Sosebee et al v. Steadfast Insurance Company et al

Filing 65

ORDER AND REASONS denying 53 Motion to Strike. Signed by Judge Eldon E. Fallon on 5/23/2011. (caa, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

TIM SOSEBEE, ET AL.

CIVIL ACTION

VERSUS

NO. 09-4138

STEADFAST INSURANCE COMPANY, ET AL.

SECTION "L" (3)

ORDER & REASONS
The Court has pending before it Plaintiffs’ motion to strike a defense from Defendant
Steadfast Insurance Company’s answer to the amended complaint. The court has reviewed the
briefs and the applicable law and now issues this Order and Reasons.
I.

Background
This case arises out of a collision between a utility boat and a charter fishing boat in a

navigable canal near Venice, Louisiana, in Plaquemines Parish. The utility boat was owned and
operated by Harvest Oil and Gas, LLC (“Harvest”) and insured by Steadfast Insurance Company
(“Steadfast”). The charter fishing boat was owned and operated by David Mills d/b/a Reel Tite
Fishing Guide Services, LLC (“Reel Tite”), piloted by David Mills, and insured by St. Paul Fire
and Marine Insurance Company (“St. Paul”). The Plaintiffs, all passengers on the charter fishing
boat, allege that the collision was caused by the negligence of the Defendants. They further
assert that, as a result of the collision, they have suffered from physical pain and suffering,
mental anguish, emotional distress, embarrassment, humiliation, depression, disfigurement,
disability, loss of services, loss of society, loss of support, loss of enjoyment of life, loss of
income, and loss of earning capacity, and past and future medical expenses.
Plaintiffs filed suit in this Court on June 17, 2009. (Rec. Doc. 1). Plaintiffs asserted a

claim against Steadfast pursuant to the Louisiana Direct Action Statute, alleging that Steadfast
was Harvest’s liability insurer under policy number BOG 9261707-00. Steadfast answered on
October 30, 2009. (Rec. Doc. 8). In its answer, Steadfast did not assert any policy exclusions as
affirmative defenses to liability. Plaintiffs also state that in April, 2009, through correspondence
with counsel for Harvest, Plaintiffs were informed that Steadfast allegedly did not dispute
coverage.
Plaintiffs state that in August of 2010, they were informed for the first time that, in
addition to a liability policy, Steadfast also insured Harvest through an excess policy. On
September 29, 2010, the Court granted Plaintiffs leave to file a first amended and restated
complaint. (Rec. Doc. 37). In the amended complaint, Plaintiffs sought recovery under both the
liability policy alleged in the original complaint, as well as the excess liability policy, Number
UMB 9261710-00. On April 1, 2011, Steadfast filed an answer to the amended complaint. (Rec.
Doc. 48). Steadfast filed the answer six months after Plaintiffs filed the amended complaint, and
almost one month after the Court’s deadline for filing amended pleadings expired. In the answer
to the amended complaint, Steadfast admitted that it insured Harvest pursuant to a CGL policy
and an umbrella policy in effect at the time of the accident, but stated that:
the policies exclude coverage for any bodily injury arising out of the operation,
maintenance or use of any watercraft owned or operated by, rented or loaned to
the insured, Harvest Oil & Gas, LLC. Steadfast Insurance Co. specifically avers
that the “watercraft exclusion under both policies applies as one of the vessels
involved in this alleged accident was owned by Harvest Oil & Gas, LLC.
(Rec. Doc. 48 at 3-4). Steadfast also pleaded the terms of the policies as affirmative defenses.
Trial in this matter is set for August 15, 2011. Discovery is scheduled to conclude on
July 1, 2011. Plaintiffs state that, throughout the long history of the case, Steadfast answered a

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number of discovery requests pertaining to insurance policies without indicating that it disputed
coverage or identifying the watercraft exclusion as potentially applicable. Steadfast does not
respond to that assertion, except to state that it provided the policies to Plaintiffs and that the
watercraft exclusion is “obviously” applicable.
II.

