RUSLAN MALOVANYI, Plaintiff, v. NORTH AMERICAN PIPE CORPORATION, Defendant and Third-Party Plaintiff, v. MOONLIGHT TRANSFER INC. and BLUE AND YELLOW TRANSPORTATION, INC., Third-Party Defendants.

 

15-cv-548-jdp

 

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

 

2017 U.S. Dist. LEXIS 107348

 

 

July 12, 2017, Decided

July 12, 2017, Filed

 

 

COUNSEL:  [*1] For Ruslan Malovanyi, Plaintiff: Alexander Tolmatsky, LEAD ATTORNEY, Alexander Tolmatsky, Northbrook, IL.

 

For North American Pipe Corporation, Defendant: Bradley M. Whalen, LEAD ATTORNEY, Katherine A. Wade, Porter Hedges LLP, Houston, TX.

 

JUDGES: JAMES D. PETERSON, District Judge.

 

OPINION BY: JAMES D. PETERSON

 

OPINION

 

OPINION & ORDER

Plaintiff Ruslan Malovanyi is a truck driver who was picking up a load of plastic pipe from defendant North American Pipe Corporation (NAPCO). Malovanyi was injured when a bundle of pipe fell from his truck while he was securing the load, which had been placed on his truck by a NAPCO employee. Malovanyi contends that the NAPCO employee had improperly placed the bundle, and he brings claims against NAPCO for negligence, negligence per se, and gross negligence. Dkt. 23. NAPCO brings claims against third-party defendants, Moonlight Transfer Inc., which brokered the delivery and hired Blue and Yellow Transportation, Inc., to pick up and deliver the pipe.

NAPCO moves for summary judgment on Malovanyi’s claims. Dkt. 39. And both Malovanyi and NAPCO have filed motions concerning Malovanyi’s late-disclosed liability expert. The court will grant NAPCO’s motion to strike Malovanyi’s expert, and it [*2]  will grant NAPCO’s motion for summary judgment. The court will apply the Savage rule, under which Malovanyi, not NAPCO, was responsible for securing the load. In light of the court’s decision on Malovanyi’s claims, NAPCO’s claims against the third-party defendants are apparently moot, although the court will give NAPCO the opportunity to inform the court whether those claims should be dismissed.

 

UNDISPUTED FACTS

Except where noted, the following facts are undisputed.

NAPCO manufactures plastic pipe. In late 2014, NAPCO arranged to transport a load of pipe from its Janesville, Wisconsin facility to two destinations outside of Wisconsin. NAPCO contacted Moonlight to transport the load, and Moonlight assigned the load to Blue and Yellow. Blue and Yellow assigned one of its independent contractors to do the job: Malovanyi.

Malovanyi was an inexperienced driver. Malovanyi had received his commercial driver’s license on July 30, 2014. But when Malovanyi applied to work for Blue and Yellow, he stated, falsely, that he had worked as a commercial driver since July 2012. Malovanyi claims this was merely a mistake; NAPCO characterizes the misrepresentation as more nefarious. Regardless, as of the [*3]  date of the accident, December 1, 2014, Malovanyi had been driving a commercial vehicle for only four months.

Malovanyi arrived at the Janesville facility to pick up the pipe. NAPCO’s employee, Larry Lewis, directed Malovanyi to several locations in the yard, and Lewis loaded pipe with a fork lift onto Malovanyi’s trailer at each stop. Each time Lewis placed pipe on the trailer, Malovanyi strapped it down before moving to the next location. NAPCO personnel were not responsible for securing the load.

In total, Lewis loaded four stacks of pipe, two forward stacks (one on the driver’s side, one on the passenger’s side), and two rearward stacks (again, one on the driver’s side, one on the passenger’s side). Lewis told Malovanyi to secure the load after he placed each stack of pipe; but nothing in the record indicates that Lewis–or any other NAPCO employee–told Malovanyi how to approach or secure the load.

Malovanyi knew the proper procedure for securing a load of pipe, which required throwing straps over a base layer of pipe–sometimes called the belly layer–before throwing straps over the top of the stack. Once all straps are in place, Malovanyi knew to tighten the top straps before tightening [*4]  the bottom ones. The steps are as follows:

 

1. Throw four straps (two over the forward part of the load, two over the rear) over the bottom layer before stacking the next layer on top. Do not tighten the bottom straps.
2. Load the top layer to complete loading.
3. Throw four straps over the top of the load (again, two over the forward part of the load, two over the rear) from the passenger’s side of the trailer.
4. Walk to the driver’s side of the trailer.
5. Tighten the top straps first, to secure the load from the top.
6. Tighten the bottom straps over the bottom layer.

 

 

Malovanyi knew that he needed to tighten the top straps first, “[t]o make sure that the upper portion of the pipes would not fall.” Dkt. 77, ¶ 19 (quoting Dkt. 43 (Malovanyi Dep. 96:23-24)).

But Malovanyi did not follow these steps on December 1: Malovanyi tightened the bottom straps before Lewis loaded the top layer.1 The passenger’s side bottom layer was taller than the driver’s side stack, so the taut bottom straps were at an angle, sloping down toward the driver’s side. By Malovanyi’s account, Lewis continued to load the trailer; he set a bundle on top of the taut bottom straps. As Lewis moved his forklift away from the trailer, [*5]  the bundle was left sitting at an angle atop the straps. (NAPCO disputes that this is what happened, contending that it would not be possible to set the pipe bundle down atop the sloped straps. But NAPCO accepts Malovanyi’s version of events for purposes of summary judgment.) Then Lewis left the area.

 

1   Malovanyi attempts to dispute NAPCO’s proposed finding of fact that “Malovanyi had tightened those two bottom straps at another location in the yard, and then he moved the trailer to the accident location.” Id. ¶ 23. But he does not cite any evidence that creates a dispute. The court’s summary judgment procedures provide that “[t]he court will conclude that a proposed fact is undisputed unless the responding party explicitly disputes it and either identifies contradictory evidence in the record, or demonstrates that the proponent of the fact does not have admissible evidence to support it.” Dkt. 12, at 10. Malovanyi has not adequately disputed the proposed fact. And NAPCO cites admissible evidence to support that fact: Malovanyi testified during his deposition that at some point before the accident, he tightened those straps. Dkt. 43 (Malovanyi Dep. 63:16-20, 69:2-15).

When Malovanyi approached the driver’s side of the trailer, the angled bundle slid off the trailer, striking Malovanyi. Malovanyi claims that he did not see that the top bundle was sitting at an angle. Malovanyi did not ask Lewis or any other NAPCO personnel to reload the trailer or adjust the load before he approached it.

Pictures of the scene immediately after the accident confirm that no top straps had been thrown over the load and that the bottom straps had been tightened.

The court has subject matter jurisdiction over Malovanyi’s claims pursuant to 28 U.S.C. § 1332 because the parties are completely diverse and the amount in controversy exceeds $75,000.

 

ANALYSIS

 

1. Motion to strike

The court begins with NAPCO’s motion to strike Malovanyi’s liability expert. Dkt. 56. Early in the case, Malovanyi disclosed his liability theory and his liability expert, Brooks Rugemer. NAPCO, understandably, built its [*6]  defense in response. But then Malovanyi changed experts. On November 30, 2016, more than a year after he first disclosed Rugemer’s opinions, Malovanyi disclosed a new liability expert, Adam Grill, with new opinions.2

 

2   The court will grant Malovanyi’s motion to supplement his opposition to the motion to strike. Dkt. 86 and Dkt. 87.

Malovanyi disclosed Rugemer’s report on October 6, 2015, before the court held its preliminary pretrial conference. The Preliminary Pretrial Conference Order required NAPCO to disclose its responsive liability expert not later than June 17, 2016; Malovanyi was required to disclose his rebuttal report not later than August 19, 2016. Dkt. 12, at 2. The order explicitly provides that “[f]ailure to comply with these deadlines and procedures could result in the court striking the testimony of a party’s experts pursuant to Rule 37.” Id. On August 23, 2016, Malovanyi de-designated Rugemer, citing unspecified “professional reasons.” Dkt. 56-6, at 1.

Malovanyi’s first attorney had a medical emergency, and the court agreed to reset a number of deadlines. But the Amended Scheduling Order explicitly notes that “all of plaintiff’s expert disclosure deadlines had passed before his attorney fell ill. Therefore, the court did not set new expert disclosure deadlines.” Dkt. 55. And the court told Malovanyi [*7]  that he would need to seek and obtain leave of the court before attempting to disclose or use expert witnesses in this suit. Id. (By that point, Malovanyi had jettisoned Rugemer.) But Malovanyi ignored the court’s instructions and disclosed a new liability expert with new opinions on November 30, 2016, without moving for leave to do so.

Federal Rule of Civil Procedure 26(a)(2)(D) provides that a party must make its expert disclosures “at the times and in the sequence that the court orders.” Under Rule 37(c)(1), “[i]f a party fails to provide information or identify a witness as required by Rule 26(a) . . . the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial.” These sanctions are “automatic and mandatory . . . unless [the] nondisclosure was justified or harmless.” Musser v. Gentiva Health Servs., 356 F.3d 751, 758 (7th Cir. 2004).

After reviewing Malovanyi’s explanations for his late disclosure of a new expert, the court is not convinced that the late report was justified or harmless. Malovanyi contends, unconvincingly, that the November 30, 2016 disclosure was actually timely. He cites Rule 26(a)(2)(D), which provides that parties must make expert disclosures “at least 90 days before the date set for trial or for the case to be ready for trial.” But this rule does not [*8]  govern here. Expert disclosures are due 90 days before trial “[a]bsent . . . a court order.” Id. As discussed, parties must make their expert disclosures “at the times and in the sequence that the court orders.” Id. Period. Malovanyi’s November 30, 2016 disclosure was untimely. Mere weeks before he produced the new report, the court explicitly warned him that his time for disclosing experts had come and gone.

Malovanyi contends that even if the disclosure were untimely, it was harmless. Malovanyi contends that NAPCO has had the opportunity to depose the new expert and could have its expert prepare a supplemental report; as a result, NAPCO is not prejudiced. But Malovanyi’s disclosure came well after NAPCO had secured and disclosed its own expert and well after NAPCO had moved for summary judgment. The schedule that Malovanyi proposes–where he is permitted to disclose experts at will, provided he leaves enough time in the schedule to allow NAPCO to depose the expert and secure supplemental responsive opinions–is not the schedule that the court set in this case. See Finwall v. City of Chicago, 239 F.R.D. 494, 501 (N.D. Ill.), objections overruled, 239 F.R.D. 504 (N.D. Ill. 2006) (“Late disclosure is not harmless within the meaning of Rule 37 simply because there is time to reopen discovery.”). [*9]

Malovanyi also contends that the new expert merely adopts the old expert’s liability theory, so NAPCO’s expert’s report and motion for summary judgment would not look any different had it had Malovanyi’s new expert’s report earlier. He argues that he has pursued the same liability theory all along: that NAPCO’s loading practices caused the accident. “Defendant’s experts are going to reassert the same defense, unchanged, because that Defense remains applicable to any theory of negligence, new or old.” Dkt. 61, at 5. But Malovanyi is overgeneralizing here. In reality, the new Grill report offers new opinions. Rugemer opined that NAPCO caused the accident by loading the pipe that crushed Malovanyi in a dangerous manner, namely, at an angle. Dkt. 56-1, at 5. But Malovanyi’s new expert, Adam Grill, opines that a “latent defect” in NAPCO’s loading practices caused the accident. Dkt. 57, at 7. True, both Grill and Rugemer opined that NAPCO was responsible for the accident. But the opinions offer alternative theories. In fact, it appears that Malovanyi propounded Grill’s latent defect theory to create fact issue at summary judgment. NAPCO briefed summary judgment assuming Malovanyi’s theory [*10]  that the pipe that fell and injured him were placed on a slope, over taut straps, as Malovanyi testified during his deposition. Rugemer assumed these facts in his report. To allow Malovanyi his late-disclosed liability expert would undoubtedly prejudice NAPCO: NAPCO would be required to start over to defend a latent defect theory instead of the approach taken by Rugemer.

Malovanyi has not shown that the late disclosure was harmless, and he makes no attempt to show that it was justified. The motion to strike is granted. The fact that NAPCO has deposed Grill and asked Malovanyi to supplement his expert disclosures does not eliminate the prejudice to NAPCO, which has prepared as best it could in the event the court did not strike Grill’s report.3

 

3   NAPCO moved to strike Grill’s report from the summary judgment record for other reasons: the report does not comply with Rule 56(c), it relies on inadmissible hearsay, and it is untimely. Dkt. 78. The court will deny the motion as moot. The court will also deny Malovanyi’s motion to supplement his opposition to that second motion to strike as moot. Dkt. 91. Finally, NAPCO took a third swing at Grill, in a Daubert motion, and that motion is also moot. Dkt. 90. NAPCO’s substantive criticism of Grill has at least arguable merit, but the court need not reach the issue because Grill’s report is untimely.

