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

Filing 418

ORDER denying 250 Motion for Summary Judgment; denying 251 Motion for Summary Judgment. IT IS ORDERED that Arch's Motion for Summary Judgment with respect to its duty to defend Superior as an insured or Allied as an additional insured in t he Underlying Adams or St. Pierre Lawsuits is DENIED WITH PREJUDICE. IT IS FURTHER ORDERED that Arch's Motion for Summary Judgment with respect to its duty to indemnify Superior as an insured or Allied as an additional insured in the Underlying Adams or St. Pierre Lawsuits is DENIED WITHOUT PREJUDICE. IT IS FURTHER ORDERED that Arch's Motion for Summary Judgment with respect to its duty to defend Masse as an insured or Allied as an additional insured in the Underlying Adams or St. Pier re Lawsuits is DENIED WITH PREJUDICE.IT IS FURTHER ORDERED that Arch's Motion for Summary Judgment with respect to its duty to indemnify Masse as an insured or Allied as an additional insured in the Underlying Adams or St. Pierre Lawsuits is DENIED WITHOUT PREJUDICE.. Signed by Judge Susie Morgan on 11/23/2016. (Reference: 14-1930, 14-1933)(cg)

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

CIVIL ACTION
No. 11-2375 c/w
14-1930, 14-1933,
16-2490

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

SECTION “E”

Applies to: 14-1930, 14-1933
ORDER AND REASONS
Before the Court are two motions for summary judgment filed by Arch Insurance
Company regarding its duty to defend and duty to indemnify Masse and Superior as
insureds and Allied as an additional insured under Superior’s and Masse’s policies.1
Because the motions involve identical policy language and the same state-court petitions,
the Court will consider these motions together. For the reasons set forth below, Arch’s
motions are 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

R. Docs. 250, 251. Unless otherwise indicated, “R. Doc.” refers to record documents in the consolidated
matter, No. 11-2375.
2 The petitions for damages in each State-Court Lawsuit are attached to Arch’s motions for summary
judgment. See R. Docs. 250-2, 251-2 (Adams Petition for Damages and First, Second, Third, and Fourth
Amended Petitions for Damages); R. Doc. 369-2 (Adams Sixth Amended Petition for Damages); R. Docs.
250-3, 251-3 (St. Pierre Petition for Damages).
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sandblasting activities and seek resulting damages.3 The two cases were consolidated in
state court on September 9, 2013.4
In both State-Court Lawsuits, Allied filed third-party demands against its
contractors that performed the sandblasting jobs, including Superior Labor Services, Inc.
(“Superior”)5 and Masse Contracting, Inc. (“Masse”).6 Specifically, Allied alleges that
Superior and Masse contracted with Allied to perform certain job responsibilities and to
indemnify Allied under master work contracts.7 Allied seeks indemnity from Superior and
from Masse with respect to the claims in the State-Court Lawsuits.8
The plaintiffs in Adams amended their petition to name Superior, Masse, other
subcontractors, and Gray Insurance Company as direct defendants.9
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.”10
On August 12, 2016, Allied filed a cross-claim and third-party demand in state
court against its direct insurer, Gray, and against Masse and Superior’s insurers, seeking
a declaration that it has a right to defense and indemnity as well as a declaration of its
status as an additional insured under Masse and Superior’s policies.11

See R. Docs. 250-2, 251-2, 250-3, 251-3, 369-2.
See R. Doc. 261-5.
5 See R. Docs. 244-12, 245-8.
6 See R. Docs. 242-12, 242-13, 243-8, 243-9.
7 See R. Docs. 242-12, 242-13, 243-8, 243-9, 244-12, 245-8.
8 See R. Docs. 242-12, 242-13, 243-8, 243-9, 244-12, 245-8.
9 See R. Doc. 250-2, 251-2.
10 R. Doc. 174-1 at 2.
11 See R. Doc. 250-2, 251-2.
3

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2

The Adams plaintiffs filed their sixth amended petition in state court on April 29,
2016.12 The St. Pierre plaintiffs have not amended their original petition, which was filed
on December 8, 2010.13
B. Declaratory Actions in Federal Court
Four federal actions related to the State-Court Lawsuits are pending in this Court.
The Court consolidated the first three cases—11-2375, 14-1930, and 14-1933—on
November 21, 2014, and consolidated 16-2490 with those cases on August 10, 2016.14
The two actions involving Arch are 14-1930 and 14-1933.
1. No. 14-1930
On August 22, 2014, Arch Insurance Company brought an action for declaratory
judgment against Superior and Allied.15 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.16
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.17 Arch seeks a declaration against
Superior and Allied that Arch has no defense or indemnity obligation to Superior or Allied
in the State-Court Lawsuits.18 Arch also seeks recovery of the portion of defense costs
already incurred by it on behalf of Superior.19
R. Doc. 369-2.
R. Docs. 250-3, 251-3.
14 See R. Docs. 108, 368.
15 Arch Ins. Co. v. Superior Labor Servs., Inc. et al., No. 14-1930.
16 No. 14-1930, R. Doc. 1 at ¶ 3.
17 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. Id. at ¶¶ 20–21.
18 Id. at ¶¶ 21, 47.
19 Id. at ¶ 47.
12
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2. No. 14-1933
On August 22, 2014, Arch also filed an action for declaratory judgment against
Masse and Allied.20 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.21 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.22 Arch seeks a declaration against Masse and Allied that Arch has no defense or
indemnity obligation to Masse or Allied in the State-Court Lawsuits.23 Arch also seeks
recovery of the portion of defense costs already incurred by it on behalf of Masse.24
C. Arch’s Motions for Summary Judgment
Arch filed two motions for summary judgment on December 1, 2015 regarding its
duty to defend and duty to indemnify Masse and Superior as insureds and Allied as an
additional insured under the policies issued to Masse and Superior. 25
The first motion pertains to Arch’s duty to defend and duty to indemnify Superior
as an insured and Allied as an additional insured in the underlying Adams and St. Pierre
lawsuits.26 Arch argues it has no duty under the policies to defend or indemnify them in
the Adams or St. Pierre suits.27

