Opinion
Civil Action No. 01-880, Section "N" (4)
October 29, 2002
ORDER AND REASONS
Before the Court is a Motion for Summary Judgment filed by defendants, American Home Assurance Company, National Union Fire Insurance Company of Louisiana, Inc., Axa Corporate Solutions Insurance Co., f/k/a Axa Global Risk USA Insurance Company, Navigators Insurance Company, Qatar General Insurance and Reinsurance Company, and American Offshore Insurance Sydicate (hereinafter referred to collectively as either defendants or "American Home"). The thrust of the defendants' motion are exclusions precluding coverage of plaintiffs claims under two insurance policies in effect at the time of an accident allegedly causing injuries to the plaintiff Bruce Kleisch ("Kleisch"). Via formal opposition, plaintiff contends that the summary judgment record is incomplete, noting pages missing from the subject insurance policies and suggesting that additional discovery may be necessary to determine (1) which company in fact employed the plaintiff at the pertinent time, (2) who are insureds under the policies and (3) whether there is any contractual relationship between RB Falcon Drilling U.S.A., Inc. ("Falcon Drilling") and insureds under the subject policies. The matter was continued to allow the parties additional time to obtain documentation. Thereafter, American Home filed a formal reply, and the matter was deemed submitted for determination on the summary judgment record. For the following reasons, the motion is GRANTED:
I. Background
On April 3, 2001, Kleisch filed his original suit, i.e., a seaman's action for negligence, against Falcon Drilling, owner and operator of the tugboat M/V CHOCTAW EAGLE. The centerpiece of this litigation is an accident that occurred on March 4, 2000, while Kleisch was employed as a seaman aboard the BH400 owned by TransCoastal Marine Services, Inc. ("TransCoastal"), which was in tow in the Main Pass. While Kleisch was assisting in removing the tow line from the BH400 to the M/V CHOCTAW EAGLE, the tow line allegedly surged. Kleisch's right hand was caught between the cable and the towing cavel, which allegedly caused plaintiffs severe and disabling injuries. Thereafter, plaintiff filed the instant complaint for damages pursuant to the Jones Act and the General Maritime Law.
See Plaintiffs First Supplemental and Amended Petition for Damages at Paragraph V [Rec. Doc. No. 2].
Post-accident but prior to filing suit, TransCoastal filed a petition pursuant to 11 U.S.C. § 362 in the United States Bankruptcy Court for the Southern District of Texas. Through modification of the bankruptcy stay order, and under Louisiana's Direct Action Statute, LA. REV. STAT. § 22:655, this action proceeded directly against TransCoastal's insurers. Plaintiff claims that his Jones Act employers or statutory employers, HBH, Inc. ("HBH"), Woodson Construction Company, Inc. ("Woodson"), and TransCoastal, were negligent in failing to properly equip the vessel and/or to provide sufficient means of communication between the BH400 and the M/V CHOCTAW EAGLE.
TransCoastal and its affiliates HBH, Inc. and Woodson Construction Company, are all bankrupt entitities under the protection of a stay order pursuant to 11 U.S.C. § 362 in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, consolidated under Bankruptcy Case No. 00-35677H4 (Referencing Bankruptcy Case Nos. 00-35699-H4-7, 0035703-H4-7 and 00-35707-H4-7). See Plaintiffs First Supplemental and Amended Petition for Damages at para. XIII and attached Order modifying bankruptcy stay.
Id. at Paragraphs XII through XV.
American Home Policy No. C 1422 provides coverage to TransCoastal and its affiliates as per the Named Insured Clause. The policy offers the following coverages: "Commercial General Liability ("CGL") Insurance, including Marine Liability Insurance, Special Contractors Extensions and Repairers/Ship Builders Liability Insurance, [s]ubject to all of the terms, conditions and exclusions of the form(s) attached" to the aforesaid policy. With regard to the employee and watercraft exclusions, American Home's CGL Policy states:
American Home Assurance Company Policy No. C 1422 (hereinafter referred to as the "CGL policy"), Policy Declarations [Exhibit "C" to Defendants' Motion for Summary Judgment].