 

1. Summary judgment

The court turns to NAPCO’s motion for summary judgment. Summary judgment is appropriate if the moving party “shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In reviewing NAPCO’s motion for summary [*11]  judgment, the court construes all facts and draws all reasonable inferences in Malovanyi’s favor. Id. at 255. “[T]he non-moving party does not bear the burden of proving his case; the opponent of summary judgment need only point to evidence that can be put in an admissible form at trial, and that, if believed by the fact-finder, could support judgment in his favor.” Marr v. Bank of Am., N.A., 662 F.3d 963, 966 (7th Cir. 2011).

Malovanyi brings claims for negligence, negligence per se, and gross negligence. To prove negligence under Wisconsin law, a “plaintiff must prove four elements: ‘(1) [a] duty of care on the part of the defendant; (2) a breach of that duty; (3) a causal connection between the conduct and the injury; and (4) an actual loss or damage as a result of the injury.'” Martindale v. Ripp, 2001 WI 113, ¶ 33, 246 Wis. 2d 67, 629 N.W.2d 698 (quoting Rockweit v. Senecal, 197 Wis. 2d 409, 541 N.W.2d 742, 747 (1995)).4 But NAPCO points out that federal regulations–the Federal Motor Carrier Safety Regulations (FMCSR)–supplement common law negligence principles and inform the court’s inquiry here. The FMCSR apply to “all employers, employees, and commercial motor vehicles that transport property or passengers in interstate commerce.” 49 C.F.R. § 390.3(a)(1). NAPCO contends that under the FMCSR and applicable motor carrier case law, it is not liable for the accident because any “defect in the commercial load” [*12]  was open and obvious. Dkt. 40, at 1. Because the defect was open and obvious, NAPCO, the shipper, owed no duty of care to Malovanyi, the motor carrier’s driver. See 49 C.F.R. § 376.2(k) (shipper); 49 U.S.C. § 13102(14) (motor carrier).5

 

4   The parties agree that Wisconsin substantive law applies, per Erie R. Co. v. Tompkins, 304 U.S. 64 (1938).

5   A “motor carrier” is “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). The statute does not distinguish between employees and independent contractors.

NAPCO relies on what it calls the “majority rule”: the Savage rule. In United States v. Savage Truck Line, Inc., the Fourth Circuit held that “the duty rests upon the carrier to see that the packing of goods received by it for transportation is such as to secure their safety.” 209 F.2d 442, 445 (4th Cir. 1953). “The primary duty as to the safe loading of property is . . . upon the carrier.” Id. That said, the shipper is liable if it “assumes the responsibility of loading.” Id. And in that case, “the general rule is that [the shipper] becomes liable for the defects which are latent and concealed and cannot be discerned by ordinary observation by the agents of the carrier.” Id. If a loading defect is apparent, the carrier is liable regardless of the shipper’s negligence. Id.; Decker v. New England Pub. Warehouse, Inc., 2000 ME 76, ¶ 9, 749 A.2d 762 (adopting Savage).

Savage is “the prevailing law followed by most jurisdictions” when it comes to the duties of shippers and common carriers. Vargo-Schaper v. Weyerhaeuser Co., 619 F.3d 845, 848 (8th Cir. 2010). “The policy behind the Savage rule reflects the practice and understanding in the trucking industry as to carriers [*13]  having final responsibility for the loads they haul.” Id. at 849. The rule makes sense and it reflects wide-spread judicial understanding of the unique relationship between motor carriers and shippers. It is informative here.

Wisconsin has not explicitly adopted the Savage rule, but the rule is not inconsistent with Wisconsin’s negligence law. In an ordinary negligence case in Wisconsin, courts generally presume that everyone owes the world an ordinary duty of care and apportion fault accordingly. See Rockweit, 541 N.W.2d at 747. Malovanyi appears to suggest that the Savage rule would fly in the face of Wisconsin’s ordinary negligence law. But most courts to consider the question have held that Savage is not inconsistent with comparative negligence.6 And, more to the point, Wisconsin has indicated a willingness to adopt the rule. In Allis-Chalmers Mfg. Co. v. Eagle Motor Lines, Inc., 55 Wis. 2d 39, 198 N.W.2d 162 (1972), the Wisconsin Supreme Court took a Savage-like approach without explicitly citing Savage. In that case, the court held that the general rule is that a carrier is liable for injury to property during transit, but that there is an exception “if the carrier establishes the defect it claims existed was a hidden or concealed defect.” Id. at 166. The court explained that “a carrier may refuse to accept goods [*14]  which are not properly packed, (and) if the fact of improper packing is known to the carrier, or apparent upon ordinary observation, but it accepts the goods notwithstanding” that, it is liable for the resulting injury. Id. (quoting 23 Am. Jur. 2d Carriers § 529). But if the improper packing “is not apparent to the ordinary observation of the carrier,” then the carrier is not liable for “injury resulting solely from such defective shipping condition.” Id. (quoting 23 Am. Jur. 2d Carriers § 529).

 

6   In Spence v. ESAB Group, Inc., the Third Circuit held that the Savage rule is not inconsistent with a comparative fault regime. It pointed to Savage’s use of the word “primary,” explaining that Savage does not place the exclusive duty to secure cargo with the carrier, but rather recognizes that the carrier “has the primary obligation to assure that the cargo is loaded in a secure manner.” 623 F.3d 212, 220 (3d Cir. 2010). Thus, “Savage acknowledged that a shipper may have liability when an accident results from movement of goods during transport if the shipper created a non-apparent condition that caused the load to shift.” Id.; see also Franklin Stainless Corp. v. Marlo Transp. Corp., 748 F.2d 865, 870-71 (4th Cir. 1984) (holding that contribution between the defendant carrier and the defendant shipper was appropriate under Savage and that Savage itself contemplated contribution); Kucharski v. Orbis Corp., No. 14-cv-5574, 2017 WL 1806581, at *8-9 (N.D. Ill. May 5, 2017) (adopting the Savage rule in a case applying Illinois law even though Illinois is a comparative negligence state).

And in Aragon v. Wal-Mart Stores E., LP, 924 F. Supp. 2d 1066, 1072-73 (E.D. Mo. 2013), the Eastern District of Missouri determined that Missouri, a comparative-negligence state, would adopt Savage to determine whether the shipper has a duty to safely secure loads, explaining that “since comparative fault has been adopted, the Missouri Supreme Court would now follow” Savage. Because the defects were open and obvious, the court granted summary judgment in the defendant shipper’s favor.

And in Locicero v. Interpace Corp.–the only Wisconsin case that has cited Savage, as far as the court can tell–the Wisconsin Supreme Court noted that Savage “illustrates that motor carrier safety regulations impose a clear duty on the carrier to secure the load safely but that they do not relieve other parties, such as the shipper, from common law or contractual liability for causing an unsafe load.” 83 Wis. 2d 876, 266 N.W.2d 423, 427 (1978). It held that Wisconsin law imposes the same statutory duty on the carrier, but without relieving the shipper from liability or a comparative share of damages for a breach of the common law duty of care owed to third parties [*15] . Applying that rule to the facts of the case, the court held that the shipper did not breach its duty of care when it required the carrier to use a certain method of securing the load.

If it hasn’t already, Wisconsin would likely adopt the Savage rule and use it at the summary judgment stage. And so this court will follow suit.

The undisputed facts show that NAPCO assumed responsibility for loading Malovanyi’s trailer, so it is liable for only latent or concealed defects in the load that Malovanyi could not have discerned by ordinary observation. “Two factors are taken into account in determining whether a defect is latent or open and obvious: the experience of the carrier and the presence or absence of any assurances by the shipper regarding the security of the load.” Aragon v. Wal-Mart Stores E., LP, 735 F.3d 807, 810 (8th Cir. 2013). Under Malovanyi’s version of events (the version of events that the court adopts here), the loading hazard was plainly obvious to any lay person: the pipe bundle was sitting precariously on a slope. And although Malovanyi was an inexperienced driver, he knew that he had tightened the bottom straps at the front of the trailer–contrary to protocol–when he approached the load immediately before the accident. Not only did [*16]  that move go against the proper procedure for securing the load (as Malovanyi well knew), but it created an obviously sloped surface over the driver’s side stack. When Lewis placed the top stack over the taught straps, they very apparently sat at an insecure angle.7 Tellingly, Malovanyi pled that “[a]n ordinary prudent person could have and should have foreseen that harm might result from not properly loading and securing the PVC pipes of various diameters and on a steep angle upon Plaintiff’s trailer,” and that, “[g]iven these circumstances, it was clearly foreseeable that a bundle of large diameter PVC pipes when set upon a steep angle on top of a partially loaded PVC pipe bundles would fall and slide off the Plaintiff’s trailer causing grave injuries to Plaintiff.” Dkt. 23, ¶¶ 10-11. Malovanyi has not adduced evidence that creates a triable issue of fact on the “open and obvious” question.

 

7   The court, like NAPCO, finds it implausible that this is actually what happened. It seems unlikely that Lewis would have been able to place a load of pipe over the taught straps, at an angle. It seems much more likely that, given the other undisputed facts, Malovanyi improperly tightened the bottom straps when he approached the trailer after Lewis loaded the top stack. This is especially evident because when Malovanyi approached the load just before the accident, he carried a tool for tightening straps. The top straps had not been thrown over the load at that point. Tightening the bottom straps out of order likely caused the pipe bundle to slip off the truck and strike Malovanyi. But for purposes of summary judgment, the court accepts Malovanyi’s version of events.

And nothing in the record indicates that Lewis or any other NAPCO employee assured Malovanyi that the load was properly secured. Lewis explicitly told Malovanyi to secure the load; he did not tell him how to do so or otherwise assure him that it was good to go. See, e.g., Aragon, 735 F.3d at 811 (holding that the plaintiff [*17]  did not adduce evidence sufficient to create a triable issue of fact when he “never expressed to the shipper his lack of experience in hauling pallets of RPCs, he never inquired as to whether the load was secure, he never received assurance from Wal-Mart or IFCO that the load was secure, and he never received assurance from Wal-Mart or IFCO that the method of loading employed was safe”).

The undisputed facts show that the accident was caused by an open and obvious defect in the load for which NAPCO was not liable. NAPCO is entitled to summary judgment on Malovanyi’s negligence and gross negligence claims.

Malovanyi’s negligence per se claim based on 49 C.F.R. § 392.9(a)(1) fails, too. The FMCSR “impose a duty on the carrier to inspect cargo to confirm that it is secure before and during transport of the cargo in a commercial motor vehicle. The Safety Regulations provide two exceptions to a driver’s duty to examine and secure cargo: (1) when the carrier of a sealed commercial motor vehicle has been ordered not to open the seal to inspect the cargo, and (2) when the commercial vehicle has been loaded in a manner that makes inspection of its cargo impracticable.” Id. (citing 49 C.F.R. § 392.9(a)(1), (b)(1)-(4)). In other words, the FMCSR hold [*18]  the driver responsible for inspecting the load with two exceptions. Malovanyi has not adduced any evidence that either exception applies: the cargo was not sealed off, and, as discussed, Malovanyi had a clear view of the defect in the load before he approached the trailer. Malovanyi has not identified a statutory basis for holding NAPCO liable per se.

The court will briefly address Malovanyi’s remaining arguments in opposition to summary judgment.

The Savage rule applies even though the carrier was not in transit when the accident occurred. First, Malovanyi does not cite any case law for the proposition that the Savage rule applies only when the carrier is in transit. Second, Aragon applied the Savage rule to a failure to inspect before leaving the pickup location. And third, the FMCSR provide that the carrier’s duties attach after cargo is loaded; the regulations do not say anything about being in transit. See 49 C.F.R. § 392.9; see also Patton v. Nissan N. Am., Inc., 143 F. Supp. 3d 468, 471 (S.D. Miss. 2015) (“The Federal Motor Carrier Safety Regulations explain in 49 C.F.R. § 392.9 that after cargo is loaded, a commercial driver has a duty to inspect, properly distribute, and secure it . . . .”).

The Savage rule applies in personal injury cases. See Decker, 2000 ME 76, ¶ 10 (“In subsequent years, courts extended [*19]  the Savage reasoning to include personal injuries to employees of carriers caused by the negligent loading of goods.”).

