Hanover Insurance Company v. Superior Labor Services, Inc. et al

Filing 341

ORDER AND REASONS denying 227 Motion for Partial Summary Judgment Concerning the Duty to Defend Superior Labor Services, Inc., and Allied Shipyards, Inc. as an Alleged Additional Insured, as stated herein. Signed by Judge Susie Morgan on 3/30/2016. (Reference: 11-2375) (tsf)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HANOVER INSURANCE COMPANY,
Plaintiff

CIVIL ACTION
No. 11-2375 c/w
14-1930, 14-1933

VERSUS
SUPERIOR LABOR SERVICES,
INC., ET AL.,
Defendants

SECTION “E”

Applies to: 11-2375
ORDER AND REASONS
Before the Court is Hanover’s motion for partial summary judgment seeking a
declaration that Hanover has no duty to defend Superior and no duty to defend Allied as
an additional insured. 1 For the reasons set forth below, Hanover’s motion is DENIED.
BACKGROUND
A. State-Court Lawsuits
This is a consolidated action. The case originates from two personal-injury actions
(“State-Court Lawsuits”) filed in state court against Allied Shipyard, Inc. (“Allied”):
Adams, et al. v. Allied Shipyard, Inc., et al. and St. Pierre, et al. v. Allied Shipyard, Inc.2
The plaintiffs in the State-Court Lawsuits allege Allied negligently performed
sandblasting activities, causing dangerous silica dust and other hazardous substances to
permeate the plaintiffs’ neighborhood. 3 The plaintiffs seek damages for physical pain and
suffering, medical expenses, property damage, and other damages as a result of their

R. Doc. 227. Unless otherwise indicated, “R. Doc.” refers to record documents in No. 11-2375.
The original and amended petitions for damages from each State-Court Lawsuit are attached to Hanover’s
motion for summary judgment. See R. Docs. 227-5, 227-6.
3 See R. Docs. 227-5, 227-6.
1

2

1

exposure to the hazardous substances. 4 The two cases were consolidated in state court on
September 9, 2013. 5
In both State-Court Lawsuits, Allied filed third-party demands against its
contractors that performed the sandblasting jobs, including Superior Labor Services, Inc.
(“Superior”) 6 and Masse Contracting, Inc. (“Masse”). 7 Specifically, Allied alleges that
Superior and Masse contracted with Allied to perform certain job responsibilities and to
indemnify Allied under master work contracts. 8 Allied seeks indemnity from Superior and
from Masse with respect to the claims in the State-Court Lawsuits. 9 Allied has also alleged
the right to additional assured status and coverage on all insurance policies issued to
Superior and to Masse for any liability in the State-Court Lawsuits. 10
The plaintiffs in Adams amended their petition to name Superior, Masse, other
subcontractors, and Gray Insurance Company as direct defendants. 11
The contractors against which Allied brought third-party demands “in turn sought
coverage, defense and/or indemnity from their various insurers for the periods of time
when these jobs were allegedly performed, which prompted the insurers to file lawsuits
in federal courts.” 12
B. Declaratory Actions in Federal Court
Three federal actions related to the State-Court lawsuits are pending in this Court.
The Court consolidated the three cases on November 21, 2014. 13
See R. Docs. 227-5, 227-6.
See R. Doc. 259-5.
6 R. Doc. 69 at ¶¶ 13–16; R. Docs. 227-5, 227-6.
7 R. Docs. 228-6, 228-7.
8 R. Doc. 227-8 at 1 (Superior); R. Doc. 228-6 at 2 (Masse).
9 R. Doc. 227-8 at 2 (Superior); R. Doc. 228-6 at 3–4 (Masse).
10 No. 14-1930, R. Doc. 1 at ¶¶ 12–13, 19 (Superior); No. 14-1933, R. Doc. 1 at ¶¶ 12–13, 19 (Masse).
11 See R. Doc. 227-5.
12 R. Doc. 174-1 at 2.
13 See R. Doc. 108.
4
5

2

1. No. 11-2375
On September 21, 2011, Hanover Insurance Company (“Hanover”) filed a
complaint in this Court. 14 Hanover filed an amended complaint on September 27, 2012. 15
Hanover alleges it has been participating in the defense of Superior against Allied’s thirdparty demands in the State-Court Lawsuits. 16 Hanover maintains the other insurers it
names in its federal suit “are not participating in Superior’s defense” in the State-Court
Lawsuits. 17 Hanover seeks judgment against Superior declaring that it has no duty to
defend or indemnify Superior in the State-Court Lawsuits. 18 If Hanover has a duty to
defend or indemnify Superior, Hanover seeks declaratory judgment that State National
Insurance Company (“State National”), Arch Insurance Company (“Arch”), and “other
unidentified insurance companies collectively named as ABC Insurance Company” are
liable “for their share of defense and indemnity to be paid on behalf of Superior” in the
State-Court Lawsuits. 19 Hanover also seeks reimbursement, contribution, and/or
damages from State National, Arch, and other unidentified insurance companies for
defense costs already incurred by Hanover on behalf of Superior in the State-Court
Lawsuits that, Hanover argues, should have been paid by those insurance companies. 20
On January 14, 2015, Hanover filed a second supplemental and amending
complaint naming Allied as a defendant. 21 Hanover alleges that “Allied has tendered the
[State-Court Lawsuits] to Hanover for defense and indemnity in its capacity as an alleged

Hanover Ins. Co. v. Superior Labor Servs., Inc., et al., No. 11-2375.
R. Doc. 69.
16 Id. at ¶¶ 23–24.
17 Id. at ¶ 26.
18 Id. at 22–23.
19 Id. at ¶ 2.
20 Id. at ¶ 3.
21 R. Doc. 125.
14
15

3

additional insured” under Superior’s policies, and Hanover has offered to participate in
Allied’s defense in the State-Court Lawsuits subject to a full reservation of rights. 22
Hanover alleges that Allied is not an additional assured under Hanover’s policies, and
Hanover seeks judgment against Allied declaring that it has no duty to defend or
indemnify Allied in the State-Court Lawsuits. 23 In the alternative, if the Court finds
Hanover has a duty to defend or indemnify Allied, Hanover seeks judgment declaring that
Arch, State National, other unidentified insurance companies are obligated to pay their
portions of defense costs and/or indemnity incurred by Hanover on behalf of Superior
and Allied in the State-Court Lawsuits. 24
2. No. 14-1930
On August 22, 2014, Arch Insurance Company brought an action for declaratory
judgment against Superior and Allied. Arch seeks a declaration of its rights and
responsibilities under “certain insurance policies issued by Arch to Superior,” with
respect to Superior’s request for defense and indemnity in the State-Court Lawsuits. 25
Arch also seeks a declaration of its rights and responsibilities with respect to Allied’s
request for additional assured status under the Superior policies and defense and
indemnity of Allied in the State-Court Lawsuits. 26 Arch seeks a declaration against
Superior and Allied that Arch has no defense or indemnity obligation to Superior in the

Id. at ¶ 79.
Id. at 9.
24 Id.
25 No. 14-1930, R. Doc. 1 at ¶ 3.
26 Id. at ¶ 4. Arch alleges that Allied is not entitled to additional assured coverage “to the extent there is no
evidence that any loss occurred” while Superior was performing work for Allied and during the Arch policy
periods. No. 14-1930, R. Doc. 1 at ¶¶ 20–21.
22
23

