Court Opinion

ID: 9409110
Source: CourtListenerOpinion
Date Created: 2023-07-15 00:00:36.188025+00
Date Added: 2024-06-11T17:20:48.919259
License: Public Domain

Case: 22-30164    Document: 00516821687       Page: 1     Date Filed: 07/14/2023

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

                              ____________                           FILED
                                                                 July 14, 2023
                                No. 22-30164                    Lyle W. Cayce
                              ____________                           Clerk

   Weyerhaeuser Company; Weyerhaeuser NR Company,

                                                        Plaintiffs—Appellants,

                                    versus

   Burlington Insurance Company; Evanston Insurance
   Company,

                                          Defendants—Appellees.
                 ______________________________

                 Appeal from the United States District Court
                    for the Western District of Louisiana
                           USDC No. 3:21-CV-905
                 ______________________________

   Before Wiener, Higginson, and Wilson, Circuit Judges.
   Jacques L. Wiener, Jr., Circuit Judge:
         Plaintiff-Appellant Weyerhaeuser NR Company (“NR”) entered into
   a manufacturing agreement with Simsboro Coating Services, LLC
   (“Simsboro”). That agreement required Simsboro to acquire commercial
   general liability insurance, which it obtained from Defendants-Appellees
   Burlington Insurance Company (“BIC”) and Evanston Insurance Company
   (“EIC”). It further required that “Weyerhaeuser and its Subsidiaries” be
   named as additional insureds. However, NR’s parent company,
   Weyerhaeuser Company (“W. Co.”), was never added to the insurance
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                                    No. 22-30164

   policies that Simsboro obtained from EIC and BIC. This insurance coverage
   dispute arose after several personal injury lawsuits were filed against
   Simsboro and W. Co. in state court. After those lawsuits settled, W. Co. and
   NR sued BIC and EIC, demanding that they defend and indemnify W. Co.
   and NR. EIC and BIC then filed Rule 12(b)(6) motions, which were granted
   by the district court. We AFFIRM.
                    I. FACTUAL AND PROCEDURAL BACKGROUND
          Plaintiff-Appellant NR is a wholly-owned subsidiary of W. Co.
   (collectively, “Weyerhaeuser”), which is “one of the world’s largest private
   owners of timberlands, [and] . . . one of the world’s largest manufacturers of
   wood products.” According to Plaintiffs-Appellants, NR was founded in
   2009 for the sole purpose of holding W. Co.’s taxable businesses.
   Weyerhaeuser asserts that during the timeframe relevant to this case,
   however, NR conducted all of Weyerhaeuser’s operations except for
   timberland    ownership,    including       Weyerhaeuser’s     wood   products
   manufacturing business.
          In March 2015, NR entered into a manufacturing agreement (the
   “Agreement”) with Simsboro. Under the Agreement, Simsboro would aid
   in the manufacture of Weyerhaeuser’s “Trus Joist TJIs” product by coating
   wooden floor joists with a proprietary fire-retardant coating known as “Flak
   Jacket.” The coating work at issue was to be performed in a Weyerhaeuser
   facility located in Simsboro, Louisiana. The Agreement required Simsboro to
   obtain commercial general liability (“CGL”) insurance, under which
   “Weyerhaeuser and its Subsidiaries” would be named as “Additional
   Insured[s].” The Agreement also contained an indemnification provision
   whereby Simsboro agreed to “indemnify, defend, and hold harmless
   Weyerhaeuser, and its parent company . . . against all claims, damages, fines,
   penalties, costs, liabilities, or losses” arising from Simsboro’s negligence,
   other tortious fault, intentional misconduct, and other situations.

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          Pursuant to the Agreement, Simsboro obtained CGL policies 1 (the
   “CGL Policies”) from Defendant-Appellee Burlington BIC and an excess
   insurance policy2 (the “Excess Policy”) from Defendant-Appellee EIC. NR
   was added as an “additional insured” on the CGL Policies, and the Excess
   Policy incorporated this endorsement by reference. W. Co., however, was
   never added as an additional insured on the CGL Policies.
          Between October 2017 and July 2018, three separate personal injury
   lawsuits were filed in Louisiana and Washington against Simsboro and W.
   Co. in connection with work performed under the Agreement. The plaintiffs,
   who included former Simsboro employees and their spouses, alleged that
   they were exposed to dangerous levels of formaldehyde because of the
   coating work done at W. Co.’s Simsboro, Louisiana facility. The plaintiffs
   alleged that (1) W. Co. owned and controlled the formula and specifications
   for the Flak Jacket coating; (2) W. Co. altered a previous Flak Jacket formula,
   creating a new formula that contained dangerous levels of formaldehyde; (3)
   W. Co. was aware of the dangers of formaldehyde exposure but did not warn
   or otherwise notify the Simsboro employees; and (4) some of those
   employees suffered physical ailments as a result. The Louisiana-based
   lawsuits against Simsboro and W. Co. alleged violations of the Louisiana
   Products Liability Act, La. Civ. Code art. 2800, negligence under La.
   Civ. Code arts. 2315 & 2316, and strict liability under La Civ. Code art.

          _____________________
          1
             The CGL Policies include policy number 245BW35682, which took effect on May
   18, 2016, and expired on May 18, 2017, and policy number 245BW39882, which took effect
   on May 18, 2017, and expired on May 18, 2018.
          2
             The Excess Policy (policy number MKLV4EUL100784) would insure Simsboro
   after the BIC policy limit was exhausted. The Excess Policy took effect on May 18, 2017,
   and expired on May 18, 2018.