NAPCO is not subject to the FMCSR in this case. Malovanyi’s argument that a forklift is a motor vehicle and that, as a result, NAPCO acted as the motor carrier as it loaded the trailer is nonsensical and strained. The undisputed facts are clear that Blue and Yellow was the motor carrier, that Malovanyi was its driver and agent, and that NAPCO was the shipper during the underlying events. To get technical about it, a motor carrier is “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). The FMCSR apply to “all employers, employees, and commercial motor vehicles that transport property or passengers in interstate commerce.” 49 C.F.R. § 390.3(a)(1) (emphasis added). Malovanyi has not adduced any evidence that shows that NAPCO operated its forklift in interstate commerce when it transported the pipe.

The court will grant NAPCO’s motion for summary judgment and dismiss all of Malovanyi’s claims. NAPCO’s claims against the third-party defendants are apparently moot. NAPCO has a short deadline to inform the court whether it wishes to pursue those claims or the court can dismiss them [*20]  as moot.

 

ORDER

IT IS ORDERED that:

 

1. Plaintiff Ruslan Malovanyi’s motions to supplement, Dkt. 86 and Dkt. 87, are GRANTED.
2. Defendant North American Pipe Corporation’s motion to strike plaintiff’s late-disclosed liability expert, Dkt. 56, is GRANTED.
3. Defendant’s motion to strike Exhibit B to plaintiff’s response to defendant’s motion for summary judgment, Dkt. 78, is DENIED as moot.
4. Defendant’s Daubert motion, Dkt. 90, is DENIED as moot.
5. Plaintiff’s motion to supplement, Dkt. 91, is DENIED as moot.
6. Defendant’s motion for summary judgment, Dkt. 39, is GRANTED.
7. Defendant should inform the court whether it wishes to maintain its third-party claims against Moonlight Transfer Inc. and Blue and Yellow Transportation, Inc. by July 18, 2017, or the court will dismiss the claims as moot and close the case.

 

 

Entered July 12, 2017.

BY THE COURT:

/s/ James D. Peterson

District Judge

HANOVER INSURANCE COMPANY, Plaintiff VERSUS SUPERIOR LABOR SERVICES, INC., ET AL., Defendants

 

CIVIL ACTION No. 11-2375c/w14-1930,14-1933,16-2490 SECTION “E”

 

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA

 

2017 U.S. Dist. LEXIS 107680

 

 

July 12, 2017, Decided

July 12, 2017, Filed

 

 

COUNSEL:  [*1] For Hanover Insurance Company, Plaintiff (2:11-cv-02375-SM-DEK): Kristopher T. Wilson, LEAD ATTORNEY, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (New Orleans), New Orleans, LA; Tina L. Kappen, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (Baton Rouge), Baton Rouge, LA.

 

For Arch Insurance Company, 14-1930, Consol Plaintiff (2:11-cv-02375-SM-DEK): Andrew C. Wilson, LEAD ATTORNEY, Daniel J. Caruso, Douglass F. Wynne, Jr., Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA; Sara Lauren Ochs, Simon, Peragine, Smith & Redfearn, LLP (New Orleans), New Orleans, LA.

 

For Arch Insurance Company, 14-1933, Consol Plaintiff, Counter Defendant (2:11-cv-02375-SM-DEK): Andrew C. Wilson, LEAD ATTORNEY, Daniel J. Caruso, Susan Marie Caruso, Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA; Sara Lauren Ochs, Simon, Peragine, Smith & Redfearn, LLP (New Orleans), New Orleans, LA.

 

For Great American E&S Insurance Company, 16-2490, Consol Plaintiff (2:11-cv-02375-SM-DEK): Gary M. Zwain, LEAD ATTORNEY, Paul Jeffrey Verlander, Rachel A. Smith, Duplass, Zwain, Bourgeois, Pfister & Weinstock, Metairie, LA.

 

For Hanover Insurance Company, (14-1933), Intervenor Plaintiff (2:11-cv-02375-SM-DEK): Kristopher T. [*2]  Wilson, LEAD ATTORNEY, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (New Orleans), New Orleans, LA; Tina L. Kappen, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (Baton Rouge), Baton Rouge, LA.

 

For State National Insurance Company, (14-1933), Intervenor Plaintiff (2:11-cv-02375-SM-DEK): Jay M. Lonero, LEAD ATTORNEY, Christopher Raymond Pennison, Stephanie Villagomez Lemoine, Larzelere, Picou, Wells, Simpson, Lonero, LLC, Metairie, LA.

 

For Lexington Insurance Company, Intervenor Plaintiff (2:11-cv-02375-SM-DEK): Robert I. Siegel, LEAD ATTORNEY, Victoria E. Emmerling, Gieger, Laborde & Laperouse, LLC (New Orleans), New Orleans, LA.

 

For Superior Labor Services, Inc., Defendant, Cross Defendant (2:11-cv-02375-SM-DEK): Paul N. Vance, LEAD ATTORNEY, Scott L. Sternberg, Baldwin, Haspel, Burke & Mayer, LLC (New Orleans), New Orleans, LA; Stuart Glen Richeson, Coats Rose (New Orleans), New Orleans, LA.

 

For State National Insurance Company, Defendant, Cross Claimant (2:11-cv-02375-SM-DEK): Jay M. Lonero, LEAD ATTORNEY, Christopher Raymond Pennison, Stephanie Villagomez Lemoine, Larzelere, Picou, Wells, Simpson, Lonero, LLC, Metairie, LA.

 

For Arch Insurance Company, Defendant (2:11-cv-02375-SM-DEK): Andrew [*3]  C. Wilson, LEAD ATTORNEY, Daniel J. Caruso, Douglass F. Wynne, Jr., Peter S. Thriffiley, Jr., Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA; Sara Lauren Ochs, Simon, Peragine, Smith & Redfearn, LLP (New Orleans), New Orleans, LA.

 

For Allied Shipyard, Inc., Defendant, Cross Defendant (2:11-cv-02375-SM-DEK): Elton Ford Duncan, III, LEAD ATTORNEY, Kelley A. Sevin, Duncan & Sevin, LLC, New Orleans, LA.

 

For Superior Labor Services, Inc., 14-1930, Consol Defendant (2:11-cv-02375-SM-DEK): Paul N. Vance, LEAD ATTORNEY, Scott L. Sternberg, Baldwin, Haspel, Burke & Mayer, LLC (New Orleans), New Orleans, LA; Stuart Glen Richeson, Coats Rose (New Orleans), New Orleans, LA.

 

For Allied Shipyard, Inc., 14-1930, Consol Defendant (2:11-cv-02375-SM-DEK): Elton Ford Duncan, III, LEAD ATTORNEY, Kelley A. Sevin, Duncan & Sevin, LLC, New Orleans, LA.

 

For Masse Contracting, Inc., 14-1933, Consol Defendant, Intervenor Defendant, Counter Claimant, Third Party Plaintiff (2:11-cv-02375-SM-DEK): Christopher H. Riviere, LEAD ATTORNEY, Todd M. Magee, William Nicholas Abel, Riviere Law Firm, Thibodaux, LA.

 

For Allied Shipyard, Inc., 14-1933, Consol Defendant, Intervenor Defendant (2:11-cv-02375-SM-DEK): Elton [*4]  Ford Duncan, III, LEAD ATTORNEY, Kelley A. Sevin, Duncan & Sevin, LLC, New Orleans, LA.

 

For Allied Shipyard, Inc., 14-2490, Consol Defendant (2:11-cv-02375-SM-DEK): Elton Ford Duncan, III, LEAD ATTORNEY, Kelley A. Sevin, Duncan & Sevin, LLC, New Orleans, LA.

 

For Arch Insurance Company, 16-2490, Consol Defendant (2:11-cv-02375-SM-DEK): Andrew C. Wilson, LEAD ATTORNEY, Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA.

 

For Underwriters at Lloyd’s London, 16-2490, Consol Defendant (2:11-cv-02375-SM-DEK): Chester J. Makowski, LEAD ATTORNEY, Plavnicky, Kinzel & Makowski, LLP, Houston, TX.

 

For Clarendon National Insurance Company, 16-2490, Consol Defendant (2:11-cv-02375-SM-DEK): Sidney W. Degan, III, LEAD ATTORNEY, James A. Rowell, Degan, Blanchard & Nash (New Orleans), New Orleans, LA.

 

For Travelers Indemnity Company, Third Party Defendant (2:11-cv-02375-SM-DEK): Randall C. Mulcahy, LEAD ATTORNEY, Kevin Truxillo, Garrison, Yount, Forte, Mulcahy & Lehner, LLC (New Orleans), New Orleans, LA; Robert T. Vorhoff, Garrison, Yount, Forte & Mulcahy, LLC (Tampa), Tampa, FL.

 

For Arch Insurance Company, Plaintiff (2:14-cv-01930-SM-DEK): Daniel J. Caruso, LEAD ATTORNEY, Andrew C. Wilson, Douglass [*5]  F. Wynne, Jr., Susan Marie Caruso, Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA.

 

For Superior Labor Services, Inc., Defendant (2:14-cv-01930-SM-DEK): Paul N. Vance, LEAD ATTORNEY, Scott L. Sternberg, Stuart Glen Richeson, Baldwin, Haspel, Burke & Mayer, LLC (New Orleans), New Orleans, LA.

 

For Arch Insurance Company, Plaintiff, Counter Defendant (2:14-cv-01933-SM-DEK): Andrew C. Wilson, LEAD ATTORNEY, Daniel J. Caruso, Douglass F. Wynne, Jr., Susan Marie Caruso, Simon, Peragine, Smith & Redfearn, LLP, New Orleans, LA.

 

For Hanover Insurance Company, Intervenor Plaintiff (2:14-cv-01933-SM-DEK): Kristopher T. Wilson, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (New Orleans), New Orleans, LA; Tina L. Kappen, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (Baton Rouge), Baton Rouge, LA.

 

For State National Insurance Company, Intervenor Plaintiff (2:14-cv-01933-SM-DEK): Jay M. Lonero, LEAD ATTORNEY, Christopher Raymond Pennison, Larzelere, Picou, Wells, Simpson, Lonero, LLC, Metairie, LA; Jennifer R. Kretschmann, Phelps Dunbar, LLP (New Orleans), New Orleans, LA.

 

For Masse Contracting, Inc., Defendant, Intervenor Defendant, Third Party Plaintiff, Counter Claimant (2:14-cv-01933-SM-DEK): Christopher [*6]  H. Riviere, LEAD ATTORNEY, Todd M. Magee, William Nicholas Abel, Riviere Law Firm, Thibodaux, LA.

 

For Great American E&S Insurance Company, Plaintiff (2:16-cv-02490-SM-DEK): Gary M. Zwain, LEAD ATTORNEY, Paul Jeffrey Verlander, Rachel A. Smith, Duplass, Zwain, Bourgeois, Pfister & Weinstock, Metairie, LA.

 

JUDGES: SUSIE MORGAN, UNITED STATES DISTRICT JUDGE.

 

OPINION BY: SUSIE MORGAN

 

OPINION

 

ORDER AND REASONS

Before the Court are two motions for summary judgment filed by Lexington Insurance Company (“Lexington”) regarding its duty to defend Allied Shipyard, Inc. as an additional insured under its 2000-2001 and 2008-2009 policies, both issued to Masse Contracting, Inc. (“Masse”), against claims made in the underlying Adams and St. Pierre lawsuits.1 Allied opposes the motions.2 For the reasons set forth below, Lexington’s motions are GRANTED.

 

1   R. Docs. 443; 444. Unless otherwise indicated, “R. Doc.” refers to record documents in the consolidated matter, No. 11-2375. As indicated in the Court’s July 10, 2017 order, the Court considers the previously filed motions for summary judgment and oppositions thereto, together with supporting memoranda and exhibits, as motions for summary judgment on the claims made by in Lexington against Allied in Lexington’s First Amended and Supplemental Complaint in Intervention. R. Doc. 506.

2   R. Docs. 450, 451.

 

BACKGROUND

 

1. Consolidated State-Court Lawsuit

The case originates from two state-court personal-injury actions, now consolidated3 (“Consolidated State-Court Lawsuit”) against Allied Shipyard, Inc. (“Allied”): (1) Adams, et al. v. Allied Shipyard, Inc., et al. and (2) St. Pierre, et al. v. Allied Shipyard, Inc.4 The plaintiffs in the Consolidated State-Court Lawsuit allege Allied negligently [*7]  performed sandblasting activities and they seek resulting damages.

 

3   The two cases were consolidated in state court on September 9, 2013. See R. Doc. 261-5.

4   R. Docs. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9 (Adams Petitions for Damages); R. Doc. 443-12 (St. Pierre Petition for Damages).