COMMERCIAL GENERAL LIABILITY COVERAGE Various provisions in this policy restrict coverage. Read the entire policy' carefully to determine rights, duties and what is and what is not covered.
* * *
SECTION I — COVERAGES COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE LIABILITY
* * *
2. Exclusions.
This insurance does not apply to:
* * *
(e) Employer's Liability "Bodily injury" to:
(1) An "employee" of the insured — arising out of and in the course of:
(a) Employment by the insured; or
(b) Performing duties related to the conduct of the insured's business; or
(2) The spouse, child . . . of that "employee" as a consequence of paragraph (1) above.
This exclusion applies:
(1) Whether the insured may be liable as an employer or in any other capacity; and
(2) To any obligation to share damages or repay someone else who must pay' damages because of the injury.
This exclusion does not apply to liability assumed by the insured under an "insured contract".
* * *
(g) Aircraft, Auto or Watercraft "Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and "loading or unloading."
* * *
This exclusion does not apply to:
* * *
(4) Liability assumed under any "insured contract" for the ownership, maintenance or use of aircraft or watercraft: . . .
Defendants' Motion to Supplement with complete copy of the CGL policy at p. 2 of 12; Defendants' Reply Brief at Exhibit "A".
Defendants' Motion to Supplement with complete copy of the CGL policy at p. 2 of 12; Defendants' Reply Brief at Exhibit "A".
Additionally, at the time of the accident defendant insurers subscribed to a primary protection and indemnity policy, Marine Package Policy ARS-2473 issued to TransCoastal. At Section II, entitled "Protection Indemnity," the Marine Package Policy provides the following exclusion, to wit:
Marine Package Policy ARS-2473 [Exhibit "D" to Defendants' Motion for Summary Judgment].
8. CREW EXCLUSION Protection Indemnity Form SP-23 is hereby amended to exclude liability to crew and/or employees of the Named Insured.
Id. at p. 43, paragraph 8.
Id. at p. 43, paragraph 8.
The named insured with respect to the P I Policy (ARS-2473) specifically includes TransCoastal and its affiliates, HBH and Woodson.
See General Conditions Applicable to All Sections, Definition of Named Insured [Exhibit "D" to Defendants' Reply Brief].
II. Contentions of the Parties
Defendants contend that American Home's CGL policy unambiguously excludes coverage of plaintiffs claims, since Kleisch was at all pertinent times an employee of the named insured TransCoastal, one of three entities sued as either or both the plaintiffs Jones Act or his statutory employer. HBH and Woodson, TransCoastal affiliates, were likewise sued in that capacity. In addition to excluding coverage of plaintiffs claims as a TransCoastal, HBH or Woodson employee, American Home submits in the alternative that coverage of the plaintiffs claims is nixed by the "watercraft" exclusion. As to the Marine Package Policy, defendant subscribers argue that coverage of Kleisch's claim is clearly obviated by the crew exclusion at paragraph 8, which excludes claims of employees and crew of the Named Insured, which by definition includes TransCoastal, HBH, and Woodson, inter alia.Kleisch filed a Rule 56.2 Response to American Home's Statement of Uncontested Material Facts, admitting that Kleisch believes he was an employee of TransCoastal. However, plaintiff argues that as of this date he has received no verification of this fact from TransCoastal or its representative. i.e., the Trustee in the bankruptcy proceedings. Plaintiff submits that Rule 56(f) discovery is necessary to a determination of whether he was an employee of TransCoastal or a related entity and the ownership of the BH400. Additionally, plaintiff submits he is entitled to an opportunity to probe whether the CGL policy would provide coverage as may be required by an "insured contract," if it is in fact determined during discovery that any such "insured contract" exists in this case. Kleisch argues that no proof has been adduced regarding the ownership of the BH400, and thus defendants have failed to carry their burden of proof that circumstances presented fall within the ambit of the exclusion.
In reply, defendants point out that they supplemented the summary judgment record with even-numbered pages 2 through 12 of the CGL policy inadvertently' omitted from the original filing. Additionally and considering that the plaintiff has judicially admitted that he is an employee of one or more of the named insureds, defendants contend that further discovery would not aid in the disposition of the coverage issues.