4

State-Court Lawsuits. 27 Arch also seeks recovery of the portion of defense costs already
incurred by it on behalf of Superior. 28
3. No. 14-1933
On August 22, 2014, Arch also filed an action for declaratory judgment against
Masse and Allied. Arch seeks a declaration of its rights and responsibilities under “certain
insurance policies issued by Arch to Masse,” with respect to Masse’s request for defense
and indemnity in the State-Court Lawsuits. 29 Arch also seeks a declaration of its rights
and responsibilities with respect to Allied’s request for additional assured status under
the Masse policies and defense and indemnity of Allied in the State-Court Lawsuits. 30
Arch seeks a declaration against Masse and Allied that Arch has no defense or indemnity
obligation to Masse in the State-Court Lawsuits. 31
On January 14, 2015, Hanover filed a complaint in intervention in Case No. 141933 against Defendants Masse and Allied. 32 Hanover seeks judgment declaring that
Hanover has no obligation to defend or indemnify Masse or Allied in the StateCourt Lawsuits. 33
State National Insurance Company (“State National”) also filed a petition for
intervention for declaratory judgment on January 14, 2015. 34 State National issued two
marine general liability policies to Masse that provided coverage from November 15,

Id. at ¶¶ 21, 47.
Id. at ¶ 47.
29 No. 14-1933, R. Doc. 1 at ¶ 3.
30 Id. at ¶ 4. Arch alleges that Allied is not entitled to additional assured coverage “to the extent there is no
evidence that any loss occurred” while Masse was performing work for Allied and during the Arch policy
periods. No. 14-1933, R. Doc. 1 at ¶¶ 20–21.
31 Id. at ¶ 46.
32 R. Doc. 128.
33 Id.
34 R. Doc. 132.
27

28

5

2006, to November 15, 2007, and from November 15, 2007, to November 15, 2008. 35
Allied seeks additional insured status under the policies issued by State National to
Masse. 36 State National seeks a judgment declaring there is no coverage afforded to Masse
under the State National policies and that State National has no duty to defend or
indemnify Masse in the State-Court Lawsuits. 37 State National also seeks a declaration
that “there is no coverage afforded to Allied under the [State National] policies as a
purported additional insured” and that State National does not owe a duty to defend or
indemnify Allied in the State-Court Lawsuits. 38
C. Hanover’s Motion for Partial Summary Judgment
Hanover filed a motion for partial summary judgment against Superior and Allied
on July 29, 2015. Hanover argues it has no duty to defend Superior or Allied, as an
additional insured under the policies issued to Superior, in the State-Court Lawsuits for
three reasons: (1) that the plaintiffs in the State-Court Lawsuits do not allege “bodily
injury” or “property damage” that occurred during the terms of the policies Hanover
issued to Superior; (2) alternatively, that the plaintiffs in the State-Court Lawsuits seek
recovery for injuries arising out of exposure to silica dust and the Hanover policies contain
an exclusion for silica, silicon, and silicate; and (3) alternatively, the policies contain a
Pollution Buyback Endorsement that is not triggered by the State-Court Lawsuits and
thus does not extend coverage for the state-court plaintiffs’ injuries. 39 In its motion, and
solely for purposes of its motion, Hanover assumes that Allied qualifies as an additional

R. Doc. 132 at ¶ 14.
Id. at ¶ 3.
37 Id. at ¶ 19.
38 Id.
39 R. Doc. 227 at 2.
35

36

6

assured within the meaning of the Superior policies. 40 Whether Allied will indeed qualify
as an additional assured under the policies is not addressed in this ruling.
Superior filed its opposition to Hanover’s motion on December 8, 2015, 41 and
Allied filed its opposition on December 14, 2015. 42 Hanover filed a reply memorandum in
support of its motion on December 15, 2015. 43 After deposing Tony Boudreaux, Superior’s
former vice president, Superior filed a supplemental memorandum in opposition to
Hanover’s motion on February 29, 2016. 44
CONSIDERATION OF DECLARATORY JUDGMENT ACTIONS
As a preliminary matter, when considering a declaratory judgment action, a
district court must engage in a three-step inquiry. 45 First, the Court must determine
whether the action is justiciable. 46 Second, the Court must determine whether it has
authority to grant declaratory relief. 47 Third, the Court must determine “how to exercise
its broad discretion to decide or dismiss a declaratory judgment action.” 48 If Hanover’s
claims survive this analysis, the Court will then consider whether Hanover has a duty to
defend the insured under the policies at issue.

R. Doc. 227-1 at 10 n.3.
R. Doc. 259.
42 R. Doc. 277.
43 R. Doc. 289.
44 R. Doc. 316.
45 Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000).
46 Id.
47 Id.
48 Id.
40
41

7

A. Justiciability
The justiciability doctrines of standing, mootness, political question, and ripeness
derive from Article III’s “case or controversy” requirement. 49 In a declaratory judgment
action, justiciability often turns on ripeness. 50 This case is no exception.
The ripeness doctrine is drawn “both from Article III limitations on judicial power
and from prudential reasons for refusing to exercise jurisdiction.” 51 The purpose of this
doctrine is to forestall “entanglement in abstract disagreements” through “avoidance of
premature adjudication.” 52 “The key considerations are ‘the fitness of the issues for
judicial decision and the hardship to the parties of withholding court consideration.’” 53
The Fifth Circuit has recognized that “applying the ripeness doctrine in the
declaratory judgment context presents a unique challenge.” 54 This stems primarily from
the fact that declaratory relief often involves an ex ante determination of rights, i.e., a
determination of rights before an injury has occurred, that “exists in some tension with
traditional notions of ripeness.” 55 Fortunately, this challenge is not presented today,
because the Court’s analysis is guided by a distinct subset of ripeness jurisprudence on
disputes regarding the duty to defend.

Choice Inc. of Tex. v. Greenstein, 691 F.3d 710, 714–15 (5th Cir. 2012).
See id; Orix, 212 F.3d at 895; Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 27–28 (5th Cir. 1989).
51 Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
52 Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967).
53 New Orleans Public Serv., Inc. v. Counsel of City of New Orleans, 833 F.2d 583, 586 (5th Cir. 1987)
(quoting Abbott Labs., 387 U.S. at 149).
54 Orix, 212 F.3d at 896 (internal quotation marks omitted).
55 Id.
49

50

8

Because the duty to defend does not depend on the outcome of the underlying law
suit, 56 a duty-to-defend claim is ripe when the underlying suit is filed. 57 Accordingly,
Hanover’s duty-to-defend claim is ripe, and the Court finds the action is justiciable.
B. Authority to Grant Declaratory Relief
The Fifth Circuit has explained that “when a state lawsuit is pending, more often
than not, issuing a declaratory judgment will be tantamount to issuing an injunction—
providing the declaratory plaintiff an end run around the requirements of the AntiInjunction Act.” 58 Therefore, the district court cannot consider the merits of a declaratory
judgment action when (1) a declaratory defendant has previously filed a cause of action in
state court against the declaratory plaintiff; (2) the state case involves the same issues as
those involved in the federal case; and (3) the district court is prohibited from enjoining
the state proceedings under the Anti-Injunction Act. 59
In Hanover’s amended complaint, Hanover alleges that, pursuant to its policies, it
is participating in Superior’s defense against the third-party demands in the State-Court
Lawsuits “subject to a full reservation of rights.” 60 Hanover does not assert that it is a
party in the State-Court Lawsuits, and the Court is not aware of any state-court
proceedings involving the same issues now being examined. Therefore, the Court finds

Suire v. Lafayette City-Parish Consol. Gov’t, 907 So. 2d 37, 52 (La. 2005).
See Columbia Cas. Co. v. Ga. & Fla. RailNet, Inc., 542 F.3d 106, 110 (5th Cir. 2008) (“An actual case or
controversy exists before the resolution of an insured’s underlying suit concerning the insurer’s duty to
defend.”) (emphasis in original); Morad v. Aviz, No. 12-2190, 2013 WL 1403298, at *2 (E.D. La. Apr. 5,
2013) (“Courts have routinely held that courts may determine an insurer’s duty to defend even before the
underlying suit is decided.”); Greenwich Ins. Co. v. Capsco Indus., Inc., No. 1:14CV297-LG-JCG, 2014 WL
5025856, at *2 (S.D. Miss. Oct. 8, 2014).
58 Travelers Ins. Co. v. Louisiana Farm Bureau Fed’n, Inc., 996 F.2d 774, 776 (5th Cir. 1993). The AntiInjunction Act states, “A court of the United States may not grant an injunction to stay proceedings in a
State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction,
or to protect or effectuate its judgments.” 28 U.S.C. § 2283.
59 Travelers, 996 F.2d at 776; Sherwin-Williams Co. v. Holmes Cty., 343 F.3d 383, 388 (5th Cir. 2003).
60 R. Doc. 69 at 2.
56
57