In the Consolidated State-Court Lawsuit, Allied filed a third-party demand against its contractors who performed the sandblasting jobs, including Superior Labor Services, Inc. (“Superior”) and Masse.5 Specifically, Allied alleges that Superior and Masse contracted with Allied to perform certain tasks and to indemnify Allied under master work contracts.6 Allied seeks to be named as an additional insured on Superior and Masse’s insurance policies, and seeks indemnity from Superior and from Masse with respect to the claims in the Consolidated State-Court Lawsuit.7

 

5   See R. Docs. 443-10, 443-11, 443-13, 443-14.

6   See R. Docs. 443-10, 443-11, 443-13, 443-14.

7   See R. Docs. 443-10, 443-11, 443-13, 443-14.

The plaintiffs in Adams amended their petition to name Superior, Masse, other subcontractors, and Gray Insurance Company as direct defendants.8

 

8   See R. Docs. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9.

The third-party-defendant contractors “in turn sought coverage, defense and/or indemnity from their various insurers for the periods of time when these jobs were allegedly performed, which prompted the insurers to file lawsuits in federal courts.”9

 

9   R. Doc. 174-1 at 2.

On August 18, 2016, Allied filed a cross-claim and third-party demand in state court against its direct insurer, Gray, and against Masse and Superior’s [*8]  insurers, seeking a declaration that it has a right to defense and indemnity as well as a declaration of its status as an additional insured under Masse and Superior’s policies.10

 

10   See R. Doc. 443-15.

The Adams plaintiffs filed their sixth amended petition in state court on April 29, 2016.11 The St. Pierre plaintiffs have not amended their original petition, which was filed on December 8, 2010.12

 

11   R. Doc. 443-9.

12   R. Doc. 443-12.

 

1. Declaratory Actions in Federal Court

Four federal actions related to the Consolidated State-Court Lawsuit are pending in this Court. The Court consolidated the first three cases–11-2375, 14-1930, and 14-1933–on November 21, 2014, and consolidated 16-2490 with those cases on August 10, 2016.13

 

13   See R. Docs. 108, 368.

 

1. No. 11-2375

On September 21, 2011, Hanover Insurance Company (“Hanover”) filed a complaint in this Court.14 Hanover filed an amended complaint on September 27, 2012.15 Hanover alleges it has been participating in the defense of Superior against Allied’s third-party demands in the Consolidated State-Court Lawsuit.16 Hanover maintains the other insurers it names in its federal suit “are not participating in Superior’s defense” in the Consolidated State-Court Lawsuit.17 Hanover seeks judgment against Superior declaring that it has no [*9]  duty to defend or indemnify Superior in the Consolidated State-Court Lawsuit.18 If Hanover has a duty to defend or indemnify Superior, Hanover seeks declaratory judgment that State National Insurance Company (“State National”), Arch Insurance Company (“Arch”), and “other unidentified insurance companies collectively named as ABC Insurance Company” are liable “for their share of defense and indemnity to be paid on behalf of Superior” in the Consolidated State-Court Lawsuit.19 Hanover also seeks reimbursement, contribution, and/or damages from State National, Arch, and other unidentified insurance companies for defense costs already incurred by Hanover on behalf of Superior in the Consolidated State-Court Lawsuit that, Hanover argues, should have been paid by those insurance companies.20

 

14   Hanover Ins. Co. v. Superior Labor Servs., Inc., et al., No. 11-2375.

15   R. Doc. 69.

16   Id. at ¶¶ 23-24.

17   Id. at ¶ 26.

18   Id. at ¶¶ 22-23.

19   Id. at ¶ 2.

20   Id. at ¶ 3.

On January 14, 2015, Hanover filed a second supplemental and amending complaint naming Allied as a defendant.21 Hanover alleges that “Allied has tendered the [Consolidated State-Court Lawsuit] to Hanover for defense and indemnity in its capacity as an alleged additional insured” under Superior’s policies, and Hanover has offered to participate [*10]  in Allied’s defense in the Consolidated State-Court Lawsuit subject to a full reservation of rights.22 Hanover alleges that Allied is not an additional insured under Hanover’s policies, and Hanover seeks judgment against Allied declaring that it has no duty to defend or indemnify Allied in the Consolidated State-Court Lawsuit.23 In the alternative, if the Court finds Hanover has a duty to defend or indemnify Allied, Hanover seeks judgment declaring that Arch, State National, and other unidentified insurance companies are obligated to pay their portions of defense costs and/or indemnity incurred by Hanover on behalf of Superior and Allied in the Consolidated State-Court Lawsuit.24

 

21   R. Doc. 125.

22   Id. at ¶ 79.

23   Id. at 9.

24   Id. The Court denied Hanover’s motions for partial summary judgment on its duty to defend Masse, Superior, and Allied as an additional insured in both the Adams and St. Pierre lawsuits. R. Docs. 341, 342.

On March 8, 2012, State National filed a crossclaim for declaratory judgment against Superior.25 State National filed its first amended crossclaim for declaratory judgment on September 27, 2012.26 State National filed a second amended crossclaim for declaratory judgment on January 14, 2015, naming Allied as a defendant-in-crossclaim.27 State National seeks judgment declaring that there is no coverage afforded to Superior under the State National policies issued to Superior and that State National has [*11]  no duty to defend or indemnify Superior in the Consolidated State-Court Lawsuit.28 State National also seeks a declaration that the State National policies afford no coverage to Allied as a purported additional insured and that State National does not owe a duty to defend or indemnify Allied in the Consolidated State-Court Lawsuit.29

 

25   R. Doc. 29.

26   R. Doc. 67.

27   R. Doc. 135.

28   Id. at ¶ 19.

29   Id. The Court granted State National’s motion for summary judgment, finding it had no duty to defend Masse, Superior, and Allied as an additional insured in the Adams lawsuit, and denied State National’s motion for summary judgment, finding it had a duty to defend Masse, Superior, and Allied as an additional insured in the St. Pierre lawsuit. R. Doc. 347. The Court declined to rule on any insurer’s duty to indemnify until the underlying state-court proceedings in the Adams and St. Pierre matters are resolved. R. Doc. 426 at 5.

 

2. No. 14-1930

On August 22, 2014, Arch Insurance Company brought an action for declaratory judgment against Superior and Allied.30 Arch seeks a declaration of its rights and responsibilities under “certain insurance policies issued by Arch to Superior,” with respect to Superior’s request for defense and indemnity in the Consolidated State-Court Lawsuit.31 Arch also seeks a declaration of its rights and responsibilities with respect to Allied’s request for additional insured status under the Superior policies and defense and indemnity of Allied in the Consolidated State-Court Lawsuit.32 Arch seeks a declaration against Superior and Allied that Arch has no defense or indemnity obligation to Superior or Allied in the Consolidated State-Court Lawsuit.33 Arch also seeks recovery of the portion of defense costs already incurred by it on [*12]  behalf of Superior.34

 

30   Arch Ins. Co. v. Superior Labor Servs., Inc. et al., No. 14-1930.

31   No. 14-1930, R. Doc. 1 at ¶ 3.

32   Id. at ¶ 4.

33   Id. at ¶¶ 21, 47.

34   Id. at ¶ 47. The Court denied with prejudice Arch’s motions for summary judgment, finding it had a duty to defend Masse and Superior as insureds and Allied as an additional insured in the Adams and St. Pierre lawsuits. R. Doc. 418. The Court denied without prejudice Arch’s motions for summary judgment with respect to Arch’s duty to indemnify Masse and Superior as insureds and Allied as an additional insured. Id.

 

3. No. 14-1933

On August 22, 2014, Arch also filed an action for declaratory judgment against Masse and Allied. Arch seeks a declaration of its rights and responsibilities under “certain insurance policies issued by Arch to Masse,” with respect to Masse’s request for defense and indemnity in the Consolidated State-Court Lawsuit.35 Arch also seeks a declaration of its rights and responsibilities with respect to Allied’s request for additional insured status under the Masse policies and defense and indemnity of Allied in the Consolidated State-Court Lawsuit.36 Arch seeks a declaration against Masse and Allied that Arch has no defense or indemnity obligation to Masse in the Consolidated State-Court Lawsuit.37

 

35   No. 14-1933, R. Doc. 1 at ¶ 3.

36   Id. at ¶ 4.

37   Id. at ¶ 46.

On January 14, 2015, Hanover filed a complaint in intervention in Case No. 14-1933 against Defendants Masse and Allied.38 Hanover seeks judgment declaring that Hanover has no obligation to defend or indemnify Masse or Allied in the State-Court Lawsuits.39

 

38   R. Doc. 128.

39   Id.

State National Insurance Company (“State National”) also filed a petition for intervention for declaratory judgment on January 14, 2015. [*13] 40 State National issued two marine general liability policies to Masse that provided coverage from November 15, 2006, to November 15, 2007, and from November 15, 2007, to November 15, 2008.41 Allied seeks additional insured status under the policies issued by State National to Masse.42 State National seeks a judgment declaring there is no coverage afforded to Masse under the State National policies and that State National has no duty to defend or indemnify Masse in the Consolidated State-Court Lawsuit.43 State National also seeks a declaration that “there is no coverage afforded to Allied under the [State National] policies as a purported additional insured” and that State National does not owe a duty to defend or indemnify Allied in the Consolidated State-Court Lawsuit.44

 

40   R. Doc. 132.

41   Id. at ¶ 14.

42   Id. at ¶ 3.

43   Id. at ¶ 19.

44   Id. 45 No. 11-2375, R. Doc. 354.

On April 13, 2016, Lexington intervened in Arch’s declaratory judgment action in its capacity as an insurer of Masse, and likewise, sought determinations of coverage for Masse for the claims asserted in the underlying Consolidated State-Court Lawsuit.45 On July 10, 2017, Lexington filed its first amended and supplemental complaint in intervention, naming Allied as a defendant-in-intervention, and seeking determinations [*14]  of coverage for Allied as an additional insured for the claims asserted in the underlying Consolidated State-Court Lawsuit.46 Lexington issued two commercial general liability policies to Masse–one in effect from February 16, 2000 to February 16, 2001 (“2000-2001 Lexington Policy”) and another in effect from November 15, 2008 to November 15, 2009 (“2008-2009 Lexington Policy”).47

 

45   No. 11-2375, R. Doc. 354.

46   R. Doc. 507. As discussed in the Court’s July 10, 2017 order, the Court considers the previously filed motions for summary judgment and oppositions thereto, together with supporting memoranda and exhibits, as motions for summary judgment on the claims against Allied in Lexington’s First Amended and Supplemental Complaint in Intervention. R. Doc. 506.

47   Id.

 

4. 16-2490

On March 25, 2016, Great American E&S Insurance Company (“Great American”) filed a complaint in this Court, adding Gray as a defendant.48 Great American filed an amended complaint on August 26, 2016.49 Great American seeks a declaration of its rights and responsibilities as it relates to its duties to defend or indemnify Masse as an insured or Allied as an additional insured under the Great American Policies with respect to the claims in the Adams and St. Pierre lawsuits.50 If Great American has a duty to defend or indemnify Masse as an insured or Allied as an additional insured in the Consolidated State-Court Lawsuit, Great American seeks declaratory judgment that “any such obligation should be proportionate to its time on the risk as compared to the period of time during which the underlying Plaintiff’s [*15]  toxic exposures allegedly occurred.”51 Alternatively, if Great American has a duty to defend or indemnify Masse as an insured or Allied as an additional insured, Great American seeks declaratory judgment that Great American is entitled to contribution from Arch Insurance Company, United Capitol Insurance Company, Lexington Insurance Company, Atlantic Insurance Company, State National Insurance Company, Underwriters at Lloyd’s, London, and Clarendon National Insurance Company.52

 

48   Great American E&S Ins. Co. v. Masse Contracting, Inc., et al., No. 16-2490 (E.D. La.).

49   R. Doc. 371.

50   Id. at ¶¶ 38-48.

51   Id. at ¶ 50.

52   Id. at ¶ 52. In its opposition to Gray’s motion to dismiss, Great American states Gray was “inadvertently omitted from the list of insurers that are alleged to owe contribution.” R. Doc. 480 at 3, n.7. Paragraph 7 of the prayer for relief in the amended complaint, however, includes Gray as a defendant. R. Doc. 371.

 

1. Lexington’s Motions for Summary Judgment

Lexington filed its motions for summary judgment on January 23, 2017 regarding Allied’s status as an additional insured, and Lexington’s duty to defend Allied against the claims made in the underlying St. Pierre and Adams lawsuits as an additional insured under the 2000-2001 Lexington Policy and the 2008-2009 Lexington Policy, both issued to Masse.53 These are the motions now before the Court.

