Case ID: so2d_694/html/0415-01.html
Source: Caselaw Access Project
Author: {"author": "JiBYRNES, Judge. \n      liARMSTRONG, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JANEX OIL COMPANY, INC. and ANR Production Company v. HANOVER COMPRESSOR COMPANY, et al.
    No. 96-C-2746.
    Court of Appeal of Louisiana, Fourth Circuit.
    Feb. 19, 1997.
    Order Reversing Decision on Grant of Rehearing April 30, 1997.
    J. Fredrick Kessenich, Eugene W. Policas-tri, Emmett, Cobb, Waits & Kessenich, New Orleans, for Relator National Union Fire Insurance Company.
    Lawrence E. Abbott, Deborah D. Kuehler, Monique M. Weiner, Abbott, Simses, Album & Knister, New Orleans, for Respondents Janex Oil Co., Inc. and ANR Production Co.
    Bruce R. Hoefer, Benjamin O. Schupp, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, for Respondent St. Bernard Well Service, Inc.
    Before BYRNES, ARMSTRONG and PLOTKIN, JJ.
   JiBYRNES, Judge.

Relator, National Union Fire Insurance Company (National Union), invokes the supervisory jurisdiction of this Court to review the trial court’s denial of its motion for summary judgment.

This action arises out of a fire and explosion that occurred on November 10, 1994, at the Janex Well No. 1 platform in Lake Catherine, Louisiana. Respondents, Janex Oil Company (Janex) and ANR Production Company (ANR), alleged that respondent, St. Bernard Well Service, Inc. (St. Bernard Well), was negligent in failing to supervise the replacement of a compressor, allowing pressurized gas in containment tanks, causing the compressor start-up, well-unloading process, and salvage efforts to go unsupervised, failing to properly supervise the crew using a hot torch to cut pipe, and failing to remove that crew from the platform during the testing and adjusting of the new compressor. Relator, National Union', provided “bumbershoot” coverage to St. Bernard Well. Under a section of the “bumber-shoot” policy entitled “ABSOLUTE EXCLUSIONS” (emphasis original) is a paragraph declaring that National Union shall not cover liability or expense,

Rfrom ownership, use or operation of drilling rigs, drilling barges, drilling tenders, platforms, lose lines, gathering stations and/or pipe lines, but this exclusion shall not apply to craft serving the foregoing such as crew, supply, or utility boats, tenders or tugs.

Realtor filed a motion for summary judgment based on this exclusion which was denied by the trial court. Respondents suggest that this exclusion is ambiguous and as such should be limited to the direct acts of the owner, user or operator of a drilling rig. But “arising ... from ... operation of drilling rigs” is unambiguously broader than “operator” which arguably refers to the one individual or entity in overall charge of operations. Many individuals or entities may be involved in the operation of the rig. In other words, respondents want us to read “operator” where the policy actually says “arising ... from operation of drilling rigs.” [Emphasis added.]

Moreover, in paragraph 5 of the original petition Janex alleges that, “St. Bernard had been hired by Janex for supervision of all producing and operational activities related to the platform ...” [Emphasis added.] Significantly, Janex repeats this allegation at the top of page 2 to the opposition of this writ.

National Union argues that the purpose of this exclusion was to limit coverage to vessels while excluding drilling platforms. This argument makes sense in view of Balashov v. Baltic Shipping Co., 96-CA-1129 (La.App. 4 Cir. 1/22/97), 687 So.2d 1101, in which this court discussed the fact that 46 U.S.CApp. Sec. 688(b) draws an analogous distinction between blue water seaman and oil rig workers. Moreover, we also note the schedule of covered vessels listed in the policy.

laThe actions of St. Bernard were involved in the operation of the platform and under any reasonable reading of the policy language arise out of the operation of the platform/drilling rig.

Although we find no merit in respondents’ contention that the above quoted policy exclusion does not apply to St. Bernard, we do find that a genuine issue remains regarding respondents’ assertions that National Union waived its right to deny coverage after waiting perhaps almost two years to do so and after apparently appearing at several depositions without limitation.

For the foregoing reasons we granted writs to review relator’s application, but after doing so deny the relief requested.

