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

Filing 509

ORDER AND REASONS granting 443 Motion for Partial Summary Judgment; granting 444 Motion for Partial Summary Judgment. Signed by Judge Susie Morgan on 7/12/2017. (Reference: 14-1933)(clc)

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: 14-1933
ORDER AND REASONS
Before the Court are two motions for summary judgment filed by Lexington
Insurance Company (“Lexington”) regarding its duty to defend Allied Shipyard, Inc. as an
additional insured under its 2000-2001 and 2008-2009 policies, both issued to Masse
Contracting, Inc. (“Masse”), against claims made in the underlying Adams and St. Pierre
lawsuits.1 Allied opposes the motions.2 For the reasons set forth below, Lexington’s
motions are GRANTED.
BACKGROUND
A. Consolidated State-Court Lawsuit
The case originates from two state-court personal-injury actions, now
consolidated3 (“Consolidated State-Court Lawsuit”) against Allied Shipyard, Inc.
(“Allied”): (1) Adams, et al. v. Allied Shipyard, Inc., et al. and (2) St. Pierre, et al. v. Allied

R. Docs. 443; 444. Unless otherwise indicated, “R. Doc.” refers to record documents in the consolidated
matter, No. 11-2375. As indicated in the Court’s July 10, 2017 order, the Court considers the previously filed
motions for summary judgment and oppositions thereto, together with supporting memoranda and
exhibits, as motions for summary judgment on the claims made by in Lexington against Allied in
Lexington’s First Amended and Supplemental Complaint in Intervention. R. Doc. 506.
2 R. Docs. 450, 451.
3 The two cases were consolidated in state court on September 9, 2013. See R. Doc. 261-5.
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Shipyard, Inc.4 The plaintiffs in the Consolidated State-Court Lawsuit allege Allied
negligently performed sandblasting activities and they seek resulting damages.
In the Consolidated State-Court Lawsuit, Allied filed a third-party demand
against its contractors who performed the sandblasting jobs, including Superior Labor
Services, Inc. (“Superior”) and Masse.5 Specifically, Allied alleges that Superior and Masse
contracted with Allied to perform certain tasks and to indemnify Allied under master
work contracts.6 Allied seeks to be named as an additional insured on Superior and
Masse’s insurance policies, and seeks indemnity from Superior and from Masse with
respect to the claims in the Consolidated State-Court Lawsuit.7
The plaintiffs in Adams amended their petition to name Superior, Masse, other
subcontractors, and Gray Insurance Company as direct defendants.8
The third-party-defendant contractors “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.”9
On August 18, 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.10

R. Docs. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9 (Adams Petitions for Damages); R. Doc. 443-12
(St. Pierre Petition for Damages).
5 See R. Docs. 443-10, 443-11, 443-13, 443-14.
6 See R. Docs. 443-10, 443-11, 443-13, 443-14.
7 See R. Docs. 443-10, 443-11, 443-13, 443-14.
8 See R. Docs. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9.
9 R. Doc. 174-1 at 2.
10 See R. Doc. 443-15.
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The Adams plaintiffs filed their sixth amended petition in state court on April 29,
2016.11 The St. Pierre plaintiffs have not amended their original petition, which was filed
on December 8, 2010.12
B. Declaratory Actions in Federal Court
Four federal actions related to the Consolidated State-Court Lawsuit are pending
in this Court. The Court consolidated the first three cases—11-2375, 14-1930, and 141933—on November 21, 2014, and consolidated 16-2490 with those cases on August 10,
2016.13
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 Consolidated State-Court Lawsuit.16 Hanover maintains the other
insurers it names in its federal suit “are not participating in Superior’s defense” in the
Consolidated State-Court Lawsuit.17 Hanover seeks judgment against Superior declaring
that it has no duty to defend or indemnify Superior in the Consolidated State-Court
Lawsuit.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

