Court Opinion

ID: 799890
Source: CourtListenerOpinion
Date Created: 2012-05-15 23:04:53+00
Date Added: 2024-06-11T17:59:51.521249
License: Public Domain

Case: 11-30477     Document: 00511856359         Page: 1     Date Filed: 05/15/2012

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

                                                                            FILED
                                                                           May 15, 2012

                                       No. 11-30477                        Lyle W. Cayce
                                                                                Clerk

EARL DEVILLE, ET AL,

                                                  Plaintiffs
v.

CONMACO/RECTOR L.P.,

                                                  Defendant/
                                                  Third-Party Plaintiff–Appellee
v.

FIREMANS’ FUND INSURANCE COMPANY

                                                  Third-Party Defendant–Appellant

                   Appeals from the United States District Court
                       for the Eastern District of Louisiana
                                   (09-CV-7391)

Before KING, BARKSDALE, and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:*
        This case began as a personal injury suit brought by Earl Deville for
personal injuries he sustained when a pneumatic pile-driving hammer attached
to a Conmaco/Rector L.P. (“Conmaco”) crane, situated on a Great Southern

        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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Dredging, Inc. (“Great Southern”) barge, fell on Deville’s right arm. Conmaco
then brought a third-party action against Great Southern’s insurer, Firemans’
Fund Insurance Company (“FFIC”). This appeal concerns that third-party
action, specifically which insurance policy or policies cover this accident and in
what order and proportion. We AFFIRM.
             I. FACTUAL AND PROCEDURAL BACKGROUND
A.      Injury Giving Rise to the Dispute
        In 2009, the State of Louisiana hired Great Southern to repair docks,
bulkheads, and other structures at the Turtle Cove Research Facility, near
Manchac, Louisiana. To carry out the work, Great Southern chartered, among
other vessels, eleven barges. Great Southern also leased a crawler crane and
pile-driving equipment from Conmaco. Deville was working for Great Southern
when he was injured by the crane’s hammer falling on his right arm.
B.      Contractual Relationships between the Various Parties
        When Great Southern leased the crane from Conmaco, it signed
Equipment Lease No. 2684 (the “Lease”). The Lease, which was to be governed
by Louisiana law, provides that Great Southern (as lessee) would be “liable for
any loss or casualty which is not insured, or which is within exclusions to
insurance coverage.” The Lease further provides, with respect to insurance, that

        Lessee is required to provide certificate or other evidence of
        insurance covering Equipment (as provided herein); Lessee’s
        Insurance coverage shall include endorsement for hired equipment
        and show limit; Lessee’s Insurance coverage shall not have an
        offshore exclusion; Lessee’s Insurance coverage shall include boom
        and overload protection; Lessee’s Insurance coverage shall include
        flood insurance; and Lessee is liable for any loss or casualty which
        is not insured, or which is within exclusions to insurance coverage.

Additionally, appended to the lease were “General Lease Terms and Conditions.”
Paragraph 3(c) of these General Terms states, in relevant part:

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      LESSEE SHALL AT ITS SOLE COST AND EXPENSE PROVIDE
      AND MAINTAIN A POLICY OF COMMERCIAL GENERAL
      LIABILITY INSURANCE COVERING ALL RISKS OF PHYSICAL
      LOSS OR DAMAGE TO PROPERTY OR INJURY TO PERSONS
      WITH RESPECT TO THE LESSEE’S POSSESSION AND USE OF
      THE EQUIPMENT, in such amounts as may from time to time be
      satisfactory to Lessor, including, but not limited to, coverage for
      contractual liability with regard to all of the obligations and
      indemnities of Lessee hereunder. . . . Lessee shall provide Lessor
      with Certificates of Insurance evidencing the coverages required
      above, and naming the Lessor and The CIT Group . . . as an
      additional named insured party under such policies . . . .

      In order to comply with its obligation to obtain insurance under the Lease,
Great Southern obtained a policy from FFIC (the “FFIC Policy”). Despite
paragraph 3(c) of the Lease’s requirement that the policy name Conmaco, the
FFIC Policy did not specifically identify Conmaco as an “additional insured.”
Instead, the FFIC Policy contains a blanket additional insured endorsement:
“the Policy . . . is amended to include any person or organization that you are
obligated by an ‘insured contract’ to include as Additional Insureds, but only
with respect to liability arising out of ‘your work.’” This blanket endorsement
requires the existence of an “insured contract,” which the FFIC Policy defines as

      [t]hat part of any other contract or agreement pertaining to your
      business (including an indemnification of municipality in connection
      with work performed for a municipality) under which you assume
      the tort liability of another party to pay for “bodily injury” or
      “property damage” to a third person or organization. Tort liability
      means any liability that would be imposed by law in the absence of
      any contract or agreement.

