* Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined

that this opinion should not be published and is not precedent

except under the limited circumstances set forth in 5TH CIRCUIT

RULE 47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 97-31321

Summary Calendar

____________________

AG 1824 MARINE INSURANCE,

Plaintiff-Appellant,

v.

UNITED KINGDOM MUTUAL P&I CLUB; ET AL,

Defendants,

UNITED KINGDOM MUTUAL P&I CLUB,

Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

(96-CV-3540-F)

_________________________________________________________________

August 26, 1998

Before KING, HIGGINBOTHAM, and DAVIS, Circuit Judges.

PER CURIAM:*

Plaintiff-appellant AG 1824 Marine Insurance appeals the

district court’s order dismissing its direct action claim against

the indemnity organization United Kingdom Mutual P&I Club. The

district court dismissed the claim because it found that the

Louisiana Direct Action Statute, LA. REV. STAT. ANN. § 22:655
2

(West 1995), did not apply. We affirm.

I. BACKGROUND

In September 1995, a cargo of bulk sugar in good order and

condition, owned by E.D. & F. Mann Sugar (ED&F) and insured by AG

1824 Marine Insurance (AG), left Montevideo, Uruguay, bound for

New Orleans, Louisiana. The sugar was aboard the M/V

NOVODRUZHESK, a vessel owned by Baltic Shipping (Baltic). 

Baltic’s insurance provider was United Kingdom Mutual P&I Club

(UK Club).

While en route to New Orleans, outside United States

territorial waters, and unbeknownst to the crew, heavy fuel oil

leaked into the hold containing the sugar. Shortly after its

arrival in New Orleans, the ship was unloaded. During the

unloading, it was discovered that a substantial quantity of the

sugar had been contaminated by the fuel oil. 

ED&F had sold the sugar to Domino Sugar Company, who

exercised their right of refusal upon this discovery. ED&F filed

a claim with its underwriter, AG 1824, who paid the damages, and

together they hired a surveyor to ascertain the nature, cause,

and extent of the loss. In an attempt to mitigate the damages,

efforts were made to segregate the contaminated from the sound

sugar. It soon became apparent to ED&F, however, that the cargo

was valueless, and it abandoned the sugar to the vessel owner.

AG 1824 then filed suit against Baltic and UK Club to

recover its losses under the Louisiana Direct Action Statute

(LDAS), LA. REV. STAT. ANN. § 22:655 (West 1995). UK Club filed a
 

1 The case proceeded to trial against Baltic, and Baltic

contended that ED&F and AG 1824 failed to mitigate their damages

by not selling the cargo for salvage. The district court found,

however, that the cargo was valueless and that ED&F and AG 1824

acted reasonably under the circumstances. The court therefore

entered judgment against Baltic for the fair market value of the

damaged sugar plus the survey fees and expenses involved in

attempting to salvage the cargo. Baltic claims insolvency and

has not paid any portion of the judgement.

3

motion to dismiss the claim against it, and the district court

granted the motion, finding that the LDAS was not applicable in

this instance.1 AG 1824 appeals.

II. STANDARD OF REVIEW

The facts in this case are undisputed, leaving only

questions of law, the district court’s resolution of which we

review de novo. See Heartland Fed. Sav. & Loan Ass’n v. Briscoe

Enters., II (In re Briscoe Enters., II), 994 F.2d 1160, 1163 (5th

Cir. 1993).

III. DISCUSSION

The LDAS allows an injured party to maintain a direct action

against an insurer for the tortious conduct of the insured

provided that any one of the following three conditions has been

satisfied: (1) the insurance policy was written in Louisiana, (2)

the insurance policy was delivered in Louisiana, or (3) the

accident or injury occurred in Louisiana. See LA. REV. STAT. ANN.

§ 22:655 (West 1995); Webb v. Zurich Ins. Co., 205 So. 2d 398,

402-07 (La. 1967); see also Landry v. Travelers Indem. Co., 890

F.2d 770, 772 (5th Cir. 1989). All parties agree that the policy

was neither written nor delivered in Louisiana and thus that the
4

accident or injury must have occurred in Louisiana for the LDAS

to apply.

AG 1824 contends that the district court construed the LDAS

too narrowly, failing to permit the statute to accomplish its

intended purpose. AG 1824 argues (1) that the injury occurred in

Louisiana because Baltic breached its duty to deliver the cargo

in sound condition upon arrival in New Orleans and (2) that the

damage to the cargo had an impact in Louisiana, either of which

would satisfy the requirements for application of the LDAS. 