 

CONSIDERATION OF DECLARATORY JUDGMENT ACTIONS

Lexington seeks a declaratory judgment that Allied is not an additional insured under Lexington’s policies issued to Masse and that Lexington has no duty to defend Allied [*16]  in the Adams or St. Pierre lawsuit. The Declaratory Judgment Act, 28 U.S.C. § 2201, provides in pertinent part:

 

In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.54

 

 

The Court must determine whether it will hear the Lexington declaratory judgment action before considering the motions for summary judgment.55 The Fifth Circuit has explained that, when considering a declaratory judgment action, a district court must engage in a three-step inquiry to determine whether to decide or dismiss a complaint for declaratory relief.56 First, the Court must determine whether the action is justiciable.57 Second, the Court must determine whether it has the authority to grant declaratory relief.58 Third, the Court must determine “how to exercise its broad discretion to decide or dismiss a declaratory judgment action.”59 Lexington is seeking declaratory relief on its duty to defend [*17]  Masse as an insured and Allied as an additional insured.60 The Court will determine whether to exercise its discretion to hear Lexington’s declaratory judgment action.

 

53   R. Doc. 443.

54   28 U.S.C. § 2201.

55   The Court has not previously considered Lexington’s declaratory judgment action, as the instant motions are the first to be filed by Lexington in this matter.

56   Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). See also Aggreko, LLC v. Am. Home Assur. Co., No. 14-1215, 2014 U.S. Dist. LEXIS 168656, 2014 WL 6901376, at *3 (E.D. La. Dec. 5, 2014).

57   Id.

58   Id.

59   Id.

60   In its Complaint in Intervention, Lexington also seeks a declaration of its duty to indemnify Allied as an additional insured if the Court finds it has a duty to defend. Lexington, however, does not seek summary judgment in the instant motions on its duty to indemnify Allied.

 

1. Justiciability

The justiciability doctrines of standing, mootness, political question, and ripeness derive from Article III’s “case or controversy” requirement.61 In a declaratory judgment action, justiciability often turns on ripeness.62 This case is no exception.

 

61   Choice Inc. of Tex. v. Greenstein, 691 F.3d 710, 714-15 (5th Cir. 2012).

62   See id; Orix, 212 F.3d at 895; Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 27-28 (5th Cir. 1989).

The ripeness doctrine is drawn “both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction.”63 The purpose of this doctrine is to forestall “entangl[ement] . . . in abstract disagreements” through “avoidance of premature adjudication.”64 “The key considerations are ‘the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.'”65

 

63   Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18, 113 S. Ct. 2485, 125 L. Ed. 2d 38 (1993).

64   Abbott Labs. v. Gardner, 387 U.S. 136, 148, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967), abrogated on other grounds by Califano v. Sanders, 430 U.S. 99, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977).

65   New Orleans Public Serv., Inc. v. Counsel of City of New Orleans, 833 F.2d 583, 586 (5th Cir. 1987) (quoting Abbott Labs., 387 U.S. at 149).

The Fifth Circuit has recognized that “applying the ripeness doctrine in the declaratory judgment context presents a unique challenge.”66 This stems primarily from the fact that declaratory relief often involves an ex ante determination of rights, i.e., a determination of rights before an injury [*18]  has occurred, that “exists in some tension with traditional notions of ripeness.”67 Fortunately, this challenge is not presented today, because the Court’s analysis is guided by a distinct subset of ripeness jurisprudence on disputes regarding the duty to defend.

 

66   Orix, 212 F.3d at 896 (internal quotation marks omitted).

67   Id.

Because the duty to defend does not depend on the outcome of the underlying law suit,68 a duty-to-defend claim is ripe when the underlying suit is filed.69 Accordingly, Lexington’s request for declaratory relief that it has no duty to defend is ripe, and the Court finds the actions are justiciable.

 

68   Suire v. Lafayette City-Parish Consol. Gov’t, 907 So. 2d 37, 52 (La. 2005).

69   See Columbia Cas. Co. v. Ga. & Fla. RailNet, Inc., 542 F.3d 106, 110 (5th Cir. 2008) (“An actual case or controversy exists before the resolution of an insured’s underlying suit concerning the insurer’s duty to defend.”) (emphasis in original); Morad v. Aviz, No. 12-2190, 2013 U.S. Dist. LEXIS 49631, 2013 WL 1403298, at *2 (E.D. La. Apr. 5, 2013) (“Courts have routinely held that courts may determine an insurer’s duty to defend even before the underlying suit is decided.”); Greenwich Ins. Co. v. Capsco Indus., Inc., No. 1:14CV297-LG-JCG, 2014 U.S. Dist. LEXIS 143303, 2014 WL 5025856, at *2 (S.D. Miss. Oct. 8, 2014).

 

1. Mandatory Abstention

The Fifth Circuit has explained that “when a state lawsuit is pending, more often than not, issuing a declaratory judgment will be tantamount to issuing an injunction–providing the declaratory plaintiff an end run around the requirements of the Anti-Injunction Act.”70 The Fifth Circuit has provided an analysis with respect to a district court’s authority to issue a declaratory judgment so as to not allow a declaratory plaintiff an end run around the requirements of the Anti-Injunction Act. The district court cannot consider the merits of a declaratory judgment [*19]  action when (1) a declaratory defendant has previously filed a cause of action in state court against the declaratory plaintiff; (2) the state case involves the same issues as those involved in the federal case; and (3) the district court is prohibited from enjoining the state proceedings under the Anti-Injunction Act.71 The Fifth Circuit in Jackson held “if an injunction would be barred by [the Anti-Injunction Act], this should also bar the issuance of a declaratory judgment that would have the same effect as an injunction.”72 The first factor in this analysis is not met in this case. Lexington, the declaratory judgment plaintiff in the federal action, filed its complaint in intervention in the declaratory judgment action on April 13, 2016,73 months before Allied, the declaratory defendant in the federal action, filed its cause of action against Lexington in state court on August 18, 2016.74 The presence of all three factors mandates abstention. The want of any one factor defeats mandatory abstention.75 Because the first factor has not been met, abstention is not mandatory.

 

70   Travelers Ins. Co. v. Louisiana Farm Bureau Fed’n, Inc., 996 F.2d 774, 776 (5th Cir. 1993) (citing Tex. Emps. Ins. Ass’n v. Jackson, 862 F.2d 491, 506 (5th Cir. 1988)). The Anti-Injunction Act states, “A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283.

71   Travelers, 996 F.2d at 776 (citing Jackson, 862 F.2d at 506); Sherwin-Williams Co. v. Holmes Cty., 343 F.3d 383, 387 (5th Cir. 2003).

72   Jackson, 862 F.2d at 506.

73   Even though Lexington did not add Allied as a defendant-in-intervention until July 10, 2017, Lexington’s original complaint in intervention, filed on April 13, 2016, claimed Lexington had no duty to defend Masse with respect to the third-party demands asserted by Allied against Masse. R. Doc. 354. In Allied’s third-party demand against Masse, Allied sought to be named as an additional insured on Masse’s insurance policies. See R. Doc. 443-10.

74   Allied filed a cross-claim and third-party demand in state court seeking a declaration that the insurers of Masse and Superior owe Allied a duty to defend and a duty to indemnify. R. Doc. 444-15.

75   Sealed v. Sealed, 33 F.3d 1379 (5th Cir. 1994).

 

1. Discretion to Exercise Jurisdiction on the Duty to Defend

Because there is no mandatory abstention, the Court must [*20]  consider, in its discretion, whether to exercise jurisdiction over this matter. “Since its inception, the Declaratory Judgment Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants,” even when subject-matter jurisdiction is otherwise proper.76 In Wilton v. Seven Falls Co., the Supreme Court held that the discretionary standard of Brillhart v. Excess Ins. Co. of America77 governs a district court’s decision to stay a declaratory judgment action during the pendency of parallel state-court proceedings.78 “Although Brillhart did not set out an exclusive list of factors governing the district court’s exercise of this discretion, it did provide some useful guidance in that regard.”79 There are three overarching considerations in the Supreme Court’s analysis in Brillhart: federalism, fairness, and efficiency.80 “Despite the circuits’ different expressions of the Brillhart factors, each circuit’s formulation addresses the same three aspects of the analysis.”81

 

76   Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995).

77   Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 62 S. Ct. 1173, 86 L. Ed. 1620 (1942).

78   Wilton v. Seven Falls Co., 515 U.S. 277, 284, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995).

79   Id. at 282.

80   Sherwin-Williams, 343 F.3d at 390.

81   Id.

The Fifth Circuit uses the Trejo factors to guide a district court’s exercise of discretion to accept or decline jurisdiction over a declaratory judgment suit: [*21]  (1) whether there is a pending state action in which all of the

 

(1) whether there is a pending state action in which all of the matters in controversy may be fully litigated;

(2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant;

(3) whether the plaintiff engaged in forum shopping in bringing the suit;

(4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist;

(5) whether the federal court is a convenient forum for the parties and witnesses;

(6) whether retaining the lawsuit would serve the purposes of judicial economy; and

(7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending.82

 

 

 

 

82   Sherwin-Williams, 343 F.3d at 388, 390.

 

1. Nature of Pending State Court Action

The first Trejo factor requires comparison of the declaratory judgment action with the underlying state-court action.83 “If there is a pending related state proceeding but it is not ‘parallel’ because it does not involve all the same parties or issues, the federal district court properly considers the extent of similarity between [*22]  the pending state court and federal court cases in deciding which court should decide the dispute, rather than relying on a per se rule.”84

 

83   See id. at 393-94.

84   See Sherwin-Williams, 343 F.3d at 394 n.5.

Lexington’s federal complaint in intervention and Allied’s third-party demand filed in state court are parallel, as they both seek a declaration as to Lexington’s duty to defend and indemnify Allied as an additional insured under Lexington’s policies issued to Masse. As a result, the first Trejo factor weighs against exercising jurisdiction.

 

2. Suit Filed in Anticipation of Lawsuit

The St. Pierre lawsuit was filed on December 8, 2010,85 and the Adams lawsuit was filed on December 28, 2010.86 Lexington filed its complaint in intervention in federal court on April 13, 2016.87 Allied’s cross-claim against Lexington was filed on August 18, 2016.88 Lexington likely was aware that its insurance coverage of Masse as an insured or Allied as an additional insured would become an issue in the pending Consolidated State-Court Lawsuit. Therefore, Lexington may have filed its complaint in intervention in anticipation of becoming a party to the pending Consolidated State-Court Lawsuit.89 The second Trejo factor weighs against exercising jurisdiction.90

 

85   R. Doc. 443-12.

86   R. Doc. 443-3.

87   Great American [*23]  E&S Ins. Co. v. Masse Contracting, Inc., et al., No. 16-2490 (E.D. La.).

88   R. Doc. 443-15. Even though Lexington did not add Allied as a defendant-in-intervention in federal court until July 10, 2017, Lexington’s original complaint in intervention, filed on April 13, 2016, claimed Lexington had no duty to defend Masse with respect to the third-party demands asserted by Allied in state court against Masse. R. Doc. 354. In Allied’s third-party demand in state court against Masse, Allied sought to be named as an additional insured on Masse’s insurance policies. See R. Doc. 443-10.

89   See Great Am. Ins. Co. v. Cumberland Inv. Grp., LLC, No. 13-4763, 2013 U.S. Dist. LEXIS 152324, 2013 WL 5755641, at *4 (E.D. La. Oct. 23, 2013) (noting the plaintiff “was aware the issue of its insurance coverage of [the defendant] would be at issue in the pending state court proceeding,” concluding that “it can be assumed that [the plaintiff] filed for Declaratory Judgment on June 10, 2013 in anticipation of becoming a party to that pending state court action,” and finding the second Trejo factor weighs against exercising jurisdiction).

90   See U.S. Fire, 2015 U.S. Dist. LEXIS 39384, 2015 WL 1416490, at *4.

 

3. Forum Shopping

That Lexington could have intervened and requested declaratory judgment in the Consolidated State-Court Lawsuit does not necessarily demonstrate forum shopping.91 Courts are less likely to find forum shopping where, as here, (1) a foreign insurer files a diversity action in federal court, and (2) the selection of the federal forum does not change the applicable law.92 “The record does not support a finding that [Lexington] engaged in impermissible forum shopping by filing this declaratory judgment suit.”93 The third Trejo factor weighs in favor of exercising jurisdiction.

 

91   See id.

92   See Sherwin-Williams, 343 F.3d at 399.

93   Id. at 400. See also Ironshore Specialty Ins. Co. v. Tractor Supply Co., 624 F. App’x 159, 167 (5th Cir. 2015) (per curiam).

