Summary
In Premiere, the court reasoned that because the insured subcontractor had agreed to indemnify the contractor for tort liability to the subcontractor's employees, the insured subcontractor had assumed the contractor's "indirect liability" for a tort caused by the vessel owner, whom the contractor was contractually obligated to indemnify.
Summary of this case from American Employers' Insurance Company v. PetroleumOpinion
CIVIL ACTION NO 02-3199, SECTION "J"(4).
July 8, 2003.
ORDER AND REASONS
This case involves an insurance coverage dispute arising from injuries sustained by a offshore casing hand, Rodney Sumrall, while employed by Premiere, Inc. aboard Ensco No. 51, a drilling vessel, during a personnel basket transfer to another vessel. The Ensco No. 51 was owned by Ensco Offshore Company but was contracted to Santa Fe Resources, Inc. for use in Santa Fe's drilling operations in the Gulf of Mexico off the coast of Louisiana.
In prior, related litigation, Sumrall sued Ensco for his injuries. Pursuant to a contract, Santa Fe assumed the defense and indemnity of Ensco, and eventually settled all claims by Sumrall. Santa Fe then sought indemnity from Premiere, pursuant to a master contract whereby Premiere provided casing services in connection with Santa Fe's drilling operations. Santa Fe obtained a judgment against Premiere for all defense and indemnity costs it had incurred in connection with defense and settlement of the underlying tort suit by Sumrall. That judgment was affirmed on appeal.
Premiere now seeks coverage (and reimbursement) under a commercial general liability policy which it was required to purchase pursuant to its master contract with Santa Fe. The liability insurer, Commercial Underwriters Insurance Company, claims that its policy does not cover the liability incurred by Premiere.
The coverage issue ultimately turns on whether the Santa Fe-Premiere master contract is an "insured contract" within the meaning of the policy. There is no doubt that Premiere purchased this liability insurance policy for the intended purpose of insuring its potential liabilities arising out of the master contract with Santa Fe. Because the policy does not define "insured contract" to unambiguously exclude the master contract between Premiere and Santa Fe, the policy language can be reasonably interpreted to provide coverage. According to black letter principles of contract interpretation, the Court concludes that Premiere is entitled to coverage under the policy.
Factual Background
The above-captioned matter has its roots in two contracts involving drilling operations in the Gulf of Mexico off the coast of Louisiana, as well as a comprehensive general liability policy issued in conjunction with those contracts. Santa Fe was engaged in drilling operations in the Gulf of Mexico. Santa Fe entered into a "master contract" with Premiere to provide personnel to perform casing services for Santa Fe's drilling operations. The master contract contained an indemnity provision whereby the parties agreed to indemnify and hold each other harmless from and against all claims arising out of contract or tort asserted by each company's employees against the other company and/or their subcontractors. The master contract required Premiere to procure a commercial general liability insurance policy ("CGL policy"), including bodily injury and property damage. The master contract also required the policy to provide coverage for contractual liability, covering liabilities assumed under the master contract, and to have Santa Fe named as an additional insured.
Premiere purchased the required CGL policy from Commercial Underwriters Insurance Company ("CUIC"). CUIC issued Premiere Policy NO. BCG000516 (the "CUIC policy"), which was effective from April 1, 1999 to February 5, 2000. Under the CUIC policy, CUIC agreed to "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." See Rec. Doc. 17, exhibit A-2. The insurance applied to "bodily injury" only if "[t]he `bodily injury' . . . is caused by an `occurrence' that takes place in the `coverage territory'" and "occurs during the policy period." See id. The CUIC policy also contained the following two express exclusions: (1) contractual liability and (2) employer's liability. See id. Under the contractual liability exclusion, the insurance did not apply to "`bodily injury' . . . for which the insured [Premiere] is obligated to pay damages by reason of the assumption of liability in a contract or agreement." See id. Under the employer's liability exclusion, the insurance did not apply in cases of bodily injury to "[a]n `employee' of the insured [Premiere] arising out of and in the course of . . . [e]mployment by the insured [Premiere]." See id. This exclusion applied "[w]hether the insured [Premiere] may be liable as an employer or in any other capacity." See id. However, neither exclusion applied, and thus coverage remained, for liability "[a]ssumed in a contract or agreement that is an `insured contract', provided the `bodily injury' . . . occurs subsequent to the execution of the contract or agreement." See id.
