Court Opinion

ID: 9895
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:49:35+00
Date Added: 2024-06-11T12:37:00.599112
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                       FOR THE FIFTH CIRCUIT

                           No. 96-20006

                         Summary Calendar

AMERICAN HOME ASSURANCE COMPANY,
                                           Plaintiff-Counter Defendant
                                           Appellee,

                              versus

UNITRAMP LIMITED and
UNITRAMP, S.A.,
                                           Defendants-Counter
                                           Claimants-Appellants.

          Appeal from the United States District Court
               for the Southern District of Texas
                          (CA-H-95-522)

                           June 20, 1996

Before HIGGINBOTHAM, DUHÉ, and EMILIO M. GARZA, Circuit Judges.

PER CURIAM:*

     Unitramp Limited and Unitramp, S.A. appeal the judgment of the

U.S. District Court declaring that American Home Assurance Company

owes them no indemnity for losses they incurred in a shipping

    *
     Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
mishap.    They   further   appeal    the   district     court's    award    of

attorneys' fees to American Home.         We vacate the district court's

judgment and remand for further proceedings.

                                     I.

     Unitramp was the time charterer of the M/V Glenita, a general

cargo vessel owned by Ugland.        On June 8, 1993, Enjet Refining,

Inc. delivered 450 tons of fuel to the M/V Glenita at Enjet's

Ingleside facility near Corpus Christi, Texas.            Unitramp ordered

that the fuel be kept in segregated bunkers while a laboratory

analysis of the fuel was performed.         The M/V Glenita departed for

Mobile, Alabama on June 9.      In Mobile, the ship took on a cargo of

coal.   The M/V Glenita departed Mobile on June 13, 1993 bound for

Casablanca.

     On June 14, 1993, while the M/V Glenita was at sea, Unitramp

received the report of the laboratory analysis of the fuel.                 The

report disclosed an unacceptably high level of water in the fuel.

Ugland informed Unitramp that the fuel could not be used.           Unitramp

directed the M/V Glenita to proceed to Tampa, Florida, where Enjet

refueled the ship.

     Unitramp sued Enjet for losses it incurred as a result of the

delay caused by the need to refuel the M/V Glenita.            Enjet filed

for bankruptcy    while   the   Unitramp    suit   was   pending,    but    the

bankruptcy court lifted the automatic stay and permitted Unitramp

to continue prosecuting its lawsuit against Enjet.            Unitramp and

Enjet subsequently settled the dispute for $210,000.

                                     2
     Unitramp then sought to recover its judgment from Enjet's

insurer,   American   Home.    American    Home   had   issued   Galveston

Terminal, Inc. a comprehensive liability policy effective from June

12, 1992 to noon on June 12, 1993.        The policy named Enjet as an

additional assured and covered liability arising from operations at

scheduled locations.     Enjet's Ingleside facility was not one of

those covered locations.      American Home renewed the policy.        The

renewed policy was effective as of noon on June 12, 1993 and

covered Enjet's Ingleside facility.

     Both policies defined an "occurrence" as:

     an event or a continuous or repeated exposure to
     conditions which unintentionally, from the standpoint of
     the Assureds, causes injury, loss, damages or destruction
     during the policy period. Any number of such injuries,
     damage or destruction resulting from a common cause or
     from exposure to substantially the same conditions shall
     be deemed to result from one occurrence.1

The policies further provided that "[o]perations or products in

existence prior to the inception of this policy which cause or

result in bodily injury or property damage during the policy period

are covered by this policy."

     American Home sued Unitramp, seeking a declaratory judgment

that it owed Unitramp no indemnity under its policies.            Unitramp

counterclaimed, seeking a declaration to the contrary. The crux of

the litigation centered on when the covered "occurrence" happened:

     1
          The renewal policy omits the term "loss" from this
definition.   The parties do not contend that the difference in
policy language affects this appeal.

                                   3
when the fuel was loaded on board the ship or when Unitramp

discovered that the fuel was unacceptable.          The district court

agreed with American Home that, under the terms of the policy,

liability attached at the time of the causative event, not at the

time damage was discovered.    Since Enjet delivered the bad fuel at

a time when American Home's policy did not cover Enjet's Ingleside

facility, no coverage existed. The district court awarded American

Home declaratory relief and, subsequently, $7,750 in attorneys'

fees.

                                  II.

     On   appeal,   Unitramp   argues    that,   under   Texas   law,   an

"occurrence" is not when the act causing the damage is committed,

but rather when the damage from that act is actually sustained.

According to Unitramp, it did not sustain any damage until it

discovered that the fuel was bad, that is, on June 14, 1993 when

the M/V Glenita was at sea.

     In Snug Harbor, Ltd. v. Zurich Ins., 968 F.2d 538, 544 (5th

Cir. 1992), we observed that "Texas courts have concluded that the

time of an occurrence is when a claimant sustains actual damage--

not necessarily when the act or omission causing that damage is

committed."   See Dorchester Development v. Safeco Ins., 737 S.W.2d
380, 383 (Tex. App.--Dallas 1987, no writ); Cullen/Frost Bank of

Dallas v. Commonwealth Lloyd's Ins. Co., 852 S.W.2d 252, 257 (Tex.

App.--Dallas 1993, writ denied).       In this case, the district court

held that liability attaches at the time of the causative event.

                                   4
Although we are inclined to agree with the district court's reading

of the policy language, both Texas courts and this circuit have

construed similar policy language as requiring an analysis of when

the damage manifested itself.

     We therefore VACATE the district court's judgment and REMAND

for a determination of when Unitramp sustained actual damage.   We

also VACATE the district court's award of attorneys' fees.

                                5