Barcelona Equipment, Inc. v. David Boland, Inc. et al
ORDER & REASONS that Target Construction, Inc.'s 700 Motion for Partial Summary Judgment is DENIED. Signed by Judge Stanwood R. Duval, Jr on 12/5/14. (Reference: 11-2295)(dno)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA, for the use
and benefit of BARCELONA EQUIPMENT, INC.
DAVID BOLAND, INC., INC., ET AL.
Target Construction, Inc. v. Bauer-Pileco, Inc.
C.A. NO. 11-2295
ORDER AND REASONS
Before the Court is a Motion for Partial Summary Judgment (Doc. 700) filed by Target
Construction, Inc. ("Target"). Target contends that Old Republic General Insurance Corporation
("Old Republic") has waived its insurance coverage defenses for failing to provide timely notice
of its insurance coverage decision regarding the property damage claim asserted by BauerPileco, Inc. Having reviewed the pleadings, memoranda, exhibits, testimony and the relevant
law, the Court finds the motion without merit.
As this Court has addressed the waiver issue before in its Order and Reasons of January
31, 2014 (Doc. 532), the Court reiterates and adopts the synopsis of facts pertaining to the case
found therein. As previously stated, Target was a subcontractor on a flood protection project.
As part of that work, it rented an industrial hammer from Bauer-Pileco, Inc. ("Pileco"). Target
has asserted in C.A. No. 11-2295, filed on September 13, 2011, that the Pileco equipment failed
to perform as advertised which cased delays and damages. Pileco counterclaimed in its answer
of November 11, 2011, that Target caused (1) extensive damage to the equipment, (2) failed to
pay all amounts due under the rental contract, and (3) caused damage to Pileco as a result of loss
of rental income sustained as a result of the damage Target caused to the rented piledriver.
Old Republic had issued a Commercial General Liability Insurance policy ("CGL
policy") to Target for the period of time at issue herein. On November 15, 2011,Target
transmitted a copy Pileco's pleading to the insurance agency from which Target had procured the
Policy, Alliance Insurance Services, Inc. ("Alliant"). Having received no response, in April of
2012, Target initiated an investigation as to the status of Old Republic's adjustment of the claim.
Apparently, the claim had not been passed onto Old Republic. On April 12, 2012, Gallagher
Bassett Services, Inc., ("Gallagher Bassett"), Old Republic's third-party claim administrator,
received the claim. (Gallagher Bassett Services, Inc. Print Claim Notes "Entry Date", page 137
On June 4, 2012, Gallagher Basset responded to Target; it did not declare its position
with regard to coverage; instead, it requested more information regarding the underlying facts of
the Pileco property damage claim against Target. No reservation of right letter issued, and no
defense to the Pileco claim was offered.
On June 18, 2012, counsel for Target apprised Gallagher Basset/ Old Republic that in its
opinion Old Republic's duty to defend Target had been triggered with the receipt of the thirdparty pleadings and requested confirmation of Old Republic's duty to defendant within the
following 7 days. With an offer of defending the suit not having been made, on September 25,
2012, Target filed a first amended and supplemental complaint (C.A. No. 11-2183, Rec. Doc.
138) alleging that Old Republic's failure to avail itself of the defense of non-coverage timely
constituted a waiver of its defense to indemnify and defend Target such that Old Republic owed
Target the cost of defending against the Pileco's property damage claims, as well as all costs
associated with the alleged property damage asserted in the Pileco' Answer, Counter Claim and
Third Party Demand.
On December 7, 2012, another insurer pursuant to a settlement agreement paid the cost of
repair for the damaged Pileco equipment; however, that settlement did not include Pileco's claim
for loss of rental income.
Old Republic maintains that on February 20, 2013, it sent to Target a Reservation of
Rights letter; however, the letter was not received by Target. In that letter, it advised Target that
(1) a duty to defend and the possibility of coverage was triggered under its policy by the
allegations of property damage made by Pileco against Target. However, Old Republic took the
position that (2) there was no coverage for the Pileco allegations concerning the failure of Target
to pay rent and other charges; and (3) that it would have to investigate further the allegations
made by Pileco regarding loss of rental income resulting from property damage to rented
equipment to make a final determination as concerned coverage.
Target did not actually receive this letter until after it filed its first motion for summary
judgment on this issue; Target maintains that it first received the reservation of rights letter on
or about August 28, 2013. As to that first motion for summary judgment, the Court in essence
found with respect to the coverage waiver issue, that there was a question of fact as to whether
Old Republic took any action (e.g. some kind of undertaking of defense) that would have
triggered the necessity of reserving its right to deny coverage. The Court also stated that there
was an issue as to whether "the extremely long delay in taking any action constitutes a waiver of
coverage defense in and of itself." This finding was based on the Court's belief that while Target
made this argument, it had failed to outline sufficiently its legal reasoning underpinning this
contention. As such, the Court denied the motion.
With that as background, the Court will now address the instant motion.
Standard for Motion for Summary Judgment
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment
should be granted "if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law." The party moving for summary
judgment bears the initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the record "which it believes demonstrate the absence of a
genuine issue of material fact." Stults v. Conoco, 76 F.3d 651 (5th Cir.1996), citing Skotak v.
Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.), quoting Celotex Corp. v. Catrett, 477
U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When the moving party has
carried its burden under Rule 56, its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts. The nonmoving party must come forward with
"specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v.
Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Tubacex,
Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995).
“A genuine issue of material fact exists ‘if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.’ ” Pylant v. Hartford Life and Accident
Insurance Company, 497 F.3d 536, 538 (5th Cir. 2007) quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment evidence must
be “viewed in the light most favorable to the nonmovant, with all factual inferences made in the
nonmovant’s favor.” Bazan ex rel Bazan v. Hildago County, 246 F.3d 481, 489 (5th Cir. 2001),
citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. at 2513.
[C]onclusory statements, speculation, and unsubstantiated assertions cannot
defeat a motion for summary judgment. The Court has no duty to search the
record for material fact issues. Rather, the party opposing the summary judgment
is required to identify specific evidence in the record and to articulate precisely
how this evidence supports his claim.
RSR Corporation v. International Insurance Company, 612 F.3rd 851,857 (5th Cir. 2010).
Waiver and The Duty to Defend
Target argues that Old Republic has waived its insurance coverage defenses because it
failed to provide timely notice of an insurance coverage decision regarding the property damage
claim. As such it seeks partial summary judgment "recognizing that Old Republic has waived
the right to contest coverage for the damages alleged in the [Pileco] counterclaim, leaving open
the dispute between Target and Old Republic only the quantum of defense costs and damages
attributable to [Pileco's] property damage claim, for which costs and damages Old Republic is
wholly liable. (Doc. 700-1at 17 of 18). This analysis is misplaced.
As stated in the seminal case Steptore v. Masco Constr. Co., Inc., 643 So.2d 1213 (La.
Waiver is generally understood to be the intentional relinquishment of a known
right, power, or privilege. . . . Waiver occurs when there is an existing right, a
knowledge of its existence and an actual intention to relinquish it or conduct so
inconsistent with the intent to enforce the right as to induce a reasonable belief
that it has been relinquished. . . . A waiver may apply to any provision of an
insurance contract, even though this may have the effect of bringing within
coverage risks originally excluded or not covered.
Id. at 1216 (internal citations omitted).
As such then, "waiver requires (1) misleading conduct on the part of the insurer and (2)
prejudice to the insured. Emery, 49 So.3d at 21; Scottsdale, 1999 WL 130633, at *5. The burden
of proving waiver is on the party claiming waiver. Duffy, 47 F.3d at 140." Sosbee v. Steadfast
Ins. Co., 701 F.3d 1012, 1026-27 (5th Cir. 2012). "'Waiver principles are applied stringently to
uphold the prohibition against conflicts of interest between the insurer and the insured which
could potentially affect legal representation in order to reinforce the role of the lawyer as the
loyal advocate of the client's interest. ' Steptore, supra, at 1216." Arceneaux v. Amstar Corp.,
66 so.2d 438, 451 (La. 2011). In the case at bar, no evidence of "misleading conduct"on the part
of the insurer has been demonstrated. Moreover, there is no demonstrable prejudice to the
Generally waiver is at issue in the instance where an insurer provides a defense without
timely reserving its rights as to coverage. The United States Court for the Fifth Circuit explained
in Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th Cir. 1992):
If the policy calls for a defense of the claim, an insurer has the obligation to
provide a defense to its insured, even if ultimately the insurers may have no
liability under the policy. Dugas Pest Control of Baton Rouge v. Mut. Fire,
Marine and Inland Ins. Co., 504 So.2d 1051, 1053 (La. App. 1st Cir. 1984). To
protect its own interest, an insurer can simultaneously provide its insured with a
defense and contest coverage with its insured. Id. When such a conflict of
interests arises and the insurer has knowledge of facts indicating noncoverage and
voluntarily assumes the insured's defense without obtaining a non-waiver
agreement to reserve its rights, the insurer effectively waives all such policy
defenses. Myers, 789 F.2d at 1201; Sears, 621 F.2d at 747. The insurer's notice of
its intent to avail itself of the defense of noncoverage must be timely. Pitts By
and Through Pitts v. American Sec. Life Ins. Co., , 931 F.2d 351, 356-75 (5th Cir.
Indeed, every case cited by Target for the proposition that because of Old Republic's alleged
failure to provide timely notice of its insurance coverage position are cases where waiver was
found precisely because of the insurer's providing a defense without properly reserving its rights.
As noted, the waiver is premised on the need to guard against improper conflicts of interest.
Target has not provided a single case, nor is the Court aware of a situation where a failure
to communicate or respond to a demand for defense and coverage as occurred herein was
sufficient for a court to find "misleading conduct on the part of the insurer" so as to trigger a
waiver analysis. In sum, although Old Republic was dilatory in responding to Target, the
lynchpin to a waiver of a coverage defense is misleading conduct; inaction under the facts of this
case does not constitute misleading conduct. Moreover, it is clear that Old Republic did not ever
provide a defense without reserving its rights to deny coverage. Thus, there is no waiver of Old
Republic's defense of coverage. Accordingly,
IT IS ORDERED that the Motion for Partial Summary Judgment (Doc. 700) filed by
Target Construction, Inc. ("Target") is DENIED.
New Orleans, Louisiana, this 5th day of December, 2014.
STANWOOD R. DUVAL, JR.
UNITED STATES DISTRICT COURT JUDGE
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