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   2317.1. The Washington-based lawsuit against W. Co. involved an alleged
   violation of the Washington Products Liability Act, RCW 7.72, et seq.
          In September 2020, all parties to the lawsuits mediated and reached a
   settlement. W. Co. then demanded that BIC and EIC defend and indemnify
   it for the costs of settling the lawsuits, but BIC and EIC refused to do so. As
   a result, W. Co. and NR sued EIC, BIC, and Simsboro in the Western District
   of Louisiana, asserting breach of contract claims against those three
   defendants, plus a prompt-payment violation against BIC. Weyerhaeuser
   asserted that BIC and EIC knew that W. Co. was an additional insured under
   the Agreement, thus triggering EIC’s and BIC’s duty to defend and
   indemnify W. Co. in the underlying lawsuits. Weyerhaeuser also asserted, in
   the alternative, that the Agreement qualifies as an “insured contract” under
   the CGL Policies, and thereby manifested a clear intent to include W. Co.
   and NR as third-party beneficiaries to the policies.
          BIC and EIC each filed Rule 12(b)(6) motions, asserting that dismissal
   was appropriate because W. Co. had failed to state claims for breach of
   contract and lack of prompt payment. EIC and BIC argued that they had no
   duty to compensate, defend, or indemnify W. Co. because (1) W. Co. was not
   a named or additional insured in the policies, (2) there was no mutual mistake
   among them, and (3) the underlying personal injury lawsuits were filed only
   against W. Co. and not NR too. In its opposition to the motions,
   Weyerhaeuser reasserted the allegations in its complaint and also asserted
   that (1) contract reformation was warranted because of a mutual mistake, and
   (2) EIC and BIC had waived the right to deny coverage to Weyerhaeuser.
          Before considering Defendants-Appellees’ motions to dismiss, the
   Magistrate Judge ordered Weyerhaeuser to amend its complaint to clarify the
   citizenship of Simsboro for diversity jurisdiction. Weyerhaeuser complied
   but did not add any other factual allegations pertinent to its opposition to the

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   motions to dismiss. After reviewing the amended complaint, the Magistrate
   Judge prepared a Report and Recommendation recommending that both
   motions to dismiss be granted. The Magistrate Judge reasoned that
   Weyerhaeuser had failed to state breach of contract and prompt payment
   claims against BIC and EIC because W. Co. was not named as an additional
   insured in the policies and NR was not sued in the underlying personal injury
   lawsuits. The Magistrate Judge also ruled that W. Co. could not be an
   indemnitee or a third-party beneficiary of the policies.
           The district court conducted a de novo review of the record, adopted
   the Magistrate Judge’s Report and Recommendation, and granted both
   motions to dismiss. The district court entered a Rule 54(b) judgment of
   dismissal, and Plaintiffs-Appellants timely appealed.
                                 II. STANDARD OF REVIEW
           We review a motion to dismiss de novo, accepting all well-pleaded facts
   as true and drawing all inferences in favor of the plaintiff.3 “To survive a
   motion to dismiss, a complaint must contain sufficient factual matter,
   accepted as true, to ‘state a claim to relief that is plausible on its face.’” 4
   Conclusional allegations, naked assertions, and “formulaic recitation[s] of
   the elements of a cause of action will not do.” 5 In its review of a motion to
   dismiss, the district court is limited to the contents of the pleadings, including
   attachments thereto.6 However, “‘[d]ocuments that a defendant attaches to

           _____________________
           3
               Marks v. Hudson, 933 F.3d 481, 485 (5th Cir. 2019).
           4
            Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
   U.S. 544, 570 (2007)).
           5
               Id.
           6
               Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498–99 (5th Cir. 2000).

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   a motion to dismiss are considered part of the pleadings if they are referred
   to in the plaintiff’s complaint and are central to her claims.’”7
                                         III. ANALYSIS
           Weyerhaeuser asserted three claims in its amended complaint: (1)
   breach of contract against Simsboro; (2) breach of contract against BIC and
   EIC; and (3) violation of Louisiana Insurance Code § 22:1892, which involves
   prompt payment. The district court dismissed all claims against BIC and
   EIC. Only the breach of contract claims against BIC and EIC are at issue in
   this appeal because the prompt payment claim was waived. 8
           Weyerhaeuser contends that BIC and EIC clearly breached the CGL
   Policies and the Excess Policy by failing to defend and indemnify W. Co. and
   NR as additional insureds or third-party beneficiaries in connection with the
   underlying personal injury lawsuits. The CGL Policies and the Excess Policy9
   are contracts, so the general rules of Louisiana contract interpretation
           _____________________
           7
            Id. (alteration in original) (quoting Venture Assocs. Cop. v. Zenith Data Sys. Corp.,
   987 F.2d 429, 431 (7th Cir. 1993)).
           8
              Weyerhaeuser did not brief the district court’s dismissal of its claim under
   Louisiana Insurance Code § 22:1892. Defendants-Appellees raised that issue in their briefs,
   alleging that Weyerhaeuser waived this claim on appeal. Weyerhaeuser contends that it did
   not waive this claim because “[t]he basis for the District Court’s dismissal of these claims
   is entirely subsumed within the errors set forth in Weyerhaeuser’s opening brief.”
   Defendants-Appellees correctly point out, however, that it is well-settled in this circuit that
   “an argument not raised in an appellant’s original brief as required by [Rule 28] is waived.”
   See United States v. Ogle, 415 F.3d 382, 383 (5th Cir. 2005). Accordingly, Weyerhaeuser’s
   prompt payment claim under Louisiana Insurance Code § 22:1892 was waived on appeal.
           9
             It is important to note that EIC’s insurance obligations under the Excess Policy
   were not activated unless the underlying CGL Policy was exhausted. EIC raised this issue
   in the proceedings below, asserting that Weyerhaeuser failed to sufficiently plead
   exhaustion. The district court, through the Magistrate Judge, held that it was unnecessary
   to reach this issue. EIC raised additional issues, such as whether a total pollution exclusion
   barred coverage and whether Weyerhaeuser had obtained its consent to settle, but these
   issues were not analyzed in the Magistrate Judge’s Report and Recommendation.

