Summary
noting that seamen are traditionally deemed a ward of admiralty entitled to “special solicitude”
Summary of this case from United States v. SLH2021 S.A.Opinion
CIVIL ACTION NO. 20-615
2021-12-21
Mark MARRINER v. TALOS PETROLEUM, LLC
Charles Clarence Bourque, Jr., Joseph G. Jevic, III, St. Martin & Bourque, Houma, LA, for Mark Marriner.
Charles Clarence Bourque, Jr., Joseph G. Jevic, III, St. Martin & Bourque, Houma, LA, for Mark Marriner.
SECTION "L" (2)
ORDER AND REASONS
ELDON E. FALLON, UNITED STATES DISTRICT JUDGE
Before the Court is Defendant Travelers Syndicate Management Ltd.’s Motion for Summary Judgment, R. Doc. 49, which seeks dismissal of Plaintiff Mark Marriner's direct action. Plaintiff opposes the motion. R. Doc. 60. Having considered the parties’ memoranda and the applicable law, the Court now issues this Order and Reasons.
Travelers Syndicate Management Ltd.’s full name is "Travelers Syndicate Management Ltd. as the Managing Agent of Lloyd's Syndicate 5000 and the Underwriting Members of Lloyd's Syndicate 5000 For The 2018 Year of Account."
I. BACKGROUND
This case arises from injuries Plaintiff Mark Marriner, a diver employed by Epic Diving & Marine Services, LLC ("Epic"), sustained on or about July 20, 2018 while attempting to plug and abandon a well in Block 114 of Ship Shoal in the Outer Continental Shelf of the Gulf of Mexico. R. Docs. 23; 60 at 1. Plaintiff asserts that he was lowered into the water while sitting on top of an "overdrive pile," a 105-foot-long by 60-inch pipe intended to be placed over the damaged wellhead. R. Doc. 23. While sitting atop the overdrive pile, Plaintiff allegedly slipped and grabbed its lip to stop his fall before the overdrive pile shifted, crushing his right hand between the overdrive pile and the wellhead casing. Id. ¶ 11. Plaintiff alleges he sustained significant injury to his right hand, requiring multiple surgeries. Id. ¶ 14.
Pursuant to the Jones Act, general maritime law, and state law, Marriner filed suit against several companies, including Defendant Travelers Syndicate Management Ltd. ("Travelers"). R. Doc. 23 ¶ 17. Plaintiff's claims against Travelers are based on a protection and indemnity policy ("the Policy") Travelers issued to Epic Companies, LLC, including its subsidiary Epic. R. Docs. 23 ¶ 17; 42 at 1. Plaintiff contends that Travelers is liable because the Policy covers "th[is] type of lawsuit" and because Epic has filed bankruptcy. R. Doc. 23 ¶ 17. Plaintiff sued Travelers pursuant to the Louisiana Direct Action Statute, La. Rev. Stat. 22:1269(B)(1)(a). As relevant here, the policy was issued on March 1, 2018 from the office of Underwriters at Lloyd's, London in London, United Kingdom and was delivered that same day to Epic at its address in The Woodlands, Texas. R. Doc. 49-4 at 1-2.
Plaintiff asserts claims against "Underwriters at Lloyd's London," R. Doc. 23 ¶ 1, but, in its answers, Travelers corrected Plaintiff, noting it is the managing agent of the proper Lloyd's Syndicate. R. Doc. 42.
Epic's bankruptcy proceeding is before the Bankruptcy Court for the Southern District of Texas, Docket # 19-bk-34752. R. Doc. 60-1.
II. PRESENT MOTION
Travelers filed a Motion for Summary Judgment on Plaintiff's claims against it ("the Motion"), contending that Marriner has no right of action against it because the Policy was not issued or delivered in Louisiana and the incident did not occur in Louisiana. R. Doc. 49 at 1. In opposition, Marriner argues that he can pursue a direct action against Travelers. R. Doc. 60 at 5. He argues that admiralty law authorizes a court to fashion a remedy for a plaintiff whose remedies are otherwise "incomplete, inconvenient, or unavailable." R. Doc. 60 at 5. Because Plaintiff's employer, Epic, was liquidated in bankruptcy and no longer exists, Plaintiff argues that the only remedy available to him for the portion of fault that may be apportioned to Epic would be the insurance proceeds of the Policy, and therefore he must be allowed to bring a direct action against Travelers. Id. at 6.
