Court Opinion

ID: 7798887
Source: CourtListenerOpinion
Date Created: 2022-08-08 18:00:39.427428+00
Date Added: 2024-06-11T16:28:52.246527
License: Public Domain

Case: 21-30543   Document: 00516423296      Page: 1    Date Filed: 08/08/2022

          United States Court of Appeals
               for the Fifth Circuit                           United States Court of Appeals
                                                                        Fifth Circuit

                                                                      FILED
                                                                 August 8, 2022
                             No. 21-30543
                                                                 Lyle W. Cayce
                                                                      Clerk

   John Thibodeaux; Amy Thibodeaux; Gabrielle
   Thibodeaux; Emily Thibodeaux,

                                                      Plaintiffs—Appellees,

                                versus

   J M Drilling, L.L.C.; Insight Risk Management, L.L.C.;
   C R C Insurance Services, Incorporated, incorrectly named as
   Insurisk Excess & Supply Lines,

                                                  Defendants—Appellees,

                                versus

   Rockhill Insurance Company,

                                                  Defendant—Appellant,

   ______________________________

   Rockhill Insurance Company,

                                                      Plaintiff—Appellant,

                                versus

   J M Drilling, L.L.C.,

                                                      Defendant—Appellee,
Case: 21-30543         Document: 00516423296               Page: 2       Date Filed: 08/08/2022

                                           No. 21-30543

   Insight Risk Management, L.L.C.; C R C Insurance
   Services, Incorporated,

                                                      Third Party Defendants—Appellees.

                      Appeal from the United States District Court
                         for the Western District of Louisiana
                                  USDC 6:18-CV-501

   Before Jolly, Elrod, and Haynes, Circuit Judges.
   Per Curiam:*
            While installing fiber optic cables in Louisiana, JM Drilling hit an
   underground sewer line. It did not notify anyone of this fact or seek any
   repairs. Thereafter, a three-foot sinkhole was formed. Without having
   received any warning, John Thibodeaux fell into it and suffered a severe
   injury as to which he recovered a jury verdict against JM Drilling in state
   court.
            This case concerns certain insurance coverage for JM Drilling. The
   district court found coverage; we AFFIRM. 1

            *
            Pursuant to 5th Circuit Rule 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 Circuit Rule 47.5.4.
            1
              The parties were asked on appeal to brief the question of federal court jurisdiction
   because the complaint failed to address the members of JM Drilling, which is a limited
   liability company. See Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008).
   The record confirms that the amount in controversy exceeds $75,000 and that complete
   diversity exists, given the citizenship of the owner of JM Drilling. Accordingly, we
   conclude that the district court had jurisdiction, and we proceed to the merits. See 28
   U.S.C. § 1653.

                                                 2
Case: 21-30543      Document: 00516423296           Page: 3     Date Filed: 08/08/2022

                                     No. 21-30543

          Relevant to this case, JM Drilling had two insurance policies, a
   primary policy by Admiral Insurance Company, which is not at issue here,
   and an excess liability policy from Rockhill Insurance Company that is the
   center of this dispute. Rockhill’s insurance incorporated the limits and
   exclusions of the Admiral Insurance Company policy but also added its own
   exclusions, the key one of which was the “Subsidence Exclusion,” which
   provides:
          This policy will NOT apply: . . . .

          to any liability, whether direct or indirect, arising out of, caused
          by, resulting from, contributed to, or aggravated by the
          subsidence, settling, expansion, sinking, slipping, falling away,
          tilting, caving in, shifting, eroding, mud flow, rising, or any
          other movement of land or earth if any of the foregoing
          emanate from the operations of the insured or any other person
          for whose acts the insured is legally liable.

          It is further agreed that this insurance shall not become excess
          of any reduced or exhausted underlying aggregate limit to the
          extent that such reduction or exhaustion is the result of claims,
          damage, loss or expense arising out of or in any way related to
          the above.

   Rockhill contends that this exclusion covers the sinkhole, which, in its view,
   was a subsidence. The parties agree that Tennessee law applies here.
   Tennessee has a somewhat different version of concurrent cause analysis
   than some other states. Compare Allstate Ins. Co. v. Watts, 811 S.W.2d 883,
   887–88 (Tenn. 1991), with Seahawk Liquidating Tr. v. Certain Underwriters,
   810 F.3d 986, 994–95 (5th Cir. 2016) (applying Texas law). To sum up,
   “where a nonexcluded cause is a substantial factor in producing the damage
   or injury, even though an excluded cause may have contributed in some form
   to the ultimate result and, standing alone, would have properly invoked the
   exclusion contained in the policy.” Watts, 811 S.W.2d at 887; see Clark v.

                                           3
Case: 21-30543        Document: 00516423296             Page: 4      Date Filed: 08/08/2022

                                        No. 21-30543

   Sputniks, LLC, 368 S.W.3d 431, 441 (Tenn. 2012); Capitol Indem. Corp. v.
   Braxton, 24 F. App’x 434, 440 (6th Cir. 2001). 2
           It is undisputed that subsidence would be an excluded cause under the
   Rockhill Policy. But whether JM Drilling’s negligence is a nonexcluded
   cause is disputed. A nonexcluded cause is a cause that is otherwise covered
   by the policy and is not specifically listed in the exclusion. Here, the Rockhill
   Policy covers “the ultimate net loss in excess of the amount payable under
   the terms of any Underlying Insurance . . . that the insured becomes legally
   obligated to pay as damages.” There is no dispute that the general policy
   coverage applies here, but Rockhill contends the only cause of injury to
   Thibodeaux was subsidence such that the exclusion applies.
           We agree that Rockhill makes a good argument that negligence that
   causes the sinkhole is part of the exclusion, but we disagree that the case ends
   there. Instead, we note that the parties also assert that the failure to report
   the damage was part of the negligence but did not cause the sinkhole. Rather,
   it contributed to the injury because if it had been reported, maybe it would
   have been fixed or, at least, there would have been some warning that would
   have avoided Thibodeaux working there. Per Watts, the mere relationship to
   the excluded conduct is not enough to cause everything to be excluded. 811
   S.W.2d at 884–88.         Thus, given that there is a mix of excluded and
   nonexcluded causation, we conclude that the district court did not err in
   finding coverage under the Rockhill policy.
           AFFIRMED.

           2
            Under Tennessee law, an insurer can avoid the effect of the “concurrent cause”
   doctrine by expressly including an anti-concurrent clause (“ACC”) in the policy. See
   Hardy & Kelly LLC v. QBE Ins. Corp., No. 3-11-0155, 2012 WL 1744670, at *3 (M.D. Tenn.
   May 16, 2012). While Rockhill did that on other exclusions, it did not on this one, so we
   agree with the district court that the ACC is not in play here.

                                              4