Opinion
CIVIL ACTION NO. 01-3006, c/w 01-3211, c/w 02-0066, c/w 02-0095, SECTION "N" (2)
September 22, 2003
ORDER AND REASONS
Before the Court is the Motion for Summary Judgment (Rec. Doc. No. 157) filed by defendants American Employer's Insurance Company, Markel Insurance Company, and Royal Insurance Company (hereinafter referred to as "Gulf Coast Marine Pool Underwriters" or "Gulf Coast") on September 19, 2002. After a number of mutually agreed upon continuances of the motion's hearing date, the Court heard oral argument on the motion on July 9, 2003. As explained herein, the motion is GRANTED IN PART and DENIED IN PART.
Background
On August 22, 2001, a tugboat owned and operated by DL Marine Transportation, Inc. ("DL") undertook, on behalf of TLC Marine Services, Inc. ("TLC"), to transport two barges owned by Suard Barge Service ("Suard") from Bayou Perot to Suard's facility in Lockport, Louisiana. En route, Suard's two barges capsized and DL's tugboat partially sank. Various lawsuits resulting from the incident have been consolidated in this Court. Gulf Coast filed the motion for summary judgment presently at issue on September 19, 2002, with respect to claims asserted against it by Suard.
Law and Analysis
At the time of the August 22, 2001 accident, a Gulf Coast insurance policy provided hull, protection and indemnity, and other insurance coverages to TLC. In Civil Action No. 02-0095, Suard contends that a prior oral agreement with TLC — obligating TLC to hold harmless and indemnify Suard for TLC's operations, and to make Suard an additional insured under TLC's insurance policies — entitles Suard to indemnity and defense under the Gulf Coast policy with respect to any liability that it may have arising from the August 22, 2001 accident.
See January 11, 2002 Complaint for Damages, for Breach of Contract, and for Declaratory Judgment (Civil Action No. 02-0095, Rec. Doc. No. 1) at ¶¶ 43-55.
With its motion for summary judgment, Gulf Coast seeks a determination that it does not owe coverage or defense to Suard with respect to any liability claims asserted against Suard by DL and its hull insurer, Great American Insurance Company of New York ("Great American"). Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is properly granted only "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 and that the moving party is entitled to a judgment as a matter of law." See Fed.R.Civ.P. 56(c).
Although Gulf Coast assumes for purposes of this motion that Suard was an additional assured under TLC's Gulf Coast policy, it argues that the policy nonetheless does not provide coverage to Suard with respect to DL's and Great American's liability claims. To support its position, Gulf Coast first maintains that the policy covers only liability incurred in connection with the sole vessel listed on the policy schedule — the M/V TLC Commander, Thus, Gulf Coast contends, because it is undisputed that Suard's alleged liability stems from Suard's two barges — Suard 203 and Suard 204 — and not the M/V TLC Commander, the policy provides no liability coverage to Suard.
See Gulf Coast's Memorandum in Support of Summary Judgment (Rec. Doc. No. 157) at 2.
Gulf Coast also contends that Suard's claim asserted under the contractual liability portion of the policy fails because: (1) TLC did not assume Suard's liability by a written indemnity contract, and (2) the Louisiana Direct Action statute does allow Suard to bring an action directly against Gulf Coast for such coverage. To the contrary, Gulf Coast argues, only TLC, in its capacity as an "Assured" under the policy, can bring such a claim.
Suard disagrees with each of Gulf Coast's assertions. It further argues that the "Privilege to Charter Clause" of the policy provides coverage for the claims asserted against it.
I. Suard's Claim as Additional Assured
Regarding "additional assured" status, the "Blanket Additional Assureds and Waivers of Subrogation" clause of the Gulf Coast policy provides, in pertinent part:
BLANKET ADDITIONAL ASSUREDS AND WAIVERS OF SUBROGATION
Privilege is hereby granted the Assured to name others for whom the Assured is performing work as Additional Assureds on this Policy provided the Assured shall have exercised this option prior to loss.
Notwithstanding the preceding provisions, no party shall be deemed an Additional Assured or favored with a waiver of subrogation on any vessel insured hereunder which is not actually engaged or involved in the intended operations at the time of the loss, if any.
Where required by contract, or agreed to by the Assured, it is understood and agreed that:
1. Permission is also granted to name as Additional Assureds with waiver of subrogation and notice of cancellation those individuals, partnerships, joint ventures, or corporations for whom the Assured is working, directly or indirectly, when required, provide the loss or damage, as a result of which rights would arise, occurs during and as a result of the actual performance of such work.
. . .
5. Employees of one Assured named hereunder shall be considered members of the public as to other Assureds.
6. Certificate Holder shall not be liable for any and all premiums or calls for which Certificate Holder might otherwise become liable as assignee, a Named or Co-Assured, loss payee or otherwise.