 

4. Inequities

The Court cannot conceive of any inequities that flow from allowing Lexington to proceed in this action while the Consolidated State-Court Lawsuit remain pending. No party will be prejudiced if this Court decides whether Lexington has a duty to defend Masse as an insured or Allied as an additional insured before resolution of the Consolidated State-Court Lawsuit. The fourth Trejo factor weighs in favor of exercising jurisdiction.

 

5. Convenience of Federal Forum

The Consolidated State-Court Lawsuit is pending in [*24]  the 17th Judicial District Court for the Parish of Lafourche, State of Louisiana.94 The state courthouse for the 17th Judicial District Court for Lafourche Parish is approximately 60 miles west of the federal courthouse in New Orleans. No party argues that this forum is inconvenient or that either forum is more convenient than the other for the parties or for the witnesses. This factor is neutral.95

 

94   See R. Docs. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9 (Adams Petitions for Damages); R. Doc. 443-12 (St. Pierre Petition for Damages).

95   See GlobalSantaFe Drilling Co. v. Quinn, No. 12-1987, 2012 U.S. Dist. LEXIS 138114, 2012 WL 4471578, at *4 (E.D. La. Sept. 26, 2012) (“It does not appear that the Eastern District of Louisiana is any more convenient or less convenient of a forum; the parties are located outside the state but the witnesses are located within. Therefore, this factor is neutral.” (citations omitted)); Great Am. Ins. Co. v. Cumberland Inv. Grp., LLC, No. 13-4763, 2013 U.S. Dist. LEXIS 152324, 2013 WL 5755641, at *5 (E.D. La. Oct. 23, 2013); Gemini Ins. Co. v. Turner Indus. Grp., LLC, No. 13-05922, 2014 U.S. Dist. LEXIS 96573, 2014 WL 3530475, at *5 (E.D. La. July 16, 2014).

 

6. Judicial Economy

Lexington’s complaint in intervention in this Court has been pending for over a year. All cases surrounding this controversy have been before this Court for over five years. The issue of whether Lexington has a duty to defend Masse as an insured or Allied as an additional insured in the Consolidated State-Court Lawsuit has been fully briefed before this Court. Exercising jurisdiction is in the interest of judicial economy.96 This factor weighs in favor of exercising jurisdiction.

 

96   See Ironshore, 624 F. App’x at 168 (finding that the judicial economy factor weighed against dismissal when the parties had “already fully briefed the insurance coverage issues to the district court and entered into extensive factual stipulations”); Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371, 373 (5th Cir. 1998) (finding that judicial economy weighed against dismissal in part because “there [were] no factual disputes between the parties and . . . they have fully briefed the merits of the insurance issues”).

 

7. Interpretation of Decree from Parallel State Proceeding

Although a part of the Consolidated State-Court Lawsuit and this action are parallel, filings by Allied in state court seeking a declaration of its rights to defense and indemnity were made after the filing of Lexington’s [*25]  complaint in intervention in this Court.97 This Court is unaware of a ruling by the state court on the issue of Allied’s rights to defense or indemnity, and there is no indication that such a ruling is imminent. This Court need not interpret any decree issued in the Consolidated State-Court Lawsuit to determine whether Lexington has a duty to defend. The seventh Trejo factor weighs in favor exercising jurisdiction.98

 

97   R. Doc. 443-15. Allied filed its third-party demand in state court on August 18, 2016, months after Lexington filed its complaint in intervention in federal court on April 13, 2016.

98   Ironshore, 624 F. App’x at 168 (“The seventh and last factor . . . weighs against dismissal. There is no need to construe a state judicial decree to resolve the issues in this case.”). See also U.S. Fire, 2015 U.S. Dist. LEXIS 39384, 2015 WL 1416490, at *5.

Four of the Trejo factors weigh in favor of exercising jurisdiction, while two weigh against and one is neutral. The Court will exercise its discretion to hear the declaratory judgment action on Lexington’s duty to defend Allied.

 

ALLIED’S STATUS AS AN ADDITIONAL INSURED UNDER THE MASSE POLICIES

Lexington seeks summary judgment on Allied’s status as an additional insured under its policies issued to Masse. Allied bears the burden of proving it is an “additional insured” under both the 2000-2001 Lexington Policy99 and the 2008-2009 Lexington Policy.

 

99   Because the Court finds that Allied is not an additional insured under the 2000-2001 Lexington Policy, the Court did not engage in an analysis with respect to Louisiana’s “Eight-Corners Rule.” If the Court had engaged in this analysis, the result would be the same, as the 2000-2001 Lexington policy unambiguously excludes coverage for the allegations of the Adams and St. Pierre plaintiffs because Allied is not an additional insured.

 

1. Provisions of the 2000-2001 Lexington Policy

Lexington issued a commercial general liability insurance policy to Masse providing coverage from February 16, 2000 through February 16, 2001 (“2000-2001 Lexington [*26]  Policy”).100

 

100   R. Doc. 443-17.

Lexington argues Allied does not qualify as an “Insured” under the 2000-2001 Lexington Policy, and as a result, Lexington owes no duty to defend Allied in either the Adams or St. Pierre lawsuits.101

 

101   R. Doc. 443-1.

The 2000-2001 Lexington Policy contained the following insuring agreement for bodily injury and property damage liability:

 

The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as compensatory damages . . . because of bodily injury or property damage to which this insurance applies. . . .102

 

 

An “insured” is defined under the 2000-2001 Lexington Policy as:

[A]ny person or organization qualifying as an Insured in the Persons Insured provision of this policy. The insurance afforded applies separately to each Insured against whom claim is made or suit is brought except with respect to the limits of the Company’s liability.103

 

 

The “Persons Insured” provision of the Policy provides:

 

III. PERSONS INSURED    Each of the following is an Insured under this insurance to the extent set forth below:

1. if the Named Insured is designated in the Declarations as an individual, the person so designated but only with respect to the conduct of a business of which he [*27] is the sole proprietor, and the spouse of the Named Insured with respect to the conduct of such business;
2. if the Named Insured is designated in the Declarations as a partnership or joint venture, the partnership or joint venture so designated and any partner or member thereof but only with respect to his liability as such; [and]
3. if the Named Insured is designated in the Declarations as other than an individual, partnership, or joint venture, the organization so designated and any executive officer, director or stockholder thereof while acting within the scope of this duties as such;104

 

 

 

 

102   R. Doc. 443-17 at 7 (emphasis in original).

103   R. Doc. 443-17 at 13 (emphasis in original).

104   R. Doc. 443-17 at 11-12 (emphasis in original).

Subsection A applies only if the named insured is an individual, and Subsection B applies only if the named insured is a partnership or joint venture. Masse is designated in the Declarations as a corporation.105 As a result, subsection C of the “Persons Insured” provision applies. Thus, to qualify as an “Insured” under the 2000-2001 Lexington Policy, Allied must either be a Named Insured, an “executive officer, director or stockholder” of the Named Insured, or Allied must be granted additional insured status by an endorsement in the policy.

 

105   R. Doc. 443-17 at 4. 106 R. Doc. 443-17 at 4.

In the Declarations section of the policy, the only Named Insured [*28]  is Masse Contracting Inc.106 Allied admits it is not a Named Insured named in the Declarations, and that it cannot sustain its burden of establishing it was an executive officer, director, or stockholder of Masse Contracting, Inc. during the 2000-2001 Lexington Policy period.107 The issue, then, is whether the 2000-2001 Lexington Policy contains an endorsement under which Allied qualifies as an additional insured such that it is entitled to coverage from Lexington.

 

106   R. Doc. 443-17 at 4.

107   R. Doc. 443-2 at 3, ¶ 7; R. Doc. 491 at 2, ¶ 7

There is no standard additional insured endorsement in the 2000-2001 Lexington Policy. Instead, Allied argues first that Lexington owes coverage to it in the Adams and St. Pierre lawsuits under the 2000-2001 Lexington Policy Broad Form Commercial Liability Endorsement.108 Allied argues second that Lexington owes coverage to it in the Adams and St. Pierre lawsuits under the 2000-2001 Lexington Policy Endorsement #006.

 

108   R. Doc. 450.

 

1. Broad Form Commercial Liability Endorsement

Under the 2000-2001 Lexington Policy, Lexington agreed to pay on behalf of Masse, the Insured, all sums for which Masse becomes legally obligated to pay as compensatory damages.109 Lexington will not pay Masse sums that it is legally obligated to pay as damages if the claims for [*29]  “bodily injury or property damage” result from Masse’s “assumption of liability in a contract or agreement” unless Masse’s liability for damages is “assumed in a contract or agreement that is an incidental contract, provided the bodily injury or property damage occurs subsequent to the execution of the contract or agreement.”110

 

109   R. Doc. 443-17 at 7.

110   Id. (emphasis added).

“Incidental Contract” under the 2000-2001 Lexington Policy is defined as:

 

[A]ny written (1) lease of premises, (2) easement agreement, except in connection with construction or demolition operations on or adjacent to a railroad, (3) undertaking to indemnify a municipality required by municipal ordinance, except in connection with work for the municipality, (4) sidetrack agreement, or (5) elevator maintenance agreement.111

 

 

The Broad Form Commercial Liability Endorsement extends the definition of “Incidental Contract” to include a sixth category, “any written contract or agreement relating to the conduct of the Named Insured’s business.”112

 

111   Id. at 13.

112   Id. at 20. The Broad Form Commercial Liability Endorsement provides:

 

“The insurance afforded with respect to liability assumed under an “Incidental Contract” is subject to the following additional exclusions:

 

1. to “Bodily Injury” or “Property Damage” for which the “Insured” has assumed liability under any [*30] “Incidental Contract”, if such injury or damage occurred prior to the execution of the “Incidental Contract.”

 

 

 

 

Allied argues the 1995 Master Work Contract between Allied and Masse is an “Incidental Contract” under the 2000-2001 Lexington Policy, as the Master Work Contract is related to the conduct of Masse’s business as a ship fitter for Allied, and the damages alleged by the Adams and St. Pierre plaintiffs occurred after the signing of the Master Work Contract in 1995.113 Allied argues the endorsement’s exclusion of coverage for damages by reason of the assumption of liability in a contract does not apply because the Master Work Contract is an Incidental Contract. The Court agrees that the 1995 Master Work Contract, is an Incidental Contract, but this does not entitle Allied to coverage under the 2000-2001 Lexington Policy.114

 

113   R. Doc. 450 at 2. 114 R. Doc. 450 at 2.

114   R. Doc. 450 at 2.

The Broad Form Commercial Liability Endorsement is relevant only to Lexington’s obligation to pay its Insured, Masse. The Broad Form Commercial Liability Endorsement modifies neither the “Persons Insured” section nor the definitions of “Insured” or “Named Insured” of the 2000-2001 Lexington Policy. Stated simply, the policy and the Broad Form Commercial Liability Endorsement [*31]  together provide only that Lexington will pay Masse for liability assumed by Masse in a contract that relates to Masse’s business. For the Broad Form Commercial Liability Endorsement to afford coverage to Allied, Allied would have to be an “Insured” under the 2000-2001 Lexington Policy, and it is not.115

 

115   Allied bears the burden of proving its status as an additional insured. WH Holdings, LLC v. ACE American Ins. Co., No. 07-7110, 2013 U.S. Dist. LEXIS 73237, 2013 WL 2286107, *3 (E.D. La. May 23, 2013) (finding the party seeking additional insured status “bears the burden of proof as to its status as an insured under the [insurer’s] policy. [Lexington] does not bear the burden of negating [Allied’s] claim to insured status. In Louisiana, an insured must meet the initial burden of establishing that the policy affords coverage for an incident and that the incident falls within the policy’s terms. This initial burden applies to those insureds whose status as such is not in question and therefore have undisputed rights to seek coverage under the policy. If a bona fide insured must prove coverage, then it follows rather easily that a party like [Allied] with no privity to the insurer who seeks coverage as an insured on a policy bears the burden of proof on insured status. This conclusion is buttressed by Louisiana Civil Code article 1831 which states that ‘[a] party who demands performance of an obligation must prove the existence of the obligation.'”).

Lexington does not owe coverage to Allied by virtue of the Broad Form Commercial Liability Endorsement.

