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

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### N AT IONAL 

### U NION 

### FIRE 

### I NSURANCE 

### C OMPANY OF 

### P ITTSBURGH 

### , PENNSYLVANIA 

### , Plaintiff-Appellant 

### ,
VERSUS



### LIBERTY 

### M UT UAL 

### I NSURANCE 

### C OMPANY 

### , Defendant-Appellee



### .

_________________________ Appeal from the United States District Court fo r the Middle District of Louisiana 

### m 3:05-CV-352

______________________________

Before G ARWOOD , S MITH , and D EM OSS , Circuit Judges.

JERRY E. S MITH , Circuit Judge: *

National Uni on Fire Insurance Com pany (“National Union”) sued Liberty Mut ual Insurance Com

pany (“Liberty Mutual”), seeking coverage under a pol

icy. The district court granted summary judgment f or 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 fo r an expansion project. As part of * Pursuant to 5 TH C IR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR . R. 47.5.4.2

this proj ect, S&B obtained weld shop fabricated pipes from American Pipe Fabricating, Inc. (“Am

erican Pipe”). In the middle of the proj ect, Rubicon term

inat ed S&B’s invo lvement , lit igation ensue d , and Rubicon sued S&B fo r breach of contract, negligence in perfo rm ing it s 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, fo r the costs of the suit. National Unio n and S&B settled that claim, and S&B assigned it s rights ag ainst any third parties to National Union.

In the inst ant case, National U n io n sues Liberty Mutual, American Pipe’s insurer, to
recover the amo unt of the settlement to Rubicon th at resulted from American Pi pe’s defective work, based on two the ori es. First, Nati onal Union argues that S&B was an additional in sured under Liberty Mutual’s insurance pol icy fo r American Pi

pe. Liberty Mutual admit s th at S&B was an additional insured but asserts th at S&B cannot recover in t his
case bec ause of the “yo ur work” and “your product” exclusions in the pol icy. 1 National Union argues th at S &B was not excluded under these provisions, because S&B was not “yo u” as defined by the contract, 2 so the exclusio ns applying to “yo u” did not apply to S&B. Moreover, National Union contends that the “yo ur work” exclusion is inapplica b le here because of the subcontractor exception: American Pi pe acted as a subcontractor to S&B, so the “yo ur work” exclusion does not apply. 3
Second, National Union urges th at Li berty Mutual was obligated to fulfill American Pi pe’s prom

ise to indemnify S&B for losses resulting from American Pi pe ’ s services. As part of the purchas e order between S&B and American Pi

pe, American Pi

pe prom ised to carry insurance 4 and 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-complet e d 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 perfor med on your behalf by a subcontractor.”

4 The purchase order states:

Seller must ma intain at all times with a reliable insurance carrier or carriers, at Seller’s sole expense, insurance policies providing suffici ent 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 and Com plete Oper ations and Contractual Liability, Automobile

5 The purchase order states:

To the ma ximum extent 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 liabi lity, judgement and expense (including attorney’s fees and other costs of litigation) and any fines, (continued...)3

American Pi

pe’s insurer, Liberty Mutual would be obligated to fulfill this prom ise. Liberty Mutual, however, contends th at American Pi pe’s obligation to indem

nify S&B was exclu d ed from Liberty Mutual’s pol icy wit h American Pi

pe by the c o ntractual liabilit y exclusion. 6 National Union retorts that the purchase order qualifies as an insured contract, obviating that exclusion. 7 Liberty Mutual rea sons th at American Pi pe and S&B’s contract is not an insured contract because S&B was an engineer, and Liberty Mutual’s insurance policy wit h American Pi

pe excludes engineering services from the definit io n of insured contracts. 8

II. “This Court reviews grant s of summary judgment de novo , applying the same standard
as the district court, viewing the evidence in a light mo st favorable to the non-movant.” Fruge ex rel. Fruge v. Parker Drilling C o. , 337 F.3d 558, 560 (5th Cir. 2003). “If the court finds no ambiguit y [in an insurance policy], t he court’s duty is t o enforce the policy according to it s plain meaning.” V almont 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 “yo ur work” and “yo ur product” excep ti ons do not appl y t o S&B because “yo u” was defined in the c o ntract as American Pi

