United States Court of Appeals

Fifth Circuit

FILED

May 18, 2007

Charles R. Fulbruge III

Clerk

In the

United States Court of Appeals

for the Fifth Circuit

_______________

m 06-30489

_______________

NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA,

Plaintiff-Appellant,

VERSUS

LIBERTY MUTUAL INSURANCE COMPANY,

Defendant-Appellee.

_________________________

Appeal from the United States District Court

for the Middle District of Louisiana

m 3:05-CV-352

______________________________

Before GARWOOD, SMITH, and DEMOSS, 

Circuit Judges.

JERRY E. SMITH, Circuit Judge:*

National Union Fire Insurance Company

(“National Union”) sued Liberty Mutual InsuranceCompany(“LibertyMutual”),seeking

coverage under a policy. The district court

granted summary judgment for Liberty Mutual, and we affirm.

I.

This case arises out of a dispute between

Rubicon, Inc. (“Rubicon”), and S&B Engineers and Constructors, Ltd. (“S&B”), which

Rubicon hired to provide engineering contract

services for an expansion project. As part of

* 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 R. 47.5, the court has determined that this opinion should not be published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.
2

this project, S&B obtained weld shop fabricated pipes from American Pipe Fabricating,

Inc. (“American Pipe”). In the middle of the

project, Rubicon terminated S&B’s involvement, litigation ensued, and Rubicon sued

S&B for breach of contract, negligence in performing its duties, and negligent misrepresentation, among other causes of action. 

S&B and Rubicon settled the suit, and S&B

sought payment from its insurer, National

Union, for the costs of the suit. National

Union and S&B settled that claim, and S&B

assigned its rights against any third parties to

National Union. 

In the instant case, National Union sues

Liberty Mutual, American Pipe’s insurer, to

recover the amount of the settlement to Rubicon that resulted from American Pipe’s defective work, based on two theories. First, National Union argues that S&B was an additional insured under Liberty Mutual’s insurance policy for American Pipe. Liberty Mutual admitsthat S&B was an additionalinsured

but asserts that S&B cannot recover in this

case because of the “your work” and “your

product” exclusions in the policy.1 National

Union argues that S&B was not excluded

under these provisions, because S&B was not

“you” as defined by the contract,2so the exclusions applying to “you” did not apply to S&B.

Moreover, National Union contends that the

“your work” exclusion is inapplicable here

because ofthe subcontractor exception: American Pipe acted as a subcontractor to S&B, so

the “your work” exclusion does not apply.3

Second, National Union urges that Liberty

Mutual was obligated to fulfill American

Pipe’s promise to indemnify S&B for losses

resulting from American Pipe’s services. As

part of the purchase order between S&B and

American Pipe, American Pipe promised to

carry insurance4and indemnify S&B.5 As

1 The policy excludes(1) “‘Property damage’to

‘your work’ arising out of it or any part of it and

included in the ‘products-completed operations

hazard.’”; and (2) “‘Property damage’ to ‘your

product’ arising out of it or any part of it.”

2 The policy defines “you”: “Throughout this

policy the words ‘you’ and ‘your’ refer to the

Named Insured shown in the Declarations, and any

other person or organization qualifying as a Named

Insured under this policy.”

3 Only the “your work” exclusion has a subcontractor exception; the “your product” exclusion

does not. After laying out the “your work” exclusion, the policy states that “[t]his exclusion does

not apply if the damaged work or the work out of

which the damage arises was performed on your

behalf by a subcontractor.” 

4 The purchase order states:

Seller must maintain at all times with a reliable

insurance carrier or carriers, at Seller’s sole expense, insurance policies providing sufficient

coverage and limits to cover the liabilities

assumed under this agreement. Insurance

policies provided by Seller shall include but are

not limited to General Liability, including

coverage for Products andComplete Operations

and Contractual Liability, Automobile 

5 The purchase order states:

To themaximumextent permitted by applicable

law, Seller shall defend, indemnify and hold

harmless FBD [S&B’s affiliate], and its affiliated companies, subsidiaries and clients from

and against any and all loss, damage, claims,

suit, liability, strict liability, product liability,

judgement and expense (including attorney’s

fees and other costs of litigation) and any fines,

(continued...)
3

American Pipe’s insurer, Liberty Mutual

would be obligated to fulfill this promise. LibertyMutual, however, contendsthat American

Pipe’s obligation to indemnify S&B was excluded from Liberty Mutual’s policy with

American Pipe by the contractual liability exclusion.6 National Union retorts that the purchase order qualifies as an insured contract,

obviating that exclusion.7 Liberty Mutual rea

sons that American Pipe and S&B’s contract

is not an insured contract because S&B was an

engineer, and Liberty Mutual’sinsurance policy with American Pipe excludes engineering

services from the definition of insured contracts.8

II.

“This Court reviews grants of summary

judgment de novo, applying the same standard

as the district court, viewing the evidence in a

light most favorable to the non-movant.”

Fruge ex rel. Fruge v. Parker Drilling Co.,

337 F.3d 558, 560 (5th Cir. 2003). “If the

court finds no ambiguity [in an insurance policy], the court’s duty is to enforce the policy

according to its plain meaning.” Valmont Energy Steel, Inc. v. Commercial Union Ins. Co.,

359 F.3d 770, 773 (5th Cir. 2004).

A.