Arch Ins. Co. v. Masse Contracting, Inc. et al., No. 14-1933.
No. 14-1933, R. Doc. 1 at ¶ 3.
22 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. Id. at ¶¶ 20–21.
23 Id. at ¶ 46.
24 Id. at ¶ 12.
25 R. Docs. 250, 251.
26 R. Doc. 250.
27 Id.
20
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The second motion pertains to Arch’s duty to defend and duty to indemnify Masse
as an insured and Allied as an additional insured in the Adams and St. Pierre lawsuits.28
Allied argues it has no duty under the policies to defend or indemnify them in the Adams
or St. Pierre suits.29
CONSIDERATION OF DECLARATORY JUDGMENT ACTIONS
Arch asserts declaratory judgment actions against Masse and Superior as insureds
under the policies and Allied as an additional insured. The Declaratory Judgment Act, 28
U.S.C. § 2201, provides in pertinent part:
In a case of actual controversy within its jurisdiction . . . any court of the
United States, upon the filing of an appropriate pleading, may declare the
rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought. Any such
declaration shall have the force and effect of a final judgment or decree and
shall be reviewable as such.30
The Fifth Circuit has explained that, when considering a declaratory judgment action, a
district court must engage in a three-step inquiry to determine whether to decide or
dismiss a complaint for declaratory relief.31 First, the Court must determine whether the
action is justiciable.32 Second, the Court must determine whether it has the authority to
grant declaratory relief.33 Third, the Court must determine “how to exercise its broad
discretion to decide or dismiss a declaratory judgment action.”34 Because Arch is seeking

R. Doc. 251.
Id. at 24. After filing its motions for summary judgment, Arch filed a supplemental memorandum in
support of the motions. R. Doc. 369. In its supplemental memorandum, Arch informed the Court that
multiple interested insurers are in the process of settling the claims of the plaintiffs in the Adams suit
against Masse and Superior. Id. at 1. The Court has not been informed that a final settlement has been
reached.
30 28 U.S.C. § 2201.
31 Orix Credit All., Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir. 2000). See also Aggreko, LLC v. Am. Home
Assur. Co., No. 14-1215, 2014 WL 6901376, at *3 (E.D. La. Dec. 5, 2014).
32 Id.
33 Id.
34 Id.
28
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declaratory relief on two causes of action—its duty to defend and its duty to indemnify—
the Court will conduct this analysis with respect to both.35
THE DUTY TO DEFEND
A.

Justiciability
The justiciability doctrines of standing, mootness, political question, and ripeness

derive from Article III’s “case or controversy” requirement.36 In a declaratory judgment
action, justiciability often turns on ripeness.37 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.”38 The purpose of this
doctrine is to forestall “entangl[ement] . . . in abstract disagreements” through
“avoidance of premature adjudication.”39 “The key considerations are ‘the fitness of the
issues for judicial decision and the hardship to the parties of withholding
court consideration.’”40
The Fifth Circuit has recognized that “applying the ripeness doctrine in the
declaratory judgment context presents a unique challenge.” 41 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.”42 Fortunately, this challenge is not presented today,

Because the question of the justiciability of Arch’s duty to indemnify may turn on conclusions reached on
the duty to defend claims, the Court discusses the justiciability of the duty to indemnify after the full analysis
on Arch’s duty to defend.
36 Choice Inc. of Tex. v. Greenstein, 691 F.3d 710, 714–15 (5th Cir. 2012).
37 See id; Orix, 212 F.3d at 895; Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 27–28 (5th Cir. 1989).
38 Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
39 Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), abrogated on other grounds by Califano v. Sanders,
430 U.S. 99 (1977).
40 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).
41 Orix, 212 F.3d at 896 (internal quotation marks omitted).
42 Id.
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because the Court’s analysis is guided by a distinct subset of ripeness jurisprudence on
disputes regarding the duty to defend.
Because the duty to defend does not depend on the outcome of the underlying law
suit,43 a duty-to-defend claim is ripe when the underlying suit is filed. 44 Accordingly,
Arch’s duty-to-defend claims are ripe, and the Court finds the actions are justiciable.
B.

Mandatory Abstention
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.”45 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.46 The first factor in this analysis is
not met in this case, as the declaratory defendant in this matter—Allied—did not
previously file a cause of action in state court against the declaratory plaintiff—Arch—
before Arch filed its declaratory judgment actions in this Court.47 “The presence of all
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).
45 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.
46 Travelers, 996 F.2d at 776; Sherwin-Williams Co. v. Holmes Cty., 343 F.3d 383, 387 (5th Cir. 2003).
47 Allied filed a cross claim and third-party demand in state court seeking a declaration that the insurers of
Masse and Superior owe Allied a duty to defend and a duty to indemnify, but this cross-claim and thirdparty demand was filed nearly two years after Arch filed its declaratory actions in this Court.
43

44

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three factors mandates abstention. The want of any one factor defeats mandatory
abstention.”48 Because the first factor has not been met, abstention is not mandatory.
C.

Discretion to Exercise Jurisdiction on the Duty to Defend
Because there is no mandatory abstention, the Court must consider, in its

discretion, whether to exercise jurisdiction over this matter. “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.49 In Wilton v. Seven Falls Co., the
Supreme Court held that the discretionary standard of Brillhart v. Excess Ins. Co. of
America50 governs a district court’s decision to stay a declaratory judgment action during
the pendency of parallel state-court proceedings.51 “Although Brillhart did not set out an
exclusive list of factors governing the district court’s exercise of this discretion, it did
provide some useful guidance in that regard.”52 There are three overarching
considerations in the Supreme Court’s analysis in Brillhart: federalism, fairness, and
efficiency.53 “Despite the circuits’ different expressions of the Brillhart factors, each
circuit’s formulation addresses the same three aspects of the analysis.”54
The Fifth Circuit uses the Trejo factors to guide a district court’s exercise of
discretion to accept or decline jurisdiction over a declaratory judgment suit:
(1) whether there is a pending state action in which all of the
matters in controversy may be fully litigated;

AIX Specialty Ins. Co. v. W. States Asset Mgmt., Inc., No. 12-4342, 2013 WL 4603775, at *2 (N.D. Tex.
Aug. 29, 2013).
49 Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).
50 Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942).
51 Wilton v. Seven Falls Co., 515 U.S. 277, 284 (1995).
52 Id. at 282.
53 Sherwin-Williams, 343 F.3d at 390.
54 Id.
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(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;
(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.55
1.