9

that the Anti-Injunction Act does not apply, as there is no pending state-court action
between Hanover and any of the defendants in this case. 61
Accordingly, the Court’s authority to grant declaratory relief on the duty-to-defend
claim turns on whether subject-matter jurisdiction is proper. 62 Hanover asserts the Court
has subject-matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a). 63 28
U.S.C. § 1332(a) provides that jurisdiction is proper where (1) the parties are completely
diverse, and (2) the amount in controversy exceeds $75,000. 64
The parties are completely diverse when “the citizenship of each plaintiff is diverse
from the citizenship of each defendant.” 65 All of the parties in this action are
corporations. 66 For purposes of diversity jurisdiction, a corporation is a citizen of (1) its
state of incorporation, and (2) the state in which its principal place of business is
located. 67 According to the amended complaint, Hanover is a citizen of New Hampshire,
the state of its incorporation, and Massachusetts, the state in which its principal place of
business is located. 68 Defendant Superior is a citizen of Louisiana, the state of its
incorporation and the state in which its principal place of business is located. 69 Defendant
Arch is a citizen of Missouri, the state of its incorporation, and New Jersey, the state in

61 See Sherwin-Williams, 343 F.3d at 387–88 (“The district court also properly concluded that it had the
authority to decide the declaratory judgment suit. Diversity jurisdiction was present and the AntiInjunction Act did not apply because there was no pending state court action between Sherwin-Williams
and any of the declaratory judgment defendants.”); Hudson Specialty Ins. Co. v. King Investments of
Louisiana, Inc., No. 13-5990, 2014 WL 108402, at *3 (E.D. La. Jan. 10, 2014); Nat’l Cas. Co. v. Tom’s
Welding, Inc., No. 11-3101, 2012 WL 2064451, at *5 (E.D. La. June 7, 2012).
62 See Sherwin-Williams, 343 F.3d at 387–88.
63 R. Doc. 69 at ¶ 9.
64 See 28 U.S.C. § 1332(a).
65 Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). The parties have not disputed complete diversity.
Nonetheless, the Court has a duty to examine all aspects of subject matter jurisdiction sua sponte. See Union
Planters Bank Nat’l Ass’n v. Salih, 369 F.3d 457, 460 (5th Cir. 2004).
66 See R. Doc. 69.
67 28 U.S.C. § 1332(c)(1).
68 R. Doc. 69 at ¶ 4.
69 Id. at ¶ 5.

10

which its principal place of business is located. 70 Defendant State National is a citizen of
Texas, the state of its incorporation and the state in which its principal place of business
is located. 71 Because none of the defendants is a citizen of New Hampshire or
Massachusetts, the states in which Hanover is a citizen, there is complete diversity.
In addition to complete diversity, Section 1332(a) requires that the amount in
controversy exceed $75,000. As the party invoking federal jurisdiction, Hanover bears
the burden of establishing the amount in controversy by a preponderance of the
evidence. 72 In order to determine whether that burden has been met, the Court first
inquires whether it is “facially apparent” from the complaint that the amount in
controversy exceeds $75,000. 73 If not, the Court may examine summary judgmenttype evidence. 74
When an insurer seeks a declaratory judgment on coverage issues, the amount in
controversy is equal to the “insurer’s potential liability under the policy, plus potential
attorneys’ fees, penalties, statutory damages, and punitive damages.” 75 As set forth in the
complaint in this case and the petitions from the State-Court Lawsuits, the state-court
plaintiffs allege they have suffered property damage and severe bodily injury and have
contracted diseases, including silicosis, Chronic Obstructive Pulmonary Disease,
Wegener’s granulomatosis. Superior’s potential liability for these injuries—and thus
Hanover’s liability to indemnify Superior— easily could exceed $75,000. 76 When coupled

Id. at ¶ 6.
Id. at ¶ 7.
72 See Garcia v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 639 (5th Cir. 2003).
73 See Hartford Ins. Grp. v. Lou-Con Inc., 293 F.3d 908, 910 (5th Cir. 2002).
74 Id.
75 Id. (internal quotation marks omitted). Unless the insurer seeks to void the entire insurance contract,
the amount in controversy is not measured by the face amount of the policy. Id. at 911.
76 The question arises whether Hanover’s indemnity claim can count toward the amount in controversy.
The Fifth Circuit has held that the amount in controversy is equal to the insurer’s “potential liability under
70
71

11

with Hanover’s potential defense obligations, the Court concludes the amount in
controversy exceeded the jurisdictional amount at the time this action was filed. 77
Therefore, because the Court has diversity jurisdiction over this matter and the
Anti-Injunction action does not apply, the Court finds it has the authority to grant
declaratory relief in this case. 78
C. Discretion to Exercise Jurisdiction
“Since its inception, the Declaratory Judgment Act has been understood to confer
on federal courts unique and substantial discretion in deciding whether to declare the
rights of litigants,” even when subject-matter jurisdiction is otherwise proper. 79 The Fifth
Circuit has developed seven factors—the so-called “Trejo factors”—that a district court
should consider when deciding whether to exercise jurisdiction over a declaratory
judgment action:
(1) whether there is a pending state action in which all of the
matters in controversy may be fully litigated;
(2) whether the plaintiff filed suit in anticipation of a lawsuit
filed by the defendant;
(3) whether the plaintiff engaged in forum shopping in
bringing the suit;
(4) whether possible inequities in allowing the declaratory
plaintiff to gain precedence in time or to change forums
exist;
(5) whether the federal court is a convenient forum for the
parties and witnesses;

[the] policy.” See St. Paul Reinsurance Co. Ltd., 134 F.3d 1250, 1253 (5th Cir. 1998) (emphasis added);
Hartford Ins. Grp., 293 F.3d at 912.
77 Jurisdictional facts are judged as of the time the complaint is filed. St. Paul, 134 F.3d at 1253.
78 See U.S. Fire Ins. Co. v. A-Port, LLC, No. 14-441, 2015 WL 1416490, at *3 (E.D. La. Mar. 26, 2015);
Hudson, 2014 WL 108402, at *3 (E.D. La. Jan. 10, 2014); Nat’l Cas. Co., 2012 WL 2064451, at *5.
79 Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).

12

(6) whether retaining the lawsuit would serve the purposes of
judicial economy; and
(7) whether the federal court is being called on to construe a
state judicial decree involving the same parties and
entered by the court before whom the parallel state suit
between the same parties is pending. 80
As set forth below, the Trejo factors weigh in favor of exercising jurisdiction.
Accordingly, the Court will exercise jurisdiction over this matter.
1.

Nature of Pending State Court Action

The first Trejo factor requires comparison of the declaratory judgment action with
the underlying state-court action. 81 If the declaratory judgment action presents the same
issues as the state-court action, involves the same parties, and is not governed by federal
law, the federal court should generally decline to exercise jurisdiction. 82 If, on the other
hand, the state-court action is not truly parallel because it does not involve all the same
parties or issues as the declaratory judgment action, a federal court should consider the
degree of similarity between the two actions. 83
Hanover is not a party to the State-Court Lawsuits. Moreover, whereas the StateCourt Lawsuits involve issues of fact, fault, and causation, the determination of whether
there is a duty to defend involves a straightforward examination of the state-court
pleadings and the insurance policies Hanover issued to the state-court defendants.
Resolution of the State-Court Lawsuits has no bearing on Hanover’s duty to defend. The

Sherwin-Williams, 343 F.3d at 388.
See id. at 393–94.
82 See id.; Wilton, 515 U.S. at 283 (“[W]here another suit involving the same parties and presenting
opportunity for ventilation of the same state law issues is pending in state court, a district court might be
indulging in ‘[g]ratuitous interference,’ if it permitted the federal declaratory action to proceed.”) (second
alteration in original) (internal citation omitted) (quoting Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491,
495 (1942)).
83 See Sherwin-Williams, 343 F.3d at 394 n.5.
80
81

13

state and federal proceedings are clearly not parallel. “[T]he lack of a pending parallel
state proceeding . . . weighs strongly against dismissal.” 84 The first Trejo factor weighs in
favor of exercising jurisdiction.
2.

