Court Opinion

ID: 4095147
Source: CourtListenerOpinion
Date Created: 2016-11-03 00:01:11.560722+00
Date Added: 2024-06-11T14:03:09.087098
License: Public Domain

Case: 15-30827   Document: 00513744559        Page: 1   Date Filed: 11/02/2016

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

                                    No. 15-30827                       FILED
                                                                November 2, 2016
                                                                  Lyle W. Cayce
THOMAS R. EDWARDS,                                                     Clerk

             Plaintiff - Appellee

v.

CONTINENTAL CASUALTY COMPANY,

             Defendant - Appellant

                Appeals from the United States District Court
                    for the Western District of Louisiana

Before WIENER, CLEMENT, and COSTA, Circuit Judges.
WIENER, Circuit Judge:
      Plaintiff-Appellee, Thomas R. Edwards, sued Defendant-Appellant,
Continental Casualty Company (“Continental”), seeking a declaratory
judgment that Continental was required to defend him, pursuant to a
professional liability insurance policy, in an action brought against Edwards
by Cal Dive International, Incorporated (“Cal Dive”). Edwards filed a motion
for partial summary judgment seeking a declaration that Continental had a
duty to defend him in the suit filed by Cal Dive and Continental filed a motion
for summary judgment seeking dismissal of Edwards’s claims. The district
court granted Edwards’s motion, holding that Continental had a duty to defend
    Case: 15-30827         Document: 00513744559            Page: 2   Date Filed: 11/02/2016

                                        No. 15-30827
Edwards in the action brought by Cal Dive. We reverse and render judgment
rejecting Edwards’s claims against Continental.

                          I.     FACTS AND PROCEEDINGS

      Edwards represented Andrew Schmidt, a commercial diver, in a personal
injury suit, Schmidt v. Cal Dive Int’l, Inc. (Cal Dive I), against Schmidt’s
employer, Cal Dive, for a brain injury sustained during a work-related dive. 1
The parties entered into a multi-million dollar settlement agreement before
trial under which Cal Dive and its insurer paid a lump sum to Schmidt and
funded an additional payment through annuity contracts. As a part of the
settlement, Cal Dive paid attorney’s fees to Edwards through an annuity
contract for his representation of Schmidt.
      One year after the settlement, Cal Dive and its insurer filed suit against
Schmidt and Edwards in Cal Dive Int’l, Inc. v. Schmidt (Cal Dive II), alleging
that Schmidt exaggerated or fabricated the extent of his injuries in Cal Dive
I. 2 Claiming that it was fraudulently induced to settle, Cal Dive sought
reimbursement of its lump sum payment to Schmidt and its cost of funding the
annuity contracts to Schmidt and to Edwards. It asserted claims for unjust
enrichment and restitution against Edwards. Cal Dive alleged that it incurred
significant expenses defending itself in Cal Dive I, including, among other
costs, attorney’s fees, court costs, and other litigation expenses. Cal Dive
claimed that it was entitled to restitution from Edwards of all funds that he
unjustly received under the invalid settlement agreement. The district court

      1   No. 12-cv-00930 (W.D. La. filed Apr. 19, 2012).
      2   No. 14-cv-03033 (W.D. La. filed Oct. 15, 2014).
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                                    No. 15-30827
dismissed Cal Dive’s complaint for failure to state a claim, and this court
affirmed. 3
      Edwards’s law firm maintained a professional liability policy with
Continental Casualty Company that named Edwards as an insured. Edwards
timely notified Continental of the claims brought against him in Cal Dive II
and sought defense and coverage, but Continental declined to provide either.
      Edwards filed a declaratory judgment action against Continental in
district court, seeking a declaration that his firm’s professional liability policy
required Continental to defend him in Cal Dive II. Edwards filed a motion for
partial summary judgment and Continental filed a motion for summary
judgment. The district court granted partial summary judgment in favor of
Edwards, holding that Continental had a duty to defend him and Continental
appealed. 4
      The sole issue on appeal is whether the district court erred in holding
that Continental had a duty to defend Edwards in Cal Dive II. Continental
argues that: (1) Cal Dive did not assert covered claims against Edwards
because the claims did not arise from an “act or omission” in the rendering of
legal services by Edwards, and (2) the “damages” sought by Cal Dive were not
covered under the policy.

                                  II.    ANALYSIS

A.    Summary Judgment
      “We review a grant of summary judgment de novo under the same
standard applied by the district court.” 5 Summary judgment is appropriate

      3  Cal Dive Int’l, Inc. v. Schmidt, 639 F. App’x 214 (5th Cir. 2016) (per curiam)
(unpublished).
       4 Edwards v. Continental Cas. Co., No. 15-cv-00168, 2015 WL 5009015 (W.D. La. Aug.

19, 2015).
       5 Boone v. Citigroup, Inc., 416 F.3d 382, 392–93 (5th Cir. 2005).

