Opinion ID: 150548
Heading Depth: 3
Heading Rank: 3

Heading: The Conditional Exclusion of the Navigators Policy

Text: Navigators contends that, if Amerisure does not have a duty to indemnify Sylvester, then Navigators also does not have such a duty under its conditional exclusion, which provides, this insurance shall be free from liability ... unless coverage is provided in an underlying policy scheduled hereon, and then coverage hereunder shall only operate as excess of such coverage.... According to Navigators, [b]ecause Amerisure deliberately declined to include an allocation in its settlement agreement for Amerisure's release versus Sylvester's release, no part of the settlement amount is subject to its subrogation. This conditional exclusion does not apply when the liability arise[s] out of ... [the] ownership, charter, use, operation, [or] ... loading ... of any watercraft not otherwise excluded or limited herein .... The vessel at issue, the Florida Lilly, appears on the schedule of covered vessels. So the issue is whether the incident arose out of the ownership, charter, use, operation, or loading of the Florida Lilly. In Utica National Insurance Co. of Texas v. American Indemnity Co., 141 S.W.3d 198, 203 (Tex.2004), the Texas Supreme Court explained that the phrase `arise out of' means that there is simply a `causal connection or relation,' which is interpreted to mean that there is but for causation, though not necessarily direct or proximate causation. (citations omitted). Citing to our decisions in Red Ball Motor Freight, Inc. v. Employers Mutual Liability Insurance Co., 189 F.2d 374, 378 (5th Cir.1951), and American States Insurance Co. v. Bailey, 133 F.3d 363, 370 (5th Cir. 1998), the court further noted that `[a]rising out of' are words of much broader significance than `caused by.' Utica, 141 S.W.3d at 203. This court has also explained that, under Texas insurance law, the phrase arising out of has a broad definition favoring coverageall that is needed is an incidental relationship between a claim and the conduct that the policy describes. Sport Supply Group, Inc. v. Columbia Cas. Co., 335 F.3d 453, 458-59 (5th Cir.2003) (citations omitted); American States Ins. Co., 133 F.3d at 370 ([T]he words `arising out of,' when used within an insurance policy, are `broad, general, and comprehensive terms effecting broad coverage.' (citation and footnote omitted)). Applying this broad definition of arising out of, we find that there is a causal connection or incidental relationship between the incident and the ownership, use, or operation of the Florida Lilly. Texas Crewboats had assigned Clanton and Satterfield to operate the Florida Lilly as captain and deckhand respectively. The incident occurred as Texas Crewboats was transporting them from Freeport, Texas, where Texas Crewboats has offices, to Morgan City, Louisiana, where the Florida Lilly was docked. Texas Crewboats transported them in a company car and provided a driver and a company credit card for food and gas during the trip. Furthermore, Texas Crewboats began paying them for their services as soon as they departed from Freeport. The sole purpose of the trip was to transport these crewmen to the Florida Lilly, where they were to board and operate the vessel. Under these circumstances, we hold that (1) transporting the operators of a vessel (2) to that vessel (3) by the owners of the vessel (4) for the sole purpose of operating that vessel, has an incidental relationship to the ownership, use, or operation of that vessel. Moreover, insofar as the language of this exclusion is ambiguous or inconsistent, the construction that would afford coverage to the insured must govern. Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487, 491 (5th Cir.2000) (citations omitted). Accordingly, the conditional exclusion in the Navigators policy does not apply.