See Defendants' Motion to Supplement with complete CGL policy filed September 17, 2002; see also Defendants' Reply Brief at Exhibit "A".
III. Standard of Review
"Summary judgment is proper if the pleadings, depositions, answers to interrogatories. and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Kee v. City of Rowlett, Texas, 247 F.3d 206, 210 (5th Cir.) (internal quotation marks omitted), cert. denied, 122 S.Ct. 210 (2001). "The moving party bears the burden of showing . . . that there is an absence of evidence to support the nonmoving party's case." Id. at 210. If the moving party meets this burden, "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Id. A dispute over a material fact is a genuine issue for trial if the evidence is such that a jury reasonably' could return a verdict for the nonmoving party. Id. Substantive law determines which facts are material. Id. at 211.Plaintiff has requested a Rule 56(f) continuance in his response to defendants' Motion for Summary Judgment. Rule 56(f) authorizes a court to grant a continuance when the nonmovant has not had an opportunity to conduct discovery that is essential to his opposition to a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 3242, 250 n. 5 (1986).
Rule 56(f) provides: "Should it appear form the affidavits of a party opposing the motion [for summary judgment] that a party cannot for reasons stated present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just." Fed.R.Civ.P. 56(f).
In order to obtain a continuance of a motion for summary judgment for discovery purposes, a party must set forth some statement to the court indicating why additional discovery is necessary and how additional discovery will create a genuine issue of material fact. Canady v. Bossier Parish School Board, 240 F.3d 437, 445 (5th Cir. 2001) ( citing Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 28 F.3d 1388, 1395 (5th Cir. 1994)); Stearns Airport Equipment Co. v. FMC Corp., 170 F.3d 518, 535 (5th Cir. 1999) ("[I]t is not enough to rely on vague assertions that discovery will produce needed, but unspecified, facts," but rather the nonmovant "must demonstrate how discovery will lead to a genuine issue of fact.").
Rule 56(f) is an important ingredient of the federal summary judgment scheme, and provides a mechanism for dealing with the problem of premature summary judgment motions. Celotex v. Catrett, 477 U.S. 317, 326 (1986). Requests pursuant to Rule 56(f) "are generally favored and should be liberally granted." Beattie v. Madison County School District, 254 F.3d 595, 606 (5th Cir. 2001) ( citing Stearns Airport Equipment Co., 170 F.3d at 535).
IV. Analysis 1. Rule 56(f) Request
Although issue was recently joined in the captioned matter and this case is in its infancy. plaintiff has failed to demonstrate that more time for discovery is necessary or will aid in the disposition of the coverage disputes at issue. American Home cured the problem posed by its inadvertent failure to submit a complete copy of the CGL policy at issue along with its original motion and memorandum in support of summary judgment. As explained herein below, other information as to the ownership of the barge and the precise identity of plaintiffs employer at the time of the accident — whether Woodson, HBT or TransCoastal — is irrelevant. Coverage of the plaintiffs first party claim for personal injury damages ( i.e., Section I — Coverage) is clearly and unambiguously excluded, as is coverage of the employee of any insured.
2. Principles Governing the Interpretation of Insurance Policies
The parties do not dispute that the following tenets or legal axioms concerning the interpretation of insurance policies, recognized in Louisiana and other jurisdictions, are applicable to the coverage dispute in question:
An insurance policy is an agreement between the parties and should be interpreted by using ordinary contract principles. The parties' intent, as reflected by the words of the contract, determine the extent of coverage. Such intent is to be determined in accordance with the general, ordinary, plain and popular meaning of the words used in the policy, unless the words have acquired a technical meaning. If the policy wording at issue is clear and expresses the intent of the parties, the agreement must be enforced as written. Exclusionary provisions in a policy are strictly construed against the insurer, and any ambiguity is construed in favor of the insured. However, the rule of strict construction does not "authorize a perversion of language, or the exercise of inventive powers for the purpose of creating an ambiguity where none exists." Insurance companies have the right to limit coverage in any manner they desire, so long as the limitations do not conflict with statutory provisions or public policy.
Jenkins v. CNA Insurance Co., 726 So.2d 71, 73 (La.App. 1St Cir. 1998) (quoting Ledbetter, 665 So.2d at 1169 (internal citations omitted)).