See Gulf Coast Policy, attached as Exhibit A to Gulf Coast's Memorandum in Support of Motion for Summary Judgment, at POOL — 00448-49.
Although Gulf Coast assumes for purposes of this motion that Suard is an additional assured under the policy issued to TLC, it argues that Suard is not entitled to indemnity or defense because the only vessel scheduled in the policy, the M/V TLC Commander, was in no way involved in the August 22, 2001 accident.
Not disputing the M/V TLC Commander's lack of involvement, Suard argues that it has coverage with respect to the Suard 203 and Suard 204, under the policy's "Automatic Acquisition Clause." That clause provides, in pertinent part:
AUTOMATIC ACQUISITION CLAUSE
Subject to the terms and conditions of this Policy, it is understood and agreed that this Policy covers automatically, up to a maximum Hull valuation of $860,000.00 on each vessel purchased, repaired or altered, chartered, leased, hired, operated, or placed back in service by the Assured.
The Protection and Indemnity and Collision and Towers Liability Limit shall be 51,000,000.00 for each acquired vessel.
. . .
It is further agreed that the Assured will report within ninety (90) days of a vessel coming at risk under this automatic coverage, advising date attaching hereunder, valuation, and name and description of vessel.
This insurance shall not be prejudiced by any unintentional delay or omission in making reports as required above, or any unintentional error in the value or description of vessels to be reported, if prompt notice be given these Assurers as soon as said delay or omission or error become known to the Assured.
See Gulf Coast Policy at POOL — 00449-50.
Gulf Coast counters that the "Automatic Acquisition Clause" provides coverage only to "the Assured," which it contends refers only to TLC, and not Suard. It further maintains that the clause is not applicable because Suard did not, within ninety (90) days of purchasing the Suard 203 and Suard 204, advise it of the date of acquisition, valuation, name, and description of the vessels, as is required by the policy.
The Gulf Coast policy contains several references to the "Named Assured," which indisputably refers only to TLC. On the other hand, for purposes of this motion, references to the "Additional Assured" potentially refer to Suard, not TLC. The meaning of the phrase "the Assured," which is used throughout the policy, however, is more problematic. The phrase clearly always includes TLC and, in some portions of the policy, only TLC. At the same time, however, because the policy obviously must establish the terms and conditions of the insuring agreement as to any persons named as additional assureds on the policy, it appears that, at least in certain portions of the policy, the phrase reasonably can be construed to also refer to additional assureds. Cf. Craddock Int'l, Inc. v. W.K.P. Wilson Son, Inc., 116 F.3d 1095, 1099-1102 (5th Cir. 1997) (construing "the Assured" in a policy limitation to include an additional assured); Employers Ins. of Wausau v. Trotter Towing Corp., 834 F.2d 1206, 1211-12 (5th Cir. 1988) (assuming, without deciding, that "the Assured" in an automatic acquisition clause encompasses named and additional assureds). Indeed, the statement that "[e]mployees of one Assured named hereunder shall be considered members of the public as to other Assureds," which is found in the "Blanket Additional Assureds and Waivers of Subrogation" section, strongly suggests that "Assureds," as used in this sentence, include additional assureds. The use of the phrases "one of the Assureds," "any other of the Assureds," "each of the Assureds" and "more than one Assured" in the "Cross Liabilities Clause" and the "Liability Limitation" provision likewise arguably suggest that the phrase "the Assured" can refer to an additional assured.
See, e.g., Gulf Coast Policy at POOL — 00447, 450, and 452.
See, e.g., Gulf Coast Policy at POOL — 00448 and 451.
See, e.g., Gulf Coast Policy at POOL — 00441, 447 and 448.
See Gulf Coast Policy at POOL — 00449.
See Gulf Coast Policy at POOL — 00451.
Unfortunately, the proper meaning of the phrase "the Assured," as it used in the "Additional Acquisition Clause," is not made certain by that clause's language or by resort to the rest of the policy. Thus, mindful of the rule that ambiguities in insurance policies are to be construed in favor of the insured, see e.g., Exxon Corporation v. St. Paul Fire and Marine Insurance Company, 129 F.3d 781, 788 (5th Cir. 1997), the Court cannot find as a matter of law that the "Automatic Acquisition Clause" does not apply to additional assureds such as Suard.
To the extent that another portion of the policy does clarify the meaning of this phrase, as used in this clause, Gulf Coast has not adequately demonstrated this to the Court.
