Travelers Indem. v. Certain Underwriters at Lloyd's

• Decision Date: 22 June 1983
• Docket Number: Civ. A. No. 82-3013.
• Citation: 566 F. Supp. 267
• Parties: The TRAVELERS INDEMNITY v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON AND COMPANIES.
• Court: U.S. District Court — Eastern District of Louisiana

566 F. Supp. 267

The TRAVELERS INDEMNITY v. CERTAIN UNDERWRITERS AT LLOYD'S LONDON AND COMPANIES.

Civ. A. No. 82-3013.

United States District Court, E.D. Louisiana, Section A.

June 22, 1983.

Ernest A. Carrere, Jr. and Stanhope B. Denegre, of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for plaintiff.

Clarence A. Frost of Faris, Ellis, Cutrone & Gilmore, New Orleans, La., for defendant.

ORDER

CHARLES SCHWARTZ, Jr., District Judge.

This matter came before the Court on the motion of plaintiff for partial summary judgment on its claim that it is not liable for any pre-judgment interest on the judgment rendered against J. Ray McDermott, Inc., in the case of Signal Oil & Gas Company, et al. v. The Barge W-701, Civil Action No. 70-3491. Following oral argument, and considering the record in this matter and the applicable law, for the reasons hereinafter set out, plaintiff's motion is DENIED.

The undisputed facts from which this dispute has arisen are as follows:

On December 20, 1969, a barge under charter to J. Ray McDermott & Company, Inc. ruptured a pipeline on the Outer Continental Shelf.

A lawsuit was filed in the United States District Court for the Eastern District of Louisiana against J. Ray McDermott & Company, Inc. and other parties by the owners of the pipeline for damages arising from the rupture of the pipeline.

On December 20, 1969, there was in full force and effect a comprehensive liability policy of insurance (No. TRKSLGO XXXXXX-XX) issued by the Travelers Indemnity Company to J. Ray McDermott & Company, Inc., with policy limits of $250,000 for the damages at issue.

On December 20, 1969, there was in full force and effect excess insurance coverages for J. Ray McDermott & Company, Inc., severally subscribed to by Certain Underwriters at Lloyd's.

On June 14, 1979, a judgment in the principal amount of $432,829.78, together with 7% interest from the date of the accident and attorneys' fees of McDermott's indemnitee was entered by the District Court against McDermott.

The judgment rendered against McDermott was appealed in the United States Court of Appeals for the Fifth Circuit, which affirmed and amended the judgment of the District Court to award attorneys' fees to the plaintiff, Signal Oil Company.

A petition for writ of certiorari was filed with the United States Supreme Court, which petition was denied and the judgment of the District Court, as amended, became final on February 22, 1982.

After the judgment became final, a dispute arose between McDermott's primary insurer, Travelers, and its excess underwriters, Lloyd's, as to their respective liabilities for costs of appeal and pre-judgment and post-judgment interest on the judgment rendered against McDermott.

Without prejudice, and pursuant to a written stipulation, Travelers and Lloyd's agreed to fund the full judgment against McDermott and arbitrate or litigate between themselves the dispute over appeal costs and interest on the judgment.

On July 20, 1982, the total judgment of $1,042,548.78 against McDermott was satisfied. The components of that amount are as follows:

(a) $432,829.78, the principal amount of the judgment;

(b) $382,399.00, being seven (7%) percent interest on the principal amount of the judgment from the date of the accident to the date of satisfaction of the judgment;

(c) $150,000, being attorney's fees to Signal Oil Company; and

(d) $77,356.00, being attorney's fees and costs to Sun Oil Company

Travelers funded $349,829.73 of the judgment and Lloyd's funded $663,276.78.

The issue raised by this motion for partial summary judgment is which insurer owes pre-judgment interest on the limits of the Travelers primary policy, which limits are $250,000. The Travelers contends that it is under no obligation to indemnify McDermott for pre-judgment interest in excess of the limits of its liability policy. Excess underwriters contend that the Travelers owes its pro rata share of the interest on the principal amount of the judgment, that is, pre-judgment interest on $250,000.

Traveler's policy of insurance does not explicitly cover pre-judgment interest. Indeed, its only reference to liability for interest payments is contained in its Supplementary Payments provision, which provides for coverage for "all interest on the entire amount of any judgment herein which accrues after entry of the judgment and before the company has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the company's liability thereon..."

The Lloyd's policy provides for coverage for "interest," but not when "included in other valid and collectible insurance."

The issue, then, is whether Travelers' policy implicitly or by law must be held responsible for paying any pre-judgment interest on the limits of its policy. If not, then Lloyd's would have to be responsible for such interest.

Neither party has suggested that there is any parol evidence which would guide the Court in interpreting the meaning of either policy with respect to pre-judgment interest. Indeed, both parties agree that the issue may be resolved by summary judgment.

Therefore, the first question to be addressed is what law governs this dispute. Travelers contends that since this matter involves a maritime tort and insurance for marine liabilities, the Court should be guided by federal admiralty law. As the United States Supreme Court held in Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), where there is a judicially-established federal admiralty rule on the issue, the court...