Gulf Production Company, Inc. v. Hoover Oilfield Supply, Inc. et al

Filing 576

ORDER AND REASONS denying 568 Renewed Motion for Summary Judgment on bad faith claims. Signed by Judge Ivan L.R. Lemelle on 1/10/2012. (Reference: All cases)(lag, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GULF PRODUCTION COMPANY
INC., ET AL.,

NO. 08-5016 “B”(4) C/W
09-104
09-2779

VERSUS
JUDGE LEMELLE
MAG. JUDGE ROBY
HOOVER OILFIELD SUPPLY, INC.
ET AL.,

THIS DOCUMENT RELATES TO
ALL CASES

ORDER AND REASONS
Before

the

Court

is

Defendant

First

Financial

Insurance

Company’s (“FFIC”) Renewed Rule 56(b) Motion for Summary Judgment
on Bad Faith Claims (Rec. Doc. No. 568).1

In response, Ralaco

Ventures, L.L.C., B&L Exploration, L.L.C., Biloxi Marsh Lands
Corporation (“B&L, et al”) filed a Memorandum in Opposition to
First Financial Insurance Company’s Renewed Motion for Summary
Judgment on Bad Faith Claims (Rec. Doc. No. 560). Additionally, in
response, Gulf Production, Gulf Explorer, LLC, Kaiser-Francis Gulf
Coast (the “Gulf Plaintiffs”) filed a Memorandum in Opposition of
Renewed Rule 56(b) Motion for Summary Judgment of Bad Faith Claims
Filed by First Financial Insurance Company (Rec. Doc. No. 563).
Accordingly, and for the reasons pronounced below, IT IS ORDERED

1

Filed in response to Polyflow’s Amended Answer and Cross-Claim
by Polyflow, Inc. Against First Financial Insurance Company.
(Rec. Doc. No. 265).
1

that Defendant First Financial Insurance Company’s Renewed Rule
56(b) Motion for Summary Judgment on Bad Faith Claims (Rec. Doc.
No. 568) be DENIED.

Cause of Action and Facts of the Case:
The facts of this case, the defective product claims for a
flowline that allegedly splayed when pressure tested below its
advertised maximum pressure limit was reached, allegedly resulting
in a delay of production of minerals from the wells at issue, are
well known to the Court at this time and need not here be repeated
in detail.
Law and Analysis
a. Motion for Summary Judgment:
Summary judgment is proper if the pleadings, depositions,
interrogatory

answers,

and

admissions,

together

with

any

affidavits, show that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment as a matter
of law.

Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett,

477 U.S. 317, 327 (1986).
would

allow

nonmovant.
(1986).

a

reasonable

A genuine issue exists if the evidence
jury

to

return

a

verdict

for

the

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,

Although the Court must consider the evidence with all

reasonable inferences in the light most favorable to the nonmoving
2

party, the nonmovant must produce specific facts to demonstrate
that a genuine issue exists for trial.

Webb v. Cardiothoracic

Surgery Assocs. of N. Texas, 139 F.3d 532, 536 (5th Cir. 1998).
The nonmovant must go beyond the pleadings and use affidavits,
depositions, interrogatory responses, admissions, or other evidence
to establish a genuine issue.

Id.

Accordingly, conclusory

rebuttals of the pleadings are insufficient to avoid summary
judgment.

Travelers Ins. Co. v. Liljeberg Enter., Inc. 7 F.3d

1203, 1207 (5th Cir. 1993).
It is well settled that whether an insurer breached its duty
of good faith and is liable for penalties necessarily requires a
factual determination by the trial court. See Oubre v. La Citizens
Fair Plan, 2011 WL 6379956 at *6 (Dec. 16, 2011).

Furthermore, it

is well known that LA. REV. STAT. § 22:1973 (formerly LA. REV. STAT.
§ 22:1220)“also imposes a duty of good faith and fair dealing in
performance of the insurance contract.” Oubre, 2011 WL 6379956 at
*5.
Even assuming, arguendo, that Polyflow’s underlying bad faith
claim solely focuses on the issue of attorney fees, FFIC failed to
proffer any evidence that there is no genuine issue of material
fact concerning this matter. FFIC’s key evidence that allegedly
denotes an agreement between Polyflow and FFIC merely states
“Spoke with insured last week while I was traveling.

He states

that the agreed hourly rate between all parties was $180.00.

3

Therefore, review of bills indicate payment as follows: . . . .”
(Rec. Doc. No. 568-3, Exh. 1). Yet, nothing in this exhibit depicts
who this communication is directed to, or who wrote it. Thusly, it
is not clearly demonstrative of an agreement between Polyflow and
FFIC concerning the attorney’s billing rate of $180.00.
Given

this,

there

is

concerning attorney’s fees.

a

genuine

issue

of

material

fact

Accordingly, it is inappropriate to

grant summary judgment on this issue at this juncture.
Furthermore, Polyflow’s Amended Answer and Cross-Claim by
Polyflow, Inc. Against First Financial Insurance Company (Rec. Doc.
No. 265) outlines several reasons for its bad faith claims, which
center around the scope of coverage under Polyflow’s insurance
policy with FFIC.2 In response, FFIC contends that Polyflow has
“ignored the fact that FFIC is, and has been, providing a defense
to Polyflow, under a reservation of rights,” and that “[i]t is not

2

Some of the claims include the following:
¶4: Said policy requires First Financial to defend
against and indemnify Polyflow for the claims asserted
by plaintiffs in this consolidated litigation.
¶5: Despite amicable demand, First Financial has
arbitrarily and without any reasonable basis refused to
fulfill its obligations to Polyflow.

¶6: First Financial’s actions and inactions, including,
but not limited to, its continued efforts to disclaim
coverage constitute a bad faith breach of its duty of
good faith and fair dealing, and its duty to defend and
indemnify Polyflow.
(Rec. Doc. No. 265).
4

possible for the insurance company to be in bad faith when it is
providing a defense.” (Rec. Doc. No. 568-1 at 1).3

Furthermore,

FFIC asserts that “the failure to pay the amounts demanded by
Polyflow does not warrant bad faith penalties unless such failure
was arbitrary, capricious, or without probable cause.” (Id. at 2).
Thusly, there is a genuine issue of material fact concerning
the extent of FFIC’s insurance coverage to Polyflow and what that
coverage mandates FFIC to do in relation to Polyflow, if anything.
As such, this is a factual determination that must be submitted to
the trial court. See Oubre, 2011 WL 6379956 at *6.
Accordingly, and for the reasons pronounced above, IT IS
ORDERED that Defendant First Financial Insurance Company’s
Renewed Rule 56(b) Motion for Summary Judgment on Bad Faith
Claims (Rec. Doc. No. 568) be DENIED.
New Orleans, Louisiana, this 10th day of January, 2012.

_____________________________
UNITED STATES DISTRICT JUDGE

3

FFIC fails to provide any caselaw or statutory support for this
argument.
5