Order of Filing

The St. Pierre lawsuit was filed on December 8, 2010, 85 and the Adams lawsuit was
filed on December 28, 2010. 86 Hanover filed the lawsuit presently before this Court on
September 21, 2011. 87 Hanover likely was aware that its insurance coverage of Superior
and Masse would become an issue in the pending State-Court Lawsuits. Therefore,
Hanover may have filed this declaratory judgment action in anticipation of becoming a
party to the pending State-Court Lawsuits. 88 The second Trejo factor weighs against
exercising jurisdiction. 89
3.

Forum Shopping

That Hanover could have intervened and requested declaratory judgment in the
State-Court Lawsuits does not necessarily demonstrate forum shopping. 90 As a
preliminary matter, there is no guarantee Hanover would have been allowed to intervene
in the State-Court Lawsuits. 91 Moreover, courts are less likely to find forum shopping
where, as here, (1) a foreign insurer files a diversity action in federal court, and (2) the
Id. at 394. See also Fed. Ins. Co. v. Sw. Materials, Inc., No. 02-1787, 2003 WL 21634945, at *3 (E.D. La.
July 3, 2003) (finding abstention unwarranted in similar circumstances).
85 R. Doc. 227-6 at 3.
86 R. Doc. 227-5 at 5.
87 R. Doc. 1.
88 See Great Am. Ins. Co. v. Cumberland Inv. Grp., LLC, No. 13-4763, 2013 WL 5755641, at *4 (E.D. La.
Oct. 23, 2013) (noting the plaintiff “was aware the issue of its insurance coverage of [the defendant] would
be at issue in the pending state court proceeding,” concluding that “it can be assumed that [the plaintiff]
filed for Declaratory Judgment on June 10, 2013 in anticipation of becoming a party to that pending state
court action,” and finding the second Trejo factor weighs against exercising jurisdiction).
89 See U.S. Fire, 2015 WL 1416490, at *4.
90 See id.
91 See LA. CODE CIV. PROC. art. 1091 (“A third person having an interest therein may intervene in a pending
action to enforce a right related to or connected with the object of the pending action against one or more
of the parties thereto.” (emphasis added)).
84

14

selection of the federal forum does not change the applicable law. 92 “The record does not
support a finding that [Hanover] engaged in impermissible forum shopping by filing this
declaratory

judgment

suit.” 93

The

third

Trejo

factor

weighs

in

favor

of

exercising jurisdiction.
4.

Inequities

The Court cannot conceive of any inequities that flow from allowing Hanover to
proceed in this action while the State-Court Lawsuits remain pending. As explained
above, the State-Court Lawsuits and this action are not parallel in any material sense. No
party will be prejudiced if this action is resolved before the State-Court Lawsuits. The
fourth Trejo factor weighs in favor of exercising jurisdiction.
5.

Convenience of Federal Forum

The State-Court Lawsuits are pending in the 17th Judicial District Court for the
Parish of Lafourche, State of Louisiana. 94 The state courthouse for the 17th Judicial
District Court for Lafourche Parish is approximately 60 miles west of the federal
courthouse in New Orleans. No party argues that this forum is inconvenient or that either
forum is more convenient than the other for the parties or for the witnesses. This factor
is neutral. 95

See Sherwin-Williams, 343 F.3d at 399.
Id. at 400. See also Ironshore Specialty Ins. Co. v. Tractor Supply Co., 624 F. App’x 159, 167 (5th Cir.
2015) (per curiam).
94 See R. Docs. 228-5, 228-6.
95 See GlobalSantaFe Drilling Co. v. Quinn, No. 12-1987, 2012 WL 4471578, at *4 (E.D. La. Sept. 26, 2012)
(“It does not appear that the Eastern District of Louisiana is any more convenient or less convenient of a
forum; the parties are located outside the state but the witnesses are located within. Therefore, this factor
is neutral.” (citations omitted)); Great Am. Ins. Co. v. Cumberland Inv. Grp., LLC, No. 13-4763, 2013 WL
5755641, at *5 (E.D. La. Oct. 23, 2013); Gemini Ins. Co. v. Turner Indus. Grp., LLC, No. 13-05922, 2014
WL 3530475, at *5 (E.D. La. July 16, 2014).
92
93

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6.

Judicial Economy

This action has been pending for more than four years. The duty-to-defend issue
has been fully briefed before this Court. It would be a waste of judicial resources to dismiss
this action and require Hanover to refile in another forum. Exercising jurisdiction is
clearly in the interest of judicial economy. 96 This factor weighs in favor of
exercising jurisdiction.
7.

Interpretation of Decree from Parallel State Proceeding

Again, the State-Court Lawsuits and this action are clearly not parallel. This Court
need not interpret any decree issued in the State-Court Lawsuits to determine whether
Hanover has a duty to defend. The seventh Trejo factor weighs in favor of
exercising jurisdiction. 97
Five of the Trejo factors weigh in favor of exercising jurisdiction, while one weighs
against and another is neutral. Accordingly, the Court will exercise its jurisdiction over
this matter.
LAW AND ANALYSIS
A. The “Eight-Corners Rule”
Under Louisiana law, an insurance policy is a contract and should be construed
using the general rules of interpretation of contracts set forth in the Louisiana Civil
Code. 98 A liability insurer’s duty to defend and the scope of its coverage are separate and
96 See Ironshore, 624 F. App’x at 168 (finding that the judicial economy factor weighed against dismissal
when the parties had “already fully briefed the insurance coverage issues to the district court and entered
into extensive factual stipulations”); Agora Syndicate, Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d
371, 373 (5th Cir. 1998) (finding that judicial economy weighed against dismissal in part because “there
[were] no factual disputes between the parties and . . . they have fully briefed the merits of the insurance
issues”).
97 Ironshore, 624 F. App’x at 168 (“The seventh and last factor . . . weighs against dismissal. There is no
need to construe a state judicial decree to resolve the issues in this case.”). See also U.S. Fire, 2015 WL
1416490, at *5.
98 Sher v. Lafayette Ins. Co., 2007-2441 (La. 4/8/08), 988 So. 2d 186, 192, on reh’g in part (July 7, 2008).

16

distinct issues. 99 Under Louisiana law, an insurer’s duty to defend is broader than its
obligation to indemnify for damage claims. 100 Louisiana courts apply the “eight-corners
rule” to determine whether a liability insurer has the duty to defend a civil action against
its insured; courts look to the “four corners” of the plaintiff’s petition in the civil action
and the “four corners” of the insurance policy to determine whether the insurer owes its
insured a duty to defend. 101 One Louisiana court explained as follows:
Under [the “eight-corners”] analysis, the factual allegations of the plaintiff’s
petition must be liberally interpreted to determine whether they set forth grounds
which raise even the possibility of liability under the policy. In other words, the test
is not whether the allegations unambiguously assert coverage, but rather whether
they do not unambiguously exclude coverage. Similarly, even though a plaintiff’s
petition may allege numerous claims for which coverage is excluded under an
insurer’s policy, a duty to defend may nonetheless exist if there is at least a single
allegation in the petition under which coverage is not unambiguously excluded. 102
The duty to defend “arises whenever the pleadings against the insured disclose even a
possibility of liability under the policy.” 103 The insurer has a duty to defend unless the
allegations in the petition for damages, as applied to the policy, unambiguously preclude
coverage. 104 “Once a complaint states one claim within the policy’s coverage, the insurer
has a duty to accept defense of the entire lawsuit, even though other claims in the
complaint fall outside the policy’s coverage.” 105
When a party files a motion for summary judgment regarding the duty to defend,
the Court may consider only the plaintiff’s petition and the face of the policies; the parties

99 Mossy Motors, Inc. v. Cameras Am., 2004-0726 (La. App. 4 Cir. 3/2/05), 898 So. 2d 602, 606, writ
denied, 2005-1181 (La. 12/9/05), 916 So. 2d 1057.
100 Henly v. Phillips Abita Lumber Co., 2006-1856 (La. App. 1 Cir. 10/3/07), 971 So. 2d 1104, 1109.
101 Mossy, 898 So. 2d at 606.
102 Id. (citations omitted).
103 Steptore v. Masco Const. Co., 93-2064 (La. 8/18/94), 643 So. 2d 1213, 1218. See also United Nat’l Ins.
Co. v. Paul and Mar’s Inc., No. 10-799, 2010 WL 2690615, at *2 (E.D. La. July 11, 2011).
104 Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009).
105 Treadway v. Vaughn, 633 So. 2d 626, 628 (La. Ct. App. 1993), writ denied, 635 So. 2d 233 (La. 1994).