Nature of Pending State Court Action

The first Trejo factor requires comparison of the declaratory judgment action with
the underlying state-court action.56 “If there is a pending related state proceeding but it
is not ‘parallel’ because it does not involve all the same parties or issues, the federal
district court properly considers the extent of similarity between the pending state court
and federal court cases in deciding which court should decide the dispute, rather than
relying on a per se rule.”57
On August 22, 2014, Arch filed its declaratory judgment actions in federal court,
seeking a declaration of whether Arch has a duty to defend or indemnify Masse or
Superior as insureds or Allied as an additional insured. At the time Arch filed its
declaratory judgment actions in this Court, the question of Arch’s duty to defend or

Sherwin-Williams, 343 F.3d at 388, 390.
See id. at 393–94.
57 See Sherwin-Williams, 343 F.3d at 394 n.5.
55

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indemnify Masse and Superior as insureds and Allied as an additional insured was not
before the state court. Two years after Arch filed its declaratory actions in this Court,
Allied filed a cross claim and third-party demand in state court seeking a declaration that
the insurers of Masse and Superior, which includes Arch, owe Allied duties to defend and
indemnify.58 The determination of whether Arch has a duty to defend Masse or Superior
as insureds or Allied as an additional insured involves a straightforward examination of
the state-court petitions and the insurance policies Arch issued to Masse and Superior.
This issue was fully briefed before this Court well before Allied filed its third-party
demand in state court. The first Trejo factor is neutral because of the unique posture of
this case.
2.

Order of Filing

The St. Pierre lawsuit was filed on December 8, 2010,59 and the Adams lawsuit was
filed on December 28, 2010.60 Arch filed its declaratory judgment actions in federal court
on August 22, 2014.61 Arch likely was aware that its insurance coverage of Superior and
Masse would become an issue in the pending State-Court Lawsuits. Therefore, Arch may
have filed its crossclaim and complaint in intervention in anticipation of becoming a party

See R. Doc. 250-2, 251-2.
R. Docs. 250-3, 251-3.
60 R. Docs. 250-2, 251-2.
61 Arch Ins. Co. v. Superior Labor Servs, Inc., et al., No. 14-1930 (E.D. La.); Arch Ins. Co. v. Masse
Contracting, Inc., et al., No. 14-1933 (E.D. La.).
58
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to the pending State-Court Lawsuits.62 The second Trejo factor weighs against exercising
jurisdiction.63
3.

Forum Shopping

That Arch could have intervened and requested declaratory judgment in the StateCourt Lawsuits does not necessarily demonstrate forum shopping.64 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 selection of the federal forum does not change the applicable
law.65 “The record does not support a finding that [Arch] engaged in impermissible forum
shopping by filing this declaratory judgment suit.”66 The third Trejo factor weighs in favor
of exercising jurisdiction.
4.

Inequities

The Court cannot conceive of any inequities that flow from allowing Arch to
proceed in this action while the State-Court Lawsuits remain pending. No party will be
prejudiced if this Court decides whether Arch has a duty to defend Masse or Superior as

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).
63 See U.S. Fire, 2015 WL 1416490, at *4.
64 See id.
65 See Sherwin-Williams, 343 F.3d at 399.
66 Id. at 400. See also Ironshore Specialty Ins. Co. v. Tractor Supply Co., 624 F. App’x 159, 167 (5th Cir.
2015) (per curiam).
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insureds or Allied as an additional insured before resolution of 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.67 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.68
6.

Judicial Economy

Arch’s two declaratory judgment actions in this Court have been pending for more
than two years. All cases surrounding this controversy have been before this Court for five
years. The issue of whether Arch has a duty to defend Masse or Superior as insureds or
Allied as an additional insured in the State-Court Lawsuits has been fully briefed before
this Court. Exercising jurisdiction is in the interest of judicial economy.69 This factor
weighs in favor of exercising jurisdiction.

See R. Docs. 228-5, 228-6.
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).
69 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”).
67

68

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7.

Interpretation of Decree from Parallel State Proceeding

Although a part of the State-Court Lawsuits and this action are parallel, filings by
Allied seeking a declaration of its rights to defense and indemnity were made well after
the filing of Arch’s declaratory judgment actions in this Court. This Court is unaware of a
ruling by the state court on the issue of Allied’s rights to defense or indemnity, and there
is no indication that such a ruling is imminent. This Court need not interpret any decree
issued in the State-Court Lawsuits to determine whether Arch has a duty to defend. The
seventh Trejo factor weighs in favor exercising jurisdiction.70
Four of the Trejo factors weigh in favor of exercising jurisdiction, while one weighs
against and two are neutral. The Court will exercise jurisdiction over the question of the
duty to defend in this matter.71
D.

