IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-30379

GULF COAST WORKFORCE, L.L.C., 

Plaintiff - Appellant

v.

ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS, 

Defendant - Appellee

Appeal from the United States District Court

for the Eastern District of Louisiana

USDC No. 2:15-CV-5342

Before REAVLEY, JONES, and GRAVES, Circuit Judges.

PER CURIAM:*

Plaintiff-Appellant Gulf Coast Workforce, L.L.C. (“GCW”) appeals from 

the $53,161 judgment entered against it below. Finding no error, we AFFIRM.

BACKGROUND

GCW provided contract labor in Alabama, Florida, Louisiana, 

Mississippi, and Texas. GCW purchased workers’ compensation insurance

from Appellee, Zurich American Insurance Company of Illinois (“Zurich”). 

Zurich cancelled GCW’s policy in 2015.

 

* Pursuant to 5TH CIR. R. 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 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

May 4, 2018

Lyle W. Cayce

Clerk

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GCW’s estimated premium at the beginning of the 2014-2015 policy 

period was $134,534. GCW paid a deposit of $125,463 toward this estimated 

premium. The final premium for the policy period was to be calculated after 

the policy ended. The policy regarding calculation of a final premium states:

The final premium will be determined after this policy ends 

by using the actual, not the estimated, premium basis and proper 

classifications and rates that lawfully apply to the business and 

work covered by this policy. If the final premium is more than the 

premium you paid to us, you must pay us the balance.

The policy explains that the final premium “will be determined in the following 

way . . . . If we cancel, final premium will be calculated pro rata based on the 

final time this policy was in force.”

Zurich attempted to perform a premium audit to determine GCW’s final 

premium after its policy was cancelled. A Zurich auditor, Kathleen Smith

(“Smith”), attempted this final premium audit with the help of GCW’s 

insurance broker, Blaine Vedros (“Vedros”). A series of e-mails between Smith 

and Vedros shows that Smith received some, but not all, of the information 

required to complete her premium audit. Smith informed Vedros on May 22, 

2015 that she would return the audit as “unable to complete” because she had 

not received detailed payroll reports showing overtime. Smith used the 

information she had received to estimate a final premium of $178,624. GCW 

was billed $53,161 (the estimated final premium less GCW’s deposit).

GCW did not provide further documentation or dispute this final 

premium. Instead, GCW filed a petition for damages in Louisiana state court

seeking compensation for direct and indirect losses stemming from Zurich’s 

handling of a workers’ compensation claim and subsequent cancellation of 

GCW’s insurance policy. Zurich removed the petition to federal court and then 

filed a counterclaim for the unpaid premiums. Zurich moved for summary 

judgment on GCW’s claims, which the district court granted. 

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Zurich’s counterclaim proceeded to a bench trial. The district court 

determined that GCW was liable for the outstanding premium balance and 

entered judgment in the amount of $53,161 plus costs. GCW timely appealed.

STANDARD OF REVIEW

When reviewing a bench trial, this court reviews findings of fact for clear 

error and legal issues de novo. Water Craft Mgmt. LLC v. Mercury Marine, 

457 F.3d 484, 488 (5th Cir. 2006). Factual findings are clearly erroneous if 

“(1) the findings are without substantial evidence to support them, (2) the 

court misapprehended the effect of the evidence, and (3) although there is 

evidence which if credible would be substantial, the force and effect of the 

testimony, considered as a whole, convinces the court that the findings are so 

against the preponderance of credible testimony that they do not reflect or 

represent the truth and right of the case.” Id. To reverse for clear error, this 

court must have “a definite and firm conviction that a mistake has been 

committed.” Canal Barge Co. v. Torco Oil Co., 220 F.3d 370, 375 (5th Cir.

2000).

This court reviews “the district court’s interpretation of contracts and 

conclusions of law de novo and under the same standards that guided the 

district court.” Musser Davis Land Co. v Union Pac. Res., 201 F.3d 561, 563, 

(5th Cir. 2000) (citing Exxon Corp. v. Crosby-Miss Res., Ltd., 154 F.3d 202, 205 

(5th Cir. 1998)). A district court’s determination that a party has breached a 

contract is a question of fact. See Concise Oil & Gas P’ship v. La. Intrastate 

Gas Corp., 986 F.2d 1463, 1469 (5th Cir. 1993). This court reviews a district 

court’s damages awards for clear error. See Fed. Sav. & Loan Ins. Corp. v. Tex. 

Real Estate Counselors, Inc., 955 F.2d 261, 268 (5th Cir. 1992).

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DISCUSSION

GCW alleges that the district court erred by: (1) awarding amounts 

allegedly due based on an “estimated audit” rather than a final audit; and 

(2) by awarding an amount that no witness was able to explain or confirm.

a. Awarding Amounts Due Based on an “Estimated Audit”

GCW’s first argument focuses on the policy language stating that “[t]he 

final premium will be determined after this policy ends by using the actual, 

not the estimated, premium basis . . . .” GCW contends that Zurich had no 

contractual right to recover any alleged outstanding premium because Zurich 

did not complete an actual audit to determine the final premium, and instead 

estimated the final premium based on the information available to Smith. 

GCW argues that the district court erred by fashioning a remedy for Zurich 

where Lousiana law and the contract provided none. 

The district court disregarded this argument. The court stated that 

“[t]he completion of the final audit might be considered a suspensive condition 

to a valid bill for premium due” and that “when this condition is effectively 

defeated by one party, it cannot benefit from such action or inaction.” The 

district court based this conclusion on Louisiana Civil Code Article 1772 and 

the Louisiana state court opinion in Grimsley v. Lenox, 643 So.2d 203 (La. Ct. 

App. 1994).

Upon review, this court agrees with the district court’s conclusion. The 

policy, in addition to stating that a final premium will be determined based on 

the actual premium basis, required GCW to “keep records of information 

needed to complete premium [and] provide [Zurich] with copies of those records 

when we ask for them.” The record reflects that GCW did not provide copies 

of all records requested by Smith. Louisiana Civil Code Article 1772 provides 

that “[a] condition [in a contract] is regarded as fulfilled when it is not fulfilled 

because of the fault of a party with an interest contrary to the fulfillment.” 

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Here, the district court held that the estimated final premium would be 

considered final because GCW’s failure to comply with its obligation to furnish 

records to Zurich prevented a true final audit. Article 1772 dictates this result. 

Accordingly, this court affirms the district court’s holding that GCW owed 

Zurich for unpaid premiums based on an estimated final premium audit.

b. Awarding Damages Unexplained by any Witness

GCW’s second point of error alleges that the district court awarded 

damages that no witness could explain or confirm. Zurich’s sole witness was 

Smith, who conducted the audit but did not work on billing matters. GCW 

contends that, because Smith could not testify to the $53,161 premium, Zurich 

did not prove its damages.

This argument ignores evidence admitted during the bench trial. Trial 

Exhibit 2 is an invoice dated August 13, 2015 which shows an amount due of 

$53,161 based on an audit. Trial Exhibit 3 shows Smith’s estimated audit and 

the adjustments to GCW’s premium. Calculations on the first three pages of 

this document reflect a total earned premium of $178,624, a deposit premium 

of $125,463, and the additional premium due of $53,161 (the difference 

between the earned premium and deposit premium). These documents and 

the testimony from Smith and Vedros provided the district court with sufficient 

evidence to award $53,161 in damages to Zurich. Therefore, the district court’s 

damages determination was not clearly erroneous. Accordingly, this court 

affirms the district court’s damages award.

CONCLUSION

For the reasons stated above, the district court’s judgment is 

AFFIRMED.

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