R. Doc. 443-9.
R. Doc. 443-12.
13 See R. Docs. 108, 368.
14 Hanover Ins. Co. v. Superior Labor Servs., Inc., et al., No. 11-2375.
15 R. Doc. 69.
16 Id. at ¶¶ 23–24.
17 Id. at ¶ 26.
18 Id. at ¶¶ 22–23.
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named as ABC Insurance Company” are liable “for their share of defense and indemnity
to be paid on behalf of Superior” in the Consolidated State-Court Lawsuit.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 Consolidated State-Court Lawsuit 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
[Consolidated State-Court Lawsuit] to Hanover for defense and indemnity in its capacity
as an alleged additional insured” under Superior’s policies, and Hanover has offered to
participate in Allied’s defense in the Consolidated State-Court Lawsuit subject to a full
reservation of rights.22 Hanover alleges that Allied is not an additional insured under
Hanover’s policies, and Hanover seeks judgment against Allied declaring that it has no
duty to defend or indemnify Allied in the Consolidated State-Court Lawsuit.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, and 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 Consolidated State-Court Lawsuit.24

Id. at ¶ 2.
Id. at ¶ 3.
21 R. Doc. 125.
22 Id. at ¶ 79.
23 Id. at 9.
24 Id. The Court denied Hanover’s motions for partial summary judgment on its duty to defend Masse,
Superior, and Allied as an additional insured in both the Adams and St. Pierre lawsuits. R. Docs. 341, 342.
19

20

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On March 8, 2012, State National filed a crossclaim for declaratory judgment
against Superior.25 State National filed its first amended crossclaim for declaratory
judgment on September 27, 2012.26 State National filed a second amended crossclaim for
declaratory judgment on January 14, 2015, naming Allied as a defendant-in-crossclaim.27
State National seeks judgment declaring that there is no coverage afforded to Superior
under the State National policies issued to Superior and that State National has no duty
to defend or indemnify Superior in the Consolidated State-Court Lawsuit.28 State
National also seeks a declaration that the State National policies afford no coverage to
Allied as a purported additional insured and that State National does not owe a duty to
defend or indemnify Allied in the Consolidated State-Court Lawsuit.29
2. No. 14-1930
On August 22, 2014, Arch Insurance Company brought an action for declaratory
judgment against Superior and Allied.30 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 Consolidated State-Court
Lawsuit.31 Arch also seeks a declaration of its rights and responsibilities with respect to
Allied’s request for additional insured status under the Superior policies and defense and

R. Doc. 29.
R. Doc. 67.
27 R. Doc. 135.
28 Id. at ¶ 19.
29 Id. The Court granted State National’s motion for summary judgment, finding it had no duty to defend
Masse, Superior, and Allied as an additional insured in the Adams lawsuit, and denied State National’s
motion for summary judgment, finding it had a duty to defend Masse, Superior, and Allied as an additional
insured in the St. Pierre lawsuit. R. Doc. 347. The Court declined to rule on any insurer’s duty to indemnify
until the underlying state-court proceedings in the Adams and St. Pierre matters are resolved. R. Doc. 426
at 5.
30 Arch Ins. Co. v. Superior Labor Servs., Inc. et al., No. 14-1930.
31 No. 14-1930, R. Doc. 1 at ¶ 3.
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indemnity of Allied in the Consolidated State-Court Lawsuit.32 Arch seeks a declaration
against Superior and Allied that Arch has no defense or indemnity obligation to Superior
or Allied in the Consolidated State-Court Lawsuit.33 Arch also seeks recovery of the
portion of defense costs already incurred by it on behalf of Superior.34
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 Consolidated State-Court Lawsuit.35 Arch also seeks a declaration
of its rights and responsibilities with respect to Allied’s request for additional insured
status under the Masse policies and defense and indemnity of Allied in the Consolidated
State-Court Lawsuit.36 Arch seeks a declaration against Masse and Allied that Arch has
no defense or indemnity obligation to Masse in the Consolidated State-Court Lawsuit.37
On January 14, 2015, Hanover filed a complaint in intervention in Case No. 141933 against Defendants Masse and Allied.38 Hanover seeks judgment declaring that
Hanover has no obligation to defend or indemnify Masse or Allied in the StateCourt Lawsuits.39