The Court also does not find that Suard's failure to report certain information regarding the two Suard barges, within 90 days of those vessels coming at risk, deprives Suard of coverage to which it may be entitled under the "Automatic Acquisition Clause." Although neither Gulf Coast nor Suard cited any authority to support their opposing positions regarding this particular, issue, the Court finds two Louisiana appellate court decisions persuasive. See Knotts v. Hardware Mut. Cas, Co., 212 So.2d 788, 789-90 (La.App. 2 Cir. 1973); Pendleton v. Ricca, 232 So.2d 803, 807-08 (La.App. 4 Cir. 1970). In Knotts and Pendleton, the Louisiana courts of appeal held that, when an accident occurs during the period in which notice of acquisition is to be given regarding a newly acquired vehicle, insurance coverage automatically is provided with respect to that accident, regardless of whether notice of the acquisition has been or is provided to the insurer during the specified period.
Suard purchased the two barges involved in the August 22, 2001 accident on August 10, 2001.
There appears to be a split among the state courts regarding this issue. See 8 COUCH ON INSURANCE §§ 117:35-36 (3d Ed. 2003).
If notice of acquisition is not provided during the specified period, and an accident occurs after the notice period has ended, however, there is no coverage for that accident. See Mathew v. Marquette Cas. Co., 152 So.2d 577, 581 (La.App. 2 Cir.), cert. denied, 153 So.2d 880 (La. 1963).
Although these cases addressed newly acquired automobiles, rather than vessels, the Court sees no reason that the same rule should not apply here. Thus, assuming that Suard is an additional insured under the Gulf Coast policy, and that the claims in question fall within the scope of coverage afforded to it as an additional assured, Gulf Coast is not entitled to summary judgment, because the August 22, 2001 accident occurred before the expiration of the 90-day period of automatic coverage following acquisition of the Suard barges. II. Suard's Claim for Contractual Liability Coverage
In the absence of a specific and controlling federal maritime rule, questions regarding marine insurance coverage are determined by applying state law. See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368 (1955); Taylor v. Lloyds Underwriters of London, 972 F.2d 666, 668 (5th Cir. 1992), cert. denied, 507 U.S. 952, 113 S.Ct. 1366 (1993).
Assuming that Suard is an additional assured under this policy, as Gulf Coast has done for purposes of this motion, it appears to the Court that there is some question as to whether the claims asserted against Suard by DL and Great American actually fall within the scope of coverage provided to additional assureds. Specifically, the "Blanket Additional Assureds and Waivers of Subrogation" clause states that the "loss or damage, as a result of which rights would arise," for which a person may be named as an additional assured, is that occurring "during and as a result of the actual performance of [the Assured's] work." Considering the context of this clause, this language seems to contemplate work performed by an assured other than Suard. Assuming this to be true, damage arising from Suard's alleged failure to provide seaworthy vessels for the DL tow, and/or failing to advise DL of the barges' alleged instability, arguably may not have occurred "as a result of the performance of [the Assured's] work." Because this issue was not raised by Gulf Coast's motion, and neither party has briefed it, however, the Court does not decide this question at this point.
Suard's claim against Gulf Coast under the contractual liability portion of the policy stems from TLC's alleged oral agreement to hold harmless and indemnify Suard for TLC's operations. Regarding this type of coverage, the Gulf Coast Policy provides, in pertinent part:
CONTRACTUAL LIABILITY EXTENSION
In consideration of the premium charged for this insurance, the coverage afforded under this policy is extended to insure the liability of the assured arising out of hold harmless and/or indemnity agreements contained in such contracts that have been entered into by the Assured for the furnishing of vessel services.
The coverage afforded by this contractual liability extension applies only to written contracts which have been entered into by the Assured prior to an accident/occurrence giving rise to a claim hereunder.
[T]he coverage afforded by this contractual liability extension is subject to all other terms, conditions, limitations, warranties, and limitations of this policy.
See Gulf Coast Policy at POOL — 00471.
Although this policy language plainly states that this coverage is available only for "written contracts," Suard essentially argues that the written contract requirement is rendered ambiguous, and thus must be construed in favor of providing coverage, by the absence of a written contract requirement in the "Blanket Additional Assureds and Waivers of Subrogation" of the policy, or the portion of the policy providing setting forth "general terms and conditions." Suard additionally argues that, if a written contract is required, the certificate of insurance provided to it by Laris Insurance Agency, Inc., allegedly naming Suard as an additional assured on the Gulf Coast policy, constitutes such a writing.
Suard's arguments are unavailing. That one section of a policy contains a condition not found in another section of the policy does not render the former provision ambiguous. Likewise, the absence of a condition in the general terms and conditions section does not nullify a specific condition imposed with respect to a particular type of coverage, or create ambiguity. Instead, it means only that an additional condition must be satisfied for a particular type of coverage to apply. To accept Suard's argument would require the Court to ignore the clear and express language of the policy. This the Court will not do. Plain and unequivocal policy language must be enforced as written.