The CUIC policy defined an "insured contract" as "[t]hat part of any other contract or agreement pertaining to your [Premiere's] business . . . under which you assume the tort liability of another party to pay for `bodily injury' . . . to a third person or organization." See id. The policy defined "tort liability" as "a liability that would be imposed by law in the absence of any contract or agreement." See id. Additionally, Santa Fe was named as an additional insured under the CUIC policy. Under the policy language, Santa Fe was to be treated as an insured, but only with respect to liability arising out of Premiere's operations or premises owned by or rented to Premiere.
Sante Fe entered into a separate contract with Ensco Offshore Company to supply a vessel from which the drilling operations would be conducted. Pursuant to the Santa Fe/Ensco contract, Santa Fe agreed to provide a defense and to indemnify Ensco from and against all claims asserted against Ensco arising out of the contract.
On September 27, 1999, the Ensco No. 51 was engaged in Santa Fe's drilling operations in the Gulf off the coast of Louisiana. Rodney Sumrall ("Sumrall"), a Premiere casing hand, was assigned to the Ensco No. 51 and was performing casing operations. Sumrall was seriously injured during a personnel basket transfer from the Ensco No. 51 to an adjacent crew boat.
Procedural History
On September 18, 2000, Sumrall filed suit against Ensco in the the Western District of Louisiana. Sumrall asserted tort claims arising under both federal and state law. Ensco then made a demand for defense and indemnity from Santa Fe. Santa Fe accepted the indemnity demand and made amicable demand upon Premiere to defend and indemnify Ensco pursuant to the master contract provision requiring Premiere to indemnify Santa Fe for contractual liability arising out of any claims filed by Premiere's employees against Santa Fe or its subcontractors, such as Ensco.
Ensco also filed a third-party demand in the Sumrall action against Premiere seeking a defense and indemnity. Premiere tendered the claim to CUIC. CUIC issued a reservation of rights letter to Premiere denying coverage, but provided a defense to Premiere. Judge Haik dismissed Ensco's third-party demand holding that the indemnification provisions in the master contract were not reciprocal between Premiere and Ensco and thus were void under § 905(b) of the Longshoreman and Harbor Workers' Compensation Act. Thus, Premiere had no direct liability to Ensco arising out of the underlying tort claim by Sumrall.
No independent contract existed between Premiere and Ensco.
Santa Fe also filed suit against Premiere and CUIC in a separate action in the Western District. Santa Fe sought indemnity under the master contract for all amounts paid by Santa Fe for the defense and indemnity of Ensco in the Sumrall action. Santa Fe also asserted a claim against CUIC seeking additional insured status and coverage under the CUIC policy for all amounts paid by Santa Fe for the defense and indemnity of Ensco. Alternatively, Santa Fe asserted a claim against Premiere for breach of the master contract for failing to procure the proper CGL policy. As to the indemnity claim, Judge Haik held that Premiere was obligated to defend and indemnify Santa Fe under the master contract for the defense and indemnity costs it owed to Ensco under the Santa Fe/Ensco contract.
This claim was the subject of prior litigation in the instant case as well. Previously in the instant case, CUIC filed a motion for summary judgment arguing that Judge Haik dismissed Santa Fe's claim after Santa Fe and Premiere attempted to recover from CUIC on the same grounds as those asserted by Premiere in the instant case. See Rec. Doc. 7. Therefore, Premiere's instant claim against CUIC should have been barred by principles of collateral estoppel. However, this Court rejected CUIC's argument and held that Judge Haik dismissed Santa Fe's claim against CUIC on the grounds that Santa Fe was not an additional insured under the CUIC policy. See Rec. Doc. 15. Thus, Judge Haik was not required to address the legal basis for the claim asserted by Premiere against CUIC in the instant case.Id.
Premiere appealed Judge Haik's ruling to the United States Court of Appeals for the Fifth Circuit. See Sumrall v. Ensco Offshore Co., 291 F.3d 316 (5th Cir. 2002). The Fifth Circuit affirmed Judge Haik's ruling, holding that Premiere owed indemnification to Santa Fe "for Santa Fe's contractual or legal duty to indemnify Ensco against Sumrall's injury claim." Id. at 320. In so holding, the Fifth Circuit stressed that Premiere contracted with Santa Fe to indemnify Santa Fe for its liability arising out of contract or tort which relates to the master contract and which is incurred in an action asserted by Premiere's employees. Id. at 318-19 n. 4. Premiere therefore owed indemnity to Santa Fe because Santa Fe incurred contractual liability to Ensco for the amounts paid to Sumrall in his tort action against Ensco. Id. at 320. The Fifth Circuit further stated that the indemnity provisions of the master contract evinced an intent on the part of Premiere to "indemnify not only Santa Fe, but also Santa Fe's contractors and subcontractors,' thus including Ensco, for obligations that arise due to claims of injury brought by Premiere employees." Id. at 322.