With respect to the ranking of the FFIC Policy vis-à-vis other policies, the FFIC
Policy stated that

      a. Any coverage provided hereunder will be excess over any other
      insurance under which the insured has been afforded insured

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      status, whether primary, excess (other than insurance effected by
      the Named Insured hereunder and specifically written as excess of
      this coverage), contingent, or on any other basis, whether prior or
      subsequent hereto, and by whomever effected directly or indirectly
      covering loss or damage insured hereunder, and this company shall
      be liable only for the excess of such loss or damage beyond the
      amount due from such other insurance up to, but not exceeding, the
      limits of this policy as set forth in the declarations.

      ...

      c. Notwithstanding paragraphs a. and b. above, this insurance shall
      be primary to any other insurance, but only:
            (1) With respect to “your work”, and
            (2) When required by and only to the extent of such obligation
            under an “insured contract.”

The FFIC Policy defines “your work” as “Work or operations performed by you
or on your behalf and [m]aterials, parts or equipment furnished in connection
with such work or operations.           Your work includes: Warranties or
representations made at any time with respect to the fitness, quality, durability,
performance or use of your work; and [t]he providing of or failure to provide
warnings or instructions.” In addition to the FFIC Policy, Great Southern has
an excess insurance policy (the “XL Policy”) issued by XL Speciality Insurance
Company (“XL”) with a limit of four million dollars.
      Conmaco has a general liability policy through Lexington Insurance
Company (“Lexington”) with a one-million-dollar limit of liability (the “Lexington
Policy”). As to the Lexington Policy’s ranking with respect to other policies, it
states, in relevant part, that

      [i]f other valid and collectible insurance is available to the insured
      for a loss we cover under Coverage A or B of this Policy, our
      obligations are limited as follows:
      a. Primary Insurance
             This insurance is primary except when b. Excess Insurance,
             below, applies. If this insurance is primary, our obligations

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         are not affected unless any of the other insurance is also
         primary. Then, we will share with all that other insurance by
         the method described in c. Method of Sharing, below.

   b. Excess Insurance
        This insurance is excess over: . . .

                 (2) Any other primary insurance available to you
                 covering liability for damages arising out of the
                 premises or operations or the “products-completed
                 operations hazard” for which you have been added as
                 an additional insured by attachment of an
                 endorsement.

         When this insurance is excess over other insurance, we will
         pay only our share of the amount of the loss, if any, that
         exceeds the sum of:

                 (1) The total amount that all such other insurance
                 would pay for the loss in the absence of this insurance;
                 and

                 (2) The total of all deductibles and self-insured amounts
                 under all that other insurance.

         We will share the remaining loss, if any, with any other
         insurance that is not described in this Excess Insurance
         provision and was not bought specifically to apply in excess of
         the limits of insurance shown in the Declarations of this
         Policy.

   c. Method of Sharing
        If all of the other insurance permits contribution by equal
        shares, we will follow this method also. Under this approach
        each insurer contributes an equal amount until it has paid its
        applicable limit of insurance or none of the loss remains,
        whichever comes first. If any of the other insurance does not
        permit contribution by equal shares, we will contribute by
        limits. Under this method, each insurer’s share is based on
        the ratio of its applicable limit of insurance to the total
        applicable limits of insurance of all insurers.

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C.      Procedural Background
        Deville brought suit against Conmaco, Great Southern, and their various
insurers in the Eastern District of Louisiana in late 2009. Conmaco then filed
a third-party complaint against FFIC, claiming that Conmaco was an additional
insured under Great Southern’s policy with FFIC. In September 2010, FFIC
moved for summary judgment on Conmaco’s third-party action. The district
court denied that motion, reasoning that the Lease was an “insured contract”
under the FFIC Policy. In October 2010, Great Southern, XL, and another
insurer (Seabright Insurance Company) settled with Deville, and they were
dismissed with prejudice pursuant to that settlement.
        A trial on all remaining claims between the parties was scheduled, but
prior to that, Deville settled with Conmaco and Lexington for $1,500,000. After
hearing argument on the ranking of the respective insurance policies, the
district court concluded that (1) the FFIC Policy covered Conmaco, (2) the FFIC
Policy was primary up to its one-million-dollar limit, and (3) Lexington and XL
would share the remaining $500,000 owed to Deville in the settlement on a 4:1
basis with XL paying $400,000 and Lexington paying $100,000. FFIC timely
appealed, invoking our jurisdiction under 28 U.S.C. § 1291.
           II. STANDARD OF REVIEW AND APPLICABLE LAW
        As all of the questions are ones of contract interpretation, we review them
de novo. In re Homeowners Mortg. & Equity, Inc., 354 F.3d 372, 375 (5th Cir.
2003).
        The interpretation of these contracts is governed by Louisiana law. In
determining questions of Louisiana law, this court follows the “civilian
methodology” of Louisiana. Am. Int’l Specialty Lines Ins. Co. v. Canal Indem.
Co., 352 F.3d 254, 260 (5th Cir. 2003). Although we look to decisions of the
Louisiana Supreme Court, In re Katrina Canal Breaches Litig., 495 F.3d 191,
206 (5th Cir. 2007), “[j]urisprudence, even when so cohesive and entrenched as