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   apply.10 The elements of a breach of contract claim under Louisiana law are:
   (1) the existence of a contract; (2) a party’s breach thereof; and (3) resulting
   damages.11 It is well settled that “[t]he party claiming the rights under the
   contract bears the burden of proof.”12 The Louisiana Civil Code states that
   “[t]he judiciary’s role in interpreting insurance contracts is to ascertain the
   common intent of the parties to the contract.”13 “If the wording is clear and
   unambiguous with regard to the parties’ intent, the insurance policy must be
   enforced as written.”14 Moreover, “[t]he rules of construction do not
   authorize a perversion of the words or the exercise of inventive powers to
   create an ambiguity where none exists or the making of a new contract when
   the terms express with sufficient clarity the parties’ intent.” 15
           A. Whether BIC and EIC had a duty to defend W. Co. and NR as
                  additional insureds
           An “insurer’s duty to defend is nevertheless measured by the
   allegations of the petition even though the insurer may have determined that
   there was no coverage on the basis of known or ascertainable facts.”16 This
   analysis is known as the “eight-corners rule,” under which the insurer must

           _____________________
           10
            Bernard v. Ellis, 2011-2377, (La. 7/2/12); 111 So. 3d 995, 1002; see also Mayo v.
   State Farm Mut. Auto. Ins. Co., 2003-1801, (La. 2/25/04); 869 So. 2d 96, 99 (citing La.
   Civ. Code art. 2045).
           11
             1100 S. Jefferson Davis Parkway, LLC v. Williams, 14-1326, p. 5 (La. App. 4 Cir.
   5/20/15); 165 So. 3d 1211, 1216, writ denied, 15-1449 (La. 10/9/15); 178 So. 3d 1005.
           12
                Id.
           13
                Mayo, 869 So. 2d at 909 (citing La. Civ. Code art. 2045).
           14
             Ilgenfritz v. Canopius U.S. Ins., 51,540-CA (La. App. 2 Cir. 8/9/17); 243 So. 3d
   1109, 1112.
           15
                Mayo, 869 So. 2d at 99–100.
           16
                Benoit v. Fuselier, 195 So. 2d 679, 683 (La. App. 3 Cir. 1967).

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   look to the “four corners” of the plaintiff’s petition and the “four corners”
   of the insurance policy to determine whether it owes that duty to the
   plaintiff.17 The duty to defend under Louisiana law is generally broader than
   an insurer’s liability for damage claims, and an insurer is typically “obligated
   to furnish a defense unless the petition unambiguously excludes coverage.”18
   Furthermore, “the allegations of the petition are liberally interpreted” when
   determining the duty to defend the insured.19 The district court applied the
   eight-corners rule via the Report and Recommendation, and held that the
   allegations in the personal injury lawsuits pertained only to W. Co. and
   Simsboro—not to NR, the only named Additional Insured.
           Weyerhaeuser takes issue with the district court’s application of the
   eight-corners rule, asserting that it was erroneous and “hyper-formalistic.”
   Weyerhaeuser contends that the eight-corners rule should be loosely applied
   or disregarded altogether because extrinsic evidence is necessary for the
   analysis of its claims. Citing various Louisiana cases,20 cases outside this
   circuit, and an insurance treatise,21 Weyerhaeuser asserts that Louisiana
   courts may look beyond the eight corners of the complaint and the policy to
   determine whether the duty to defend exists. Regarding extrinsic evidence,
   Weyerhaeuser claims that the “subsequent pleadings and the insurers’ actual

           _____________________
           17
                Hoffpauir v. Cajundome Comm’n, 2020-423 (La. App. 3 Cir. 4/21/21); 318 So. 3d
   334, 339.
           18
                Charley Am. Home Assur. Co. v. Czarniecki, 230 So. 2d 253, 259 (La. 1969).
           19
                T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., 242 F.3d 667, 677 (5th Cir. 2001).
           20
              See, e.g., Grimaldi Mech., L.L.C. v. The Gray Ins. Co., 2005-0695 (La. App. 4 Cir.
   6/2/06); 933 So. 2d 887 writ denied sub nom. Grimaldi Mech., L.L.C. v. Gray Ins. Co., 2006-
   2146 (La. 11/17/06); 942 So. 2d 536; Bryant v. Motwani, 96-1351 (La. App. 4 Cir. 10/30/96);
   683 So. 2d 880, 884; State Farm Fire and Cas. Co. v. Target Corp., 939 F. Supp. 2d 593
   (M.D. La. 2011).
           21
                STEVEN PLITT, ET AL., COUCH ON INSURANCE § 200:22 (3d ed. 2020).

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   or constructive knowledge left no doubt that [NR] was the true party in the
   underlying litigation.”
             Weyerhaeuser further contends that the alleged misnomer in the
   personal injury lawsuits presents a novel issue that requires this court to make
   an “Erie guess” regarding Louisiana insurance law. Courts may make an
   “Erie guess” when there is no decision on point from the state’s supreme
   court regarding that issue, which in this case is the Louisiana Supreme
   Court.22 An Erie guess would require this court to “employ Louisiana’s
   civilian methodology, [and] first examine primary sources of law: the
   constitution, codes, and statutes.”23 In support, Weyerhaeuser relies on the
   treatise, COUCH ON INSURANCE, which states that “some jurisdictions . . .
   consider extrinsic evidence in determining whether the insurer has a duty to
   defend.”24 Weyerhaeuser notes that this court has relied on COUCH ON
   INSURANCE to make Erie guesses regarding Louisiana insurance law in at
   least two instances.25 Indeed, in Weaver v. CCA Industries, Inc., this court
   relied on that treatise when it made an Erie guess to determine how a policy
   exclusion should be interpreted, noting that “no Louisiana court has
   considered this particular exclusion in this context.” 26 Further, in In re

             _____________________
             22
                  See Apache Deepwater, L.L.C. v. W&T Offshore, Inc., 930 F.3d 647, 654 (5th Cir.
   2019).
             23
                  Id. (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir.
   2007)).
             24
                  COUCH ON INSURANCE § 200:22.
             25
             See, e.g., Weaver v. CCA Indus., Inc., 529 F.3d 335, 342 (5th Cir. 2008); In re
   Katrina, 495 F.3d at 208.
             26
                  Weaver, 529 F.3d at 342.