17

cannot present any evidence such as affidavits or depositions. 106 Factual inquiries beyond
the petition for damages and the relevant insurance policy are prohibited with respect to
the duty to defend. 107 Any ambiguities within the policy are resolved in favor of the
insured to effect, not deny, coverage. 108
B. The Policies
Hanover issued two commercial lines policies to Superior: one that provided
coverage from July 11, 2009, through July 11, 2010, 109 and another that provided coverage
from July 11, 2010, through July 11, 2011.110 The policies provide that Hanover “will pay
on behalf of the insured all sums which the insured shall become legally obligated to pay
as damages because of . . . bodily injury [and] . . . property damage to which this insurance
applies, caused by an occurrence, and [Hanover] shall have the right and duty to defend
any suit against the insured seeking damages . . . .” 111 The policies define “bodily injury”
as “bodily injury, sickness or disease sustained by any person which occurs during the
policy period, including death at any time resulting therefrom.” 112 The policies define
“property damage” as “(1) physical injury to or destruction of tangible property which
occurs during the policy period, including the loss of use thereof at any time resulting
therefrom, or (2) loss of use of tangible property which has not been physically injured or
destroyed provided such loss of use is caused by an occurrence during the policy

106 Milano v. Bd. of Comm’rs of Orleans Levee Dist., 96-1368 (La. App. 4 Cir. 3/26/97), 691 So. 2d
1311, 1314.
107 Martco, 588 F.3d at 872.
108 Doerr v. Mobil Oil Corp., 2000-0947 (La. 12/19/00), 774 So. 2d 119, 124. Hanover argues that “neither
Allied nor Superior has can sustain their burden of establishing” that the state-court plaintiffs’ bodily
injuries or property damage occurred during Hanover’s policy periods. R. Doc. 227-1 at 10–11. This,
however, is not the correct standard for motions for summary judgment on the duty to defend.
109 R. Doc. 227-9.
110 R. Doc. 227-10.
111 R. Doc. 227-9 at 17; R. Doc. 227-10 at 16.
112 R. Doc. 227-9 at 11; R. Doc. 227-10 at 10.

18

period.” 113 The policies define “occurrence” as “an accident, including continuous or
repeated exposure in conditions, which results in bodily injury or property damage
neither expected nor intended from the standpoint of the insured.” 114
Both policies contain an exclusion for silicon, silica, and silicate:
1. This insurance does not apply to any liability or loss, cost or expense arising
out of the actual, alleged or threatened contaminative, pathogenic, toxic or
other hazardous properties of Silicon.
2. This insurance does not apply to any loss, cost or expense arising out of any:
a. Request, demand, order or regulatory or statutory requirement that
any assured or others test for, monitor, clean up, remove, contain,
treat, detoxify or neutralize, or in any way respond to, or assess the
effects of Silicon[;] or
b. Claim or proceeding by or on behalf of a governmental authority or
others for damages because of testing for, monitoring, cleaning up,
removing, containing, treating, detoxifying or neutralizing, or in any
way responding to, or assessing the effects of Silicon.
As used in this exclusion, Silicon means the element Silicon, including silica
and other silicate compounds, or its presence or use in any other alloy, byproduct, compound or other material or waste. Waste includes material to
be recycled, reconditioned or reclaimed. 115
The policies also contain a Pollution Buyback Endorsement. In relevant part, the
endorsement states as follows:
It is hereby understood and agreed that this policy shall not apply to any claim
arising out of the discharge, dispersal, release or escape of smoke, vapors, soot,
fumes, alkalis, toxic chemicals, liquids or gases, waste materials, oil or other
petroleum substance or derivative (including all oil refuse or oil mixed wastes) or
other irritants, contaminants or pollutants or upon land, the atmosphere, or any
watercourse or body of water.
This exclusion shall not apply, however, provided that the Assured establishes that
all of the following conditions have been met[:]
(a) the occurrence was accidental and was neither expected nor intended by the
assured. An occurrence shall not be considered unintended or unexpected
unless caused by some intervening event neither foreseeable nor intended
by the assured.
R. Doc. 227-9 at 13; R. Doc. 227-10 at 12.
R. Doc. 227-9 at 13; R. Doc. 227-10 at 12.
115 R. Doc. 227-9 at 44; R. Doc. 227-10 at 43.
113

114

19

(b) the occurrence can be identified as commencing at a specific time and date
during the term of the policy.
(c) the occurrence became known to the assured within 72 hours after it’s [sic]
commencement.
(d) the occurrence was reported in writing to these underwriter [sic] within 30
days after having become known to the assured.
(e) the occurrence did not result from the assured’s intentional and willful
violation of any government statute, rule or regulations. 116
C. The Allegations of the State-Court Lawsuits
In Adams, et al. v. Allied Shipyard, Inc., et al., the plaintiffs allege they “are
residents of a neighborhood that borders” Allied’s shipyard. 117 They further allege that
Allied, whose shipyard has been operating since the 1960s, has been operating “for
decades without appropriate borders to stop the resulting dangerous silica dust produced
by its sandblasting from permeating the neighborhood.” 118 Allied’s alleged negligence has
“expos[ed] the residents to dust containing silica sand, a very dangerous substance, as
well as other toxic substances.” 119 The petition alleges that the plaintiffs’ “long, consistent
and protracted” exposure and “inhalation of the silica dust” has caused the plaintiffs to
contract severe diseases and illnesses “that are painful and disabling,” including
Wegener’s granulomatosis, rheumatoid arthritis, silicosis, and Chronic Obstructive
Pulmonary Disease. 120 In the plaintiffs’ third amended petition for damages, the plaintiffs
named Superior as a defendant. 121 The plaintiffs allege that Superior has “conducted
sandblasting and painting operations and [has] allowed dangerous byproduct to drift into

R. Doc. 227-9 at 34; R. Doc. 227-10 at 33.
R. Doc. 227-5 at 1.
118 Id. at 2.
119 Id.
120 Id. at 2–3.
121 Id. at 12–13.
116
117

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the neighborhood,” which “caused both personal injuries and property damages to
all Plaintiffs.” 122
In St. Pierre, et al. v. Allied Shipyard, Inc., the plaintiffs allege they lived in a
residence near Allied’s shipyard for approximately eight years preceding 2010. 123 The St.
Pierre plaintiffs allege that Allied was negligent when performing its operations, which
“resulted in the release into the atmosphere and environment in the neighborhoods
surrounding the shipyard of hazardous substances, including, but not limited to, paint,
sand and silica.” 124 The petition alleges that, as a result, the plaintiffs were exposed to the
hazardous substances and “have suffered personal injury, mental anguish, health
problems, inconvenience, distress, loss of consortium, fear of disease, and
other damages.” 125
D. Hanover Argues the Damages Did Not Occur during the Policy Periods and, Thus,
Recovery is Unambiguously Excluded under the Policies
The Hanover policies impose on Hanover a duty to pay on behalf of its insured any
sums the insured becomes legally obligated to pay as damages because of “bodily injury”
or “property damage” caused by an “occurrence” and to which the policies apply. 126 The
bodily injury or property damage, however, must “occur[] during the policy period.” 127
Hanover argues that it has no duty to defend Superior or Allied because the StateCourt Lawsuits do not allege “bodily injury” or “property damage” that “occurred” during
the policy periods. 128 Hanover argues, “[N]either underlying plaintiffs nor Allied have