 

1. Endorsement #006–The “Other Insurance” Endorsement

Allied sought leave of Court to file a supplemental memorandum in opposition to Lexington’s motion for summary judgment, to argue that it is a “Person Insured” under “Endorsement #006” of the 2000-2001 Lexington Policy and is, therefore, owed a defense in the Adams and St. Pierre lawsuits.116 Endorsement #006 is a Primary/Non-Contributory Insurance Endorsement, which replaces the “Other Insurance” section of the 2000-2001 Lexington Policy.117

 

116   R. Doc. 479.

117   R. Doc. 443-17 at 38.

Endorsement #006, in pertinent part, provides:

 

In consideration of the payment of the premium, it is hereby understood and agreed that Part C, Other Insurance of Section VII, Conditions, is deleted in its entirety and replaced by the following:

5. Other insurance: when both this insurance and other insurance [*32] apply to a loss on the same basis, whether the other insurance is stated as primary, excess or contingent, the company shall not be liable under this policy for a greater proportion of the loss than that stated in the applicable contribution provision below:

(b) Contribution by limits: If any of such other insurance does not provide for contribution by equal shares, the company shall not be liable for a greater proportion of such loss than the applicable limit of liability under this policy for such loss bears to the total applicable limit of liability of all valid and collectable insurance against such loss.

Notwithstanding the foregoing, the company agrees that such insurance as is afforded by this policy for the benefit of certificate holders included as persons insured shall be primary and non-contributing insurance, but only as respects a claim, loss or liability arising out of insured operations or work on behalf of the named insured performed under a written contract between the name insured and the certificate holder that requires the named insured to maintain such primary and non-contributory insurance and to include the certificate holder as a person insured thereunder.118

 

 

 

 

118   R. Doc. 443-17 at 38-39 (emphasis added).

Allied [*33]  argues it is provided coverage under Endorsement #006 through its 1995 Master Work Contract with Masse because that agreement required Masse to obtain general liability insurance and name Allied as an additional insured under the policy.119 Allied contends the Master Work Contract makes it a “Person Insured” under Endorsement #006 of the 2000-2001 Lexington Policy.120

 

119   R. Doc. 234-7 at 3-4. 120 R. Doc. 479 at 2.

120   R. Doc. 479 at 2.

Like the Broad Form Commercial Liability Endorsement, Endorsement #006–an “Other Insurance” endorsement–is not triggered unless Allied first establishes its status as an additional insured.121 First, Endorsement #006 provides insurance for the benefit of the certificate holder included as a person insured. Allied is not a certificate holder or a person insured. Endorsement #006 modifies neither the “Persons Insured” section nor the definitions of “Insured” or “Named Insured” of the 2000-2001 Lexington Policy. Endorsement #006 applies only when “both this insurance and other insurance apply to a loss on the same basis,”122 meaning coverage must be established under the 2000-2001 Lexington Policy, and at least one other insurance policy, before the endorsement applies. Even then, the endorsement only applies to certificate holders included [*34]  as persons insured. To be entitled to coverage from Lexington, Allied would have to establish its status as an “Insured” under the 2000-2001 Lexington Policy and that the insuring agreement has been triggered.

 

121   See Wallace v. Boyte Enterprises, Inc., 385 So. 2d 916, 918-19 (La. Ct. App. 2 Cir. 1980) (finding that because the insurance policy at issue did not provide coverage to entities claiming additional insured status, neither entity was afforded “other insurance” under the policy’s endorsement).

122   R. Doc. 443-17 at 38.

As discussed above, Allied has failed to establish it is an “Insured” under the 2000-2001 Lexington Policy, because it is not (1) listed as a Named Insured in the Declarations, (2) an executive officer, director or stockholder of Masse, or (3) afforded coverage through an “additional insured” endorsement in the policy.

Because Allied cannot meets its burden of proving its status as an additional insured under the 2000-2001 Lexington Policy, Lexington owes Allied no defense or indemnity in the underlying Adams and St. Pierre lawsuits claims under the 2000-2001 Lexington Policy.123

 

123   The Court notes that even if Allied qualified as an additional insured and was therefore entitled to coverage under the 2000-2001 Lexington Policy, Lexington would not have a duty to defend Allied in the St. Pierre lawsuit. As discussed in the Court’s Order on Great American’s Motion for Partial Summary Judgment, the St. Pierre plaintiffs allege they resided near the Allied shipyard for approximately eight years before the filing of their complaint in 2010. Thus, any exposure causing bodily injury or property damage of the St. Pierre plaintiffs occurred between 2002 and 2010, after the 2000-2001 Lexington Policy was in effect.

 

2. Provisions of the 2008-2009 Lexington Policy

Lexington issued a policy to Masse that provided coverage from November 15, 2008 through November 15, 2009 (“2008-2009 Lexington Policy”).124

 

124   R. Doc. 444-17.

Lexington argues Allied does not qualify as an “Insured” under the 2008-2009 Lexington Policy, and as a result, Lexington owes no duty to defend Allied in the Adams or St. Pierre lawsuits.125

 

125   R. Doc. 444-1.

The [*35]  2008-2009 Lexington Policy contained the following insuring agreement for bodily injury and property damage liability:

 

We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages because of “bodily injury” or “property damage” to which this insurance does not apply.126

 

 

 

 

126   R. Doc. 444-17 at 7.

The 2008-2009 Lexington Policy defines an “Insured” as “any person or organization qualifying as such under SECTION II — WHO IS AN INSURED.”127 The “Who is an Insured” provision of the 2008-2009 Lexington Policy provides:

 

1. If you are designated in the Declarations as:

 

***

1. An organization other than a partnership, joint venture or limited liability company, you are an insured. Your “executive officers” and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders.128

 

 

 

 

 

 

127   R. Doc. 444-17 at 7.

128   R. Doc. 444-17 at 18-19.

Thus, to qualify as an “Insured” under the 2008-2009 [*36]  Lexington Policy, Allied must either be named as an insured in the Declarations, an executive officer, director, or stockholder of the insured named in the Declarations, or Allied must be granted additional insured status by an endorsement in the policy.

In the Declarations section of the policy, the Named Insured is Masse Contracting Inc.129 Allied admits it is not a Named Insured and cannot sustain its burden of establishing it was an executive officer, director, or stockholder of Masse Contracting, Inc. during the 2008-2009 Lexington Policy period.130 The issue, then, is whether the 2008-2009 Lexington Policy contains an endorsement under which Allied qualifies as an additional insured such that it is entitled to coverage from Lexington.

 

129   R. Doc. 444-17 at 4.

130   R. Doc. 444-2 at 3, ¶ 8; R. Doc. 492 at 2, ¶ 8.

 

1. Additional Insured Required by Written Contract Endorsement

Unlike the 2000-2001 Lexington Policy, the 2008-2009 Lexington Policy contains an “Additional Insured Required by Written Contract” Endorsement (“Additional Insured Endorsement”).131 The Additional Insured Endorsement provides:

 

1. Section II — Who Is An Insured is amended to include any person or organization you are required to include as an additional insured on this policy by a written contract [*37] or written agreement in effect during this policy period and executed prior to the “occurrence” of the “bodily injury” or “property damage.”
2. The insurance provided to the above described additional insured under this endorsement is limited as follows:

 

1. COVERAGE A BODILY INJURY AND PROPERTY DAMAGE (Section I — Coverages) only.
2. The person or organization is only an additional insured with respect to liability arising out of “your work” or “your product” for that additional insured.132

 

 

 

 

“You” or “your” in the 2008-2009 Lexington Policy refers to “the Named Insured shown in the Declarations, and any other person or organization qualifying as a Named Insured under this policy.”133 Thus, any reference to “you” or “your” in the 2008-2009 Lexington Policy is to Masse. The 2008-2009 Lexington Policy defines “your work” as “(1) [w]ork or operations performed by you or on your behalf; and (2) [m]aterials, parts or equipment furnished in connection with such work or operations.”134

 

131   R. Doc. 444-17 at 36-37.

132   R. Doc. 444-17 at 36.

133   R. Doc. 444-17 at 7.

134   R. Doc. 444-17 at 25. “Your work” includes “(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of ‘your work’; and (2) [t]he providing of or failure to provide warnings and instructions.” Id.

It is undisputed that the Master Work Contract between Allied and Masse required Masse to procure insurance and name Allied as an additional insured. The issue, then, is whether Allied’s liability arises out of Masse’s work for Allied.135

 

135    [*38] See 444-17 at 36 (“The person or organization is only an additional insured with respect to liability arising out of “your work” or “your product” for that additional insured.”).

Focusing on the language in the Additional Insured Endorsement, that Allied’s liability must “arise out of [Masse’s] work . . . for [Allied],”136 Lexington argues Allied is only provided coverage under the Additional Insured Endorsement if the Adams and St. Pierre plaintiffs allege that Allied is vicariously liable for Masse’s actions.137

 

136   R. Doc. 444-17 at 25.

137   R. Doc. 451.

In support of its argument, Lexington relies on Maldonado v. Kiewit Louisiana Co.138 The court in Maldonado found that the additional insured policy provision at issue limited coverage to the additional insured’s vicarious liability for the fault of the named insured.139 However, the language of the additional insured endorsement in Maldonado differs significantly from the 2008-2009 Lexington Policy’s Additional Insured Endorsement. The endorsement in Maldonado stated the insurer would provide coverage to the additional insured “only to the extent that [the additional insured] is liable for ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ caused by [the named insured’s] acts or omissions or the acts or omissions of those action on [the named insured’s] behalf.”140 On the other hand, the Additional Insured Endorsement in the 2008-2009 Lexington [*39]  Policy provides coverage to an additional insured’s liability “arising out of ‘[Masse’s] work’ or ‘[Masse’s] product’ for that additional insured.”141

 

138   146 So. 3d 210 (La. Ct. App. 1 Cir. 3/24/14).

139   Id. at 220.

140   Id. at 219 (emphasis added).

141   R. Doc. 444-17 at 25.

The Adams petition alleges Masse and Allied “conducted sandblasting and painting operations and have allowed dangerous byproduct to drift into the neighborhood surrounding Allied Shipyard.”142 The St. Pierre petition alleges Allied “has been negligent and/or otherwise at fault through its employees and/or agents.”143 Allied’s supplemental and amended third-party demand against Masse alleges Masse’s “actions and activities, and failure to perform their contracted job responsibilities[,] initiated the claims of the[Adams and St. Pierre] petitioners.”144 Allied’s cross-claim and third-party demand against Masse and Superior’s insurers, which applies to the claims in both the Adams and St. Pierre lawsuits, alleges Lexington’s insurance policy obligates it to defend Allied for “those sums that Allied may become legally obligated to pay as a result of the operations of Masse.”145 Both the Adams and St. Pierre plaintiffs allege that Allied was individually at fault and that Allied is liable for the work of Masse, or, at least, the allegations do not unambiguously [*40]  exclude the possibility that Allied may be liable for Masse’s operations. As a result, Allied’s liability arises out of Masse’s “work” for Allied. Allied qualifies as an additional insured under the 2008-2009 Lexington Policy.146

 

142   R. Doc. 444-6 at 3.

143   R. Doc. 444-12 at 2.

144   R. Doc. 444-11 at 2. The Adams plaintiffs adopted all allegations asserted against Allied and asserted the same allegations against Masse. R. Doc. 444-6 at 3.

145   R. Doc. 444-15 at 4.

146   Jones v. Capitol Enters., Inc., 89 So. 3d 474, 485-87 (La. Ct. App. 4 Cir. 5/9/12).

 

THE DUTY TO DEFEND ALLIED–THE “EIGHT-CORNERS RULE”

Because the Court finds Allied is an additional insured under the 2008-2009 Lexington Policy, the Court must determine whether Lexington owes a duty to defend Allied in the Adams and St. Pierre lawsuits. Under Louisiana law, an insurance policy is a contract and should be construed using the general rules of interpretation of contracts set forth in the Louisiana Civil Code.147 A liability insurer’s duty to defend and the scope of its coverage are separate and distinct issues.148 Under Louisiana law, an insurer’s duty to defend is broader than its obligation to indemnify for damage claims.149

 

147   Sher v. Lafayette Ins. Co., 2007-2441 (La. 4/8/08), 988 So. 2d 186, 192, on reh’g in part (July 7, 2008).

148   Mossy Motors, Inc. v. Cameras Am., 2004-0726 (La. App. 4 Cir. 3/2/05), 898 So. 2d 602, 606, writ denied, 2005-1181 (La. 12/9/05), 916 So. 2d 1057.