Louisiana Law on the Duty to Defend
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.72 A liability insurer’s duty to defend and the scope of its coverage are separate and

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.
71 Applying this same analysis to the declaratory judgment action filed by Hanover against Superior and
State National (No. 11-2375) and to the declaratory judgment action filed by Arch against Masse and Allied
(No. 14-1933) would result in the same conclusion.
72 Sher v. Lafayette Ins. Co., 2007-2441 (La. 4/8/08), 988 So. 2d 186, 192, on reh’g in part (July 7, 2008).
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distinct issues.73 Under Louisiana law, an insurer’s duty to defend is broader than its
obligation to indemnify for damage claims.74
1. The “Eight-Corners Rule”
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.75 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.76
The duty to defend “arises whenever the pleadings against the insured disclose even a
possibility of liability under the policy.”77 The insurer has a duty to defend unless the
allegations in the petition for damages, as applied to the policy, unambiguously preclude
coverage.78 “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.”79

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.
74 Henly v. Phillips Abita Lumber Co., 2006-1856 (La. App. 1 Cir. 10/3/07), 971 So. 2d 1104, 1109.
75 Mossy, 898 So. 2d at 606.
76 Id. (citations omitted).
77 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).
78 Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009).
79 Treadway v. Vaughn, 633 So. 2d 626, 628 (La. Ct. App. 1993), writ denied, 635 So. 2d 233 (La. 1994).
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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
cannot present any evidence such as affidavits or depositions.80 Factual inquiries beyond
the petition for damages and the relevant insurance policy are prohibited with respect to
the duty to defend.81 Any ambiguities within the policy are resolved in favor of the insured
to effect, not deny, coverage.82
2. The Policies
Arch issued two marine general liability insurance policies to Superior: one that
provided coverage from July 11, 2005 through July 11, 2006,83 and another that provided
coverage from July 11, 2006 through July 11, 2007 (collectively, “the Superior policies”).84
Arch issued a marine general liability insurance policy to Masse, which provided coverage
from November 15, 2005, through November 15, 2006 (“the Masse policy”).85
a. General Liability
The Masse policy and the Superior policies contained the following insuring
agreement for bodily injury and property damage liability:
The company will pay on behalf of the Assured all sums which the Assured
shall become legally obligated to pay as damages because of[:] A. bodily
injury, or B. property damages to which this insurance applies, caused by
an occurrence, and the company shall have the right and duty to defend any
suit against the Assured seeking damages on account of such bodily injury
or property damage . . . .86

Milano v. Bd. of Comm’rs of Orleans Levee Dist., 96-1368 (La. App. 4 Cir. 3/26/97), 691 So. 2d
1311, 1314.
81 Martco, 588 F.3d at 872.
82 Doerr v. Mobil Oil Corp., 2000-0947 (La. 12/19/00), 774 So. 2d 119, 124. Hanover argues that “neither
Allied nor Masse can sustain their burden of establishing” that the state-court plaintiffs’ bodily injuries or
property damage occurred during Hanover’s policy periods. R. Doc. 228-1 at 11. This, however, is not the
correct standard for motions for summary judgment on the duty to defend.
83 R. Doc. 272-5.
84 R. Doc. 272-6.
85 R. Docs. 251-7.
86 R. Docs. 251-7 at 11 (Masse policy); R. Docs. 272-5 at 11, 272-6 at 11 (Superior policies).
80

15

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.”87 The policies provide the following definition of “property damage”:
“(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 period.”88 The policies define
“occurrence” as “an accident, including continuous or repeated exposure to conditions,
which results in Bodily Injury or Property Damage neither expected nor intended from
the standpoint of the Assured.”89
b. Health Hazard and Silica Exclusions
The Masse policy and the Superior policies contain the same “Health Hazard
Exclusion”:
Health Hazard Exclusion: Notwithstanding anything to the contrary
contained in this policy, no coverage is granted by this policy for any
claim or expense (including but not limited to defense cost) arising
out of the following exclusion.
This policy shall not apply to:
a)

Polychlorinated Biphenyl (P.C.B.) . . .

b)
Silica: Bodily Injury or Personal Injury or Loss of, or damage
to or loss of use of property directly or indirectly caused by Silica.
c)

Lead . . .

It is further agreed that this policy shall not apply to any liability for
Bodily Injury or Personal Injury and/or Property Damage made by
or on behalf of any person or persons directly or indirectly, on
account of continuous, intermittent or repeated exposures to,
R. Docs. 251-7 at 8 (Masse policy); R. Docs. 272-5 at 8, 272-6 at 8 (Superior policies).
R. Docs. 251-7 at 9–10 (Masse policy); R. Docs. 272-5 at 9–10, 272-6 at 9–10 (Superior policies).
89 R. Docs. 251-7 at 9 (Masse policy); R. Docs. 272-5 at 9, 272-6 at 9 (Superior policies).
87

88

16

ingestion, inhalation, or absorption of, any substances, materials,
products, wastes or emissions, noise or environmental disturbance
where the Assured is or may be liable for any reason, including, but
not limited to, as a result of the manufacture, production, extraction,
sale, handling, utilization, distribution, disposal or creation by or on
behalf of the Assured of such substances, materials, products, wastes,
or emissions, noise or environmental disturbance.
For the purpose of this clause, the term “Personal Injury” shall mean
bodily injury or insult (including death at any time resulting
therefrom), mental injury, mental anguish, shock, sickness, disease,
disability, detention, humiliation or wrongful eviction.90
c. Pollution Exclusion and Pollution Limitation Endorsement
The policies issued to Masse and Superior also contain the same pollution
exclusion and Pollution Limitation Endorsement. The pollution exclusion provides in
relevant part:
Pollution Limitation Endorsement
Such coverage as is afforded by this policy shall not apply to any claim
arising out of the discharge, dispersal, release or escape of smoke,
vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases,
waste materials, oil or other petroleum substance or derivative
(including any 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.
This exclusion shall not apply, however, provided that the Assured
establishes that all of the following conditions have been met:
(A)
The discharge, dispersal, release or escape was accidental and
was neither expected not intended by the Assured. A discharge,
dispersal, release or escape shall not be considered unintended or
unexpected unless caused by some intervening event neither
foreseeable nor intended by the Assured.
(B)
The discharge, dispersal, release or escape can be identified as
commencing at a specific time and date during the term of this policy.
(C)
The discharge, dispersal, release or escape became known to
the Assured within 72 hours after its commencement.
90