National Union seeks coverage as an additional insured, arguing the “your work” and

“your product” exceptions do not apply to

S&B because “you” was defined in the contract as American Pipe, not additional insureds

5

(...continued)

penalties and assessments arising out of injury

to, disease or death of, or damage to or loss of

property of, persons (except for Seller’s property, employees, agents or subcontractors)

resulting from or in connection with the execution of this order by Seller, its agents or subcontractsto the extent and proportion caused by

the sole, concurrent, or contributory negligence

or other fault of Seller, its agents orsubcontractors. Liability and Workers’ Compensation

including employers Liability coverage. All

Policies, excepting Workers’ Compensation

shall include FBD and its affiliated companies,

subsidiaries and clients as additional insureds.”

6 LibertyMutual’s contract with American Pipe

excludes coverage for

‘Bodily injury’ or ‘property damage’ for which

the insured is obligated to pay damages by reason of the assumption of liability in a contract

or agreement. This exclusion does not apply to

liability for damages:

(1) Assumed in a contract or agreement that is

an ‘insured contract’, provided the ‘bodily injury’ or ‘property damage’ occurs subsequent

to the execution of the contract or agreement; or

(2) That the insured would have in the absence

of the contract or agreement.

7 The insurance policy defined an insured con-

(continued...)

7

(...continued)

tract as “[t]hat part of any other contract or agreement pertaining to your business . . . under which

you assume the tort liability of another party to pay

for ‘bodily injury’ or ‘property damage’ to a third

person or organization.”

8 The definition of an insured contract “does

not include any contract or agreement: . . . (2) That

indemnifies an architect, engineer or surveyor for

injury or damages arising out of: (a) Preparing,

approving or failing to prepare or approve maps,

drawings, opinions, reports, surveys, change

orders, designs or specifications; or (b) Giving

directions or instructions, or failing to give them, if

that is the primary cause of the injury or damage .

. . .”
4

such as S&B. We take as a given that “you”

in this policy only means American Pipe, according to the policy’s definition of that word.

Read with that definition, the policy excludes

claims based on American Pipe’s work or

product, because American Pipe issubstituted

for you in those exclusions. With that substitution, the policyexcludes(1) “‘Propertydamage’ to ‘[American Pipe’s] work’ arising out

of it or any part of it and included in the ‘products-completed operations hazard.’”; and

(2) “‘Property damage’ to ‘[American Pipe’s]

product’ arising out of it or any part of it.” 

S&B’s claim as an additional insured is

based on American Pipe’s work or product.

S&B is correct that if S&B’s work or product

had been the basis of the suit, these exclusions

would not apply, but they do apply in this case

because American Pipe’s work or product is

the cause of the claim.

National Union points us to Chevron

Chemical Co. v. Factory Compressor Parts,

Inc., 1993 WL 329999 (E.D. La. Aug. 23,

1993), to support its position. Instead of bolstering National Union’s argument, however,

ChevronChemical confirmsthe effect we have

given to the terms of the policy here. In that

case, an insurance policy excluded “bodily

injury or property damage arising out of the

alleged or threatened discharge, dispersal, release or escape of pollutants . . . at or from

premises you own, rent or occupy.” Id. at *2

(internal quotations omitted). The “you” was

defined in the policy as the named insured in

the declaration, and the named insured was

FactoryCompressor Parts. Id. at *3. Because

the damage frompollutants occurred onChevron’s and not Factory Compressor Parts’s

premises, the exclusion did not apply on those

facts: “[T]he pollution exclusion only applies

to claimsfor bodily injury which arise fromthe

discharge, dispersal, release or escape of

pollutants from premises owned by Factory

(the only insured included in the policy’s definition of ‘you’).” Id.

The instant case has different facts, but our

reading of the insurance policy comports entirely with Chevron Chemical’s reading of the

policy in that case. In both cases, the named

insured is substituted for “you” in the policy.

Though the substitution in that case meant that

the exclusion did not apply because the premises were not owned by “you,” in this case

the exclusion does apply, because the work or

product serving as the basis of the claim was

“yours”SSAmerican Pipe’s. 

Substituting “American Pipe” for “you” in

the subcontractor exception similarly reveals

that S&B is not entitled to relief under that

exception. The policy says that the “your

work” exclusion does not apply “if the damaged work or the work out of which the damages arises was performed on your behalf by a

subcontractor.” Because the contract defines

“you” as American Pipe, the exception applies

when someone else does work as American

Pipe’ssubcontractor, not when American Pipe

is a subcontractor. “[O]n your behalf” becomes “on American Pipe’s behalf,” so S&B

cannot obtain the benefit of this exception, because no one worked on American Pipe’s

behalf. S&B was excluded from coverage because American Pipe’s work or product was

the basis of the claim, and American Pipe did

not hire a subcontractor to work on its behalf,

so the district court correctly determined that

S&B’s claim was excluded.

B.

National Union seeks coverage pursuant to

the purchase order between S&B and American Pipe in which American Pipe agreed to
5

defend and indemnify S&B. National Union

asserts that Liberty Mutual, as American

Pipe’s insurer, is liable to S&B for this obligation.

Because the basis of S&B’s claim is American Pipe’s work or product, the indemnity

provision in the purchase order does not provide a way for S&B to be covered by Liberty

Mutual’s policy. The indemnity provision was

never triggered. 

American Pipe promised to indemnify S&B

for claims “arising out of injury to, disease or

death of, or damage to or loss of property of,

persons(except for Seller’s property, employees, agents or subcontractors) . . . .” This

provision excludes damage to property of

American Pipe, asthe “Seller.” Without damages beyond damagesto American Pipe’s own

work or product, the indemnity provision was

never triggered, and Liberty Mutual is not obligated to pay National Union on this basis.

AFFIRMED.