A final judgment was subsequently entered against Premiere for the amounts paid by Santa Fe in settling and defending the claims of Sumrall against Ensco. On October 23, 2002, Premiere filed the present suit against CUIC seeking coverage under the CUIC policy for the money judgment awarded to Santa Fe. In addition to its contractual claim, Premiere has also asserted a claim under La. R.S. §§ 22:658(B) and 22:1220(B) alleging that CUIC breached its duty of good faith and fair dealing in failing to provide coverage to Premiere for its liability owed to Santa Fe.
CUIC has consistently claimed it does not owe coverage to Premiere in this matter. CUIC first argues that Premiere's claim for coverage is not within the CUIC policy's insuring language. CUIC contends that Premiere's claim, seeking coverage for the indemnity owed to Santa Fe for Santa Fe's contractual liability to Ensco, is not a claim for "bodily injury" or "property damage" caused by an "occurrence" as defined in the CUIC policy. According to CUIC, Ensco is the only party that has been obligated to pay damaged because of "bodily injury" caused by an "occurrence." CUIC contends that Premiere seeks coverage under the CUIC policy for contractual liability and thus does not fit within the policy's insuring language.
Alternatively, CUIC argues that Premiere cannot recover under the CUIC policy because the policy's contractual and employer's liability exclusions apply to Premiere's claim. CUIC asserts that Premiere became obligated to indemnify Santa Fe by reason of the master contract, which CUIC argues is not an "insured contract" under the policy's language. According to CUIC, the master contract is not an "insured contract" because Santa Fe tendered contractual, not tort, liability to Premiere under the master contract. The same argument applies to the employer's liability exclusion. According to CUIC, the employer's liability exclusion applies because the underlying Sumrall action involved "bodily injury" to an "employee" of Premiere and Premiere is responsible for repaying Santa Fe for its liability incurred in indemnifying Ensco for the damages paid to Sumrall. Since Premiere assumed Santa Fe's contractual liability pursuant to the master contract, the master contract is not an "insured contract" and thus does not prevent the application of the employer's liability exclusion.
Premiere contends is an "insured contract" under the language of the CUIC policy. Premiere argues that the language of the policy is ambiguous and thus under the rules of insurance policy interpretation, the Court must interpret the policy in favor of coverage.
Discussion
I. Standard of Review
Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citing FED. R. CIV. PROC. 56(c)). The moving party bears the initial burden of demonstrating to the court that there is an absence of genuine factual issues. Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992). Once the movant meets that burden, the non-moving party must produce evidence sufficient to establish that there is a genuine issue of material fact in dispute. Id. Accordingly, a factual controversy exists when both parties have submitted evidence of contradictory facts. Little, 37 F.3d at 1075. On summary judgment, factual controversies are resolved in favor of the non-moving party. Id.
II. Premiere's Contractual Claim for Coverage under the CUIC Policy
Neither party disputes that Louisiana law governs the resolution of Premiere's claim for coverage under the CUIC insurance policy. The policy was issued to Premiere, a Louisiana corporation, at its Louisiana address. See Adams v. Unione Mediterranea Di Sicurta, 220 F.3d 659, 677 (5th Cir. 2000). Under Louisiana law, an insurance policy is a contract between the parties and thus, as is true with all other contracts, it is the law between the parties. La. Ins. Guar. Ass'n v. Interstate Fire Cas. Co., 630 So.2d 759, 763 (La. 1994). In interpreting insurance contracts, a court must determine the common intent of the parties. Id. "The parties' intent as reflected by the words in the policy determine the extent of coverage." Id. (internal citation omitted). "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." Id. (citing LA. CIV. CODE art. 2047).
An insurance policy is not to be interpreted in an unreasonable or strained manner "so as to enlarge or to restrict its provisions beyond what is reasonably contemplated by its terms or so as to achieve an absurd conclusion." Id. In the absence of a statutory or public policy conflict, insurers are allowed to limit their liability and to impose and enforce whatever reasonable conditions they place upon their policy obligations. Id.