R. Docs. 251-7 at 5 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies).

17

(D)
The discharge, dispersal, release or escape was reported in
writing to these underwriters within 30 days after having become
known to the Assured.
(E)
The discharge, dispersal, release or escape did not result from
the Assured’s intentional and willful violation of any government
statute, rule or regulation.91
3. The Allegations of the State-Court Lawsuits
In Adams, et al. v. Allied Shipyard, Inc., et al., the plaintiffs allege in their sixth
amended petition they “are residents of a neighborhood that borders” Allied’s shipyard.92
They further allege Allied, whose shipyard has been operating since the 1960s, has been
operating “without appropriate borders to stop the resulting by-products, including, but
not limited to, sand, dirt/dust, paint and various metals, produced by its sandblasting
from permeating the neighborhood.”93 The Adams plaintiffs allege Allied’s negligence has
“expos[ed] the residents to dust, sand, paint and various metals, as well as other
substances.”94 The petition alleges that the plaintiffs’ “long, consistent and protracted”
exposure and “inhalation of . . . by-products” has caused the plaintiffs to contract severe
diseases and illnesses “that are painful and disabling,” including Wegener’s
granulomatosis,

IgA

nephropathy,

Scleroderma,

coughing,

wheezing,

Chronic

Obstructive Pulmonary Disease, and migraine headaches.95
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 2010.96 The St.
Pierre plaintiffs allege that Allied was negligent when performing its operations, which

R. Docs. 251-7 at 34 (Masse policy); R. Docs. 272-5 at 47, 272-6 at 35 (Superior policies).
R. Docs. 250-2, 251-2.
93 R. Docs. 250-2, 251-2.
94 R. Doc. 369-2 at 4.
95 Id.
96 R. Docs. 250-3, 251-3.
91

92

18

“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.”97 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.”98
E.

Arch Argues the Health Hazard Exclusion Contained in its Policies Unambiguously
Excludes Coverage
Arch argues the eight corners of the petitions and the health hazard exclusion

contained in its policies taken together unambiguously preclude coverage for any liability
of the state-court plaintiffs’ injuries.99
The health hazard exclusion in Arch’s policies excludes coverage for “Bodily Injury
and/or Property Damage . . . of any person directly or indirectly on account of continuous,
intermittent or repeated exposures to ingestion, inhalation, or absorption of, any
substances . . . .”100 The St. Pierre plaintiffs’ claims that they were exposed to “paint, sand,
and silica” for an eight-year period and the Adams plaintiffs’ claim in the sixth amended
petition that they were “made ill by inhalation . . . due to prolonged exposure to the byproducts.”101 Arch argues these claims are unambiguously excluded from coverage under
the health hazard exclusion.102

R. Docs. 250-3, 251-3.
R. Docs. 250-3, 251-3.
99 R. Doc. 369 at 9.
100 R. Doc. 251-7 at 5 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies).
101 R. Doc. 369.
102 R. Doc. 369.
97

98

19

Arch points the Court to Cobb v. Sipco Services & Marine Inc.103 in support of its
position. In Cobb, the court found that a policy containing an identical health hazard
exclusion unambiguously precluded coverage for the plaintiff’s bodily injuries alleged in
his petition.104 Because the language of the health hazard exclusion in Cobb is the same
as the language in Arch’s policies, Arch argues this Court should interpret the policy the
same way, finding the exclusion unambiguously excludes coverage.105 Interpreting the
language of the policy, however, is only one part of the duty to defend inquiry, and the
Court must also consider the plaintiffs’ petition. The Cobb plaintiff’s petition alleged only
bodily injury, which the court found was clearly excluded from coverage.106 Both the
Adams and St. Pierre petitions, however, allege other types of damage in addition to
bodily injury.107 This distinction is crucial and renders Cobb distinguishable from the case
now before the Court.
American Home Assurance Co. v. Arrow Terminals, LLC,108 is more analogous to
this case. In American Home Assurance, the court considered the plaintiff’s motion for
summary judgment with respect to whether the health hazard exclusion unambiguously
precluded coverage for the plaintiffs’ injuries. In American Home Assurance, Everette
Avenue Townhomes, a plaintiff in the underlying action, alleged damages related to the
physical injury and destruction to tangible property within its townhome units as a result
of defective Chinese drywall.109 Arrow Terminals, Inc. acquired and sold the Chinese

No. 95-2131, 1997 WL 369633 (E.D. La. June 27, 1997).
Id. at *3.
105 R. Doc. 369 at 11.
106 See id. at *1.
107 R. Doc. 250-3 at 2 (St. Pierre Petition for Damages); R. Doc. 369-2 at 5 (Adams Sixth Amended Petition
for Damages).
108 No. 11-1278, 2013 WL 1909597 (M.D. Fla. May 8, 2013).
109 Id. at *1.
103

104

20

drywall used in the construction of the townhomes.110 American Home Assurance
Company issued a policy to Arrow, which included a health hazard exclusion with
language identical to the health hazard exclusion in this case.111 The court held the plain
language of the health hazard exclusion made it clear that the exclusion applies only to
claims “arising out of the human ingestion of hazardous substances” and “the exclusion
ha[d] no application to the property damage claims asserted in the Underlying
Complaints.”112 Because the plaintiff’s complaint in the underlying suit alleged property
damage, the court held the health hazard exclusion did not defeat American Home
Assurance Company’s duty to defend its insured, Arrow.113 The court held “to the extent
that the health hazard exclusion’s reference to “Property Damage” renders it ambiguous,
said ambiguity must be construed in favor of . . . the insured [and] [t]herefore, Plaintiffs
cannot satisfy their burden of proving that the allegations of the Underlying Complaints
are solely and entirely within the health hazard exclusion.”114
The Arch health hazard exclusion states the policy will not apply to any “Bodily
Injury or Personal Injury and/or Property Damage” caused by exposure to various
substances.115 But like the language of the health hazard exclusion in American Home
Assurance, Arch’s health hazard exclusion applies to “ingestion, inhalation, or absorption
of any substances, materials, products, [or] wastes . . . .”116 The Adams sixth amended
petition alleges the plaintiffs suffered “property damage,”117 and the St. Pierre petition