III. LEGAL STANDARD
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 and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citing Fed. R. Civ. P. 56(c) ). " Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial." Id. The moving party bears the burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S.Ct. 2548.
"A factual dispute is ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. A fact is ‘material’ if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc. , 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). When ruling on a motion for summary judgment, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co. , 530 F.3d 395, 398-99 (5th Cir. 2008) ; Int'l Shortstop, Inc. v. Rally's Inc. , 939 F.2d 1257, 1263 (5th Cir. 1991). Moreover, the court must assess the evidence and "review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co. , 784 F.2d 577, 578 (5th Cir. 1986). However, "conclusory allegations," "unsubstantiated assertions," or "only a ‘scintilla’ of evidence" are not sufficient to show a genuine dispute of material fact. Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994).
IV. DISCUSSION
Federal admiralty law provides no general right to sue a tortfeasor's insurers directly. Cont'l Oil Co. v. Bonanza Corp. , 677 F.2d 455, 460 (5th Cir. 1982), rev'd in part on other grounds , 706 F.2d 1365 (5th Cir. 1983) (en banc) (citing Stuyvesant Ins. Co. v. Nardelli , 286 F.2d 600 (5th Cir. 1961) ). "Generally, federal courts confronted with admiralty claims against insurers refer to state law to determine the validity of direct suits," including those against a tortfeasor's liability insurer. Szafarowicz v. Gotterup , 68 F. Supp. 2d 38, 43 (D. Mass. 1999) (first citing Kiernan v. Zurich Cos. , 150 F.3d 1120, 1123 (9th Cir. 1998) ; then citing Conoco, Inc. v. Republic Ins. Co. , 819 F.2d 120, 123–124 (5th Cir. 1987) ).
Louisiana's Direct Action Statute grants a procedural right of action against an insurer where an injured party has a substantive cause of action against the insured and other statutorily-specified conditions are met. Soileau v. Smith True Value and Rental , 2012-1711 (La. 6/28/13), 144 So. 3d 771, 775. Under the terms of the Direct Action Statute, insurance policies that are "issued or delivered in" Louisiana "must contain[ ] provision to the effect that the insolvency or bankruptcy of the insured shall not release the insurer from the payment of damages for injuries sustained or loss occasioned during the existence of the policy ... and an action may thereafter be maintained within the terms and limits of the policy by the injured person ... against the insurer." La. Rev. Stat. 22:1269(A).
The Direct Action Statute also provides that the "right of direction action [against a tortfeasor's insurer] shall exist whether or not the policy of insurance sued upon was written or delivered in the state of Louisiana and whether or not such policy contains a provision forbidding such direct action, provided the accident or injury occurred within the state of Louisiana. " Id. 22:1269(B)(2) (emphasis added).
Accordingly, the Direct Action Statute authorizes a suit directly against the insurer "when the insurance contract at issue was written or delivered by in the State of Louisiana or if the injury occurred within the state." Signal Oil & Gas Co. v. Barge W-701 , 654 F.2d 1164, 1175 (5th Cir. Unit A 1981) (citing Webb v. Zurich Ins. Co. , 251 La. 558, 205 So. 2d 398 (1967) ); accord Landry v. Travelers Indem. Co. , 890 F.2d 770, 772 (5th Cir. 1989) ("Under Louisiana law, a right of direct action may be brought against an insurer in only three limited instances: (1) if the accident occurred in Louisiana; (2) if the policy was written in Louisiana; or (3) if the policy was delivered in Louisiana.").
In Signal Oil & Gas Co. v. Barge W-701 , a maritime injury occurred in the Gulf of Mexico, "well beyond the boundaries of Louisiana," and an insurance policy purchased by an alleged tortfeasor was written in London and delivered in Texas. 654 F.2d at 1175. Thus, the prerequisites to triggering the Direct Action Statute—either that the insurance policy be written or delivered in Louisiana or that the accident occur in Louisiana—were not met. Nonetheless, an injured party complained "that it contravenes public policy to allow a company with significant and ongoing business contacts" with the state "to ‘evade’ the direct action statute by purchase and delivery of insurance by an out-of-state affiliate." Id. The Fifth Circuit reasoned that this policy argument should be directed to the political branches, not the courts. Id. "Tak[ing] the statute as written by the legislature,’ the Fifth Circuit rejected the party's attempt to reach the insurer through the Direct Action Statute. Id.