pe, 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)
re sulting from or in connection with the execution of this order by Seller, it s ag ents or subcontracts to the extent and proportion caused by the sole, concurrent, or contributory negligence
or other fault of Seller, its agents or subcontractors. 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 Liberty Mutual’s contract with Amer ican 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 damage s 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

su ch as S&B. We take as a given that “you” in this pol

icy only means American Pi pe, according to the pol

icy’s definit io n of th at word. Read wit h t hat definit io n, the pol icy excludes claims based on American Pipe’s work or product, because American Pi pe is substituted fo r you in t hose exclusions. With that substitution, the pol

icy excludes (1) “‘Property damage’ to ‘[American Pipe’s] work’ ari sing out of it or any part of it and included in the ‘products-com pleted operations hazard.’”; and (2) “‘Property damage’ to ‘[American Pi pe’s] product’ ari sing out of it or any part of it.”

S&B’s claim as an additional insured is based on Americ an Pi

pe’s work or product. S&B is correct th at 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 point s us to C hevron Chemical Co. v. Factory Compressor Parts, Inc. , 1993 WL 329999 (E.D. La. Aug. 23, 1993), to support it s position. Instead of bolstering National Union’s argument, however, Chevron Chemical confirms the effect we have g iven to the terms of the pol icy here. In t hat case, an insurance policy excluded “bodily injury or property damage arising out of th e alleged or th

reatened discharge, dispersal, release or escape of pollut ants . . . at or from premises you own, rent or occupy .” Id. at *2 (int ernal quotations om

it ted). The “you” was defined in t he policy as the named insured in th e declaration, and the named insured was Factory Com

pressor Parts. I

d. at *3. Because the damage from pollut ants occurred on Chevron’s and not Factory Com pre ssor Parts’s premises, the exclusion did not apply on those facts: “[T]he pollution exclusion only applies to claims fo r bodily injury which arise from the discharge, disper s al, release or escape of pollut ants from premises owned by Factory (the only insured inc luded in t he policy’s definit io n of ‘you’).” Id.
The inst ant case has different facts, but our reading of the insurance po licy comports enti rely wit h Chevron Chemical ’s reading of the pol icy in t hat case. In both cases, the named insured is substitu ted for “yo u” in the policy. Though the substitution in th at case meant th at the exclusion did not apply because the premises were not owned by “yo u,” in this case the exclusion does apply, because the work or product serving as the basis of the claim was “yo urs” 

### SS

American Pipe’s. Substituting “American Pi pe” fo r “yo u” in the subcontrac t or exception similarly reveals th at S&B is not entitled to relief under th at exception. The policy says that the “your work” exclus io n does not apply “if the damaged work or the work out of which the damages arises was performed on yo ur behalf by a subcontractor.” Because the contract defines “yo u” as American Pi

pe, the exception applies when som

eone else does work as Am e rican Pi pe’s subcontractor, not when American Pi pe is a subcontractor. “[O]n yo ur behalf” becom es “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 Pi

pe’s work or produc t w as the basis of the claim, and American Pi pe did not hire a subcontractor to work on it s behalf, so the district court correctl y determined th at S&B’s claim was excluded.

B. National Union seeks coverage pursuant to the purchase order between S&B and American Pi pe in whic h American Pipe agreed to5

defend and indemnify S&B. National Union asserts th at Liberty Mutual, as American Pi pe’s insurer, is liable to S&B fo r this obligation.
Because the basis of S&B’s claim is American Pi pe’s work or product, the indem nit y provision in the purchase order does not provide a way for S&B to be covered by Libert y Mutual’s pol

icy. The indemnity provision was never triggered.
American Pi

pe prom ised to indemnify S&B fo r claims “arising out of injury to, disease or death of, or damage to or loss of property of , persons (except fo r Seller’s property , employees, agents or s ubcontractors) . . . .” Thi s provision excludes damage to property of American Pi

pe, as the “Seller.” Wit hout dam

ages beyo nd damages to American Pi pe’s own work or product, the indemnit y provision was never triggered, and Liberty Mutual is not obligat ed to pay National Union on this basis.

AFFIRMED.