Id. at 13.
R. Doc. 227-6 at 1.
124 Id.
125 Id.
126 R. Doc. 227-9 at 17; R. Doc. 227-10 at 16.
127 R. Doc. 227-9 at 11, 13; R. Doc. 227-10 at 10, 12.
128 R. Doc. 227-1 at 10–11.
122
123

21

alleged any injuries during Hanover’s Policy periods, much less that Superior was actually
performing any work at Allied’s shipyard during Hanover’s Policy periods that could have
caused underlying plaintiffs’ alleged damages during the relevant periods.” 129 As
previously explained, however, Hanover misstates the standard for a motion for summary
judgment on the duty to defend. 130 To prevail on a motion for summary judgment that it
has no duty to defend, an insurer must establish that coverage is unambiguously
precluded based on review of the four corners of the petition for damages and the four
corners of the complaint. 131
The Hanover policy periods span July 11, 2009, through July 11, 2011. 132 The
Adams lawsuit was filed on December 28, 2010. 133 The petition in Adams notes that Allied
has operated “for decades without appropriate borders” to prevent dangerous silica dust
from permeating the neighborhood and that the exposure has been “prolonged” and
“long, consistent and protracted.” 134 Thus, the Adams plaintiffs’ allege their exposure
occurred over decades. The Adams plaintiffs also allege that they contracted illnesses and
diseases as a result of the exposure and that “[t]he dust is so constant and voluminous
that residents must continuously wash their cars and houses, almost on a daily basis.” 135
They seek damages for medical expenses, loss of income, property damage, and loss of
value of property. 136

R. Doc. 227-1 at 10–11.
See supra Part A (The “Eight-Corners Rule”).
131 Id.
132 R. Doc. 227-9 at 1; R. Doc. 227-10 at 1.
133 See R. Doc. 227-5 at 5.
134 R. Doc. 227-5 at 2, 3.
135 R. Doc. 227-5 at 2–3.
136 Id. at 4.
129

130

22

The St. Pierre lawsuit was filed on December 8, 2010. 137 The St. Pierre petition
alleges that “[f]or approximately eight (8) years, the plaintiffs have lived in a residence . . .
located near the shipyard,” and during that time, they were exposed to the hazardous
substances released by Allied. 138 Based on the allegations in the St. Pierre lawsuit, the St.
Pierre plaintiffs’ exposure began in 2002, eight years prior to the suit’s filing, and
continued at least until 2010, when the petition was filed. The St. Pierre plaintiffs allege
that, as a result of the exposure, they “have suffered personal injury, mental anguish,
health problems,” and other damages. 139 They seek damages for physical and mental pain
and suffering, medical expenses, damage to personal property. 140
Although the state-court petitions do not identify a precise time period during
which the plaintiffs were exposed to the hazardous substances causing bodily injury and
property damage, a review of the petitions and the policies does not unambiguously
preclude a finding that the exposure occurred during the policy periods. “An insured’s
duty to defend arises whenever the pleadings against the insured disclose even a
possibility of liability under the policy.” 141 The petitions clearly allege exposure that was
ongoing and continuous for years, even decades in Adams. The plaintiffs in St. Pierre
allege that they were exposed to the hazardous substances from 2002 to 2010. 142 The
See R. Doc. 227-6 at 3.
R. Doc. 227-6 at 1.
139 Id.
140 Id. at 2.
141 Steptore, 643 So. 2d at 1218.
142 To determine when property damage or bodily injury “occurs” due to long-term exposure to harmful
substances, Louisiana courts apply the exposure theory. See Cole v. Celotex Corp., 599 So. 2d 1058, 1076–
77 (La. 1992); Norfolk S. Corp. v. California Union Ins. Co., 2002-0369 (La. App. 1 Cir. 9/12/03), 859 So.
2d 167, 192, writ denied, 2003-2742 (La. 12/19/03), 861 So. 2d 579; Grefer v. Travelers Ins. Co., 04-1428
(La. App. 5 Cir. 12/16/05), 919 So. 2d 758, 765. The parties do not dispute that the exposure theory applies.
Under the exposure theory, “[e]ven where the damage or injury was not manifested until after an insurer’s
policy period, if the insurer’s policy period fell either at the inception or during the course of exposure, the
insurer would be liable.” Oxner v. Montgomery, 34,727 (La. App. 2 Cir. 8/1/01), 794 So. 2d 86, 93, writ
denied, 803 So. 2d 36 (La. 2001). Thus, applying the exposure theory, the state-court plaintiffs’ bodily
injuries and property damage “occurred” “during the entire course of [the plaintiffs’] exposure.”142 Thus, “if
137

138

23

policies Hanover issued to Superior provide coverage during these time periods. 143 The
eight corners of the state-court petitions and the policies do not unambiguously preclude
the possibility that the exposure causing the plaintiffs’ personal injuries and property
damage occurred during Hanover’s policy periods. 144
E. Hanover Argues the Policies’ Silicon, Silica, and Silicate Exclusion Unambiguously
Excludes Coverage
Hanover argues separately and alternatively that the eight corners of the petition
and the silicon, silica, and silicate exclusion included in its policies taken together
unambiguously bar coverage for any liability of the state-court plaintiffs’ injuries. 145
The silicon, silica, and silicate exclusion precludes coverage for any liability or loss
“arising out of the actual, alleged or threatened contaminative, pathogenic, toxic or other
hazardous properties of Silicon.” 146
In their original petition for damages, the Adams plaintiffs allege that their
exposure to “silica sand . . . as well as other toxic substances” 147 and “silica dust and other

the insurer’s policy period fell either at the inception or during the course of exposure, the insurer would be
liable.” Id.
143 R. Doc. 227-9 at 1; R. Doc. 227-10 at 1.
144 R. Doc. 227-5 at 1, 2; R. Doc. 227-6 at 1. See also Duhon v. Nitrogen Pumping & Coiled Tubing
Specialists, Inc., 611 So. 2d 158, 161–62 (La. App. 3 Cir. 1992) (From a common sense reading of the
plaintiffs’ petition, we cannot say that the allegations unambiguously rest on an occurrence which began
before the policy period. Plaintiffs’ petition generally alleges a period of time when acts of liability took
place. However, no particular accident is detailed, and no specific allegation is made that the plaintiffs were
repeatedly exposed to the same harmful condition prior to the effective date of Lloyd’s
policies. . . . Accordingly, because plaintiffs’ petition does not unambiguously exclude that the occurrence
began during the policy period, Lloyd’s must defend NPACT. . . .”); Steptore, 643 So. 2d at 1218 (The “duty
to defend arises whenever the pleadings against the insured disclose even a possibility of liability under the
policy.”); United Nat’l Ins., 2010 WL 2690615, at *2 (“The duty to defend analysis begins with an
examination of whether any of the facts pleaded in the complaint possibly fall within matters covered under
the insuring clause. . . . The duty to defend arises whenever the pleadings against the insured disclose even
a possibility of liability under the policy.” (citations omitted) (internal quotation marks omitted)); Fed. Ins.
Co. v. St. Paul Fire & Marine Ins. Co., 638 So. 2d 1132, 1135 (La. App. 1 Cir. 1994) (“The absence of detailed
times, dates, and places in the petition does not defeat our conclusion that the allegations state, at least
rudimentarily, a claim which may be covered by the insurance contract.”).
145 R. Doc. 227-1 at 12–13.
146 R. Doc. 227-9 at 44.
147 R. Doc. 227-5 at 2.