At the time, the statute was codified at La. Rev. Stat. 22:655. The statute has since been redesignated though without substantive change.
Relying on Signal Oil , multiple Sections in this Court have found that parties lacked a cause of action against an insurer where the policy was neither issued nor delivered in Louisiana and the incident sued upon occurred outside the state. E.g. Menard v. Gibson Applied Tech. & Eng'g, Inc. , No. 16-498, 2017 WL 6610466, at *2 (E.D. La. Dec. 27, 2017) (holding that, where insurance policy at issue was issued and delivered outside Louisiana and "the accident occurred on the Outer Continental Shelf in the Gulf of Mexico, outside the state of Louisiana," "Louisiana's direct action statute, therefore, does not give plaintiff a right of action against" the tortfeasor's insurer); Joyner v. Ensco Offshore Co. , No. 99-3754, 2001 WL 333114, at *3 (E.D. La. Apr. 5, 2001) ("It is clear and undisputed that the Direct Action Statute is not satisfied here. The accident did not occur within the State of Louisiana, and the policy was neither written or delivered in the State."); McGlynn v. Salen Protexa Drilling Co. , No. 85-0146, 1988 WL 40235, at *2 (E.D. La. Apr. 25, 1988) ("Because the accident occurred in the Gulf of Mexico, well beyond the boundaries of the State of Louisiana, and [the insurer]’s excess policy was written in California and delivered to [the alleged tortfeasor]’s corporate headquarters in Houston, Texas, the Court finds that the Louisiana Direct Action Statute does not permit a direct action against Pacific.").
In this case, competent and unrebutted summary judgment evidence in the form of an affidavit from Epic's insurance broker shows that the Policy was issued in the United Kingdom and delivered in Texas. Further, Plaintiff admits that the accident occurred on the Outer Continental Shelf in Ship Shoal Block 114. R. Doc. 60 at 1. That location is outside the boundary of the territorial waters of Louisiana and thus not within the state of Louisiana. R. Doc. 49-7. Because the Policy was neither issued nor delivered and Louisiana and because the incident occurred outside of the state, Louisiana's Direct Action Statute is inapplicable. See Signal Oil & Gas Co. , 654 F.2d at 1175.
Understandably, Marriner does not contest that he lacks a procedural right to sue Travelers under Louisiana's Direct Action Statute. Instead, Plaintiff argues that his situation is distinguishable from the long line of authority cited above because, in the instant case, Epic was liquidated in bankruptcy proceedings and is no longer extant. R. Doc. 60 at 4. Thus, unlike in prior cases, Plaintiff may be unable to obtain complete relief fors the extent of his injuries attributable to Epic. Id. at 4-5. Marriner contends that where, as here, admiralty remedies are "incomplete, inconvenient, or unavailable," a direct action against the insurer should be permitted. Id. at 6. In effect, Plaintiff asks this Court to exercise its admiralty authority to fashion a new rule of marine insurance that authorizes seamen to sue an insurer directly where the seaman may be unable to fully recover maritime remedies against an insured due to its bankruptcy and liquidation. Id.
In Wilburn Boat v. Fireman's Fund Insurance Co. , 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955), "the Supreme Court set forth a two-step process for deciding whether to apply federal or state law to a particular admiralty dispute." United States v. Tug Marine Venture , No. 96-1090, 1998 WL 1108933, at *3 (D. Md. Dec. 4, 1998) (citing Wilburn Boat , 348 U.S. at 314, 75 S.Ct. 368 ). "The first step is to determine whether the dispute is governed by an established federal statutory or judicially-created rule." Id. "If no established federal rule governs the dispute, the second step is to decide whether the court should fashion one." Id.
Turning to the first step, the federal courts that have considered the question are unanimous that no established admiralty rule authorizes or forecloses a third party's right to directly sue an insurance company. Id. ; accord Authenment v. Ingram Barge Co. , 878 F. Supp. 2d 672, 680 n.4 (E.D. La. 2012) (citing, inter alia, Morewitz v. West of England Ship Owners Mut. Prot. & Indem. Ass'n , 62 F.3d 1356, 1362 (11th Cir. 1995) ; Kiernan v. Zurich Co. , 150 F.3d 1120, 1121-22 (9th Cir. 1998) ).
