Holden et al v. U.S. United Ocean Services, LLC et al

Filing 119

ORDER AND REASONS granting 67 Motion for Summary Judgment; denying 68 Motion for Summary Judgment. Signed by Judge Ivan L.R. Lemelle on 2/7/12. (mmv, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
PAUL HOLDEN AND PENNY HOLDEN

* CIVIL ACTION

VERSUS

* NO. 09-3670

U.S. UNITED OCEAN SERVICES, LLC., ET AL.

* SECTION "B"(2)

ORDER AND REASONS
Before the Court is St. Paul Fire & Marine Insurance Company's
("St. Paul") Motion for Summary Judgment and responsive pleading
(Rec. Doc. Nos. 67 and 91).

In response, U.S. United Ocean

Services, LLC's ("UOS") filed its Opposition to St. Paul Fire &
Marine Insurance Company's Motion for Summary Judgment. (Rec. Doc.
No. 77). Subsequently, UOS filed a Motion for Summary Judgment and
responsive pleading (Rec. Doc. Nos. 68 and 89).
Paul

filed

its

St.

Paul

Fire

&

Marine

In response, St.

Insurance

Company's

Opposition to U.S. United Ocean Services, L.L.C.'s Motion for
Summary Judgment (Rec. Doc. No. 81).
Accordingly, and for the reasons articulated below, IT IS
ORDERED that St. Paul Fire & Marine Insurance Company's ("St.
Paul") Motion for Summary Judgment (Rec. Doc. No. 67) is GRANTED.
IT IS FURTHER ORDERED that UOS’s Motion for Summary Judgment
is DENIED.

Cause of Action and Facts of the Case:

1

This lawsuit arises out of the May 29, 2008 accident involving
Plaintiff Paul Holden ("Paul Holden"), an employee of Buck Kriehs.1
(Rec. Doc. No. 50-2 at 2).

Paul Holden claims he was injured while

the M/V LISA W and M/V BARBARA VAUGHT were undergoing repairs at
Buck Kreihs' dock located in New Orleans, Louisiana.

(Id.).

As a result of the incident, Paul Holden and his wife, Penny
Holden, filed this lawsuit on May 28, 2009, alleging personal
injuries and loss of society claims, respectively, against UOS and
other defendants who have since been dismissed.2 (Id.) On February
15, 2011, UOS filed its Third-Party Complaint, Rec. Doc. No. 29,
against St. Paul seeking defense, indemnity and coverage under a
marine general liability insurance policy that St. Paul issued to
Buck Kreihs. (Id.) UOS asserts that it is owed contractual defense
and indemnity against the Holdens' claims under a General Services
Agreement ("GSA") between UOS and Buck Kreihs, and that those
purported contractual defense and indemnity obligations are insured
under Buck Kreihs' St. Paul insurance policy. (Id. at 3).

1

Chambers has been notified by the parties that Plaintiffs have
settled their claims against Defendant UOS. (See Fax to Chambers
from Plaintiffs’ counsel, dated January 25, 2012).
2

The other defendants are United Maritime Group, L.L.C. (“UMG”)
and TECO Ocean Shipping, Inc. (“TECO”).
TECO was dismissed by
summary judgment by Order, Rec. Doc. No. 22, dated October 3, 2010.
UMG was voluntarily dismissed without prejudice by Plaintiffs by
Order, Rec. Doc. No. 48, dated July 12, 2011.
2

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

A genuine issue exists if the evidence

reasonable

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
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).

3

Insurance Coverage
Here, the operative provision is the Watercraft Exclusion.
The vessels at issue, M/V LISA W and M/V BARBARA VAUGHT, constitute
watercrafts, and neither party has contested such status.

The

Watercraft Exclusion, in pertinent part, states:
This exclusion does not apply to: . . .
(c) Liability assumed under an “insured contract,” but
only that portion of the “insured contract” under which
the “Named Insured” assumes the tort liability of
another party for “bodily injury” or “property damage”
to a third person or organization.
Tort liability
means a liability that would be imposed by law in the
absence of any contract or agreement.
(Rec. Doc. No. 68-9, Exh. H, at 30) (emphasis added).
Buck Kreihs is the named insured.

UOS concedes that its

precedessor-in-interest entered into a General Services Agreement
(“GSA”) with Buck Kreihs and pursuant to said agreement, Buck
Kreihs agreed to “defend, protect, indemnify and hold harmless UOS
. . . .” (Rec. Doc. No. 68-1, Exh. A, at 3).
Given this, the GSA serves as the insured contract, and Buck
Kreihs is the named insured. (See Id. at 1).

Per the plain

language of the Watercraft Exclusion, this exclusion would

apply

if Buck Kreihs, pursuant to its GSA with UOS, assumed the tort
liability of UOS, or another third party. However, that is not the
case. Buck Kreihs has not assumed the tort liability of UOS
concerning Holden’s alleged injuries. Given this, the exception to
4

the exclusion is not triggered.

This provision clearly states it

applies to the named insured, not the additional insured, as UOS
contests. UOS seeks coverage from St. Paul as an additional insured
for its own liability, instead of enforcement of an insured
obligation by Buck Kreihs. Thusly, the exception to the Watercraft
Exclusion does not apply.