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   Katrina Canal Breaches Litigation, this court relied on that treatise’s
   definition of “flood” to assist in interpreting an insurance policy.27
           COUCH ON INSURANCE does not instruct us to abandon the eight
   corners rule in this case, however. The Erie guesses in Weaver and In re
   Katrina pertain to the interpretation of particular words or provisions in
   insurance contracts—not to the interpretation of Louisiana contract law
   canons. COUCH ON INSURANCE states that “a court has no obligation to
   examine evidence extrinsic in determining whether the liability insurer has a
   duty to defend the underlying action where the allegations of the complaint
   are not ambiguous.”28 Importantly, none of the cases which that treatise cites
   in support of considering extrinsic evidence apply Louisiana law. 29
   Moreover, that treatise clearly states that “under Louisiana law, in
   determining whether [the] insurer has duty to defend, court[s] will look only
   to factual allegations in [the] complaint; statements of conclusions in [the]
   complaint that are unsupported by factual allegations will not trigger [the]
   duty to defend.”30 Weyerhaeuser’s assertion that we must forego the eight-
   corners rule in favor of an “Erie guess” is therefore unavailing.
           Moreover, as the Magistrate Judge’s Report and Recommendation
   correctly points out, none of the Louisiana cases cited by Weyerhaeuser held
   that pleadings outside the complaint may extend a duty to defend an entity
   that is not named in the underlying suit. For example, in Grimaldi Mechanical,
   L.L.C. v. The Gray Insurance Co., the Louisiana Fourth Circuit considered

           _____________________
           27
                In re Katrina, 495 F.3d at 212.
           28
                COUCH ON INSURANCE § 200:22.
           29
                Id.
           30
             Id. (citing Liberty Mut. Ins. Co. v. Jotun Paints, Inc., 555 F. Supp. 2d 686 (E.D.
   La. 2008)).

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   the reconventional demand and corresponding exhibits of an adverse party to
   interpret coverage—but only in relation to the named insured.31 The court
   noted that the facts of the case were “somewhat of an anomaly,” but it still
   applied the eight-corners rule.32 In Bryant v. Motwani, the Louisiana Fourth
   Circuit clearly endorsed the eight-corners rule, holding that “[t]he duty to
   defend is determined solely from the plaintiff’s pleadings and the face of the
   policy, without consideration of extraneous evidence.” 33 Finally, in State
   Farm Fire and Casualty Co. v. Target Corp., the U.S. District Court for the
   Middle District of Louisiana considered the original petition and the
   additional insured’s third party demand only against the named insured.34
   Louisiana state and federal courts have consistently rejected loosening or
   abandoning the eight-corners rule.35 We see no reason to stray from the eight-
   corners rule here.
          A simple application of the eight-corners rule in this case shows that
   the duty to defend was not triggered by the complaints in the underlying
   personal injury lawsuits. As a preliminary matter, the CGL Policies do not
   list W. Co. as an additional insured; neither does the Excess Policy, which
   incorporates the CGL Policies by reference. The three petitions in the

          _____________________
          31
               933 So. 2d at 892.
          32
               Id. at 897.
          33
               683 So. 2d at 884.
          34
               939 F. Supp. 2d at 602.
          35
              Kent & Smith Holdings, LLC v. HDI Glob. Ins. Co., 344 F. Supp. 3d 878, 882
   (M.D. La. 2018) (“Under Louisiana’s ‘Eight Corners Rule,’ duty to defend must be
   analyzed by applying the allegations of the complaint without resort to extrinsic
   evidence.”); Seilham v. Commonwealth Land Title Ins. Co., 360 F. Supp. 3d 412, 423 (E.D.
   La. 2018) (“Thus, in evaluating an insurer’s duty to defend, a court examines only the
   plaintiff’s pleadings and the face of the policy, without consideration of extraneous
   evidence.” (internal quotes and citations omitted)).

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   underlying lawsuits do not mention NR at all, and the allegations relate only
   to NR’s parent company, W. Co. The complaints assert that (1) W. Co.
   owned and controlled the formula and specifications for the Flak Jacket
   coating; (2) W. Co. altered a previous Flak Jacket formula, creating a new
   formula that contained dangerous levels of formaldehyde; and (3) W. Co. was
   aware of the dangers of formaldehyde exposure but did not warn or notify the
   Simsboro employees. The petitions clearly define W. Co. as “one of the
   world’s largest private owners of timberlands” and assert facts concerning
   high-level corporate actions and responsibilities—not the actions of its
   wholly-owned subsidiary, NR. We therefore conclude that EIC and BIC did
   not have a duty to defend W. Co. and NR and that they did not breach their
   defense obligations under the CGL Policies and the Excess Policy.
           B. Whether BIC and EIC had a duty to indemnify W. Co. and NR
                  as additional insureds
           This court has distinguished the duty-to-defend inquiry from the
   duty-to-indemnify inquiry, explaining that “[w]hile factual inquiries beyond
   the complaint are prohibited with respect to the duty to defend, they are
   indispensable in assessing the duty to indemnify.” 36 In other words, courts
   may consider extrinsic evidence to determine whether an insurer has a duty
   to indemnify.37 In Chevron Oronite Co., L.L.C. v. Jacob Field Services North
   America, Inc., this court held that, “[a]s a general rule, one seeking indemnity
   for a settlement must show actual liability to recover.”38 Thus, the duty to

           _____________________
           36
                Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009).
           37
                Id.
           38
              Chevron Oronite Co., L.L.C. v. Jacobs Field Servs. N. Am., Inc., 951 F.3d 219, 226
   (5th Cir. 2020) (quoting Sullivan v. Franicevich, 2004-0321 (La. App. 4 Cir. 3/9/05); 899
   So. 2d 602, 609, cert. denied, 902 So. 2d 1051 (La. 2005)).