24

harmful products” caused their injuries. 148 The plaintiffs’ third amended petition for
damages alleges that the defendants “have conducted sandblasting and painting
operations and have allowed dangerous byproduct to drift into the neighborhood” and
“[t]he byproduct caused both personal injuries and property damages to all Plaintiffs.”149
The plaintiffs allege their exposure to hazardous substances, in addition to silica dust,
caused their personal injuries and property damage. The petition for damages does not
unambiguously limit the cause of their injuries to “contaminative, pathogenic, toxic or
other hazardous properties of Silicon,” to which the exclusion applies. 150
The St. Pierre petition for damages also does not unambiguously limit the cause of
the plaintiffs’ injuries to the hazardous properties of silicon, silica, or silicate. The St.
Pierre plaintiffs allege that Allied’s operations “resulted in the release into the atmosphere
and environment in the neighborhoods surrounding the shipyard of hazardous
substances, including, but not limited to, paint, sand and silica,” 151 which caused the
plaintiffs’ personal injuries and property damage. 152
Considering the Adams petitions for damages, the St. Pierre petition for damages,
and the language of the exclusion found in the policies, the Court does not find that the
silicon, silica, and silicate exclusion unambiguously bars coverage of the damages alleged
in the State-Court Lawsuits.

Id. at 3.
Id. at 13.
150 R. Doc. 227-9 at 44.
151 R. Doc. 227-6 at 1.
152 Id. at 2.
148
149

25

F. Hanover Argues the Pollution Buyback Endorsement Unambiguously Excludes
Coverage
Hanover further argues separately and alternatively that the eight corners of the
petitions and the Pollution Buyback Endorsement found in its policies unambiguously
preclude coverage. 153 The Pollution Buyback Endorsement excludes coverage for “any
claim arising out of the discharge, dispersal, release or escape of smoke, vapors, soot,
fumes, alkalis, toxic chemicals, liquids or gases, waste materials, oil or other petroleum
substance or derivative (including all oil refuse or oil mixed wastes) or other irritants,
contaminants or pollutants into or upon land, the atmosphere, or any watercourse or body
of water.” 154 The insured may still be entitled to coverage, however, if it establishes five
conditions. 155 The endorsement is a total pollution exclusion on damages caused by
pollutants, with time-element exceptions. 156 Hanover must establish that the exclusion
unambiguously precludes coverage before the Court may consider whether the timeelement conditions have been met. 157
The Louisiana Supreme Court has ruled that a literal application of a total pollution
exclusion “would lead to . . . absurd results” and explained that, “[i]n light of the origin of
pollution exclusions, as well as the ambiguous nature and absurd consequences which

R. Doc. 227-1 at 13–17.
R. Doc. 227-9 at 34; R. Doc. 227-10 at 33.
155 R. Doc. 227-9 at 34; R. Doc. 227-10 at 33.
156 See R. Doc. 227-9 at 34 (“This exclusion shall not apply, however, provided that the Assured establishes
that all of the following conditions have been met . . . .”); R. Doc. 227-10 at 33 (same). See also In re Matter
of Complaint of Settoon Towing, L.L.C., 720 F.3d 268, 278 (5th Cir. 2013) (interpreting a pollution buyback
provision as establishing conditions precedent for an exclusion to not apply, noting the insured must
“‘establish’ that the ‘conditions’ have been met in order for the absolute pollution exclusion not to apply);
Certain Underwriters at Lloyd’s London v. C.A. Turner Const. Co., 941 F. Supp. 623, 629 (S.D. Tex. 1996),
aff’d, 112 F.3d 184 (5th Cir. 1997) (applying Texas law) (“The Court observes that [the pollution buyback]
clause is not itself an exclusion . . . but rather serves merely to reinstate coverage that has been found to be
excluded.”).
157 See Martco, 588 F.3d at 880, 883–84 (“[The insurer] bears the burden of proving the applicability of an
exclusionary clause within the Policy. If [the insurer] cannot unambiguously show an exclusion applies, the
Policy must be construed in favor of coverage.” (citations omitted)).
153

154

26

attend a strict reading of these provisions,” a total pollution exclusion is “neither designed
nor intended to be read strictly to exclude coverage for all interactions with irritants or
contaminants of any kind.” 158 As a result, the Louisiana Supreme Court has instructed
that courts must “attempt to determine the true meaning and interpretation of [the]
pollution exclusion.” 159 In Doerr v. Mobil Oil Corporation, the Louisiana Supreme Court
explained that the applicability of such an exclusion in any given case must necessarily
turn on three considerations: (1) whether the insured is a “polluter” within the meaning
of the exclusion; (2) whether the injury-causing substance is a “pollutant” within the
meaning of the exclusion; and (3) whether there was a “discharge, dispersal, seepage,
migration, release or escape” of a pollutant by the insured within the meaning of the
policy. 160 If the insurer fails to show these three questions are answered in the affirmative,
the total pollution exclusion is not applicable and the court need not examine whether the
time-element conditions, or exceptions, contained in the endorsement are met. 161 The
Louisiana Supreme Court expressly stated that these factors must be considered “in any
given case,” 162 which this Court construes to include decisions involving a motion for

Doerr, 774 So. 2d at 135.
Id. at 125.
160 Id. The exclusion in Doerr precluded coverage for bodily or personal injury, advertising injury, or
property damage that “would not have occurred in whole or in part but for the actual, alleged or threatened
discharge, dispersal, seepage, migration, release or escape of pollutants at any time.” Doerr, 774 So. 2d at
122. The Doerr policy defined “pollutants” as “solid[,] liquid, gaseous, or thermal irritant or contaminant
including smoke, vapor, soot, fumes, acid, alkalis, chemicals and waste.” Id. The court instead found it was
“appropriate to construe a pollution exclusion clause in light of its general purpose, which is to exclude
coverage for environmental pollution, and under such interpretation, the clause will not be applied to all
contact with substances that may be classified as pollutants.” Id. at 135.
161 See Smith v. Reliance Ins. Co. of Illinois, 01-888 (La. App. 5 Cir. 1/15/02), 807 So. 2d 1010, 1020 (“[I]n
light of the recent pronouncement by the Supreme Court in Doerr and after consideration of the abovementioned factors, we conclude that the insurer in this case failed to meet its burden of proving the
applicability of Exclusion 10 of the policy, the total pollution exclusion. Additionally, although the parties
extensively dispute the applicability of the limited buy-back endorsement to this exclusion, we find it
unnecessary to reach this issue based on our holding that Exclusion 10 does not unambiguously exclude
coverage based on the facts alleged in this case.”).
162 Doerr, 774 So. 2d at 135.
158
159

27

summary judgment on the duty to defend, as well as motions involving the duty
to indemnify.
Although the Doerr factors should be considered in the duty-to-defend context,
the Court is nevertheless limited to the eight corners of the petitions and the policies when
deciding whether to apply a total pollution exclusion as written. This is borne out by an
examination of Louisiana state court cases facing this issue. In Lodwick, L.L.C. v. Chevron
U.S.A., Inc., 163 for example, a Louisiana appellate court found that, considering the four
corners of the underlying petitions and the four corners of the time-element pollution
exclusion, the insurer had no duty to defend because the exclusion unambiguously
precluded coverage. 164 The court in Lodwick addressed Doerr as “the seminal case
addressing pollution exclusions” and applied the Doerr factors using only the four corners
of the plaintiffs’ petition for damages. 165 For example, the court found that the insureds
were “‘polluters’ under the Doerr test” because “[t]hroughout the plaintiffs’ petition for
damages, all defendants . . . are alleged to be oil field operators and producers.” 166 The
court also found that the substances that caused the plaintiffs’ injuries were “pollutants”
within the meaning of the total pollution exclusion because the plaintiffs “allege[d] that
their property was contaminated by . . . [substances that] qualify as chemicals,
contaminants, irritants, or waste under the various exclusions.” 167 The court concluded
that “[p]laintiffs’ allegations make it clear that all three Doerr factors are met.” 168 The

163 Lodwick, L.L.C. v. Chevron U.S.A., Inc., 48,312 (La. App. 2 Cir. 10/2/13), 126 So. 3d 544, writ denied,
2013-2898 (La. 2/28/14), 134 So. 3d 1176. The plaintiffs in Lodwick alleged that the activities of nearby oil
and gas operators “caused pollution damages on or adjacent to their property.” Id. at 547.
164 R. Doc. 227-1 at 16.
165 Lodwick, 126 So. 3d at 560. Hanover incorrectly argues that the court in Lodwick “not[ed] that Doerr
did not apply.” R. Doc. 227-1 at 16.
166 Id. at 561.
167 Id.
168 Id.