Under Wilburn Boat , the next step is to determine whether, in the absence of an established admiralty rule, this Court should craft a rule of admiralty law. See 348 U.S. at 314, 75 S.Ct. 368. Specifically, Plaintiff seeks a rule permitting seamen to directly sue an insurer where, as here, the injured party cannot recover from the tortfeasor due to the tortfeasor's insolvency and thus denying seamen the ability to reach the tortfeasor's insurer directly could potentially leave seamen without a complete remedy.
Wilburn Boat does not delineate specific factors a court should consider in determining whether to formulate an admiralty rule governing a particular dispute and, if so, what that rule should be. Significantly though, the decision "has generally been interpreted, in deference to state hegemony over insurance, to discourage the fashioning of new federal law and to favor the application of state law." Acadia Ins. Co. v. McNeil , 116 F.3d 599, 603 (1st Cir. 1997) (internal quotation marks omitted); accord Kiernan v. Zurich Cos. , 150 F.3d 1120, 1122 (9th Cir. 1998) ("Both the Supreme Court and this court disfavor the judicial creation of marine insurance rules[.]" (citing Wilburn Boat , 348 U.S. at 321, 75 S.Ct. 368 )); see also Wilburn Boat Co. , 348 U.S. 310, 316, 75 S.Ct. 368 (1955) ("The whole judicial and legislative history of insurance regulation in the United States warns us against the judicial creation of admiralty rules to govern marine policy terms and warranties."). Indeed, the Fifth Circuit has stated that the presumption that regulation of marine insurance is properly left with the states "is, by now, axiomatic." Albany Ins. Co. v. Anh Thi Kieu , 927 F.2d 882, 886 (5th Cir. 1991).
Plaintiff cites the Sixth Circuit's decision in Aasma v. Am. S.S. Owners Mut. Prot. & Indem. Ass'n, Inc. , which held that a judicially-established rule of maritime law regarding direct actions by seamen against insurers was required to ensure uniformity in admiralty. 95 F.3d 400, 402 (6th Cir. 1996). There, a group of seamen claimed to have developed asbestosis due to exposure to asbestos while serving on their former employer's vessels. Id. at 402. Although the former employer had gone bankrupt and was defunct, it had maintained protection and indemnity policies issued by a collective of shipowners. The seamen thus sought to sue directly the protection and indemnity associations that insured these policies. Under the policies’ "pay first" clauses, the insurers were obligated to pay the insured—the former employer—only in the event the insured became liable and paid for damages covered by the policy. Id.
Confronting this situation, the Sixth Circuit determined that it should create "a single maritime solution" instead of permitting a "hodge-podge of state law rules" to govern. Id. at 404. The court reasoned that a judge-made rule was needed because the case "involve[d] a large class" of seamen—a class entitled to "special solicitude" as wards of the admiralty court—"who were injured on the high seas during the course of many years." Id. "Equally important" to the court's conclusion was the involvement of protection and indemnity associations—insurance entities that are "peculiar to the maritime setting." Id. Because the case was "uniquely maritime in nature," the Sixth Circuit found that it "demand[ed] a uniform rule in admiralty." The court proceeded to draw a "narrow" rule, determining that the "pay first" provisions in the insurance policies must be given effect. Since the former employer, as the insured, had never paid damages to the seamen, the protection and indemnity associations were not bound by the policies to pay the seamen. Id. The clear language of the pay first conditions took precedence over the special consideration admiralty affords seamen. See id. 404-05.
The Sixth Circuit's decision in Aasma is the sole federal appellate authority that supports the judicial creation of a rule governing maritime insurance, and it appears to have been followed by only one district court. See Heikkila v. Sphere Drake Ins. Underwriting Mgmt., Ltd. , No. CIV. 96-00047, 1997 WL 995625, at *6-*7 (D. Guam Aug. 29, 1997) (adopting Aasma ’s determination that a court-created federal admiralty rule is needed in cases involving direct actions by mariners against a vessel's insurers because of the need for uniformity in maritime matters; the special status of the inured seamen involved in these cases; and the unique nature of the protection and indemnity insurers).