Id.
Id. at *3.
112 Id. at *6.
113 Id.
114 Id.
115 R. Doc. 251-7 at 5 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies) (emphasis added).
116 R. Doc. 251-7 at 6 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies).
117 R. Doc. 369-2 at 5.
110
111

21

alleges plaintiffs suffered “damage to personal property.”118 The Court finds the exclusion
has no application to the Adams and St. Pierre plaintiffs’ property damage claims—
property damage cannot be the result of “ingestion, inhalation, or absorption” of
hazardous substances. To the extent Arch’s health hazard exclusion’s reference to
“Property Damage” renders the exclusion ambiguous, the ambiguity must be construed
in favor of Masse and Superior as insureds and Allied as an additional insured.
Arch’s argument that the health hazard exclusion unambiguously excludes the
plaintiffs’ allegations also fails because the exclusion does not unambiguously exclude all
of the plaintiffs’ other alleged damages. The court in Smith v. Reliance Insurance
Company of Illinois analyzed a nearly identical health hazard exclusion to determine
whether Reliance—the insurer—owed a duty to defend.119 The court held Reliance could
not escape its duty to defend by relying on its health hazard exclusion because the
exclusion did not unambiguously exclude coverage for all of the plaintiffs’ alleged
damages.120 Specifically, the Smith court held Reliance’s health hazard exclusion did not
unambiguously exclude coverage for plaintiffs’ alleged inconvenience, loss of enjoyment
of life, or harm caused by the increased presence of mosquitoes in the area.121 Because the
health hazard exclusion did not unambiguously exclude coverage for all of the plaintiff’s
alleged damages, Reliance owed a defense to its insured.122
This Court is faced with the same scenario. The health hazard exclusion in Arch’s
policies excludes coverage for “Bodily Injury and/or Property Damage . . . of any person
directly or indirectly on account of continuous, intermittent or repeated exposures to

R. Docs. 250-3 at 2, 251-3 at 2.
Smith, 807 So. 2d at 1021.
120 Id.
121 Id.
122 Id.
118
119

22

ingestion, inhalation, or absorption of, any substances . . . .”123 In their sixth amended
petition, the Adams plaintiffs allege the “by-products caused bodily injuries, personal
injuries and/or property damages to all Plaintiffs.”124 The Adams plaintiffs also allege
claims of fear of disease, loss of income, medical expenses, loss of value of property, and
inconvenience, among other claims.125 The St. Pierre petition alleges the plaintiffs have
suffered “damage to personal property” as a result of Allied’s negligence. 126 The St. Pierre
plaintiffs also allege mental anguish, inconvenience, loss of consortium, fear of disease,
loss of enjoyment of life, economic damages, loss of income, and loss of service and
society.127 Many of the plaintiffs’ claims—such as loss of income, loss of value of property,
inconvenience, mental anguish, and economic damages—do not arise out of the
“ingestion, inhalation, or absorption” of various substances. Arch’s health hazard
exclusion does not unambiguously exclude coverage for all of the plaintiffs’ alleged
damages. The existence of even one allegation that is not precluded by the health hazard
exclusion gives rise to Arch’s duty to defend.128 Allied cannot satisfy its burden of proving
all the allegations of the petitions are unambiguously excluded by the health hazard
exclusion.
Considering the Adams sixth amended petition for damages, the St. Pierre petition
for damages, and the language of the exclusion found in the policies, the Court finds that

R. Docs. 251-7 at 5 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies).
R. Doc. 369-2 at 5.
125 R. Docs. 250-2, 251-2.
126 R. Docs. 250-3 at 2.
127 R. Docs. 250-3, 251-3.
128 Suire v. Lafayette City-Parish Consol. Gov’t, 907 So. 2d 37, 52 (La. 4/12/05) (“Unless unambiguous
exclusion of all of the plaintiff’s claims is shown, the duty to defend arises.”); Duhon v. Nitrogen Pumping
& Coiled Tubing Specialists, Inc., 611 So. 2d 158, 161 (La. Ct. App. 1992) (“Even though the plaintiffs’
petition may allege numerous claims for which coverage is excluded under the policy, the duty to defend
may nonetheless exist if there is at least a single allegation in plaintiff’s petition under which coverage is
not unambiguously excluded.”).
123

124

23

the health hazard exclusion does not unambiguously bar coverage of the damages alleged
in the State-Court lawsuits.
F.

Arch Argues the Silica Exclusion Contained in its Policies Unambiguously
Excludes Coverage
Arch argues separately and alternatively that the eight corners of the petitions and

the silica exclusion included in the health hazard exclusion taken together unambiguously
bar coverage for any liability to the state-court plaintiffs’ injuries.129
The silica exclusion in Arch’s policies precludes coverage for “Bodily Injury or
Personal Injury or loss of, damage to, or loss of use of property directly or indirectly
caused by Silica.”130
In their sixth amended petition for damages, the Adams plaintiffs allege that their
exposure to “by-products, including, but not limited to, sand, dirt/dust, paint and various
metals” caused their injuries.131 The sixth amended petition does not unambiguously limit
the cause of the plaintiffs’ injuries to bodily injury, personal injury, or property damage
directly or indirectly caused by Silica, and the exclusion therefore does not apply.
Arch urges the Court to apply to Arch’s policies the rationale the Court applied in
its prior ruling that State National’s silica exclusion precludes a duty to defend in the
Adams matter.132 First, State National’s motion for summary judgment was decided on
the Adams plaintiffs’ third amended petition.133 This motion for summary judgment is
being decided on the Adams plaintiffs’ sixth amended petition, which removed all
reference to exposure to silica or silica-related dust.134 Furthermore, State National’s

