Vedros v. Northrop Grumman et al

Filing 492

ORDER & REASONS: granting 443 Defendant Northrop Grumman Shipbuilding, Inc. (n/k/a Huntington Ingalls Incorporated, f/k/a Northrop Grumman Ship Systems, Inc., f/k/a Avondale Industries, Inc., f/k/a Avondale Shipyards, Inc., f/k/a Avondale Marine Ways, Inc.)s Motion for Partial Summary Judgment as set forth in document. Signed by Judge Carl Barbier on 6/17/15. (sek)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

VEDROS

CIVIL ACTION

VERSUS

NO: 11-1198

NORTHROP GRUMMAN ET AL.
ORDER & REASONS

SECTION: “J” (4)

Before

the

Court

is

Defendant

Northrop

Grumman

Shipbuilding, Inc. (n/k/a Huntington Ingalls Incorporated, f/k/a
Northrop Grumman Ship Systems, Inc., f/k/a Avondale Industries,
Inc.,

f/k/a

Avondale

Shipyards,

Inc.,

f/k/a

Avondale

Marine

Ways, Inc.)(“Avondale”)’s Motion for Partial Summary Judgment on
La. C.C. Article 1821-1823 Claims (Rec. Doc. 443); Plaintiffs
Gerald Vedros, Lori Vedros Kravet, and Valerie Vedros White’s
opposition thereto (Rec. Doc. 463); and Avondale’s reply. (Rec.
Doc.

483)

Having

considered

the

motion

and

memoranda

of

the

parties, the record, and the applicable law, the Court finds
that the motion should be GRANTED for the reasons set forth more
fully below.
FACTS AND PROCEDURAL BACKGROUND
The Court is familiar with the facts of the case and so
will provide only a brief recitation here. This action arises
from

the

death

of

Sally

Gros

Vedros

(“Vedros”)

due

to

mesothelioma. Alton Gros, Vedros's father, worked at Avondale as
a welder from 1943 to 1976, and Vedros claims to have spent many

years

washing

resulted

in

her

father's

Vedros's

work

secondary

clothes,

exposure

which

to

allegedly

insulation

dust

containing asbestos. Vedros also worked at Avondale from 1960 to
1963 in the purchasing department, and she claims that she was
directly

exposed

to

asbestos

while

she

worked

at

Avondale.

Before her death, Vedros filed suit against many defendants, and
after her death, her children joined the suit as Plaintiffs.
Although

Plaintiffs

filed

suit

in

state

court,

Defendants

removed the matter to this Court on May 20, 2011.
In their Petition for Damages, Plaintiffs assert a number
of

claims

against

Avondale.

Relevant

here,

Plaintiffs

allege

that Avondale is liable for its executive officers’ personal
tort

liability

pursuant

to

certain

agreements

(“buy-back

agreements”) that it entered with its now-insolvent insurers to
terminate the contracts or policies of insurance. 1 Plaintiffs
also assert claims against Avondale as a result of the buy-back
agreements as an alleged “additional insurer” of itself, arguing
that Avondale assumed the obligations of its insurers under the
policies with regard to third persons, such as Vedros, within
the

meaning

of

Louisiana

Civil

Code

articles

1821-1823.

See

(Rec. Doc. 463-4, pp. 2-3).
Avondale filed its Motion for Partial Summary Judgment on
La. C.C. Article 1821-1823 Claims (Rec. Doc. 443) on June 2,
1

The policies insured Avondale’s executive officers against individual
liability for actions undertaken in the course of their employment.

2

2015. On June 9, 2015, Plaintiffs opposed the motion. (Rec. Doc.
463)
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing FED.
R. CIV. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, the Court considers “all of the evidence
in

the

record

but

refrains

from

making

credibility

determinations or weighing the evidence.” Delta & Pine Land Co.
v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir.
2008).

All

reasonable

inferences

are

drawn

in

favor

of

the

nonmoving party, but a party cannot defeat summary judgment with
conclusory allegations or unsubstantiated assertions. Little, 37
F.3d

at

1075.

A

court

ultimately

must

be

satisfied

that

“a

reasonable jury could not return a verdict for the nonmoving
party.” Delta, 530 F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int’l

3

Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
Cir.

1991)

(citation

omitted).

The

nonmoving

party

can

then

defeat the motion by either countering with sufficient evidence
of its own, or “showing that the moving party’s evidence is so
sheer that it may not persuade the reasonable fact-finder to
return a verdict in favor of the moving party.” Id. at 1265.
If

the

dispositive

issue

is

one

on

which

the

nonmoving

party will bear the burden of proof at trial, the moving party
may satisfy its burden by merely pointing out that the evidence
in

the

record

is

insufficient

with

respect

to

an

essential

element of the nonmoving party’s claim. See Celotex, 477 U.S. at
325. The burden then shifts to the nonmoving party, who must, by
submitting
showing

or

that

referring
a

genuine

to

evidence,

issue

set

exists.

out

See

specific

id.

at

facts

324.