An insurance policy must be construed as a whole so that one provision is not "construed separately at the expense of disregarding other policy provisions." Id. (citing LA. CIV. CODE art. 2050). If the policy's language "is clear and unambiguously expresses the parties' intent, the [policy] must be enforced as written." Id. at 764 (citing LA. CIV. CODE art. 2046). However, where the language is ambiguous, the ambiguous policy provision is to be construed against the insurance company, as drafter and issuer of the policy, and in favor of coverage to the insured. Id. An ambiguity exists if the insurance policy is subject to two or more equally reasonable interpretations. Id. at 770. Furthermore, exclusionary provisions in insurance policies are strictly construed against the insurer, and ambiguities are to be construed in favor of the insured. Garcia v. St. Bernard Parish Sch. Bd., 576 So.2d 975, 976 (La. 1991). When such an ambiguity exists in an exclusionary provision, the interpretation that favors coverage must be applied. Id. The insurance company has the burden of showing that an exclusion unambiguously applies. See Arnette v. NPC Servs., Inc., 808 So.2d 798, 802 (La.App. 1st Cir. 2002). Whether a policy contains an ambiguous provision is a question of law. Interstate, 630 So.2d at 764.
A. Whether Premiere's Claim is Within the Insuring Language of the CUIC Policy
CUIC first argues that Premiere's claim is not within the insuring language of the CUIC policy. Under the policy's insuring agreement, CUIC agreed to "pay those sums that [Premiere] becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies." See Rec. Doc. 17, exhibit A-2, at 2. The policy defines "bodily injury" as "bodily injury, sickness or disease sustained by a person." See id. at 10. Furthermore, the "bodily injury" has to be caused by an "occurrence". See id. at 2. An "occurrence" is "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." See id. at 12. CUIC argues that Ensco is the only party in this matter that was legally obligated to pay "bodily injury" damages. CUIC contends that Premiere's liability in this matter is purely contractual. Therefore, according to CUIC, Premiere is not seeking coverage for damages it has to pay because of "bodily injury".
CUIC's argument is directly related to its coverage exclusion argument. The language of the insuring agreement could be reasonably interpreted to cover the claim asserted by Premiere for its liability to Santa Fe if the master contract is determined to be an "insured contract" for purposes of this litigation. Thus, the Court will move on to the CUIC's second argument made in support of its motion for summary judgment.
B. Whether the Master Contract is an Insured Contract for Purposes of Premiere's Contractual Claim under the CUIC Policy
The dispositive issue in this matter is whether the master contract, under which Judge Haik and the Fifth Circuit held that Premiere is liable to Santa Fe, is an "insured contract" under the CUIC policy. CUIC contends that the contractual liability and employer's liability exclusions apply to preclude Premiere from receiving coverage for the liability it owes to Santa Fe. However, if Premiere assumed such liability under an "insured contract" then the CUIC policy does provide coverage.
Since CUIC relies on a policy exclusion to deny coverage, it has the burden of showing that such exclusion clearly and unambiguously applies. CUIC has failed to meet this burden. Premiere's suggested interpretation of the policy language is equally reasonable to the interpretation claimed by the insurer. When considered as a whole, the policy's language reasonably permits either of the separate interpretations offered by Premiere and CUIC. Since the policy's language is ambiguous, the CUIC policy must be interpreted in favor of coverage.
Premiere essentially contends that the definition of "insured contract" under the CUIC policy is met when the liability tendered to the insured is contractual in nature, as long as there is underlying tort liability. More specifically, Premiere contends that the definition of "insured contract" can be met in two different ways. First, the insured may assume another's "direct" tort liability, such as where Ensco would tender its liability to Premiere directly or where if Sumrall had sued Santa Fe directly and then Santa Fe had tendered its tort liability to Premiere. Secondly, the insured may assume another party's "indirect" tort liability, such as occurred here, where Premiere is ultimately responsible for the tort liability owed to its employee. Under this interpretation, Premiere is liable indirectly for the same liability it contracted to assume directly under the master contract.
It appears that both sides agree that for purposes of indemnification under the master and Ensco-Santa Fe contracts, Santa Fe's liability to Ensco was contractual in nature. See Sumrall v. Ensco Offshore Co., 291 F.3d 316, 320 (5th Cir. 2002).