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   indemnify often arises “after judgment has been entered in the underlying
   liability case.”39
           This court has recognized two exceptions to that rule. First, when
   there is a written contract, “the indemnitee only need show potential, rather
   than actual liability.”40 Second, if “the defendant tenders the defense of the
   action to the indemnitor,” the party seeking indemnity may show potential
   rather than actual liability.41 This court has cautioned that an “indemnitee’s
   unilateral acts, albeit reasonable and undertaken in good faith, cannot bind
   the indemnitor; notice and an opportunity to defend are the indispensable
   due process satisfying elements.”42
           Weyerhaeuser alleges that BIC breached its duty to indemnify it by
   failing to do so in connection with the settlement of the underlying personal
   injury lawsuits. Weyerhaeuser further alleges that EIC breached its duty to
   indemnify it because the CGL Policies “have been or will be exhausted.”
   Weyerhaeuser contends that the district court erred in finding that BIC and
   EIC had no duty to indemnify because that court incorrectly subsumed the
   indemnification inquiry in its analysis of the duty to defend. Quoting a 2009
   case from this circuit, Weyerhaeuser asserts that “[a]n insurer’s duty to
   defend suits on behalf of an insured presents a separate and distinct inquiry
   from that of the insurer’s duty to indemnify a covered claim.” 43
   Weyerhaeuser contends that the atypical nature of this case necessitates a

           _____________________
           39
                Martco, 588 F.3d at 872.
           40
             Chevron Oronite Co., 951 F.3d at 226 (quoting Fontenot v. Mesa Petrol. Co., 791
   F.2d 1207, 1216–17 (5th Cir. 1986)).
           41
                Id.
           42
                Parfait v. Jahncke Serv., Inc., 484 F.2d 296, 304 (5th Cir. 1973).
           43
                Martco Ltd., 588 F.3d at 872.

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   separate analysis incorporating “factual information beyond the original
   petitions.” Weyerhaeuser further asserts that extrinsic evidence, such as
   subsequent pleadings in the personal injury lawsuits, “indisputably trigger[s]
   Appellees’ duty to indemnify Weyerhaeuser.”
           The district court, via the Magistrate Judge’s Report and
   Recommendation, analyzed the duty to defend in conjunction with the duty
   to indemnify, and concluded that EIC and BIC had no duty to indemnify
   Weyerhaeuser in the underlying lawsuits. The district court pointed out that
   “[i]t is well established that the duty to defend in Louisiana law is generally
   broader than an insurer’s liability for damage claims,” and that, since EIC
   and BIC did not have a duty to defend Weyerhaeuser in the underlying suits,
   there was no duty to indemnify Weyerhaeuser. In support of that theory, the
   district court relied on a Louisiana Third Circuit case which held that
   “[l]ogic dictates that if the policy unambiguously excludes coverage for
   purpose[ ] of an insurer’s duty to defend, the insurer owes no duty to pay the
   sums its insured is legally obligated to pay.” 44 The district court emphasized
   that NR was never named in the underlying lawsuits and that NR was not
   alleged to have participated in or funded the settlements.
           Weyerhaeuser correctly asserts that the duty to indemnify and the
   duty to defend involve distinctly different analyses, but engaging in those
   separate analyses still results in the same outcome. The underlying petitions
   do not name NR and were never amended to add NR. And, although
   Weyerhaeuser generally alleges that NR participated in the settlement and
   funded it, it provides no evidence to support that allegation. Moreover, it is
   unclear whether the “possibility of liability” exception even applies because

           _____________________
           44
             Chalmers, Collins & Alwell, Inc. v. Burnett and Co., (La. App. 3 Cir. 10/7/15); 175
   So. 3d 1100.

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                                           No. 22-30164

   (1) NR is not a party to the written contracts, i.e., the CGL Policies or Excess
   Policy, and (2) neither BIC nor EIC tendered a defense in the underlying
   lawsuits.45 In any event, a careful examination of the underlying state court
   petitions shows that the plaintiffs described W. Co. and its functions,
   knowledge, and responsibilities in detail. Even when construed liberally, the
   complaints do not appear to have asserted allegations against NR. Based on
   our well-settled precedent, Weyerhaeuser has not shown actual liability of
   NR sufficient to trigger BIC and EIC’s indemnity obligations.
           Weyerhaeuser further asserts that it adequately placed EIC and BIC
   on notice of NR’s potential liability by sending formal letters to BIC and
   Simsboro ahead of the September 2020 mediation. Weyerhaeuser claims that
   it sent five letters to Simsboro which “demanded that Simsboro notify its
   insurance carriers of Weyerhaeuser’s tender and the underlying claims.”
   Weyerhaeuser also alleges that it sent a letter to BIC in July 2020, notifying
   BIC that it had breached its duty to defend Weyerhaeuser in relation to the
   underlying lawsuits. Notifying an indemnitor ahead of settlement and giving
   it the opportunity to defend may be sufficient to show “potential liability,”46
   but that exception only applies to parties to a written agreement.47 W. Co. is
   not a party to the insurance policies between Simsboro and BIC and EIC, so
   the district court correctly held that BIC and EIC had no duty to indemnify
   Weyerhaeuser in connection with the underlying personal injury lawsuits.