Nor is the Court persuaded that the certificate of insurance provided to Suard by Laris Insurance Agency, Inc. satisfies the written contract requirement of this policy provision. Even if, that document confers additional assured status on Suard, which the Court does not decide, a named assured's designation of another entity as an additional assured status simply confers insurance coverage on that entity. In other words, there has been no showing made that naming someone as an additional assured also necessarily means that the named assured has agreed to hold harmless or indemnify the additional assured. Furthermore, the certificate of insurance in question specifically states that it "is issued as a matter of information only[,] confers no rights upon the certificate holder[,]" and "does not amend, extend or alter the coverage afforded by the [listed] policies," Accordingly, because the alleged indemnity obligation on which Suard bases its claim under this portion of the Gulf Coast policy rests solely on an oral agreement with TLC, contractual liability coverage has not been triggered.
See Certificate of Liability Insurance, attached as Exhibit C to Suard's Memorandum in Opposition to Gulf Coast Marine Pool Underwriters' Motion for Summary Judgment.
In any event, Suard has no right of recovery under the contractual liability provision of the Gulf Coast policy for its liability to DL and Great American, because it seeks such coverage as a nonparty to the contract. Apparently not disputing that the Gulf Coast policy does not allow such an action, Suard looks to the Louisiana Direct Action statute, La.R.S. 22:655, for authority. Notwithstanding this statute's application to all types of liability insurance policies, including marine protection and indemnity policies, see Grubbs v. Gulf International Marine, Inc., 625 So.2d 495, 502 (La. 1993), it authorizes direct actions only with respect to tort claims. See North American Specialty Ins. Co. v. Georgia Gulf Corp., 99 F. Supp.2d 726, 728 (M.D.La. 2000); see also Cacamo v. Liberty Mm. Fire Ins. Co., 764 So.2d 41, 43 (La. 2000); Robertson v. First of Georgia Underwriters Co., 464 So.2d 927, 928 (La, App. 4 Cir. 1985). Because Suard's claim is not a tort claim, the Louisiana Direct Action statute does not allow it to sue Gulf Coast on this claim. III. Suard's Claim Under the Privilege to Charter Clause
Suard's assumed additional insured status is unavailing because this provision provides coverage only for liability arising out of hold harmless and/or indemnity agreements contained in contracts entered into for the furnishing of vessel services. The claims asserted by DL and Great American against Suard are based on tort law, not an indemnity agreement. In any event, Suard's contract with respect to the August 22, 2001 tow was with TLC, not DL.
Suard also seeks to find coverage under the "Privilege to Charter Clause" based on the use of a DL tugboat to tow Suard's barges on August 22, 2001. This provision states:
PRIVILEGE TO CHARTER CLAUSE
Privilege is granted to charter, and/or sub-charter and/or enter into operating agreements, and during the term of such charter and/or sub-charter and/or operating agreement, this insurance shall be for the account of Owner, Charterer, Sub-charterer, and/or Operator, and waiver of Underwriters' rights of subrogation . . . against any individual, firm, or corporation, their subsidiaries, factors or assigns for whom or with whom the Assured may be operating is granted.
If at the time of the charter the Named Assured requires the Charterer to effect insurance for the account of the Named Assured and Charter, such insurance shall be primary, but this policy shall nevertheless remain in effect as an excess and/or difference in conditions cover for the account of the Named Assured only. In the event of loss or damage, the Named Assured agrees to used all reasonable means to effect recovery from the Charterer and/or his insurers before claiming hereunder. In the event the Named Assured fails to recover in whole or in part from the Charterers and/or their insurers, then Underwriters will pay the difference between the amount collected, if any, and the amount which would otherwise have been collectible under this Policy had the other insurance not been effected by Charterer, and Underwriters shall have all rights of recoveries against said Charterer and/or its Underwriters.
Premium at pro-rata of policy rates shall be due in the event of a claim under this Clause.
Notwithstanding the preceding provisions, no party shall be deemed an Additional Assured or favored with a waiver of subrogation of any vessel(s) insured hereunder, unless that party is actually engaged or involved in the operations at the time of the loss, if any.
See Gulf Coast Policy at POOL — 00450-51.
The Court is not convinced that this provision does anything other than maintain coverage for an insured vessel when it is chartered to a third party. Significantly, coverage for non-scheduled vessels purchased or chartered by an assured is addressed by the "Automatic Acquisition Clause," which is discussed above. Accordingly, based on the showing made, the Court concludes that the "Privilege to Charter Clause" provides no coverage to Suard for claims asserted against it by DL and Great American.
Conclusion
To the extent that Suard is an additional assured under the Gulf Coast policy issued to TLC, and the claims asserted against Suard by DL and Great American fall within the scope of the coverage provided to it as an additional assured, the Gulf Coast policy can be construed to provide coverage to Suard for those claims. The Court does not find, however, that the Gulf Coast policy provides coverage to Suard with respect to those same claims under the "Contractual Liability Extension" provision or the "Privilege to Charter Clause." Accordingly, Gulf Coast's motion is GRANTED IN PART and DENIED IN PART.