Id. at ¶ 4.
Id. at ¶¶ 21, 47.
34 Id. at ¶ 47. The Court denied with prejudice Arch’s motions for summary judgment, finding it had a duty
to defend Masse and Superior as insureds and Allied as an additional insured in the Adams and St. Pierre
lawsuits. R. Doc. 418. The Court denied without prejudice Arch’s motions for summary judgment with
respect to Arch’s duty to indemnify Masse and Superior as insureds and Allied as an additional insured. Id.
35 No. 14-1933, R. Doc. 1 at ¶ 3.
36 Id. at ¶ 4.
37 Id. at ¶ 46.
38 R. Doc. 128.
39 Id.
32
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State National Insurance Company (“State National”) also filed a petition for
intervention for declaratory judgment on January 14, 2015. 40 State National issued two
marine general liability policies to Masse that provided coverage from November 15,
2006, to November 15, 2007, and from November 15, 2007, to November 15, 2008.41
Allied seeks additional insured status under the policies issued by State National to
Masse.42 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 Consolidated State-Court Lawsuit.43 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 Consolidated State-Court Lawsuit.44
On April 13, 2016, Lexington intervened in Arch’s declaratory judgment action in
its capacity as an insurer of Masse, and likewise, sought determinations of coverage for
Masse for the claims asserted in the underlying Consolidated State-Court Lawsuit.45 On
July 10, 2017, Lexington filed its first amended and supplemental complaint in
intervention, naming Allied as a defendant-in-intervention, and seeking determinations
of coverage for Allied as an additional insured for the claims asserted in the underlying
Consolidated State-Court Lawsuit.46 Lexington issued two commercial general liability
policies to Masse—one in effect from February 16, 2000 to February 16, 2001 (“2000R. Doc. 132.
Id. at ¶ 14.
42 Id. at ¶ 3.
43 Id. at ¶ 19.
44 Id.
45 No. 11-2375, R. Doc. 354.
46 R. Doc. 507. As discussed in the Court’s July 10, 2017 order, the Court considers the previously filed
motions for summary judgment and oppositions thereto, together with supporting memoranda and
exhibits, as motions for summary judgment on the claims against Allied in Lexington’s First Amended and
Supplemental Complaint in Intervention. R. Doc. 506.
40
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2001 Lexington Policy”) and another in effect from November 15, 2008 to November 15,
2009 (“2008-2009 Lexington Policy”).47
4. 16-2490
On March 25, 2016, Great American E&S Insurance Company (“Great American”)
filed a complaint in this Court, adding Gray as a defendant.48 Great American filed an
amended complaint on August 26, 2016.49 Great American seeks a declaration of its rights
and responsibilities as it relates to its duties to defend or indemnify Masse as an insured
or Allied as an additional insured under the Great American Policies with respect to the
claims in the Adams and St. Pierre lawsuits.50 If Great American has a duty to defend or
indemnify Masse as an insured or Allied as an additional insured in the Consolidated
State-Court Lawsuit, Great American seeks declaratory judgment that “any such
obligation should be proportionate to its time on the risk as compared to the period of
time during which the underlying Plaintiff’s toxic exposures allegedly occurred.” 51
Alternatively, if Great American has a duty to defend or indemnify Masse as an insured
or Allied as an additional insured, Great American seeks declaratory judgment that Great
American is entitled to contribution from Arch Insurance Company, United Capitol
Insurance Company, Lexington Insurance Company, Atlantic Insurance Company, State

Id.
Great American E&S Ins. Co. v. Masse Contracting, Inc., et al., No. 16-2490 (E.D. La.).
49 R. Doc. 371.
50 Id. at ¶¶ 38–48.
51 Id. at ¶ 50.
47

