Court Opinion

ID: 69015
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:40:18+00
Date Added: 2024-06-11T16:41:42.336918
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          October 15, 2009

                                       No. 09-20112                    Charles R. Fulbruge III
                                                                               Clerk

COOPER INDUSTRIES LLC; COOPER B-LINE, INC

                                                   Plaintiffs - Appellants
v.

AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE
COMPANY

                                                   Defendant - Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:06-CV-01082

Before REAVLEY, JOLLY, and WIENER, Circuit Judges.
PER CURIAM:*
       This is a coverage dispute between insured Cooper Industries (“Cooper”)
and its insurance company American International Specialty Lines Insurance
Co. (“AISLIC”) over claims arising from the deaths of two employees of Cooper
B-Line (“B-Line”), a wholly owned subsidiary of Cooper. The underlying lawsuit
settled and the insured now appeals the district court’s allocation of the
settlement between them.

       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
                                   No. 09-20112

                                         I.
      Two B-Line employees, Maurice Vickers and James Canady, were killed
in an accident at B-Line’s Sherman, Texas, facility. Vickers’s wife, daughter and
son, and Canady’s parents, all sued B-Line and Cooper. The parties settled their
claims for $4.95 million with an agreement that allocated the settlement
payment among plaintiffs as follows: Mia and Maria Vickers (Vickers’s wife and
daughter) received $3.6 million; Kevin Davis (Vickers’s son) received $825,000,
and the Canady plaintiffs received $525,000. As a condition of the settlement,
AISLIC required that at least $3.6 million be allocated to Mia and Maria
Vickers, to which Cooper agreed, but otherwise the plaintiffs allocated the
proceeds among themselves according to an agreement among only the plaintiffs.
The settlement agreement did not contain an allocation of liability between
Cooper and B-Line.      At the time, Cooper paid a $1 million deductible and
AISLIC paid $2.6 million, the additional amount AISLIC attributed to B-Line’s
liability. The parties disputed the responsibility for the remaining $1.35 million,
which AISLIC attributed to Cooper but for which Cooper never accepted liability.
Cooper originally believed that its AISLIC employer liability policy covered
Cooper and that therefore AISLIC was responsible for the entire remainder. To
reach a final settlement with the plaintiffs, each party paid half of that
remainder.
      In an earlier appeal we found that Cooper was not entitled to coverage
from its AISLIC employer liability policy for the Vickers’ and Canadys’ claims.
Cooper Indus., L.L.C. v. Am. Int’l Specialty Lines Ins. Co., 273 F. App’x 297 (5th
Cir. 2008). After affirming the district court’s prior ruling that the policy did not
cover Cooper’s liability, we remanded for an allocation of the $1.35 million based
on a determination of how much of the settlement should be attributed to B-
Line’s potential liability and how much to Cooper’s.

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                                    No. 09-20112

                                          II.
      On remand, the district court allocated 100% of the disputed settlement
amount to Cooper as a matter of law. The court based its allocation on the
settlement agreement itself and applicable Texas law that limited the amount
of B-Line’s possible liability to each plaintiff.
      Texas law limited the parties’ potential liability in two ways. First, none
of the plaintiffs could recover actual damages from B-Line because B-Line’s
workers’ compensation insurance was their exclusive remedy for their negligence
claims. The exception to the exclusive remedy under the Texas Labor Code is for
surviving spouses or “heirs of the body,” who can recover punitive damages for
deaths caused by an employer’s intentional act or gross negligence. T EX. L AB.
C ODE A NN. § 408.001(b). Under Texas law, “heirs of the body” do not include
parents.   See, e.g., Galvan v. Public Utils. Bd., 778 S.W.2d 580, 584 (Tex.
App.–Corpus Christi 1989).        Canady’s parents’ claims against B-Line were
therefore foreclosed by Texas law and the Canadys only could have recovered
from Cooper, so the court allocated the $525,000 they received to Cooper.
      Second, the Vickers’ claims were limited by a state law cap on punitive
damages. As the decedent’s spouse and children, Mia and Maria Vickers would
have been able to recover punitive damages from his employer, B-Line.1 The
amount they could recover was limited, however, by Texas’s cap on punitive
damages, which is calculated based on a formula that includes the amount of
economic and noneconomic damages incurred by the plaintiffs. T EX. C IV. P RAC.
& R EM. C ODE § 41.008(b). The district court found that although Texas law was
unclear, the proper calculation of the punitive damages cap for the Vickers

        1
          There was some dispute as to whether Vickers’s son, Davis, would actually have
been able to recover because the parent-child relationship between them had been severed
by a prior court order. This likely would have reduced, and possibly eliminated, the
likelihood of Davis recovering from B-Line.

