Terra Resources, Inc. v. Lake Charles Dredging & Towing, Inc.

• Decision Date: 18 March 1981
• Docket Number: Civ. A. No. 781533.
• Citation: 555 F. Supp. 406
• Parties: TERRA RESOURCES, INC. et al. v. LAKE CHARLES DREDGING & TOWING, INC. et al.
• Court: U.S. District Court — Western District of Louisiana

555 F. Supp. 406

TERRA RESOURCES, INC. et al. v. LAKE CHARLES DREDGING & TOWING, INC. et al.

Civ. A. No. 781533.

United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.

March 18, 1981.

Stephen T. Victory, Liskow & Lewis, New Orleans, La., for plaintiff.

J.L. Cox, Jr., Woodley, Barnett, Cox, Williams & Fenet, Lake Charles, La., for Lake Charles Dredging and Parker Bros.

John Blackwell, Gibbens & Blackwell, New Iberia, La., for Century Towing and Utah Home Fire Ins. Co. David A. Hurlburt, Fontenot & Hurlburt, Lafayette, La., for Aetna Cas. and Aetna Life.

MEMORANDUM OPINION

W. EUGENE DAVIS, District Judge.

In January 1978 Lake Charles Dredging & Towing Co., Inc. (Lake Charles) was engaged in dredging operations in East Cote Blanche Bay. The dredging flotilla was composed of a dredge and two barges owned by Parker Brothers, Inc., and one barge owned by Lake Charles. On the morning of January 25, the crewmembers of Century Towing's vessel, THOMAS E. CLARY, tied the three barges to a mooring device selected and owned by Lake Charles. During the night the barges dragged the mooring device two miles and collided with production facilities and a pipeline owned by Terra Resources, Reading & Bates Petroleum Company, Petroleum Resources Company and Farmland Industries.

A suit for damages was filed against Lake Charles, Parker Brothers and their protection and indemnity insurer, Fidelity & Casualty Company of New York, seeking to recover for the damage to plaintiffs' property. This claim was eventually settled for $140,000 and the defendants received an assignment of rights against Aetna Casualty & Surety Company, Inc., Lake Charles' and Parker Brothers' comprehensive general liability insurer. The only issue left for determination concerns the applicability of Aetna's policy to the instant facts.

Aetna first contends that its policy is inapplicable due to a watercraft exclusion. However, under the stated facts, liability could also have been visited on Lake Charles due to its selection and ownership of the allegedly inadequate mooring device. Louisiana courts have taken the sound position that coverage is afforded despite an exclusion if a separate and unexcluded predicate for liability exists. Johns v. State Farm Fire & Casualty Co., 349 So.2d 481 (La.App. 3rd Cir.1977); Hurston v. Dufor, 292 So.2d 733 (La.App. 1st Cir.1974) writs refused 295 So.2d 178 (La.1974). Therefore, it is clear that the watercraft exclusion does not preclude coverage for this claim.

Under the test announced by the Fifth Circuit in Wisconsin Barge Line, Inc. v. Barge Chem 300, 546 F.2d 1125 (5th Cir.1977), an indemnitee need only show potential liability and a sufficient reason to have paid the amount in settlement in three circumstances: if the defense is tendered to the indemnitor; if the claim for indemnity is founded on a judgment; or if the claim is based on a written contract of insurance or indemnification.

In the instant case, Lake Charles and Parker Brothers did not tender the defense to Aetna, but to have done so clearly would have been vain and useless in light of Aetna's specific denial of coverage. Aetna argues that its written denial of coverage referred only to Lake Charles and that Parker Brothers was insured under the same policy and was the owner of two of the barges involved in the collision. Certainly it was reasonable to assume that Aetna would take a consistent position with respect to coverage of Parker Brothers' exposure by claiming that the same watercraft exclusion operated to deny coverage to Parker Brothers. For these reasons, I conclude that Lake Charles and Parker Brothers are entitled to the benefits of the Wisconsin...