WRIT GRANTED; RELIEF DENIED.

|2ON rehearing

Relator, National Union Fire Insurance Company, applies for rehearing of the judgment rendered by this Court herein on February 19, 1997 in which this Court ruled that a genuine issue of material fact existed as to whether National Union waived its right to deny coverage.

On rehearing National Union contends that any actions it took which might be construed as participating in the defense, did not constitute a waiver of National Union’s right to deny coverage, because its actions were specifically permitted by the following policy provision:

D. Assistance and Co-Operation

Underwriters shall not be called upon to assume charge of the settlement or defense of any claim made or suit brought or proceeding instituted against the Assured, but Underwriters shall have the right and shall be given the opportunity to associate with the Assured or the Assured’s Underlying Insurers, or both, in the defense and control of any claim, suit or proceeding relative to an occurrence where the claim or suit involves or appears reasonably likely to involve Underwriters, in which event the Assured, the Underlying Insurers and Underwriters shall cooperate in all things in the defense of such claim, suit or proceeding.

|3We agree with National Union’s reading of this provision. It gives them the privilege of participating in the defense without assuming responsibility therefor. Respondents have pointed to no actions by National Union inconsistent with this policy provision, i.e., even if for purposes of argument we assume the actions of National Union to be exactly as alleged by respondents, they fall within those acts permitted by the above quoted policy provision. Respondents have failed to raise a genuine issue of material fact to the contrary. In none of the cases cited by respondents did the court consider a policy provision even remotely resembling this one.

However, respondents argue correctly that the above quoted provision must be read in the context of the policy as a whole.

Respondents call this Court’s attention to the following provision found in the policy:

In the event of reduction or exhaustion of the aggregate limits of liability under underlying insurance by reason of losses paid thereunder, such underlying insurance shall, for the purpose of this Policy, be deemed to have been reinstated in full, notwithstanding anything herein contained to the contrary. [Emphasis added.]

Respondents contend that, “once the underlying policy is exhausted [past tense], its terms are reinstated and incorporated into the National Union excess policy, including the duty of the underlying insurer to defend.”

Up to this point, respondents’ argument offers a reasonable reading of the policy provision. However, respondents’ argument then shifts from the past tense “is exhausted” to the argument that the losses will potentially exceed the underlying coverage, thereby triggering National Union’s duty to defend, which duty once triggered and assumed could result in a waiver of National Union’s right to deny coverage.

However, this policy provision relied on by respondents clearly and | unambiguously requires: (1) that the reduction or exhaustion has occurred, i.e., a potential reduction or exhaustion is insufficient, and (2) more significantly, the reduction or exhaustion must be “by reason of losses paid [emphasis added] thereunder.”

This clause limits its application to losses actually “paid.” “Paid” is clearly and unambiguously in the past tense. Respondents’ contention that this clause refers to unpaid, uncertain, judgment, potential future losses is without foundation.

For the foregoing reasons, we find that there is no genuine issue of material fact concerning whether National Union’s waived its right to deny coverage. Therefore, it was error for the trial court to deny National Union’s motion for summary judgment. Accordingly, we reverse the original judgment of this Court rendered herein on February 19,1997, and we reverse the judgment of the trial court denying National Union’s motion for summary judgment. We grant National Union’s motion for summary judgment, dismiss National Union from this litigation and remand for further proceedings consistent with this opinion.

ORIGINAL JUDGMENT OF THIS COURT REVERSED; JUDGMENT OF TRIAL COURT REVERSED AND REMANDED.

ARMSTRONG, J., concurs.

liARMSTRONG, Judge,

concurring.

I concur simply to point out that the insurance policy exclusion at issue in the present case is different and broader than the exclusion of the Lloyd’s MEL policy at issue in Howell v. American Casualty Co., 96-0694 (La.App. 4th Cir. 3/19/96), 691 So.2d 715. In Howell, the exclusion raised the issue of whether the vessel was “operated” by the insured in particular. In the present case, as specifically pointed out by the opinion on original hearing, the exclusion addresses the “operation” of drilling rigs in general. 
      
      . National Union did not call this policy provision to the trial court’s attention below, nor did National Union call it to this Court’s attention in connection with its original application. However, as this policy provision shows on the face of the record and is dispositive of this litigation vis a vis National Union, this Court granted rehearing in the interest of judicial economy.