           _____________________
           45
                Chevron Oronite Co. instructs that “one seeking indemnity must show actual
   liability to recover.” 951 F.3d at 226. One may show “potential liability” when there is a
   written contract or when the defendant tenders a defense of the action. Id.
           46
              See Parfait, 484 F.2d at 305 (holding that “[i]f the indemnitor declines to take
   either course, then the indemnitee will only be required to show potential liability to the
   original plaintiff”).
           47
                Chevron Oronite, 951 F.3d at 226.

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           C. Whether contract reformation is an available remedy
           Weyerhaeuser asserts that a “mutual mistake” occurred with respect
   to W. Co.’s exclusion as an additional insured and that it sufficiently raised
   this as an alternative ground for coverage. Weyerhaeuser contends that,
   because of that mutual mistake, the CGL Policies should be reformed to
   include W. Co. as an additional insured. Weyerhaeuser asserts that the
   Magistrate Judge incorrectly applied the summary judgment standard when
   evaluating mutual mistake and “improperly demanded ‘evidence’ of the
   mistake.” Finally, Weyerhaeuser alleges that the Magistrate Judge erred in
   denying it the opportunity to amend its complaint to allege mutual mistake
   under Rule 15(a) of the Federal Rules of Civil Procedure.
           Under Louisiana law, a written insurance contract may be amended to
   conform to the “true intent of the parties.”48 Reformation “is an equitable
   remedy” which is available “only to correct mistakes or errors in written
   instruments only when such instruments, as written, do not express the true
   contract of the parties.”49 To demonstrate that reformation is warranted, the
   movant must show, “by clear and convincing evidence, that a mutual mistake
   has been made.”50 When, as here, a plaintiff raises an argument for the first
   time in response to a dispositive motion, the court may consider those claims
   and arguments as a motion to amend under Rule 15(a)(2).51 This rule states
   that leave to amend “should be freely given when justice so requires.”52

           _____________________
           48
              Teche Realty & Inv. Co. v. Morrow, 95-1473 (La. App. 3 Cir. 4/17/96); 673 So. 2d
   1145, 1147 (citing Agurs v. Holt, 95 So. 2d 644 (1957)).
           49
                Agurs, 95 So. 2d at 645.
           50
                Motors Ins. Co. v. Bud's Boat Rental, Inc., 917 F.2d 199, 203 (5th Cir. 1990).
           51
                Fed. R. Civ. P. 15(a)(2).
           52
                Id.

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                                             No. 22-30164

   However, courts have discretion to deny such leave on the basis of “undue
   delay, bad faith or dilatory motive on the part of the movant, repeated failures
   to cure deficiencies by amendments previously allowed, undue prejudice to
   the opposing party . . . , and futility of the amendment.”53 “Leave to amend
   is in no way automatic, but the district court must possess a substantial reason
   to deny a party’s request for leave to amend.”54
           The district court held that Weyerhaeuser insufficiently pleaded
   mutual mistake and therefore “failed to meet their heavy burden to warrant
   reformation.” The court explained that “to warrant reformation of the
   Policy, Weyerhaeuser and NR must show that Burlington and Simsboro
   made a mutual mistake by failing to include Weyerhaeuser as an additional
   insured.” The district court pointed out that the Agreement clause requiring
   Simsboro to add W. Co. as an additional insured does not evince BIC/EIC’s
   and Simsboro’s mutual intent to include W. Co. as an additional insured. In
   support, that court cited Certain Underwriters at Lloyd’s, London v. First
   Petroleum, Inc., which held that an insurer is not obligated to defend a
   company that was not a named or additional insured but was excluded
   because of the alleged fault of the insurance agent or insurer.55 The district
   court further noted that Weyerhaeuser raised this contention for the first
   time in its motion to dismiss and failed to assert it in its original and amended
   complaints. The court chose not to construe that new claim as a motion to
   amend under Rule 15(a), concluding that an “amendment would be futile.”

           _____________________
           53
             Marucci Sports, L.L.C. v. Nat’l Collegiate Athletic Ass’n, 751 F.3d 368, 378 (5th
   Cir. 2014); Fed. R. Civ. P. 15(a)(2).
           54
                Id. (internal citation omitted).
           55
                13-cv-2226, 2014 WL 4929316 at *5 (W.D. La. Oct. 1, 2014).

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                                        No. 22-30164

          First, we must clarify the record regarding the district court’s alleged
   denial of leave to amend Weyerhaeuser’s complaint. Weyerhaeuser asserts
   that the district court erred in denying leave to amend its first amended
   complaint. However, Weyerhaeuser never filed a motion for leave to amend
   its complaint. EIC’s and BIC’s motions to dismiss were filed on June 1, 2021,
   and Weyerhaeuser filed its opposition on August 3, 2021. Under Rule
   15(a)(1)(B) of the Federal Rules of Civil Procedure, “[a] party may amend its
   pleading once as a matter of course within . . . 21 days after service of a motion
   under Rule 12(b), (2), or (f).”56 Weyerhaeuser did not seek to amend its
   complaint to remedy its deficiencies after reviewing BIC’s and EIC’s
   motions to dismiss. Instead, on September 21, 2021, Weyerhaeuser, EIC, and
   BIC filed a consent motion requesting that the district court abate the
   responsive pleading deadline to the first amended complaint until after it
   ruled on the pending motions to dismiss. That motion was granted by the
   district court. The Magistrate Judge noted that a claim raised for the first
   time in opposition to a dispositive motion could be construed as a motion to
   amend under Rule 15(a) but chose not to construe it as such.
          We must also clarify whether the district court, via the Report and
   Recommendation, applied the correct burden of proof to Weyerhaeuser’s
   contract reformation claim. Weyerhaeuser argues that, by requiring “clear
   and convincing evidence,” the district court incorrectly applied the summary
   judgment standard at the motion-to-dismiss stage. However, it is well settled
   in this court and in Louisiana that “clear and convincing evidence” is the
   appropriate burden of proof for contract reformation actions at various stages
   of litigation, including the motion-to-dismiss stage.57 The district court thus

          _____________________
          56
               Fed. R. Civ. P. 15(a)(1)(B).
          57
            See, e.g., Motors Ins. Co., 917 F.2d at 203 (requiring “clear and convincing
   evidence” at the motion to dismiss stage); Farmers-Merchants Bank & Tr. Co. v. St.