Present Motion
Plaintiffs now move to strike Steadfast’s assertion of any policy exclusions as affirmative

defenses on the basis of unfair surprise and prejudice. They contend that Steadfast did nothing
to notify them that it would assert the watercraft exclusion until the answer to the amended
complaint was filed. Plaintiffs argue that asserting the exclusion at this late date unfairly
surprises and prejudices them because the surprise defense comes late in the case when Plaintiffs
will not be able to conduct discovery relevant to the exclusion or its exceptions.
Steadfast opposes the motion, arguing that Plaintiffs are in no way prejudiced by the
assertion of an obviously applicable policy exclusion. Steadfast also states that no discovery is
necessary because the exclusion applies on its face and none of the exceptions are remotely
applicable.
III.

Law & Analysis
Affirmative defenses must be specifically pleaded. Fed. R. Civ. Pro. 8(c)(1). Courts

hold that under Louisiana law, insurance policy exclusions are among the affirmative defenses
that must be specifically pleaded in an answer. E.g., Aunt Sally’s Praline Shop, Inc. v. United
Fire & Cas. Co., No. 06-7674, 2008 WL 2517137, at *2 (E.D. La. June 20, 2008), aff’d, No. 1030746, 2011 WL 902428 (5th Cir. Mar. 16, 2011). The Court has discretion to determine
whether a party is prejudiced or unfairly surprised by another’s non-compliance with Rule 8(c),

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and how to remedy that non-compliance. Aunt Sally’s, 2011 WL 902428, at *3.
On these facts, the Court cannot say that Plaintiffs have been so prejudiced or unfairly
surprised by Steadfast’s answer to the amended complaint that the affirmative defense must be
stricken. To be sure, Steadfast’s decision to dispute coverage for the first time seventeen months
after it originally answered the complaint is an inconvenience to the Plaintiffs. The delay
perhaps prevented Plaintiffs from fully assessing the nature of the case and the potential for
recovery, and the discovery Plaintiffs indicate is necessary will have to be completed on an
expedited basis. The Court also notes that Steadfast has utterly failed to explain its delay in
articulating what it contends to be a complete defense to liability. But based on these specific
facts the Plaintiffs are not so prejudiced that it is necessary to strike the affirmative defense and
potentially create insurance coverage where coverage might not exist. However, the
applicability of the watercraft exclusion is not properly before the Court at this time, and Court
expresses no conclusions on that matter.
Plaintiffs rely on Aunt Sally’s Praline Shop, but the facts in that case were more
egregious. In Aunt Sally’s, the defendant insurer did not specify any particular policy exclusion
in its answer and then attempted to assert exclusions as a defense for the first time in the pretrial
order. The court excluded the defense because it had only been asserted with adequate
specificity “on the eve of trial.” 2008 WL 2517137, at *3. The Fifth Circuit later affirmed.
Aunt Sally’s Praline Shop, Inc. v. United Fire & Cas. Co., Inc., No. 10-30746, 2011 WL 902428,
at *2-3 (5th Cir. Mar. 16, 2011). Here, although Steadfast failed to answer the amended
complaint for six months, it notified Plaintiffs of its intent to assert the watercraft exclusion as an

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affirmative defense four and a half months before trial.1 Accordingly,
Plaintiffs’ motion to strike is DENIED. The Court will entertain any motions to extend
discovery deadlines or continue the trial filed if by the Plaintiff.
New Orleans, Louisiana this 23rd day of May, 2011.
_________________________________
UNITED STATES DISTRICT JUDGE

1

Plaintiffs also cite Carey Canada, Inc. v. California Union Ins. Co., 748 F. Supp. 8
(D.D.C. 1990), and Swanson v. Van Otterloo, 177 F.R.D. 645 (N.D. Iowa 1998). Both of those
decisions granted the relief Plaintiffs seek here, but neither is dispositive. In Carey, the
affirmative defense was a policy exclusion asserted over three years after the suit was filed, and
raised first in a summary judgment motion instead of an answer. 748 F. Supp. at 13-14. In
Swanson, the affirmative defense at issue was qualified immunity, and leave to amend an answer
to assert it was denied two months before trial. 177 F.R.D. at 649. Each of those cases turned on
the specific facts. Here, the Court concludes that the facts do not rise to the level of prejudice or
surprise so unfair that Steadfast must be prohibited from asserting the defense.
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