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                                  No. 09-20112

plaintiffs should not include the Canadys’ economic damages.            The court
calculated the applicable cap to be $3,601,362. It therefore allocated the $3.6
million received by Mia and Maria Vickers to AISLIC and the remainder to
Cooper.   This allocation meant that Cooper was responsible for the entire
disputed $1.35 million.
                                       III.
      We review a district court’s legal decisions de novo. Empire Fire & Marine
Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679, 681 (5th Cir. 2000).
      In Texas, insurance settlement amounts are allocated based on the
“concurrent causes” doctrine. See Comsys Info. Tech. Servs., Inc. v. Twin, 130
S.W.3d 181, 198 (Tex. App.–Houston 2003). When covered and noncovered
causes combine to create a harm, the insurer is liable only for the portion of the
loss caused solely by the covered cause and the insured bears the burden of
showing that a loss is covered. Id.
      A district court may determine the proper apportionment of a settlement
as a matter of law by looking to the settlement agreement and by examining the
allegations in the underlying suit and the coverage of the insurance contract.
Enserch Corp. v. Shand Morahan & Co., 952 F.2d 1485, 1494 (5th Cir. 1992). If
the district court cannot determine the allocation of liability as a matter of law,
it must hold a trial to apportion responsibility between the covered and
noncovered causes of the harm. Id. The goal is to avoid fully retrying the
plaintiffs’ underlying claims; instead, the court must “determine what portion
of the settlement was reasonably intended to concern claims covered by the
policy at issue.” American Int’l Specialty Lines Ins. Co. v. Res-Care, 529 F.3d
649, 657 (5th Cir. 2008) (emphasis added).
      AISLIC argues that the district court properly decided the apportionment
question as a matter of law based on the settlement agreement and the statutory
limits on each plaintiff’s possible recovery. On the other hand, Cooper argues

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                                  No. 09-20112

that the apportionment issue should have been a jury question as to what the
parties intended at the time of settlement. In support of its argument, Cooper
presented evidence that at the time of settlement, Cooper and B-Line believed
that a court might calculate the punitive damages cap (and therefore B-Line’s
maximum liability) to be $5.1 million instead of $3.6 million and that B-Line’s
risk of liability was significantly greater than Cooper’s. They point out that the
settlement agreement did not allocate responsibility between Cooper and B-Line
and only allocated the settlement proceeds among the plaintiffs.
      Although it is a close call as to whether this issue was more properly
decided as a matter of law or by a jury, we are nevertheless satisfied that the
district court did not err in apportioning the settlement as it did.         It is
undisputed that AISLIC’s view at the time of settlement was that B-Line was
only responsible for $3.6 million.    The court’s determination that B-Line’s
punitive damages cap was $3.6 million means that AISLIC had all along
correctly estimated the extent of B-Line’s responsibility. The mere fact that
Cooper and B-Line may have overestimated their possible liability, especially
given that they apparently believed at the time that AISLIC would be
responsible for the entire settlement, does not convince us that the
apportionment issue thus became a jury question.
      This appeal comes to us as a well-vetted matter. After studying the briefs,
reviewing the record, and hearing arguments from the parties, we are convinced
that the district court properly concluded as a matter of law that AISLIC’s
intended allocation of the settlement was correct. We are further convinced that
even if this case had presented a jury question, the resulting apportionment
would, most likely, have been no different. Given the time, the tedious work and
the careful analysis that the district court invested in arriving at the proper
apportionment, we are satisfied that this long and thoroughly litigated dispute
has been brought to a legally sound final conclusion.

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                           No. 09-20112

                                IV.
For the reasons stated above, the judgment of the district court is
                                                            AFFIRMED.

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