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when “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” 6 We consider the evidence in the light
most favorable to the nonmoving party and draw all reasonable inferences in
its favor. 7
         “Once a movant who does not have the burden of proof at trial makes a
properly supported motion” for summary judgment, “the burden shifts to the
nonmovant to show that [the motion] should not be granted.” 8 To do so, the
nonmovant must “identify specific evidence in the record and . . . articulate the
precise manner in which that evidence supports his or her claim.” 9 Neither we
nor the district court have a duty to “sift through the record in search of
evidence to support” the nonmovant’s opposition to summary judgment. 10
B.       Insurance Coverage
         Continental contends that it had no duty to defend Edwards in the
underlying action because Cal Dive’s claims against Edwards are not the kind
that are covered by the insurance policy. The policy provides that Continental
“shall have the right and duty to defend in the Insured’s name and on the
Insured’s behalf a claim covered by this Policy even if any of the allegations
of the claim are groundless, false or fraudulent.” 11 The operative policy
language specifies that a “claim” is one “arising out of an act or omission,
including personal injury, in the rendering of or failure to render legal

         6   FED. R. CIV. P. 56(a).
         7   See Lawyers Title Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848, 856 (5th Cir.
2014).
         Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
         8

         Id.; accord RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 857 (5th Cir. 2010).
         9
       10 Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) (quoting Skotak v. Tenneco

Resins, Inc., 953 F.2d 909, 915 n.7 (5th Cir. 1992)).
       11 Emphasis in original.

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services.” 12 “Legal services” are defined as “services . . . performed by an
Insured for others as a lawyer.” 13
      The parties do not dispute that Louisiana law applies to this diversity
action. Under Louisiana law, “[t]he duty to defend is determined by examining
the allegations of the injured plaintiff’s petition . . . and the insurer is obligated
to tender a defense unless the petition unambiguously excludes coverage.” 14
Continental’s duty to defend is activated by a claim covered by the policy.
      The claims filed against Edwards in this action are not the type of claims
that are covered by his firm’s insurance policy with Continental, so Edwards
is not seeking defense against a “covered” claim. This is so because Cal Dive’s
claims against Edwards do not “arise out of an act or omission . . . in
[Edwards’s] rendering of or failure to render legal services.” Even though Cal
Dive’s unjust enrichment and restitution claims against Edwards have some
general and remote relation to his representation of Schmidt, Cal Dive does not
allege a single professional act or omission by Edwards that gives rise to such
claims. Instead, Cal Dive named Edwards in the underlying action only
because Edwards received settlement funds from Cal Dive for his
representation of Schmidt. Cal Dive did not allege that Edwards did or failed
to do anything to warrant its claims. In fact, Cal Dive specifically alleged that
it does “not believe that Edwards . . . [was] aware of Schmidt’s fraud.” Cal
Dive’s complaint, for which Edwards seeks defense from Continental, contains
no allegations against Edwards, save for his receipt of settlement funds in the
nature of attorney’s fees as a result of his client’s alleged fraud. Acts or
omissions in the rendering of legal services by Edwards to his client, Schmidt,

      12 Emphasis in original.
      13 Emphasis in original.
      14 Hardy v. Hartford Ins. Co., 236 F.3d 287, 290 (5th Cir. 2001) (citing Yount v.

Maisano, 627 So. 2d 148, 153 (La. 1993)).
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                                      No. 15-30827
are simply not at issue. Thus, Continental’s insurance policy does not provide
coverage to Edwards in Cal Dive II.
      Edwards nevertheless insists that the “arising out of” language of the
policy should be applied broadly to provide coverage for Cal Dive’s claims. It is
true that (1) Louisiana courts read the words “arising out of” expansively,
requiring nothing more than “but for” causation, and (2) ambiguous provisions
in insurance policies are strictly construed against the insurer and in favor of
FINA insurance policy does not provide coverage in this case because Cal
Dive’s claims did not “arise out of” an act or omission by Edwards in the
rendering of legal services to Cal Dive. Applied to these facts, the discrete
language in Edwards’s policy is not ambiguous.
      Edwards also contends that this reading of the insurance policy would
result in professional liability policies only covering claims for malpractice and
other attorney misdeeds. This argument fails to recognize that the insurance
policy at issue does not provide coverage in this particular situation for this
particular conduct. Alone, Edwards’s representation of Schmidt cannot serve
as an act or omission in Edwards’s rendering of legal services. Such an
interpretation would effectively read the words “act or omission” out of the
policy’s definition of a claim. In other situations with other insurance policies,
a professional liability policy might cover the conduct at issue here. In this
case, however, the language of the policy does not provide coverage to Edwards
for Cal Dive’s claims.

                               III.    CONCLUSION

      For the foregoing reasons, we REVERSE the district court’s order
granting Edwards’s motion for summary judgment and RENDER judgment
rejecting Edwards’s claims against Continental.

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                                 No. 15-30827

EDITH BROWN CLEMENT, Circuit Judge, dissenting:
      I would affirm the district court’s holding that State Farm’s duty to
defend—which is much broader than its duty to provide coverage—was
triggered by Cal Dive’s complaint against Edwards. We have construed the
words “arising out of” used in the policy as “broad, general, and comprehensive
terms effecting broad coverage.” Red Ball Motor Freight, Inc. v. Emps. Mut.
Liab. Ins. Co. of Wis., 189 F.2d 374, 378 (5th Cir. 1951). They simply require
that a claim flow from, be incident to, or have a connection with an act or
omission in rendering legal services. See id.; see also Perkins v. Rubicon, Inc.,
563 So. 2d 258, 259 (La. 1990) (reading “arising out of” as only “requiring a
connexity similar to” but-for causation). Edwards successfully represented
Schmidt in a suit against Cal Dive through litigation and settlement. Cal
Dive’s claims for unjust enrichment and restitution against Edwards at least
have an incidental relationship to his legal representation of Schmidt. Because
we must “liberally interpret[]” the allegations of the complaint and hold that
the insurer is obligated to tender a defense unless the allegations
“unambiguously exclude coverage,” I would affirm. Yount v. Maisano, 627 So.
2d 148, 153 (La. 1993).

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