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to rise to the level of jurisprudence constante, is merely a secondary law source,”
behind the “State’s Constitution, codes, and statutes.” Am. Int’l Speciality Lines
Ins., 352 F.3d at 260–61 (internal quotation marks omitted). As for decisions of
Louisiana’s intermediate appellate courts, though we will not “disregard” them
absent “other persuasive data” that the Louisiana Supreme Court would decide
otherwise, we are not “bound” by such decisions. Id. at 261.
      Insurance policies are contracts and therefore should be “‘construed by
using the general rules of interpretation [of contracts] set forth in the Louisiana
Civil Code.’” Fruge v. Amerisure Mut. Ins. Co., 663 F.3d 743, 748 (5th Cir. 2011)
(quoting Cadwallader v. Allstate Ins. Co., 848 So. 2d 577, 580 (La. 2003)).
Interpreting a contract requires “the determination of the common intent of the
parties.” La. Civ. Code art. 2045. “When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be
made in search of the parties’ intent.” Id. at art. 2046. “Words and phrases used
in an insurance policy are to be construed using their plain, ordinary and
generally prevailing meaning, unless the words have acquired a technical
meaning.” Cadwallader, 848 So. 2d at 580 (citing La. Civ. Code art. 2047).
Additionally, “[a] provision susceptible of different meanings must be interpreted
with a meaning that renders it effective and not with one that renders it
ineffective.” La. Civ. Code art. 2049. However, “[a]n insurance contract . . .
should not be interpreted in an unreasonable or strained manner . . . to enlarge
or to restrict its provisions beyond what is reasonably contemplated by
unambiguous terms.” Cadwallader, 848 So. 2d at 580. If ambiguity is found to
exist, such ambiguous provisions are “construed against the insurer and in favor
of coverage.” Id. (citing La. Civ. Code art. 2056). As for burdens, “the insured
bears the burden of proving the existence of the policy and coverage,” but the
insurer “bears the burden of showing policy limits or exclusions.” Tunstall v.
Stierwald, 809 So. 2d 916, 921 (La. 2002).

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                                III. DISCUSSION
A.      Conmaco as an “Additional Insured” under the FFIC Policy
        Conmaco claims that it is covered under the FFIC Policy as an “additional
insured” under that policy. As this is an issue of “proving the existence of . . .
coverage,” Conmaco bears the burden of showing that it is covered by the blanket
“additional insured” provision of the FFIC Policy. To do so, it must demonstrate
that the Lease constituted an “insured contract” pursuant to the FFIC Policy.
To qualify as an “insured contract,” Conmaco must show that Great Southern
assumed Conmaco’s “tort liability” through the execution of the Lease. The key
inquiry then is the assumption of Conmaco’s tort liability by Great Southern.
FFIC contends that the Lease only imposed a mere obligation to procure
insurance and not the assumption of Conmaco’s tort liability.
        While it is true that under Louisiana law there is a presumption against
finding the assumption of tort liability unless such an intention is expressed in
unequivocal terms, see Polozola v. Garlock, Inc., 343 So. 2d 1000, 1003 (La.
1977); see also Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir.
1981) (“A contract to indemnify another for his own negligence imposes an
extraordinary obligation. Thus an indemnitor is entitled to express notice . . .
.”), Louisiana courts have not held that any certain prescribed language is
required to shift liability from one party to another. Rather, the courts look to
the contract as a whole. See Soverign Ins. Co. v. Tex. Pipe Line Co., 488 So. 2d
982, 983 (La. 1986). Viewing the whole of the contract, we find that paragraph
3(c) and the additional General Terms, especially when read together, evince the
requisite express intent of the parties to have Great Southern assume Conmaco’s
tort liability. The language of paragraph 3(c) is very broad: “Lessee shall . . .
cover[] all risks of physical loss or damage to property or injury to persons . . . .”
This language suggests that Great Southern must obtain an insurance policy
that covers all torts arising out of the use of the crane. Moreover, when