28

court thus found that the pollution exclusion in the policies at issue did unambiguously
exclude coverage and granted summary judgment declaring that the insurers had no duty
to defend. 169
In Smith v. Reliance Insurance Company of Illinois, the plaintiffs alleged that the
release of noxious odors carried by the wind to the plaintiffs’ homes and properties caused
their damages. 170 Before the Smith court was a motion for partial summary judgment on
the insurer’s duty to defend. 171 When ruling on the motion, the court used the eightcorners rule and examined a pollution exclusion with a buyback endorsement similar to
the exclusion and endorsement currently before this Court as well as the allegations
contained in the plaintiff’s petition. 172 The court applied the Doerr factors based on the
facts alleged in the petition and concluded that the insurer “failed to meet its burden of
proving the applicability” of the pollution exclusion. 173 The court explained that,
“although the parties extensively dispute[d] the applicability of the limited buy-back
endorsement to th[e] exclusion,” it was unnecessary to reach the issue of whether the
buyback endorsement applied because the court found the exclusion itself did not
unambiguously exclude coverage given the Doerr analysis. 174 The court affirmed the
judgment of the trial court, which found that the insurer had a duty to defend. 175
To apply the Doerr factors in this case, the Court must first determine whether the
insured is a “polluter” within the meaning of the exclusion, using the eight corners of the

Id.
Smith, 807 So. 2d at 1013.
171 Id.
172 Id. at 1019–20. See also id. at 1015 (explaining that the insurer’s duty to defend “is determined by the
allegations of the plaintiff’s petition with the insurer being obligated to furnish a defense unless the petition
unambiguously excludes coverage”).
173 Id. at 1020.
174 Id.
175 Id. at 1013.
169
170

29

petitions and the policies. The Doerr court described this issue as a fact-based
determination for which courts should consider “the nature of the insured’s business,
whether that type of business presents a risk of pollution, whether the insured has a
separate policy covering the disputed claim, whether the insured should have known from
a read of the exclusion that a separate policy covering pollution damages would be
necessary for the insured’s business, who the insurer typically insures, any other claims
made under the policy, and any other factor the trier of fact deems relevant to this
conclusion.” 176 Hanover is unable to establish from the eight corners that Superior is a
“polluter” within the meaning of the exclusion. For example, Hanover is unable to point
to any information within the eight corners regarding the nature of Superior’s business,
whether that type of business presents a risk of pollution, and whether Superior has a
separate pollution policy. Accordingly, the Court is unable to conclude that Superior is a
“polluter” within the meaning of the exclusion.
Second, the Court must determine whether the injury-causing substance is a
“pollutant” within the meaning of the exclusion. The Court should consider “the nature of
the injury-causing substance, its typical usage, the quantity of the discharge, whether the
substance was being used for its intended purpose when the injury took place, whether
the substance is one that would be viewed as a pollutant as the term is generally
understood, and any other factor the trier of fact deems relevant to that conclusion.” 177
Hanover is unable to establish from the eight corners that the substances the State-Court
Lawsuit plaintiffs allege caused their personal injuries and property damage are
“pollutants” within the meaning of the exclusion such that the exclusion unambiguously

176
177

Doerr, 774 So. 2d at 135.
Id.

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precludes coverage. In the Adams and St. Pierre petitions for damages, the plaintiffs
broadly describe the substances causing their injuries. The Adams plaintiffs, for example,
allege that “silica dust and other harmful products”178 and “dangerous byproduct”179
caused their injuries. The St. Pierre plaintiffs allege that “hazardous substances,
including, but not limited to, paint, sand and silica” caused their injuries. 180 The Court is
unable to determine the nature of the injury-causing substances, their typical usages, the
quantity of any discharges, whether the substances were being used for their intended
purpose when the injury took place, or whether the substances are ones that would be
viewed as pollutants as the term is generally understood. The Court reiterates that “any
ambiguity should be interpreted in favor of the insured.” 181 Hanover has failed to establish
that the injury-causing substance is a “pollutant” within the meaning of the exclusion.
Finally, the Court must consider whether there was a “discharge, dispersal,
seepage, migration, release or escape” of a pollutant by the insured within the meaning of
the policy, a fact-based determination. 182 The Court “should consider whether the
pollutant was intentionally or negligently discharged, the amount of the injury-causing
substance discharged, whether the actions of the alleged polluter were active or passive,
and any other factor the trier of fact deems relevant.” 183 The Court is unable to determine
from the eight corners whether a pollutant was intentionally or negligently discharged,
the amount of the injury-causing substance discharged, or whether the actions of the
alleged polluter were active or passive. Hanover has failed to establish that there was a

R. Doc. 227-5 at 3 (emphasis added).
Id. at 13.
180 R. Doc. 227-6 at 1.
181 Doerr, 774 So. 2d at 125.
182 Id. at 135.
183 Id. at 136.
178
179

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discharge, dispersal, seepage, migration, release or escape of a pollutant by the insured
within the meaning of the policy.
Because Hanover has failed to establish that Superior is a polluter, that the
substance or substances to which the plaintiffs were exposed were pollutants, or that there
was a discharge within the meaning of the policies, Hanover has failed to establish that
the pollution exclusion unambiguously precludes coverage. Therefore, the Court need not
reach the issue of whether Superior met the time-element conditions necessary to
establish the exception to the pollution exclusion. 184 Hanover’s motion for summary
judgment on its duty to defend is denied.
The Court notes that Hanover argues Doerr does not apply to this case because the
exclusion in Hanover’s policies is not a total pollution exclusion as was the provision
examined by the court in Doerr. 185 Hanover cites Bridger Lake, LLC v. Seneca Insurance
Company, Inc. in support of its position, but this case is distinguishable from the matter
before the Court. 186 In Bridger Lake, the Western District of Louisiana found that the
pollution exclusion for damage “arising out of the actual, alleged or threatened discharge,
dispersal, seepage, migration, release or escape of ‘pollutants’” applied to a case in which
a crude oil pipeline ruptured, causing the release of more than 3,000 barrels of crude oil

See Smith, 807 So. 2d at 1020 (“[I]n light of the recent pronouncement by the Supreme Court in Doerr
and after consideration of the above-mentioned factors, we conclude that the insurer in this case failed to
meet its burden of proving the applicability of Exclusion 10 of the policy, the total pollution exclusion.
Additionally, although the parties extensively dispute the applicability of the limited buy-back endorsement
to this exclusion, we find it unnecessary to reach this issue based on our holding that Exclusion 10 does not
unambiguously exclude coverage based on the facts alleged in this case.”).
185 R. Doc. 227-1 at 16–18.
186 Bridger Lake, LLC v. Seneca Ins. Co., No. 11-0342, 2013 WL 2458758 (W.D. La. June 6, 2013).
184

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into the environment. 187 The court, however, applied Wyoming law and thus was not
bound by, and did not consider, the Louisiana Supreme Court’s decision in Doerr. 188
CONCLUSION
For the foregoing reasons;
IT IS ORDERED that Hanover’s motion for partial summary judgment is
DENIED.
New Orleans, Louisiana, this 30th day of March, 2016.
__________ ________ ________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

Id. at *5.
See id. Hanover also cites Lodwick, but as explained supra, Lodwick indeed applied the Doerr factors
when considering a motion for summary judgment on the duty to defend.
187

188

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