See Plaintiffs Opposition Memorandum at p. 7 (quoting the Louisiana Supreme Court's decision in Ledbetter v. Concord General Corp., 665 So.2d 1166, 1169, judgment amended, 671 So.2d 915 (1996)).
Jenkins v. CNA Insurance Co., 726 So.2d 71, 73 (La.App. 1St Cir. 1998) (quoting Ledbetter, 665 So.2d at 1169 (internal citations omitted)).
Another tenet is that an insurance contract is to be construed as a whole, and one portion thereof should not be construed separately at the expense of disregarding another. Whether this Court employs Louisiana law or some other law is not material to the resolution of the issues raised in this case. Every indication is that land-based insurance principles concerning the construction of insurance policies do not vary significantly from marine principles. Bearing the tenets governing the interpretation of insurance contracts in mind, the Court turns to the exclusions which are the focus of American Home's Motion for Summary Judgment.
Jenkins, 726 So.2d at 73; see also Adams v. Unione Mediterranean di Sicurta, 220 F.3d 659 678 (5th Cir. 2000) (Construing policy provisions under Louisiana law using their plain, ordinary' and generally prevailing meaning and enforcing the agreement as written where the language is clear).
See, e.g., Ingersoll-Rand Financial Corp. v. Employers Ins., 771 F.2d 910, 912 n. 1 (5th Cir. 1985) (adverting to principles of Louisiana insurance law and noting the consonance of Louisiana court's interpretations with federal rules and the vast majority of other American state jurisdictions); Progress Marine, Inc., v. Foremost Insurance Co., 642 F.2d 816, 818 (5th Cir.), cert. denied, ( 454 U.S. 860 (1981)).
3. Exclusion of Employee's or Crew Claims for Bodily Injury
As noted above, plaintiff asserted Jones Act negligence and unseaworthiness claims directly against the underwriters (collectively referred to herein as American Home), which issued a CGL policy to his employer(s) and/or statutory employer(s) TransCoastal, HBH, or Woodson, named assureds under the subject CGL policy and Marine P I Policy. Admittedly, plaintiff is an employee of one, and perhaps all three, of American Home's assureds. American Home's CGL policy lists the named insured as "TransCoastal Marine Services, Inc. as per the Named Insured Clause." Additionally, the CGL policy provides a Broad Form Named Insured Clause, to wit:
See Plaintiffs First Supplemental and Amended Petition for Damages at para. XII [Rec. Doc. No. 2]
See Policy Declarations [Exhibit "C" to Defendants' Motion for Summary Judgment].
The Named Insured shall be as stated in the Declarations including any owned and/or controlled subsidiary of any tier, and any affiliated entity under the control or management of the Named Insured, including their interests in any joint venture, partnership or limited liability entity of any description, including any additional percentage interest of any joint venture, partnership or limited liability entity of any description required to be included as an insured but only to the extent of any obligation of the Named Insured to afford insurance to such interests under contract or agreement, all as now may exist or hereafter be created or acquired.
See General Amendatory Endorsement (emphasis added) [American Home Exhibit "C" to American Home's Reply Brief].
See General Amendatory Endorsement (emphasis added) [American Home Exhibit "C" to American Home's Reply Brief].
It cannot be and is not seriously disputed that the policy's named insured clause reiterated above is broad enough to include TransCoastal affiliates HBH and Woodson within its dragnet. Even assuming a genuine dispute about which entity employed the plaintiff at the precise time of the accident, whether that employer was TransCoastal, HBH, or Woodson, presents no material issue.
Plaintiff explicitly alleges an employer-employee relationship by and between himself and TransCoastal and/or affiliates, HBH and Woodson. The summary judgment record is uncontroverted that prior to and immediately following the subject accident, plaintiff was paid by TransCoastal. Additionally, HBH and Woodson were listed on the TransCoastal pay stubs issued to the plaintiff. Moreover, the plaintiffs W-2 for the year 2000 lists Woodson as his employer.
See Pay Stubs attached to the Plaintiffs Memorandum in Opposition.
See W-2 Wages and Tax Statements for the year 2000 [Exhibit "E" to Defendants' Reply Brief].