Premiere argues that its interpretation of an "insured contract" is reasonable because it is ultimately liable for Ensco's tort liability to Sumrall and the CUIC policy does not expressly or unambiguously exclude coverage for such liability. Premiere further argues that the fact that Premiere's indemnification obligation to Ensco is invalid and unenforceable should not preclude the Court from concluding that the master contract is still an "insured contract" under the CUIC policy's language. This is so because the Fifth Circuit has previously held that by entering into the master contract, Premiere intended to indemnify Ensco, as a third-party contractor of Santa Fe. Sumrall, 291 F.3d at 320.
It should be noted that there is a clear lack of relevant precedent involving this issue. In fact, the Court has been unable to discover a case from any jurisdiction which is directly on point. However, the Fifth Circuit has previously noted that it is "highly unclear" that indemnification provisions to a master contract held to be invalid and unenforceable would affect the contract's status as an "insured contract". Mid-Continent Casualty Co. v. Swift Energy Co., 206 F.3d 487, 493 (5th Cir. 2000) (citing Douglas R. Richmond Darren S. Black, Expanding Liability Coverage: Insured Contracts and Additional Insureds, 44 DRAKE L. REV. 781, 793 (1996)). The Fifth Circuit further noted in Mid-Continent that a reasonable argument in a factual scenario similar to the instant case is that the insurer "should simply . . . draft clear policy language if they wish to exclude an indemnity provision which proves unenforceable from the definition of `insured contract'."). 206 F.3d at 493 (citing Richmond Black, at 793). The Fifth Circuit held that the definition of "insured contract" used in the Mid-Continent CGL policy is ambiguous and went on to reject the defendant insurer's argument that an unenforceable indemnification provision cannot qualify as an insured contract. Id. at 493. The Fifth Circuit ultimately held that the master contract in that case would be an "insured contract" "even if . . . the assumption [is granted] that the . . . indemnification provisions [contained in the master contract] are invalid." Id.
Several of the cases cited by Premiere are factually inapposite to the instant case. See Gibson Assocs., Inc. v. Home Ins. Co., 966 F. Supp. 468 (N.D. Tex. 1997); Michael Nicholas, Inc. v. Royal Ins. Co. of Am., 748 N.E.2d 786 (Ill.App.Ct. 2001). These cases each involved a factual scenario similar to if Sumrall had sued Santa Fe directly, instead of Ensco. In Gibson and Michael Nicholas, a third party sued another party in tort who had an indemnity agreement with the named insured. 966 F.2d at 470-71; 748 N.E.2d at 788. The sued party then tendered its tort liability directly to the named insured. Id. CUIC does not deny that the CUIC policy would provide coverage in that type of case where tort liability is tendered directly to Premiere, the named insured.
CUIC argues that Mid-Continent is inapplicable to the instant case because it involved the interpretation of an additional insured clause in a CGL policy, whereas the instant case deals with liability exclusions. However, Mid-Continent is factually applicable because the Fifth Circuit was required to interpret the meaning of an "insured contract" provision which contained a definition identical to that used in the CUIC policy. See 206 F.3d at 492. Additionally, while the Fifth Circuit interpreted Texas law in Mid-Continent, the case is persuasive authority because the court dealt with policy language identical to that used in the CUIC policy.
The Fifth Circuit further discussed the effect that clearly invalid indemnification provisions would have upon the master contract's status as an "insured contract" under a CGL policy. See id. The court stated that "[o]ut of an abundance of caution, we nevertheless assume without deciding that, if [a master contract's] indemnity provisions were clearly invalid under or offensive to [Texas law], it might affect the [contract's] status as an `insured contract' under [a CGL policy]." Id. This Court interprets this statement and the Fifth Circuit's subsequent discussion of the Mid-Continent master contract's indemnification provisions to be dicta. See id. at 493-495. This is so because this portion of the opinion was not necessary to resolve the dispositive issues before the Fifth Circuit and the court stated that it was not deciding at that time the legal effect of a clearly unenforceable indemnification provision on a master contract's status as an "insured contract". See id. at 493. Therefore, this Court is not governed by the Fifth Circuit's discussion subsequent to its holding and rationale in Mid-Continent. See id. 493-95.