R. Doc. 250-1 at 16; R. Doc. 251-1 at 16; R. Doc. 369 at 13.
R. Docs. 251-7 at 5 (Masse policy); R. Docs. 272-5 at 5, 272-6 at 5 (Superior policies).
131 R. Doc. 369-2.
132 R. Doc. 369 at 13.
133 See R. Doc. 347.
134 R. Doc. 369-2.
129

130

24

policy precluded coverage for bodily injury “arising, in whole or in part, out of the actual,
alleged, threatened, or suspected inhalation of, or ingestion of, ‘silica’ or ‘silica-related
dust’” and for property damage “arising, in whole or in part, out of the actual, alleged,
threatened, or suspected contact with, exposure to, existence of, or presence of, ‘silica’ or
‘silica-related dust.’”135 Arch’s silica exclusion does not contain the same “in whole or in
part” language. As a result, Arch’s silica exclusion does not unambiguously exclude all
allegations of the Adams plaintiffs’ sixth amended petition.
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,” 136 which caused the
plaintiffs’ personal injuries and property damage.137
Considering the Adams sixth amended petition for damages, the St. Pierre petition
for damages, and the language of the exclusion found in the policies, the Court finds that
the silicon, silica, and silicate exclusion does not unambiguously bar coverage of the
damages alleged in the State-Court Lawsuits.
G.

Arch Argues the Policies’ Pollution Exclusion and Pollution Limitation
Endorsement Unambiguously Exclude Coverage
Arch further argues separately and alternatively that the eight corners of the

petitions and the Pollution Limitation Endorsement found in its policies unambiguously
preclude coverage.138 The pollution exception excludes coverage for “any claim arising out
R. Doc. 347 at 33 (emphasis added).
R. Docs. 250-3, 251-3.
137 R. Docs. 250-3, 251-3.
138 R. Doc. 250-1 at 11; R. Doc. 251-1 at 11; R. Doc. 369 at 16.
135

136

25

of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, alkaloids,
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.”139
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
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.”140 As a result, the Louisiana Supreme Court has instructed
that courts must “attempt to determine the true meaning and interpretation of [the]
pollution exclusion.”141 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.142 The Louisiana Supreme Court expressly stated that the Doerr factors must be

R. Docs. 251-7 at 34 (Masse policy); R. Docs. 272-5 at 47, 272-6 at 35 (Superior policies).
Doerr, 774 So. 2d at 135.
141 Id. at 125.
142 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.
139

140

26

considered “in any given case,”143 which this Court construes to include decisions
involving a motion for 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.144 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.,145 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.146 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.147 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.”148 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,

Doerr, 774 So. 2d at 135.
Arch’s argues that the Court should consider documents from the Louisiana Department of
Environmental Quality in its consideration of the Doerr factors. When determining whether there is a duty
to defend, however, the Court must adhere to the “eight-corners rule,” and therefore only consider the
Adams and St. Pierre petitions and the respective policies.
145 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.
146 R. Doc. 227-1 at 16.
147 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.
148 Id. at 561.
143

144

27

contaminants, irritants, or waste under the various exclusions.”149 The court concluded
that “[p]laintiffs’ allegations make it clear that all three Doerr factors are met.”150 The
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.151
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.152 Before the Smith court was a motion for partial summary judgment on
the insurer’s duty to defend.153 When ruling on the motion, the court used the eight-corner
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.154 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.155 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

Id.
Id.
151 Id.
152 Smith, 807 So. 2d at 1013.
153 Id.
154 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”).
155 Id. at 1020.
149

150

28

unambiguously exclude coverage given the Doerr analysis.156 The court affirmed the
judgment of the trial court, which found that the insurer had a duty to defend. 157
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
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.”158 Arch is unable to establish from the eight corners that Allied is a “polluter”
within the meaning of the exclusion.159 For example, Arch is unable to point to any
information within the eight corners regarding the nature of Allied’s business, whether
that type of business presents a risk of pollution, and whether Allied has a separate
pollution policy. Accordingly, the Court is unable to conclude that Allied is a “polluter”
within the meaning of the exclusion contained in the policies.160
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

Id.
Id. at 1013.
158 Doerr, 774 So. 2d at 135.
159 The Court has already found that neither Masse nor Superior are “polluters” under the Doerr analysis.
R. Doc. 341 at 30; R. Doc. 342 at 37–38; R. Doc. 347 at 42.
160 The Court has already found that it has not been established that either Masse or Superior are “polluters”
for the purposes of the Doerr analysis. R. Docs. 341, 342, 347.
156
157

29

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.”161
Arch is unable to establish from the eight corners that the substances the plaintiffs in the
State-Court Lawsuits allege caused their personal injuries and property damage are
“pollutants” within the meaning of the exclusion such that the exclusion unambiguously
precludes coverage. In the Adams and St. Pierre petitions for damages, the plaintiffs
broadly describe the substances causing their injuries. The Adams plaintiffs, in their sixth
amended petition, allege that “prolonged exposure to . . . by-products” which include
“sand, dirt/dust, paint and various metals” caused their injuries.162 The St. Pierre
plaintiffs allege that “hazardous substances, including, but not limited to, paint, sand and
silica” caused their injuries.163 The Court is unable to determine the nature of the injurycausing 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.”164 Arch 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.165 The Court “should consider whether the

Doerr, 774 So. 2d at 135.
R. Doc. 369-2 at 4.
163 R. Doc. 227-6 at 1.
164 Doerr, 774 So. 2d at 125.
165 Id. at 135.
161

162

30

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.”166 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. Arch has failed to establish that there was a
discharge, dispersal, seepage, migration, release or escape of a pollutant by the insured
within the meaning of the policy.
Because Arch has failed to answer all three Doerr factors in the affirmative, Arch
cannot establish that the pollution exclusion unambiguously precludes coverage.
Arch argues coverage may be unambiguously excluded if the insureds have not met
the notice requirements in the pollution limitation endorsement without regard to the
Doerr factors.167 Although the notice requirements may be conditions precedent to the
determination of whether the pollution limitation provision is triggered168 with respect to
whether it has a duty to defend Masse or Superior as insureds or Allied as an additional
insured, Arch must first establish that the pollution exclusion unambiguously precludes
coverage.169 The Court has found Arch failed to show all three Doerr factors are answered
in the affirmative and, as a result, the total pollution exclusion is not applicable. As stated