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paragraph 3(c) is read alongside the General Terms provision stating that
“Lessee is liable for any loss or casualty which is not insured, or which is within
exclusions to insurance coverage,” it becomes clear that Great Southern was
bound to cover any liability of Conmaco, even that which is outside of the scope
of the broad insurance-procurement provision.
      Our reading of the FFIC Policy is bolstered by the decision, on very similar
facts, of the Louisiana Fifth Circuit Court of Appeal in Alwell v. Meadowcrest
Hospital, Inc., 971 So. 2d 411 (La. Ct. App. 2007). In that case, the plaintiff
slipped and fell in a hospital and sued the hospital (Meadowcrest) and the
hospital’s janitorial service (HHS). Meadowcrest, like Conmaco, filed a third-
party suit against HHS’s insurer (Liberty), claiming that it was an “additional
insured.” HHS had agreed to “maintain adequate . . . general public liability . . .
insurance against any claim or claims that might or could arise as a result of
[HHS] performing Hotel Service for the benefit of [Meadowcrest] under [that]
Agreement.” Id. at 414 n.3. Moreover, the agreement provided that “[t]he
insurance policies shall name [Meadowcrest] as an additional insured (to the
extent of [HHS]’s negligence).” Id. “HHS subsequently purchased a policy from
Liberty to comply with the . . . Agreement. The policy provide[d] coverage for
damages HHS ha[d] obligated itself to pay under a contractual assumption of
liability, but only when that liability is assumed in an ‘insured contract.’” Id. at
413. The policy defined an insured contract the exact same way as the FFIC
Policy does here, and the Alwell court found no error in the trial court’s
determination that “Liberty ha[d] a duty to defend Meadowcrest.” Id. at 415.
      We find that the Lease was an “insured contract” because in the Lease
Great Southern assumed Conmaco’s tort liability. We therefore hold that
Conmaco is an “additional insured” under the FFIC Policy.

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B.      Ranking of the Policies
        FFIC next contends that its policy is excess to Conmaco’s general
commercial insurance, the Lexington Policy. Where, as here, “there is no
statutory or public policy governing the ranking of insurance, the law requires
that the court give effect to the actual language of each policy, to the extent
possible.” Spiro v. Liberty Mut. Fire Ins. Co., 761 So. 2d 53, 55 (La. Ct. App.
2000). The default ranking of the FFIC Policy is excess, but the FFIC Policy
provides that it becomes primary if two conditions are met: (1) “‘your [Great
Southern’s] work’” is at issue and (2) “[w]hen required by and only to the extent
of such obligation under an ‘insured contract.’” The “your work” condition is met
here because “your work” encompasses “[m]aterials, parts or equipment
furnished in connection with [Great Southern’s] work or operations,” and the
Conmaco crane was furnished in connection with Great Southern’s work.
Ranking of the FFIC Policy and the Lexington Policy therefore turns on the
second condition.
        FFIC argues, based on Jessop v. City of Alexandria, 871 So. 2d 1140 (La.
Ct. App. 2004), that this second condition requires the “insured contract” at issue
to specifically state that the policy is primary. In Jessop, the court dealt with a
ranking clause that provided: “Any coverage provided hereunder will be excess
over any other valid and collectible insurance available to the additional insured
whether primary, excess, contingent or on any other basis unless a contract
specifically requires that this insurance be primary.” Id. at 1146 (internal
quotation marks omitted). Unlike in Jessop, however, the FFIC Policy imposes
no specificity requirement, only that the policy be primary as a result of
obligations undertaken in an “insured contract.” Thus, both conditions for
rendering the FFIC Policy primary are met: (1) the need for coverage arose out
of Great Southern’s “work” and (2) the Lease is an “insured contract.”

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      Such a determination does not, as FFIC argues, render the phrase “only
to the extent of such obligation” superfluous. That phrase refers to the nature
and extent of the requirements in the insured contract such as the type of
coverage, the limits of coverage and/or any deductibles or retentions. For
example, if Conmaco had only required Great Southern to procure $100,000
worth of commercial general liability coverage, as opposed to $1,000,000, then
the FFIC Policy would arguably only afford Conmaco $100,000 of coverage.
Moreover, such a reading is not in tension with the Lexington Policy, which
defaults to be a primary policy but is rendered excess when “[a]ny other primary
insurance available to you covering liability for damages arising out of the
premises or operations or the ‘products-completed operations hazard’ for which
you have been added as an additional insured by attachment of an
endorsement.” The Lexington Policy becomes excess because the “insured
contract” endorsement to the FFIC Policy covers Conmaco for the “operation” at
issue in this case (the lease of the crane to Great Southern). Lastly, the FFIC
and Lexington Policies’ “other insurance” clauses are not “mutually repugnant”
based on the failure of the Lexington Policy to define “operations” in its excess
insurance clause. “Words and phrases used in an insurance policy are to be
construed using their plain, ordinary and generally prevailing meaning.”
Cadwallader, 848 So. 2d at 580 (citing La. Civ. Code art. 2047). In this case, the
only logical meaning of the word “operations” in the context of “operations . . . for
which you have been added as an additional insured” is Great Southern’s use of
the crane, which is the source of the dispute.
                               IV. CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.

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