Finally, this Court finds further support in the Fifth Circuit's rejection of the defendant insurer's argument that a master contract cannot be an "insured contract" where the contract is not applicable because the contract's indemnification provisions were never triggered. Id. at 496. The Fifth Circuit stated that performance under a master contract need not have commenced by the time liability arises.Id. Most importantly, the Fifth Circuit appeared to focus on the time period in which the parties enter into a master contract. See id. at 496. The Fifth Circuit stated that a master contract becomes an "insured contract" under a CGL policy upon the contract's execution. Id. No further actions by the parties are necessary beyond agreeing to assume liability in a contract. See id. This further adds to the conclusion that an unenforceable indemnification provision of a master contract does not necessarily preclude the contract from being an "insured contract" under a CGL policy.
The Court is somewhat perplexed by CUIC's interpretation of an "insured contract" under the policy. CUIC's interpretation appears to be completely dependent on the form by which the indemnity claim was tendered to Premiere. CUIC admitted during oral argument and in its briefs that it would gladly have provided coverage to Premiere had the Ensco-Premiere indemnification provision in the master contract been held to be valid and enforceable. CUIC admits that it also would have provided coverage to Premiere had Sumrall sued Santa Fe directly. In either case, where the tort liability owed to Sumrall is tendered directly to Premiere, coverage is available. However, where the tort liability is tendered indirectly through Santa Fe, coverage is not available even though Premiere is in either instance liable for the same tort liability owed to its employee. Under either scenario (direct or indirect tender), Premiere essentially indemnifies Santa Fe and its contractor Ensco, as Premiere and Santa Fe agreed in the master contract.
Premiere clearly intended to purchase a commercial general liability insurance policy to cover the potential indemnity liability it had under the master contract with Santa Fe. It is unreasonable to believe that Premiere intended its coverage to be dependent upon which party is sued as a direct defendant. This is especially so where the master contract makes Premiere ultimately liable for the tort damages owed to Sumrall, its employee. Premiere entered into an insurance policy to receive contractual liability and employer's liability coverage and to meet its indemnification obligations to Santa Fe and its contractors, including Ensco, regardless of the party that was actually sued in tort.
CUIC cites only one case in support of its motion for summary judgment. See Old Republic Ins. Co. v. Chesapeake Operating, Inc., 2000 WL 33399807 (W.D. La. 2000). CUIC cites Old Republic for the principle that "contractual liability coverage under a CGL policy does not contemplate indemnification of a party who attempts to `reach through' the indemnity obligations owed to another." See Rec. Doc. 21, at 17. In Old Republic, Judge Trimble held that a party in a position similar to Ensco could not personally seek indemnification under a CGL policy by "reaching through an indemnitee of the underlying insured." 2000 WL at *8. Under Judge Trimble's holding, a party in a position similar to Ensco could not reach through a party in similar position to Santa Fe to be personally indemnified under a CGL policy like the one in the instant case. However, Judge Trimble based his holding on the fact that neither the party seeking indemnification, nor the indemnitee to be "reached through", was a named insured, and therefore not a party to the CGL policy. Id. Like in the instant case, the CGL policy inOld Republic provided "only for contractual liability coverage for the named insured . . . and certain indemnity contracts entered into by the named insured." Id.
The problem for CUIC is that Premiere is the named insured on the policy in the instant case. Thus, Premiere has greater rights to coverage under the policy than did the parties potentially seeking coverage in Old Republic. Therefore, the Court concludes that Old Republic is factually inapposite to the instant case. As stated above, CUIC offers no other legal support for its interpretation of the policy language. CUIC has failed to carry its burden of showing that the contractual liability and employer's liability exclusions clearly and unambiguously apply to the instant case. CUIC could have written these exclusions to expressly and unambiguously preclude coverage for underlying indemnification agreements that are subsequently held to be unenforceable.
However, in light of the ambiguity in the policy exclusion language, the lack of relevant precedent requiring the interpretation argued by the insurer, and Premiere's equally reasonable interpretation of the policy's language, the Court concludes that the master contract is an "insured contract" for purposes of the CUIC policy. Through the master contract, Premiere did, albeit indirectly, assume the tort liability of another party, Ensco, to pay for "bodily injury" to a third person, Sumrall. Since Premiere assumed liability pursuant to an insured contract, the contractual liability and employer's liability exclusions are inapplicable. CUIC owes coverage to Premiere for the liability owed to Santa Fe.
Accordingly;
It is HEREBY ORDERED that Plaintiff Premiere, Inc.'s Motion for Summary Judgment (Rec. Doc. 17) is GRANTED.
It is FURTHER ORDERED that Defendant Commercial Underwriters Insurance Company's Motion for Summary Judgment (Rec. Doc. 21) is DENIED.