Id. at 136.
R. Doc. 250-1 at 12; R. Doc. 251-1 at 12.
168 See R. Doc. 251-7 at 34 (“This exclusion shall not apply, however, provided that the Assured establishes
that all of the following conditions have been met . . . .”); R. Doc. 250-7 at 34 (same); R. Doc. 251-7 at 34
(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).
169 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)).
166
167

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by the Louisiana Fifth Circuit in Smith v. Reliance Insurance Company of Illinois,
“[A]fter consideration of the [Doerr] factors, we conclude that the insurer in this case
failed to meet its burden of proving the applicability of . . . the total pollution exclusion. .
. . [W]e find it unnecessary to reach this issue [of the applicability of the limited buy-back
endorsement] based on our holding that Exclusion 10 does not unambiguously exclude
coverage based on the facts alleged in this case.”170 Therefore, the Court need not examine
whether Masse or Superior as insureds, or Allied as an additional insured, met the timeelement conditions necessary to establish the exception to the pollution exclusion.171
Arch’s motions for summary judgment with respect to the applicability of the
pollution exclusion on its duty to defend are denied.
JUSTICIABILITY OF THE DUTY TO INDEMNIFY
In its supplemental memorandum in support of its pending motions for summary
judgment, Arch contends the Court’s decision with respect to Arch’s duty to indemnify
Masse or Superior as insureds under the policies and Allied as an additional insured is
ripe for decision.172
As stated with respect to the justiciability of the duty to provide a defense, the
justiciability doctrines of standing, mootness, political question, and ripeness derive from

See Smith v. Reliance Ins. Co. of Illinois, 807 So. 2d 1010, 1020 (La. App. 5 Cir. 1/15/02).
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.”). 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.”).
172 R. Doc. 369.
170
171

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Article III’s “case or controversy” requirement.173 In a declaratory judgment action,
justiciability often turns on ripeness.174
The ripeness doctrine is drawn “both from Article III limitations on judicial power
and from prudential reasons for refusing to exercise jurisdiction.”175 The purpose of this
doctrine is to forestall “entangl[ement] . . . in abstract disagreements” through
“avoidance of premature adjudication.”176 “The key considerations are ‘the fitness of the
issues for judicial decision and the hardship to the parties of withholding
court consideration.’”177
Under Louisiana law, an insurer’s duty to indemnify generally cannot be
determined until after the underlying suit has been resolved and the insurer is found
liable.178 The exception to this general rule is that the duty to indemnify is justiciable
before the insurer’s liability is determined if “the insurer has no duty to defend and the
same reasons that negate the duty to defend will likewise negate any possibility the
insurer will ever have a duty to indemnify.”179 Because the Court has found Arch has a
duty to defend Masse and Superior as insureds and Allied as an additional insured, this
exception does not apply.

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).
175 Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
176 Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), abrogated on other grounds by Califano v. Sanders,
430 U.S. 99 (1977).
177 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).
178 Allstate Ins. Co. v. Emp. Liab. Assurance Corp., 445 F.2d 1278, 1281 (5th Cir. 1971); see also Corgeis Ins.
Co. v. Sch. Bd. of Allen Parish, No. 07-30844, 2008 WL 2325632, at *2–3 (5th Cir. June 6, 2008) (“[A]fter
the district court concludes that the insurer has a duty to defend, the indemnity issue is nonjusticiable
pending resolution of the liability suit.”). Unlike the duty to defend, the duty to indemnify “is triggered by
the actual facts that establish liability in the underlying lawsuit. Guar. Nat’l Ins. Co. v. Azrock Indus. Inc.,
211 F.3d 239, 243 (5th Cir. 2000), overruled on other grounds as recognized by OneBeacon Ins. Co. v. Don's
Bldg. Supply Inc., 553 F.3d 901, 903 (5th Cir. 2008) (per curiam).
179 Med. Protective Co. v. Turner, No. 15-0366, 2015 WL 3631701, at *4 (N.D. Tex. June 10, 2015) (emphasis
added).
173

174

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The liability in the underlying state-court lawsuits has not yet been determined,
and the Court therefore cannot determine as a matter of law whether Arch is obligated to
indemnify Masse and Superior as insureds or Allied as an additional insured. The duty to
indemnify is not justiciable at this time.
Accordingly, Arch’s motions for summary judgment with respect to its duty to
indemnify Masse and Superior as insureds and Allied as an additional insured in the
Adams and St. Pierre lawsuits are denied without prejudice.
CONCLUSION
IT IS ORDERED that Arch’s Motion for Summary Judgment with respect to its
duty to defend Superior as an insured or Allied as an additional insured in the Underlying
Adams or St. Pierre Lawsuits is DENIED WITH PREJUDICE.180
IT IS FURTHER ORDERED that Arch’s Motion for Summary Judgment with
respect to its duty to indemnify Superior as an insured or Allied as an additional insured
in the Underlying Adams or St. Pierre Lawsuits is DENIED WITHOUT
PREJUDICE.181
IT IS FURTHER ORDERED that Arch’s Motion for Summary Judgment with
respect to its duty to defend Masse as an insured or Allied as an additional insured in the
Underlying Adams or St. Pierre Lawsuits is DENIED WITH PREJUDICE.182
IT IS FURTHER ORDERED that Arch’s Motion for Summary Judgment with
respect to its duty to indemnify Masse as an insured or Allied as an additional insured in
the Underlying Adams or St. Pierre Lawsuits is DENIED WITHOUT PREJUDICE.183

R. Doc. 250.
R. Doc. 250.
182 R. Doc. 251.
183 R. Doc. 251.
180
181

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New Orleans, Louisiana, this 23rd day of November, 2016.
_____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

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