The

nonmovant may not rest upon the pleadings, but must identify
specific facts that establish a genuine issue for trial. See,
e.g., id. at 325; Little, 37 F.3d at 1075.
PARTIES’ ARGUMENTS AND DISCUSSION
Avondale
shipyard

maintained

operations

with

liability
a

insurance

variety

of

policies

insurance

for

its

companies,

including Highlands Insurance Company (“Highlands”) and American
Motorists Insurance Company (“American Motorists”). Avondale’s
policy with Highlands was effective from 1970 to 1971, whereas
its policy with American Motorists was effective 1950 to 1957

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and 1972 to 1975. Both policies covered both Avondale and its
executive officers. Because Highlands and American Motorists are
now insolvent or bankrupt, however, they are no longer subject
to suit.
Avondale subsequently entered into buy-back agreements that
terminated the insurers’ obligations in exchange for a lump-sum
payment.
agreed,

(Rec.
“In

Docs.

exchange

463-13,

463-14)

Avondale

for

mutual

covenants,

the

and

Highlands

promises

and

consideration which are described throughout this Agreement, the
Settling Parties hereby agree to compromise, release and settle
all claims arising out of or incident to the Policies and to
undertake the acts and obligations set forth in this section.”
(Rec. Doc. 463-13, p. 12) In exchange for a lump-sum payment,
Avondale

“expressly

discharge[d]

release[d],

Highlands

from

any

acquit[ted]
and

all

and

obligations

forever
arising

under or related in any way to the Policies.” Id. The agreement
further

rendered

“void

ab

initio”

Highlands’

obligations

to

Avondale under the policies. Id. at 14. Lastly, Avondale agreed
to

indemnify

Highlands

for

claims

brought

by

third

parties

asserting coverage under the policies. Id.
Avondale

and

American

Motorists

similarly

agreed

to

extinguish the policies of insurance in exchange for a lump-sum
payment. The agreement states that “the Parties intend to fully
and forever extinguish all rights, duties and coverage under the

5

P[olicies] and to render them null and void, as if they had
never been issued.” (Rec. Doc. 463-14, p. 1) Again, in exchange
for payment, Avondale “fully , forever, and irrevocably releases
and discharges [American Motorists] from any [claim, known or
unknown,

from

the

beginning

of

time

until

the

end

of

time,

arising out of, based upon, or in any manner relating to, or
implicating, the terms and conditions of the policies].” See id.
at 3, 5. The agreement further provides that the policies were
thereafter “rescinded for all purposes,” “null and void, and are
void ab initio, as if they had never been issued.” Id. at 5. The
agreement included indemnity provisions similar to those of the
Highlands agreement. Id. at 6-7.
Avondale

argues

that

Plaintiffs

lack

a

cause

of

action

under the buy-back agreements that it entered with certain of
its liability insurers, and consequently, that it is entitled to
judgment

as

a

matter

of

law

as

to

those

claims.

Plaintiffs

counterargue that, in the buy-back agreements, Avondale assumed
its insurers’ obligations within the meaning of Louisiana Civil
Code articles 1821-23. Accordingly, Plaintiffs assert that they
have claims against Avondale for the individual liability of its
executive officers’ as well as the insurers’ liability.
The Court has examined the policies, which Avondale and
Plaintiffs

submitted

to

the

Court

under

seal

for

in

camera

review, and concludes that they do not evince an assumption by

6

Avondale of the putative obligations of Highlands and American
Motorists

with

respect

to

Plaintiffs.

Pursuant

to

Louisiana

Civil Code article 1821, “An obligor[, such as Highlands and
American Motorists,] and a third person[, Avondale,] may agree
to an assumption by the latter of an obligation of the former.”
The unambiguous language of the buy-back agreements, excerpted
above,

does

not

reflect

any

such

assumption

on

the

part

of

Avondale. Rather, it is clear that the parties merely contracted
to void the policies as if they had never been issued. (Rec.
Doc.

463-13,

Plaintiffs
American

did

p.

14;

not

Motorists

Rec.

Doc.

463-14,

pursue

their

claims

were

subject

to

p.

5)

while
suit,

And

because

Highlands
the

and

indemnity

provisions are not implicated. See Comardelle v. Pennsylvania
Gen. Ins. Co., No. 13-6555, 2014 WL 6485642, at *3 (E.D. La.
Nov. 18, 2014)(Africk, J.). Of course, this Order has no effect
on

Plaintiffs’

claims

against

Avondale

for

its

alleged

tort

liability or its vicarious liability for the alleged tortious
acts of its executive officers. Accordingly,
IT IS HEREBY ORDERED that the motion (Rec. Doc. 443) is
GRANTED.
New Orleans, Louisiana this 17th day of June, 2015.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

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