                                              18
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                                             No. 22-30164

   correctly required “clear and convincing evidence” for Weyerhaeuser to
   prevail on its contract-reformation claim.
           This circuit has cautioned that “[r]eformation is warranted only,
   however, to embody the parties’ mutual intent; otherwise, the courts would,
   in effect, be rewriting the contract.”58 In its briefing, Weyerhaeuser focuses
   on Simsboro’s knowledge and obligations, overlooking the fact that it must
   show, by clear and convincing evidence, that BIC and EIC participated in the
   mutual mistake. Weyerhaeuser presented no evidence that BIC and EIC
   knew that W. Co. was an additional insured when they issued policies to
   Simsboro. Because Weyerhaeuser has not shown that EIC, BIC, and
   Simsboro mutually intended to include W. Co. as an additional insured,
   contract reformation is not warranted.
           Neither did the district court err by not construing Weyerhaeuser’s
   reformation contention as a motion to amend its complaint. As explained
   above, the district court never actually denied Weyerhaeuser leave to amend
   its complaint. Moreover, Weyerhaeuser again had the opportunity to request
   leave to amend its complaint after the motions to dismiss were filed, but it
   did not do so. And, even if Weyerhaeuser had filed a motion for leave to
   amend, the district court would have had discretion to deny it based on the
   futility of such an amendment, Weyerhaeuser’s repeated failure to cure
   deficiencies, and other factors.59

           _____________________
   Katherine Ins. Co., 96-1138 (La. App. 3 Cir. 4/30/97); 693 So. 2d 876, 880, writ denied, 97-
   1867 (La. 10/31/97); 703 So. 2d 25 (requiring “clear and convincing evidence” at the no
   cause of action exception stage).
           58
                Motors Ins. Co., 917 F.2d at 203.
           59
                Marucci Sports, L.L.C., 751 F.3d at 378; Fed. R. Civ. P. 15(a)(2).

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                                          No. 22-30164

           In summary, the district court, via the Report and Recommendation,
   correctly held that EIC and BIC do not have a duty to indemnify W. Co. and
   NR as additional insureds on the CGL Policies and the Excess Policy. The
   district court properly concluded that Weyerhaeuser inadequately pleaded
   mutual mistake and that contract reformation was unavailable as a potential
   remedy.
           D. Whether BIC and EIC owed duties to defend and indemnify W.
                Co. and NR as third-party beneficiaries
            Weyerhaeuser asserts that W. Co. and NR are third-party
   beneficiaries of the CGL Policies and the Excess Policy, permitting them to
   sue EIC and BIC directly for breach of the contract. Weyerhaeuser contends
   that W. Co. and NR are third-party beneficiaries “by virtue of their right to
   contractual indemnity under an ‘insured contract’ [the Agreement] with the
   primary insured [Simsboro].” Weyerhaeuser presents this as an alternative
   argument to its assertion that W. Co. and NR are additional insureds on the
   policies.
           In Louisiana, a plaintiff may sue under an insurance policy if that
   plaintiff is a third-party beneficiary of such policy.60 The Louisiana Supreme
   Court articulated a three-part test to determine whether a contract confers
   third-party beneficiary status, known as a “stipulation pour autrui”: “1) the
   stipulation for a third party is manifestly clear; 2) there is certainty as to the
   benefit provided the third party; and 3) the benefit is not a mere incident of

           _____________________
           60
              Haddad v. Elkhateeb, 2010-0214 (La. App. 4 Cir. 8/11/10); 46 So. 3d 244, 257 n.
   11, writ denied, 49 So. 3d 895 (La. 2010); see also Rogers v. Integrated Expl. & Prod., LLC,
   2018-CA-0425 (La. App. 4 Cir. 2/20/19); 265 So. 3d 880, 896, writ denied, 271 So. 3d 198
   (La. 2019) (“If a party is neither a named insured nor an additional insured, he can
   nonetheless avail himself of the benefits of the policy if he can establish that he is a third
   party beneficiary.”) (internal citations omitted).

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                                          No. 22-30164

   the contract between the promisor and the promisee.” 61 The court explained
   that “the party claiming the benefit bears the burden of proof” 62 when that
   party is neither a named or additional insured on the policy. Louisiana courts
   have recognized that indemnitees under “insured contracts” often qualify as
   third-party beneficiaries under the policies insuring such contracts.63
           Weyerhaeuser contends that the district court erred in holding that
   W. Co. and NR are not third-party beneficiaries under the CGL Policies and
   the Excess Policy. Weyerhaeuser claims that the underlying personal injury
   lawsuits triggered Simsboro’s duty to defend and indemnify NR and W. Co.,
   thereby activating BIC’s (and EIC’s) duty to defend and indemnify W. Co.
   and NR. Weyerhaeuser points out that the CGL Policies define “insured
   contract” as “[t]hat part of any other contract or agreement pertaining to
   your business . . . under which you assume the tort liability of another party
   to pay for ‘bodily injury’ or ‘property damage’” that “is caused, in whole or
   in part, by you or those acting on your behalf.” Weyerhaeuser further asserts
   that the Agreement qualifies as an “insured contract” that “manifest[s] a
   clear intention to benefit any party whose liability was assumed.”
           The district court, via the Magistrate Judge’s Report and
   Recommendation, disagreed with Weyerhaeuser’s analysis, holding that
   Weyerhaeuser had insufficiently alleged facts showing that the CGL Policies
   and the Excess Policy manifested a clear intention to benefit Weyerhaeuser.
   Citing a Louisiana Fourth Circuit case, the district court explained that, even

           _____________________
           61
             Joseph v. Hosp. Serv. Dist. No. 2 of the Parish of St. Mary, 2005-2364 (La.
   10/15/06); 939 So. 2d 1206, 1212.
           62
                Id.
           63
             See, e.g., Rogers, 265 So. 3d at 896-897; Mabile v. Dow Chem. Co., 2016-0577, (La.
   App. 1 Cir. 12/22/16); 2016 WL 7436587 at *7; Cashman Equip. Corp. v. Rozel Operating
   Co., 854 F. Supp. 2d 406, 414 (M.D. La. 2012).

