Opinion ID: 1112384
Heading Depth: 2
Heading Rank: 2

Heading: Ocean Marine Insurance

Text: The Louisiana Insurance Code is found in Title 22 of the Louisiana Revised Statutes. The Direct Action Statute is contained in Part XIV of the Insurance Code. Part XIV is entitled The Insurance Contract and includes Sections 611-673 of Title 22. Section 611 is entitled Scope of Part and provides in pertinent part: The applicable provisions of this Part shall apply to insurance other than ocean marine and foreign trade insurances.  La.Rev.Stat. 22:611(A) (emphasis added). [10] Section 611 thus raises the question of whether P & I insurance is a type of ocean marine insurance. If it is, then the ocean marine exclusion in Section 611 appears to conflict with the plain meaning of the all-inclusive language in the Direct Action Statute. In Deshotels v. SHRM Catering Services, Inc., 538 So.2d 988 (La.1989), and Backhus v. Transit Casualty Co., 549 So.2d 283 (La. 1989), this court interpreted the meaning of the term ocean marine insurance as that term is used in Part XXIX-A of the Insurance Code which governs the Louisiana Insurance Guaranty Association Fund (LIGA). Section 1377 delineates the scope of Part XXIX-A and provides that that Part shall apply to all kinds of direct insurance, except... ocean marine insurance. La.Rev.Stat. 22:1377(A). In Deshotels, the court concluded that because the categories of insurance excluded from coverage under LIGA enumerated different kinds of insurance policies rather than different kinds of risks, therefore a claim brought under a workers' compensation policy with a maritime endorsement was not a claim brought under an ocean marine insurance policy and thus was subject to LIGA protection. Deshotels, 538 So.2d at 993. Implicit in this holding was the premise that ocean marine insurance policies would fall within the ocean marine insurance exclusion in Section 1377 and thereby be excluded from LIGA protection. Later, in Backhus, the court addressed the issue of whether a P & I policy was ocean marine insurance within the meaning of the LIGA exclusion. The court held that common usage, coupled with the inclusion of protection and indemnity insurance under the definition of marine insurance in R.S. 22:6(13), leads to the conclusion that the term ocean marine insurance includes protection and indemnity insurance and that protection and indemnity insurance, absent some intent on the part of the legislature to protect individuals entitled to recover under protection and indemnity policies, falls within the ocean marine insurance exception to Louisiana Insurance Guaranty Association protection. Backhus, 549 So.2d at 289 (emphasis added). Backhus therefore establishes that P & I insurance constitutes ocean marine insurance as that term is used in the Louisiana Insurance Code, including Part XIV of the Insurance Code containing Section 611 and the Direct Action Statute. [11] The similarity between the ocean marine insurance exclusion in Part XXIX-A of the Insurance Code (governing LIGA) and the ocean marine insurance exclusion in Part XIV of the Insurance Code (containing the Direct Action Statute) has led some courts, including the federal court of appeals in its original opinion in this case, to reason that our holding in Backhus leads inevitably to the conclusion that Section 611 excludes P & I insurance from the operation of the Direct Action Statute. [12] No doubt such reasoning has been encouraged by this court's dictum in Deshotels that ocean marine insurance is not only excluded from LIGA but also from the scope of Part XIV, which applies to `The Insurance Contract' and includes the Louisiana direct action statute. Deshotels, 538 So.2d at 992. However, Backhus and Deshotels do not settle the issue presented in the present case. The similarity between LIGA and the Direct Action Statute stretches no farther than our interpretation of the term ocean marine insurance as used in the Louisiana Insurance Code. Thus, while it may be said that P & I insurance constitutes ocean marine insurance within the meaning of the exclusion in Section 611, such a conclusion does not resolve the peculiar ambiguities created by the interaction between Section 611 and the Direct Action Statute. The Direct Action Statute applies to all liability policies; yet, Section 611 excludes ocean marine insurance, including P & I policies, from the operation of the applicable provisions of Part XIV. La.Rev.Stat. 22:611(A). The apparent conflict between these provisions therefore must be resolved by reference to the purpose of the provisions, the legislature's intent in enacting them, and the context in which they occur and the text of the law as a whole. See La.Civ.Code arts. 9, 10, and 12. [13]