In Pettigrew v. ABB Lummus Global, Inc., 53 F. Supp.2d 864 (E.D.La. 1999) (McNamara, J.), the court construed an almost identical employee exclusion clause in Lexington Insurance Company's policy, finding that it unambiguously excluded coverage of claims for "bodily injury to an employee of any insured." Id. at 870. The court noted that a "severability of interests clause" does not nullify the effect of the employer's liability exclusion which employs the " any insured" policy language. Id. at 871.
Severability of interests in Pettigrew derived from the definition of an Insured as any person or organization qualifying as a insured in the Persons Insured provision. The insurance provided that it applied separately to each Insured against whom claim is made or suit is brought except with respect to the limits of liability. Pettigrew, 53 F. Supp.2d at 870-71 n. 48. Severability of interests in the case at bar would derive from the "Separation of Insureds" clause set forth in the instant CGL policy is set forth at item 7 on p. 9 of 12 [American Home's Exhibit "C"].
Given Kleisch's undisputed status as either an employee of TransCoastal or one of its affiliates (Woodson or HBH) during the pertinent time frame, the plain unambiguous language of the CGL policy's employee exclusion precludes coverage for his claim. Plaintiff is clearly "the employee of any insured," regardless of whether the insured is liable in his capacity as an employer or otherwise. The CGL policy specifically provides at subparagraph (1) that the employer's liability "exclusion is applicable whether the insured may be liable as an employer or in some other capacity." CGL Policy at p. 2 of 12.
See also Alleman v. Bunge Corp., 779 F.2d 218, 219-20 (5th Cir. 1985) (construing a CGL policy under Louisiana law and finding it unambiguously excluded coverage of all employee's claims for bodily injury notwithstanding provision under Section II (coverage of third party liability) which provided coverage for Bunge's liabilities as vessel owner except for worker's compensation claims.); Arcement v. Norman Industries, Inc., 652 F.2d 395, 397 (5th Cir. 1981) ( per curiam) (construing policy provision in American Home's policy insuring "liabilities arising out of bodily injury to . . . any' person ( other than an employee of an assured under this policy)" and finding the employee's claim for bodily injury "explicitly excluded from coverage under the policy by this language") (emphasis added); Sanders v. Ashland Oil, Inc., 656 So.2d 643, 648 (La.App. 1St Cir. 1995) (CGL policy unambiguously excluded coverage of bodily injury to an employee of the assured); Wainwright v. Moreno's, Inc., 602 So.2d 734, 739-40 (La.App. 3rd Cir. 1992) (same).
Reference to Section II coverage (third party liability coverage) under the policy creates no ambiguity. With respect to the definition of "who is an insured" for purposes of Section II coverage, the Amendatory Endorsement provides in pertinent part:
2. Each of the following is also an insured:
A. Your "employees," other than either your "executive officers" . . . but only for acts within the scope of their employment by you or while performing your duties related to the conduct of your businesses. However, none of these "employees"is an insured for:
(1) "Bodily injury" or "personal injury":
(a) to you, while the "employee" is either in the scope of his or her employment or is performing duties related to the conduct of your business;. . .
See CGL Policy under Section II at item 2a(1)(a) at p. 6 of 12.
See CGL Policy under Section II at item 2a(1)(a) at p. 6 of 12.
The foregoing Section II coverage endorsement is wholly consistent with the thrust of the employee exclusion from Section I coverage. In any' event, Section I addresses first party coverage (direct claims), whereas Section II defines who is an insured for purposes of third party liability and coverage with respect thereto. Moreover, there is no ambiguity because Section II expressly and similarly provides that no employee is an insured for "bodily injury . . . while the `employee' is either in the course and scope of his or her employment or is performing duties related to the conduct of your business."
Id.