149   Henly v. Phillips Abita Lumber Co., 2006-1856 (La. App. 1 Cir. 10/3/07), 971 So. 2d 1104, 1109.

Louisiana courts apply the “eight-corners rule” to determine whether a liability insurer has the duty to defend a civil action against its insured; courts look to the “four corners” of the plaintiff’s petition in the civil action and the “four corners” of the insurance policy to determine whether the insurer [*41]  owes its insured a duty to defend.150 One Louisiana court explained as follows:

 

Under [the “eight-corners”] analysis, the factual allegations of the plaintiff’s petition must be liberally interpreted to determine whether they set forth grounds which raise even the possibility of liability under the policy. In other words, the test is not whether the allegations unambiguously assert coverage, but rather whether they do not unambiguously exclude coverage. Similarly, even though a plaintiff’s petition may allege numerous claims for which coverage is excluded under an insurer’s policy, a duty to defend may nonetheless exist if there is at least a single allegation in the petition under which coverage is not unambiguously excluded.151

 

 

The duty to defend “arises whenever the pleadings against the insured disclose even a possibility of liability under the policy.”152 The insurer has a duty to defend unless the allegations in the petition for damages, as applied to the policy, unambiguously preclude coverage.153 “Once a complaint states one claim within the policy’s coverage, the insurer has a duty to accept defense of the entire lawsuit, even though other claims in the complaint fall outside the policy’s [*42]  coverage.”154

 

150   Mossy, 898 So. 2d at 606.

151   Id. (citations omitted).

152   Steptore v. Masco Constr. Co., 93-2064 (La. 8/18/94), 643 So. 2d 1213, 1218. See also United Nat’l Ins. Co. v. Paul and Mar’s Inc., No. 10-799, 2011 U.S. Dist. LEXIS 74192, 2010 WL 2690615, at *2 (E.D. La. July 11, 2011).

153   Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009).

154   Treadway v. Vaughn, 633 So. 2d 626, 628 (La. Ct. App. 1993), writ denied, 635 So. 2d 233 (La. 1994).

Ordinarily, when a party files a motion for summary judgment regarding the duty to defend, the Court may consider only the plaintiff’s petition155 and the face of the policies; the parties cannot present any evidence such as affidavits or depositions.156 Factual inquiries beyond the petition for damages and the relevant insurance policy are prohibited with respect to the duty to defend.157 Any ambiguities within the policy are resolved in favor of the insured to effect, not deny, coverage.158

 

155   As discussed below, the Court may also consider a third-party demand filed by the alleged insured.

156   Milano v. Bd. of Comm’rs of Orleans Levee Dist., 96-1368 (La. App. 4 Cir. 3/26/97), 691 So. 2d 1311, 1314.

157   Martco, 588 F.3d at 872.

158   Doerr v. Mobil Oil Corp., 2000-0947 (La. 12/19/00), 774 So. 2d 119, 124.

However, the insureds of Masse, including Lexington, were brought into the Consolidated State-Court Lawsuit via Allied’s cross-claim and third-party demand.159 In its cross-claim and third-party demand, Allied alleges it is entitled to defense and indemnity in the event it is found liable for the claims alleged in the underlying Adams or St. Pierre lawsuits.160 The obligation to defend may result from the allegations of a cross-claim or third-party demand rather than solely from the original petitions.161 Allied’s cross-claim and third-party demand incorporates the allegations of the Adams and St. Pierre petitions, which are based on the plaintiffs’ exposure to harmful substances emanating [*43]  from the Allied shipyard. As a result, to the extent necessary, the Court will consider Allied’s cross-claim and third-party demand, the underlying Adams and St. Pierre petitions, and Lexington’s insurance policy issued to Masse to determine whether Lexington owes a duty to defend or indemnify Allied.

 

159   R. Doc. 444-15.

160   Id.

161   See, e.g., Gootee Constr., Inc. v. Travelers Prop. Cas. Co. of Am., No. 15-3185, 2016 U.S. Dist. LEXIS 50911, 2016 WL 1545658 (E.D. La. Apr. 15, 2016) (considering general contractor’s third-party demand along with subcontractor’s insurance policy to determine whether insurer owed a duty to defend the subcontractor); Hanover Ins. Co. v. Plaquemines Parish Gov’t, No. 12-1680, 2015 U.S. Dist. LEXIS 114519, 2015 WL 5093452 (E.D. La.) (considering third party demand to determine an insurer’s duty to defend).

 

1. The Allegations of the Consolidated State-Court Lawsuit and Allied’s Cross-Claim and Third-Party Demand

In Adams, et al. v. Allied Shipyard, Inc., et al., the plaintiffs allege in their sixth amended petition they “are residents of a neighborhood that borders” Allied’s shipyard.162 They further allege Allied, whose shipyard has been operating since the 1960s, has been operating “without appropriate borders to stop the resulting by-products, including, but not limited to, sand, dirt/dust, paint and various metals, produced by its sandblasting from permeating the neighborhood.”163 The Adams plaintiffs allege Allied’s negligence has “expos[ed] the residents to dust, sand, paint and various metals, as well as other substances.”164 The petition alleges that the plaintiffs’ “long, consistent and protracted” exposure and “inhalation of . . . by-products” has caused the plaintiffs to contract severe [*44]  diseases and illnesses “that are painful and disabling,” including Wegener’s granulomatosis, IgA nephropathy, Scleroderma, coughing, wheezing, Chronic Obstructive Pulmonary Disease, and migraine headaches.165 Allied filed a supplemental and amended third-party demand against Masse, alleging Masse’s “actions and activities, and failure to perform their contracted job responsibilities[,] initiated the claims of the[Adams and St. Pierre] petitioners.”166 The Adams plaintiffs adopted all allegations asserted against Allied and asserted the same allegations against Masse.167

 

162   R. Doc. 443-9.

163   R. Doc. 443-9.

164   R. Doc. 443-9.

165   R. Doc. 443-9.

166   R. Doc. 444-11 at 2.

167   R. Doc. 444-6 at 3.

In St. Pierre, et al. v. Allied Shipyard, Inc., the plaintiffs allege they lived in a residence near Allied’s shipyard for approximately eight years preceding 2010.168 The St. Pierre plaintiffs allege that Allied was negligent when performing its operations, which “resulted in the release into the atmosphere and environment in the neighborhoods surrounding the shipyard of hazardous substances, including, but not limited to, paint, sand and silica.”169 The petition alleges that, as a result, the plaintiffs were exposed to the hazardous substances and “have suffered personal injury, mental anguish, health problems, inconvenience, distress, [*45]  loss of consortium, fear of disease, and other damages.”170

 

168   R. Doc. 443-12. 169

169   Id.

170   Id.

On August 18, 2016, Allied filed a cross-claim and third-party demand against the insurers of Masse, seeking a declaration of its status as an additional insured and of its right to defense and indemnity under those policies.171 In its cross-claim against the insurers of Masse, Allied alleges it executed a Master Work Contract with Masse in 1995, which required Masse to obtain policies of insurance and to name Allied as an additional insured.172 Allied further alleges it is entitled to defense and indemnity from Masse’s insurers under the policies issued to Masse, but that none of Masse’s insurers have provided Allied a defense or indemnity as an additional insured.173

 

171   R. Doc. 443-15.

172   R. Doc. 444-15 at 3.

173   R. Doc. 444-15 at 3.

Considering the eight corners of Allied’s cross-claim and third-party demand, the underlying Adams and St. Pierre petitions, and Lexington’s insurance policy issued to Masse, to determine whether Lexington owes a duty to defend Allied, the Court finds that Lexington owes Allied defense as an additional insured under the Additional Insured Endorsement, if other provisions of the policy are satisfied. Specifically, the Additional Insured Endorsement contains a provision [*46]  with respect to excess insurance, which may preclude Lexington’s duty to defend Allied as an additional insured under the 2008-2009 Lexington Policy.

 

2. Lexington as an Excess Insurer Under the 2008-2009 Lexington Policy

Even though the Court has determined Allied is an additional insured under the 2008-2009 Lexington Policy issued to Masse, Lexington currently owes no duty to defend Allied in the Adams and St. Pierre lawsuits. The Additional Insured Endorsement precludes coverage for an additional insured until all other valid and collectible insurance available to it is exhausted. The Additional Insured Endorsement of the 2008-2009 Lexington Policy provides:

 

Any coverage provided by this endorsement to an additional insured shall be excess over any other valid and collectible insurance available to the additional insured, whether primary, excess, contingent or on any other basis unless a written contract or written agreement specifically requires that this insurance apply on a primary or non-contributory basis.174

 

 

 

 

174   R. Doc. 444-17 at 37 (emphasis added).

In Louisiana, “an excess insurer does not owe its insured a defense of a claim within a primary insurer’s limits.”175 “[A]n excess insurance policy provides coverage that begins only [*47]  after a predetermined amount of primary coverage is exhausted.”176 It is not until the claim exceeds the limits of an insured’s primary coverage that the excess insurer has a duty to defend the insured.177 The rationale for limiting an excess insurer’s duty to defend is rooted in the principle that covering only those damages in excess of the primary insurer’s limits reduces the risk that an excess insurer will have to pay for losses incurred by the insured. This reduced risk translates into reduced premiums, as “inexpensive premiums reflect an excess insurer’s desire to limit its exposure and the insured’s willingness to take on the corresponding level of risk.”178

 

175   Easton v. Chevron Indus., Inc., 602 So. 2d 1032, 1041 (La. Ct. App. 4 Cir. 5/28/1992), writ denied, 604 So. 2d 1315 (La. 1992), and writ denied, 604 So. 2d 1318 (La. 1992) (quoting Lumbermens Mut. Casualty Co. v. Connecticut Fire Ins. Co., 239 So. 2d 472, 474 (La. Ct. App. 4 Cir. 6/6/1970), writ denied, 256 LA. 1157, 241 So. 2d 255 (1970)).

176   Id. (quoting Steve D. Thompson Trucking, Inc. v. Twin City Fire Ins. Co., 832 F.2d 309, 310 (5th Cir. 1987)).

177   See Am. Home Assur. Co. v. Czarniecki, 255 LA. 251, 230 So. 2d 253, 260 (1969).

178   LaMarque Ford, Inc. v. Fed. Ins. Co., No. 10-4355, 2011 U.S. Dist. LEXIS 55536, 2011 WL 2020566, at *5 (E.D. La. May 24, 2011) (citing Harville v. Twin City Fire Ins. Co., 885 F.2d 276, 279 (5th Cir. 1989)).

It is undisputed that Gray Insurance Company provides primary insurance to Allied.179 Allied further admits it has not exhausted its available primary insurance under Gray’s policy.180 The 2008-2009 Lexington Policy provides that Lexington’s coverage to an additional insured is excess unless “a written contract or written agreement specifically requires that this insurance apply on a primary or non-contributory basis.”181 It is undisputed that neither the 1995 nor the 2007 Master Work Contracts between [*48]  Allied and Masse require the coverage afforded to Allied to be primary or non-contributory.182 As a result, Lexington, as Allied’s excess insurer, owes no duty to defend Allied until Allied has exhausted its available primary insurance. In the event Allied exhausts its available primary insurance, as well as other excess insurance, Lexington’s duty to defend Allied may arise. If such an event occurs, Allied may seek a declaration of Lexington’s duty to defend it as an additional insured under the 2008-2009 Lexington Policy against the claims made in the Adams and St. Pierre lawsuits.183

 

179   R. Doc. 444-2 at 7, ¶ 23; R. Doc. 492 at 3, ¶ 23. Gray is currently providing a defense to Allied in the Consolidated State-Court Lawsuit. Id.

180   R. Doc. 444-2 at 7, ¶ 25; R. Doc. 492 at 3, ¶ 25.

181   R. Doc. 444-17 at 37.

182   R. Doc. 444-2 at 7, ¶ 24; R. Doc. 492 at 3, ¶ 24; R. Doc. 444-19.

183   Alternatively, Allied argues if it is not an additional insured under the Additional Insured Endorsement, it is afforded coverage under the Contractual Liability Exclusion in the 2008-2009 Lexington Policy. R. Doc. 451 at 2. The Contractual Liability Exclusion is just that–a coverage exclusion–and does not afford any rights to Allied.

 

CONCLUSION

IT IS ORDERED that Lexington’s Motion for Summary Judgment with respect to Allied’s status as an additional insured and to Lexington’s duty to defend Allied in the Adams and St. Pierre lawsuits as an additional insured under the 2000-2001 Lexington Policy is GRANTED.184

 

184   R. Doc. 443.

IT IS FURTHER ORDERED that Lexington’s Motion for Summary Judgment with respect to Allied’s status as an additional insured and to Lexington’s duty to defend Allied in the Adams and St. Pierre lawsuits as an additional insured under the 2008-2009 Lexington Policy is GRANTED.185

 

185   85 R. Doc. 444.

New Orleans, Louisiana, this 12th day of July, 2017.

/s/ Susie [*49]  Morgan

SUSIE MORGAN

UNITED STATES DISTRICT JUDGE