Conversely, both the Ninth and Eleventh Circuits have declined to fashion federal admiralty rules regarding direct actions against an insurer by a third-party to the insurance contact. See Kiernan , 150 F.3d at 1122 ; Steelmet, Inc. v. Caribe Towing Corp. , 779 F.2d 1485 (11th Cir. 1986). The Ninth Circuit cited the "admonitions against judicial creation of federal maritime law to govern maritime insurance policies and the absence of any compelling need" for a uniform admiralty rule in a case involving a single plaintiff who was pursuing recreational activities when he was injured by the owner of a single boat. Kiernan , 150 F.3d at 1123. The Ninth Circuit reserved whether cases that "are more uniquely maritime in nature" may require a uniform rule. Id.
The Eleventh Circuit decided against a uniform admiralty rule concerning direct actions against insurers based in part on the national interest in state regulation of insurance discussed in Wilburn Boat. See Steelmet , 779 F.2d at 1490. The court also determined that there was not a significant concern for uniformity where only the interests of insurers were at issue and that direct actions involved the interests of insurers generally rather than marine insurers specifically. Id.
The Court recognizes that the facts of this case contain some similarities with those in Aasma. Both concern the rights of seamen, a group traditionally deemed a ward of admiralty. See Wilkins v. P.M.B. Sys. Eng'g, Inc. , 741 F.2d 795, 798 n.2 d (5th Cir. 1984). And both cases involve as defendants protection and indemnity clubs, entities specific to the maritime context—and whose presence was significant to the Aasma court's determination that the case was uniquely maritime and demanded a uniform admiralty rule. 95 F.3d at 404. But unlike Aasma , this case concerns only a single seaman allegedly injured during a single incident, not a "large class" of mariners who were injured over the course of "many years" at sea. Id. at 404.
More significant though is the Supreme Court's instruction that the regulation of marine insurance generally ought to be left to the states. See Wilburn Boat , 348 U.S. at 321, 75 S.Ct. 368 ; see also Albany Ins. Co. , 927 F.2d at 886. In this case, no pressing need has been demonstrated that requires the Court to take the rather extraordinary and disfavored step of formulating a "uniform" rule of admiralty law rather than "leav[ing] the regulation of marine insurance where it has been—with the States." Wilburn Boat , 348 U.S. at 321, 75 S.Ct. 368. The Court is sympathetic with Marriner's predicament: he cannot recover from his former employer, Epic, because it has been liquidated and no longer legally exists, nor can he reach Epic's insurer, Travelers, through the vehicle of a direct action. But the presumption that regulation of marine insurance should be left to the states—a presumption the Fifth Circuit has described as "axiomatic," Albany Ins. Co. , 927 F.2d at 886 —has not been overcome. In other words, Plaintiff has not demonstrated a "compelling need" that is broader than this particular case and which might require this Court to supplant the state legislature's traditional role in marine insurance by fashioning its own rule. See Kiernan , 150 F.3d at 1123 ; Steelmet , 779 F.2d at 1490. Moreover, in this case there is a state statute specifically dealing with this issues.
Adopting the uniform rule Plaintiff advocates would be to judicially overrule the limitations of Louisiana's Direct Action Statute, a provision crafted by politically-accountable state legislators weighing policy matters they are "peculiarly suited to make." Wilburn Boat , 348 U.S. at 314, 321, 75 S.Ct. 368. And the Court notes that the specific Direct Action Statute that Plaintiff asks this Court to replace with a judge-made rule has been characterized as "the most generous to injured third parties" of such statutes, "providing a wide-ranging right against insurers." Matthew J. Pallay, The Right of Direct Action: Issues Proceeding Directly Against Marine Insurers , 41 TUL. MAR. L.J. 57, 67–68 (2016). Thus, the Court is unwilling at this time to fashion a new rule of maritime insurance that directly contravenes this state statute.
In sum, the Court declines to create a new admiralty rule governing maritime insurance. Consequently, state law—that is, Louisiana's Direct Action Statute—applies, and, for the reasons discussed, it does not authorize a third-party action by Plaintiff against Traveler's. Because Plaintiff lacks a right of action against Travelers, summary judgment in favor of Travelers is appropriate.
V. CONCLUSION
For these reasons,
IT IS ORDERED that Defendant Travelers's motion for summary judgment, R. Doc. 49, is GRANTED , and Plaintiff Marriner's claims against Travelers are DISMISSED with prejudice.