Turning to the "crew exclusion," the P I Policy (ARS 2473) provides in pertinent part: "Protection and Indemnity Form SP-23 is hereby amended to exclude liability to crew and/or employees of the Named Insured." Applying the undisputed facts to the plain language of the policy, coverage of Kleisch's claims are unambiguously excluded from coverage by' the "crew exclusion" of the Marine Package Policy. Affiliated companies Woodson and HBH are explicitly listed as named insureds in the General Conditions Section of the Marine Package Policy. Accordingly, for purposes of the Marine Package Policy, it is clearly irrelevant whether Kleisch's specific employer at the time of the accident was either TransCoastal, HBH, or Woodson. All three affiliated companies are named insureds under the policy, and thus coverage is clearly excluded per the allegations of the plaintiffs complaint. Plaintiff was admittedly an employee of TransCoastal at all pertinent times.
Certified copy of Marine Package Policy ARS-2473 [Exhibit "D" to Defendants' Motion for Summary Judgment].
General Conditions Applicable to All Sections [Exhibit "D" to Defendants' Reply Brief].
4. Watercraft Exclusion
Kleisch alleges in his complaint that American Home is liable for TransCoastal's failure to provide an adequate crew for the BH400, "a vessel owned and/or operated by" TransCoastal, Woodson or HBH, Inc. Since all three are insureds under the policy, which of the three actually owned and/or operated or used the BH400 is not material. TransCoastal's status as an insured under the policy is sufficient to preclude coverage.
See First Supplemental and Amended Complaint for Damages at para. XV [Rec. Doc. No. 2].
Although the plaintiff claims that the watercraft exclusion is not implicated because the alleged accident did not arise out of the operation of TransCoastal's vessel, the clear and unambiguous language of the watercraft exclusion belies the plaintiffs contention. The policy excludes coverage for "`[b]odily injury' or `property damage' arising out of the ownership, maintenance, use or entrustment to other of any aircraft, `auto', or watercraft owned or operated by' or rented or loaned to any insured." The meaning of the term "use" includes loading and unloading. The meaning of the terms `arising out of' the operation of any insured's vessel is sufficiently broad to include "use" of the vessel.
CGL Policy at item G, pp. 2 and 3 of 12.
Id.
See Clark v. B D Inspection Service, 896 F.2d 105, 106-07 (5th Cir. 1990) ("informal arrangement" was sufficient to trigger policy provision which covered an additional insured "when required to be so named," but watercraft exclusion unambiguously precluded coverage); Pepper v. Plaisance, 732 F. Supp. 48 (E. D. La. 1989) (watercraft and maritime exclusions are unambiguous); Landerman v. Liberty Serv., Inc., 637 So.2d 809 (La.App. 4th Cir. 1994) (even though vessel owner who borrowed injured employee was an insured under the alternate employer endorsement in WC/EL policy of lending employer, watercraft exclusion was applicable to preclude coverage for injuries sustained on vessel); Fanguy v. Dupre Bros. Const. Co., 588 So.2d 1251 (La.App. 1St Cir.), cert. denied, 594 So.2d 892 (La. 1992) (watercraft exclusion plainly applicable to claim by plaintiff who was injured when a pipe being lifted by a crane barge became unhooked and fell on him).
Finally, absent even a scintilla of proof of a contractual relationship vis a vis TransCoastal and Falcon Drilling, plaintiff cannot begin to demonstrate coverage for an insured contract. Falcon Drilling has clearly indicated in discovery to date that no such contractual relationship exists. However, as a practical matter, counsel for American Home must continue to monitor the proceedings for the following reasons: (1) the Court has no intention of issuing a final judgment with respect to coverage until the close of the case; and (2) should further discovery reveal the existence of such an insured contract, upon motion of the plaintiff the Court will revisit this summary judgment ruling on coverage under American Home's policies in light of any such discovery.
Contractual liability coverage provisions are specifically designed to provide coverage for indemnification actions, notwithstanding the fact that the policy may offer no coverage for breach of a contractual duty. See Musgrove v. Southland Corp., 898 F.2d 1041, 1044 (5th Cir. 1990) (general liability policy did not afford coverage to Citgo for its contractual claim against the employer, because the contract between the parties did not contain an indemnity agreement applicable to that particular loss).
Accordingly, and for all of the foregoing reasons,
IT IS ORDERED that the defendants' Motion for Summary Judgment is GRANTED, except to the extent that National Union Fire Insurance Company of Louisiana, Inc., is an excess insurer of TransCoastal Marine Services, Inc.