Additionally, AG 1824 argues that the LDAS should be interpreted

as broadly as the United States Constitution allows, which would

allow this action to survive.

While it is well settled that the LDAS “is remedial and

should be liberally construed to accomplish its purpose of

affording a person suffering loss or damage a direct action

against a tortfeasor’s insurer,” Quinlan v. Liberty Bank & Trust

Co., 575 So. 2d 336, 353 (La. 1990), the limits of the LDAS are

equally well established. Courts have been given several

opportunities to extend the LDAS’s reach to the bounds of the

Constitution and have declined to do so. See, e.g., Esteve v.

Allstate Ins. Co., 351 So. 2d 117, 118, 120 (La. 1977) (rejecting

an argument for a broad interpretation of the LDAS that would

encompass accidents outside Louisiana where the policy was

neither delivered nor written in Louisiana); Kirchman v. Mikula,

258 So. 2d 701, 702-03 (La. Ct. App. 1972) (rejecting an argument

to follow New York in allowing a direct action against an insurer
5

without meeting the above requirements of the LDAS); see also

Landry, 890 F.2d at 773 (rejecting an argument to extend the LDAS

to defendant insurer solely upon the basis that the necessary

minimum contacts with the forum exist to create personal

jurisdiction); Signal Oil & Gas Co. v. Barge W-701, 654 F.2d

1164, 1175 (5th Cir. Unit A Sept. 1981) (same).

The damage to the sugar caused by the leakage of fuel oil

into the hold containing the sugar did not occur in Louisiana,

and the harmful impact that this accident or injury undoubtedly

had in Louisiana is insufficient to satisfy the LDAS. See Morse

v. Hartford Cas. Ins. Co., 301 So. 2d 741, 744 (La. Ct. App.

1974) (holding that an out-of-state injury to a Louisiana

resident does not bring an action within the purview of the LDAS,

citing Grinnell v. Garrett, 295 So. 2d 496 (La. Ct. App. 1974),

and Kirchman, 258 So. 2d at 703); see also Hunter Douglas Metals,

Inc. v. New Bay Fin. Shipping Co., Civ. A. No. 88-3470, 1989 WL

237754, at *1 (E.D. La. Dec. 21, 1989) (“While the injury clearly

had an impact in Louisiana, it did not arise in Louisiana.”); cf.

Vincent v. Penrod Drilling Co., 372 So. 2d 807, 811 (La. Ct. App.

1979) (stating in a case involving an injured seaman, “To invoke

the [LDAS] in a maritime action for injuries sustained on the

high seas, the insurance policy in question must have been issued

in or delivered in Louisiana.”). Additionally, to construe the

LDAS to apply where an impact from the injury is felt in

Louisiana would be inconsistent with the decisions of the courts

of Louisiana not to extend the LDAS to the bounds of the
6

Constitution.

In order to maintain its action against UK Club, AG 1824

contends that the relevant accident or injury in this case was

suffered when Baltic breached its duty to deliver the cargo in

sound condition by delivering contaminated sugar in New Orleans. 

However, for the LDAS to apply, the injury occurring in Louisiana

must sound in tort. See Holland Am. Ins. Co. v. Succession of

Roy, 777 F.2d 992, 995 (5th Cir. 1985). In arguing that this

injury sounds in tort, AG 1824 cites for the first time in its

reply brief only cases determining the priority of maritime liens

and holding that damage to cargo sounds both in tort and

contract. See Associated Metals & Minerals Corp. v. Alexander’s

Unity MV, 41 F.3d 1007, 1012 (5th Cir. 1995) (citing The John G.

Stevens, 170 U.S. 113 (1898)); Oriente Commercial, Inc. v.

American Flag Vessel, M/V Floridian, 529 F.2d 221, 222-23 (4th

Cir. 1975) (same). However, these cases refer only to the

sources of the duty to carry and deliver the goods in sound

condition and do not alter the fact that the actual tort at

issue--the leakage of the fuel oil--here arose entirely outside

of Louisiana. Assuming that the breach of the duty to carry and

deliver the cargo in sound condition is tortious, the breach of

this duty occurred once the fuel oil leaked into the sugar hold

and not after the vessel arrived in port. Accord Hunter Douglas

Metals, Civ. A. No. 88-3470, 1989 WL 237754, at *1 (holding that

a loss of cargo bound for New Orleans due to a vessel sinking did

not arise in Louisiana and therefore did not fall under the
7

LDAS). Therefore, no accident or injury allowing invocation of

the LDAS occurred in Louisiana.

IV. CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s

order of dismissal.