which issued a $14,000,000 excess wharfinger policy to Bayou Steel, initially denied coverage for the claims, but ultimately participated in, and contributed to, the settlement of the underlying claim.
Evanston Insurance Company, Bayou Steel's commercial general liability insurer, and National Union Fire Insurance Company of Pittsburgh, Pa. (NUFIC–PA), Bayou Steel's commercial umbrella carrier, denied coverage of the claim, relying in part on the policies' Longshoremen and Harbor Workers Compensation Act exclusion; neither Evanston nor NUFIC–PA participated in the settlement of the underlying litigation. The underlying litigation was ultimately settled for $6,000,000 with NUFIC–LA contributing $585,158.74, NYMAGIC contributing $3,414,841.76, and Kindra Marine contributing approximately $2,000,000, and all claims against NUFIC–LA and NYMAGIC were released; Bayou Steel and NYMAGIC reserved their right to seek contribution or recovery against Evanston and NUFIC–PA.
On February 21, 2008 Bayou Steel and NYMAGIC sued Evanston and NUFIC–PA, seeking declaration of coverage under the respective policies, and seeking reimbursement of the payments made to settle Campbell's underlying claim. The parties filed a first set of cross-motions for summary judgment regarding the applicability of the LHWCA exclusion. Although this Court granted the motions filed by Evanston and NUFIC–PA, finding that the LHWCA exclusion applied, that finding was overruled by the U.S. Fifth Circuit Court of Appeals. See Bayou Steel Corp. v. Evanston Ins. Co., 354 Fed.Appx. 9 (5th Cir.2009) (unpublished) (per curiam)(“Bayou SteelI ”). Because the Fifth Circuit determined that Campbell's suit against Bayou Steel could not be characterized as a suit “pursuant to” the LHWCA, the Fifth Circuit ruled that Evanston's exclusion did not apply and “Evanston and NUFICPA must provide coverage to Bayou consistent with their respective policies.” See id.
Following remand, the parties filed a second set of cross-motions, this time disputing the applicability of an exclusion contained in the NYMAGIC policy, which excluded coverage for injuries to employees of the insured's (Bayou Steel's) subcontractors. The NYMAGIC excess policy exclusion focusing that dispute (as incorporated from the NUFIC–LA primary policy, to which NYMAGIC's policy followed form) adds in limited coverage for personal injury, stating:
In consideration of an additional premium ... this policy is extended to cover the liability imposed by law for loss of life, or personal injury arising out of the custodianship of the barges described ... hereunder but always excluding liability for:
...
(2) Employees of ... [Bayou Steel's] sub-contractors.
This Court found that Kindra Marine was a subcontractor of Bayou Steel (pursuant to the Bayou Steel/Memco freight contract), and that because Campbell was Kindra Marine's employee at the time of the accident, the exclusion applied to preclude coverage under the NYMAGIC policy. However, on appeal, the Fifth Circuit reversed this Court's summary judgment that Kindra Marine was Bayou Steel's subcontractor. In reaching its conclusion that Kindra Marine was Bayou Steel's contractor (and not sub-contractor), the Fifth Circuit observed that:
This appeal turns on whether Campbell's employer, Kindra, was a sub-contractor of Bayou for purposes of this NYMAGIC policy exclusion. There are two possible alternatives: (1) Kindra was a sub-contractor of Bayou, so NYMAGIC is off the hook for coverage of Campbell's injuries, and NUFIC–PA is on the hook; or (2) Kindra was not a sub-contractor of Bayou, so NYMAGIC is on the hook, and NUFIC–PA is off.
Bayou Steel Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 642 F.3d 506, 509 (5th Cir.2011)(emphasis in original)( Bayou Steel II ).1 The Fifth Circuit ultimately determined that NYMAGIC was on the proverbial hook, holding that “for the purposes of the subcontractor exclusion in the NYMAGIC policy, Kindra was Bayou's contractor—not its sub-contractor—so that Campbell's injuries are not excluded from coverage under NYMAGIC's policy.” Id. at 507–08 (emphasis in original). In concluding that Kindra Marine was Bayou Steel's contractor, not its sub-contractor, the Fifth Circuit posed the following:
If, for a hypothetical example, Kindra had contracted with a crane contractor to provide and operate a crane during the unloading operation, the crane operator would have been Bayou's sub-contractor, but Kindra would have remained Bayou's contractor.
Id. at 512 n. 29. In further developing its observation that “Bayou never had a sub-contractor at any stage of these transactions”, the Fifth Circuit poses yet another hypothetical example:
Suppose that Bayou had elected to contract with XYZ stevedoring to load the cargo in Louisiana and to unload it in Illinois. XYZ would have been Bayou's contractor for the purposes of NYMAGIC's policy exclusion, and any XYZ employee injured during the course of the stevedoring work would have been covered. But, in turn, if XYZ had contracted with Kindra to do the part of XYZ's stevedoring work that consisted of unloading the cargo in Illinois, Kindra would have been Bayou's sub-contractor, i.e., the party hired to do part of the work of Bayou's contractor, XYZ, and Kindra's employee would have been excludedfrom coverage under NYMAGIC's policy.
Id. at 513.
The plaintiffs, Bayou Steel and NYMAGIC, and defendant, NUFIC–PA, have now filed a third round of cross-motions for summary relief. NYMAGIC and Bayou Steel, asserting that the NYMAGIC policy does not afford coverage, now claim the applicability of two exclusions in the NYMAGIC policy: (1) again, they invoke the exclusion for injuries to employees of Bayou Steel's subcontractors; and (2) they invoke as a second exclusion Endorsement # 4, which excludes from coverage anything that would be covered under the Standard Comprehensive General Liability Policy. NUFIC–PA, by cross-motion, asserts that neither of these exclusions apply such that there is coverage under the NYMAGIC policy: the exclusion for injuries to employees of Bayou Steel's subcontractors exclusion is inapplicable, the defendant insists, because the Fifth Circuit has already determined as much; the exclusion regarding applicability of the Standard CGL Policy is inapplicable, NUFIC–PA contends, because the plaintiffs have failed to carry their burden to show that it is applicable.2
Federal Rule of Civil Procedure 56 instructs that summary judgment is proper if the record discloses no genuine dispute as to any material fact such that the moving party is entitled to judgment as a matter of law. No genuine issue of fact exists if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
The Court emphasizes that the mere argued existence of a factual dispute does...
To continue reading
Request your trial