Accordingly, the Watercraft Exclusion3

applies because Holden allegedly suffered bodily injuries arising
from the operation of the M/V BARBARA VAUGHT, a vessel owned by UOS
that was being serviced at Buck Kreihs’ facility. (See Rec. Doc.
No. 68-1 at 2).
Moreover, the Court notes that pursuant to UOS’s own Exhibit
A, the GSA states that Buck Kreihs, as the Contractor, will:
[D]efend, protect, indemnify, and hold harmless UOS
[the
Company]
(including
reimbursement
of
all
attorney’s fees) from and against any and all losses,
damages, costs, expenses, claims, causes of action,
liens, obligation to indemnify another, lawsuits and
liabilities of every kind and character, on account of
any such illness, occupational disease, injury, death
. . . arising out of or relating in any way to the work
or services performed by Buck Kreihs for UOS even if
illness, occupational disease, injury, death . . . is
partially caused by UOS’s fault or negligence.
HOWEVER, BUCK KREIHS [CONTRACTOR] SHALL HAVE NO
RESPONSIBILITY OR LIABILITY WHATSOEVER FOR ANY ILLNESS,

3

“Bodily injury” or “property damage” arising out of
the ownership or operation of any watercraft:
(a) Owned by an insured;
(b) Chartered, leased, rented, or loaned to an insured.
(Rec. Doc. No. 68-1, Exh. H., at 30).
5

OCCUPATIONAL DISEASE, INJURY . . . CAUSED SOLELY BY
UOS’S FAULT OR NEGLIGENCE.
The phrase “property
damage” as used herein includes, but is not limited to,
damage to the property of UOS [Company] or of Buck
Kreihs [Contractor] and damage to the property of any
third party.
(Rec. Doc. No. 68-2, Exh. A, at 3) (emphasis added).
Although UOS failed to include the highlighted language in its
immediate pleadings, it clearly denotes there was no agreement for
Buck Kreihs to assume any tort or property liability that was
solely UOS’s fault.

Bad Faith Claims
UOS contests that it is entitled to an award of penalties and
attorney’s fees against St. Paul pursuant to LA. REV. STAT. § §
22:1973 (formerly § 22:1220) and 22:1892 (formerly § 22:658).

In

order to recover under said statutes, one must prove that: “i) the
insurer received satisfactory proof of loss; ii) the insurer failed
to pay the claim within the applicable statutory period; and iii)
the

insurer’s

failure

to

pay

was

arbitrary

and

capricious.”

Boudreaux v. State Farm Mut. Auto Ins. Co., 896 So.2d 230, 233 (La.
App. 4th Cir. 2005).
UOS contends that it provided satisfactory proof of loss when
it tendered its claim to Buck Kreihs. (Rec. Doc. No. 68-1, at 18).
Outside of mere argument, UOS fails to demonstrate how this claim
constitutes satisfactory proof of loss and what damage it has

6

suffered.

Furthermore, outside of St. Paul refusing to extend

coverage, UOS does not proffer any evidence that St. Paul engaged
in arbitrary and capricious behavior. (Id.).

This alone fails to

constitute arbitrary and capricious behavior.

Contract Reformation
It is well-settled that “[t]he burden is on the one seeking
the reformation to prove the error, and he must carry said burden
by clear, and the strongest possible proof.” Ferguson v. Belcher
and Son, 230 La 422, 431 (La. 1956).

Here, outside of mere

argument, UOS has failed to demonstrate any mutual error that would
warrant the Court reforming the policy at hand.

While UOS does

produce several communications regarding the policy at issue, it is
not clear that these communications evince mutual error in the
issuance of the policy at hand.4

Thusly, UOS has failed to satisfy

its burden.5
4

UOS did produce a Certificate of Insurance that contained
language which states “Watercraft exclusion is deleted from G.L.”
(Rec. Doc. No. 77-12, Exh. L). Yet, this certificate is dated
7/28/2005, and is applicable for the 08/01/05-08/01/06 period. Thus,
it appears that this certificate expired approximately two years
before Holden’s accident occurred.
Furthermore, St. Paul produced a
Certificate of Insurance that was effective 08/01/2007-08/01/2008,
(Holden’s accident occurred in May of 2008) and said policy did not
contain any language about the deletion of the Watercraft Exclusion.
(Rec. Doc. No. 91-1 at 1, Exh. I).
5

UOS also produced an affidavit from a representative of its
parent company, Mark Cline, which stated “there was a mutual agreement
to delete the Watercraft Exclusion to be compliant.” (Rec. Doc. No.
77-12, Exh. M). Yet, UOS fails to clearly demonstrate how there was
any mutual error, warranting this Court to reform the policy at issue.

7

Accordingly, and for the reasons articulated above, IT IS
ORDERED that St. Paul Fire & Marine Insurance Company's ("St.
Paul") Motion for Summary Judgment (Rec. Doc. No. 67) is GRANTED.
IT IS FURTHER ORDERED that UOS’s Motion for Summary Judgment
is DENIED.
New Orleans, Louisiana, this 7TH day of February, 2012.

____________________________
UNITED STATES DISTRICT JUDGE

8