                                               21
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                                          No. 22-30164

   if Weyerhaeuser had demonstrated a stipulation pour autrui, the “insured
   contract” provision merely requires BIC and EIC to defend and indemnify
   the insured—not the indemnitee.64 The court acknowledged that, when the
   Agreement and CGL Policies are read together, NR could have a third-party
   beneficiary indemnification claim against BIC. That court concluded,
   however, that “the burden remains on Weyerhaeuser to allege facts that
   manifest the clear intent of Burlington and Simsboro to provide a benefit to
   Weyerhaeuser,” and that the burden was not carried here.
          The district court did not err in determining that W. Co. and NR failed
   to state third-party beneficiary claims under the CGL Policies and Excess
   Policy. As discussed at length above, this court must avoid considering
   extrinsic evidence when determining a party’s duty to defend. We are thus
   satisfied that BIC and EIC had no duty to defend W. Co. and NR as third-
   party beneficiaries. The indemnification inquiry, however, is fact intensive
   and may incorporate extrinsic evidence. The district court explained that
   because NR is listed on the CGL Policies as an additional insured and the
   CGL Policies might cover Simsboro’s indemnification obligation arising
   from the Agreement, NR might be a third-party beneficiary of the policies
   with respect to indemnification. This is, of course, only if Weyerhaeuser met
   the burden imposed by the Louisiana Supreme Court’s three-part test in
   Joseph v. Hosp. Serv. Dist. No. 2 of the Parish of St. Mary.65
          A recent Louisiana Third Circuit Court of Appeal opinion lends
   clarity to this complex question. In Savoy v. Kelly-Dixon, et al., the Louisiana
   Third Circuit Court of Appeal addressed a factually analogous situation
   involving BIC, offering persuasive authority in favor of BIC and EIC’s

          _____________________
          64
               See Ordonez v. W.T. Grant Co., 297 So.2d 780, 783 (La. App. 4 Cir. 7/9/74).
          65
               939 So. 2d at 1212.

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                                            No. 22-30164

   position.66 That court held that a purported contractual indemnitee cannot
   rely on Louisiana’s third-party beneficiary case law to create additional
   insured coverage.67 The Savoy court distinguished and declined to follow the
   Louisiana Fourth Circuit’s 2019 opinion in Rogers v. Integrated Explorations
   and Products, LLC that Weyerhaeuser relied on for its assertion of coverage.68
   The court instead looked to Ordonez v. W.T. Grant Co., in which the
   Louisiana Fourth Circuit held that an insurer had no duty to defend the
   contractual indemnitee of its insured.69 The Savoy court explained that “[i]f
   every indemnitee was a ‘third party beneficiary’ to a commercial liability
   policy then there would be no reason to have an additional named insured.”70
   The Savoy court further noted that “[i]nsurance companies cannot be bound
   to carry extra insureds for no additional premiums paid.”71
           We agree with Savoy’s analysis and conclude that neither NR nor W.
   Co. is a third-party beneficiary of the CGL Policies under the Louisiana
   Supreme Court’s test. In Rogers, the indemnification agreement at issue
   stated that indemnity was owed “EVEN IF SUCH CLAIMS ARE
   CONTRIBUTED TO OR CAUSED BY THE . . . ACTIVE OR PASSIVE
   NEGLIGENCE OF THE INDEMNIFIED PARTY OR ANY MEMBER
   OF ITS GROUP.”72 The Agreement, on the other hand, only provides

           _____________________
           66
                2022-318 (La. App. 3 Cir. 11/23/22); 353 So. 3d 981.
           67
                Id.
           68
             18-425 (La App. 4 Cir. 2/20/19); 265 So. 3d 880, writ denied, 19-481 (La.
   5/20/19); 271 So. 3d 198 (applying the Joseph test and finding that coverage extended to a
   contractual indemnitee).
           69
                297 So.2d at 780.
           70
                Savoy, 353 So. 3d at 995.
           71
                Id.
           72
                265 So. 3d at 891.

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                                         No. 22-30164

   defense and indemnity to NR for claims arising out of Simsboro’s own fault.73
   Similar to the agreement at issue in Savoy, the Agreement here does not
   evidence a clear intent to benefit third parties, such as NR and W. Co. The
   benefit is instead intended for the “Named Insured” (Simsboro) when it
   owes damages under an insured contract. Any benefit provided to a third
   party under the CGL Policies is not “manifestly clear” but is merely
   incidental. The district court correctly concluded that Weyerhaeuser failed
   to show that BIC and EIC had a duty to indemnify NR and W. Co. as third-
   party beneficiaries of the CGL Policies.
                                     IV. CONCLUSION
           We AFFIRM the district court’s dismissal of Weyerhaeuser’s
   breach of contract claims and conclude that Defendants-Appellees had no
   duty to defend or indemnify W. Co. and NR as additional insureds or as third-
   party beneficiaries to the CGL Policies or Excess Policy.

           _____________________
           73
              The Agreement further states that “no right to indemnity will exist in that
   portion of a Claim resulting from the negligence, tortious fault, or intentional misconduct
   of Weyerhaeuser, its officers, employees, contractors, and agents.”

                                               24