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National Insurance Company, Underwriters at Lloyd’s, London, and Clarendon National
Insurance Company.52
C. Lexington’s Motions for Summary Judgment
Lexington filed its motions for summary judgment on January 23, 2017 regarding
Allied’s status as an additional insured, and Lexington’s duty to defend Allied against the
claims made in the underlying St. Pierre and Adams lawsuits as an additional insured
under the 2000-2001 Lexington Policy and the 2008-2009 Lexington Policy, both issued
to Masse.53 These are the motions now before the Court.
CONSIDERATION OF DECLARATORY JUDGMENT ACTIONS
Lexington seeks a declaratory judgment that Allied is not an additional insured
under Lexington’s policies issued to Masse and that Lexington has no duty to defend
Allied in the Adams or St. Pierre lawsuit. 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.54
The Court must determine whether it will hear the Lexington declaratory judgment action
before considering the motions for summary judgment.55 The Fifth Circuit has explained
that, when considering a declaratory judgment action, a district court must engage in a

Id. at ¶ 52. In its opposition to Gray’s motion to dismiss, Great American states Gray was “inadvertently
omitted from the list of insurers that are alleged to owe contribution.” R. Doc. 480 at 3, n.7. Paragraph 7 of
the prayer for relief in the amended complaint, however, includes Gray as a defendant. R. Doc. 371.
53 R. Doc. 443.
54 28 U.S.C. § 2201.
55 The Court has not previously considered Lexington’s declaratory judgment action, as the instant motions
are the first to be filed by Lexington in this matter.
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three-step inquiry to determine whether to decide or dismiss a complaint for declaratory
relief.56 First, the Court must determine whether the action is justiciable. 57 Second, the
Court must determine whether it has the authority to grant declaratory relief.58 Third, the
Court must determine “how to exercise its broad discretion to decide or dismiss a
declaratory judgment action.”59 Lexington is seeking declaratory relief on its duty to
defend Masse as an insured and Allied as an additional insured.60 The Court will
determine whether to exercise its discretion to hear Lexington’s declaratory judgment
action.
A.

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

derive from Article III’s “case or controversy” requirement.61 In a declaratory judgment
action, justiciability often turns on ripeness.62 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.”63 The purpose of this
doctrine is to forestall “entangl[ement] . . . in abstract disagreements” through
“avoidance of premature adjudication.”64 “The key considerations are ‘the fitness of the

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).
57 Id.
58 Id.
59 Id.
60 In its Complaint in Intervention, Lexington also seeks a declaration of its duty to indemnify Allied as an
additional insured if the Court finds it has a duty to defend. Lexington, however, does not seek summary
judgment in the instant motions on its duty to indemnify Allied.
61 Choice Inc. of Tex. v. Greenstein, 691 F.3d 710, 714–15 (5th Cir. 2012).
62 See id; Orix, 212 F.3d at 895; Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 27–28 (5th Cir. 1989).
63 Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993).
64 Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), abrogated on other grounds by Califano v. Sanders,
430 U.S. 99 (1977).
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issues for judicial decision and the hardship to the parties of withholding
court consideration.’”65
The Fifth Circuit has recognized that “applying the ripeness doctrine in the
declaratory judgment context presents a unique challenge.” 66 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.”67 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.
Because the duty to defend does not depend on the outcome of the underlying law
suit,68 a duty-to-defend claim is ripe when the underlying suit is filed. 69 Accordingly,
Lexington’s request for declaratory relief that it has no duty to defend is 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 Anti-

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).
66 Orix, 212 F.3d at 896 (internal quotation marks omitted).
67 Id.
68 Suire v. Lafayette City-Parish Consol. Gov’t, 907 So. 2d 37, 52 (La. 2005).
69 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).
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Injunction Act.”70 The Fifth Circuit has provided an analysis with respect to a district
court’s authority to issue a declaratory judgment so as to not allow a declaratory plaintiff
an end run around the requirements of the Anti-Injunction Act. 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 AntiInjunction Act.71 The Fifth Circuit in Jackson held “if an injunction would be barred by
[the Anti-Injunction Act], this should also bar the issuance of a declaratory judgment that
would have the same effect as an injunction.”72 The first factor in this analysis is not met
in this case. Lexington, the declaratory judgment plaintiff in the federal action, filed its
complaint in intervention in the declaratory judgment action on April 13, 2016,73 months
before Allied, the declaratory defendant in the federal action, filed its cause of action
against Lexington in state court on August 18, 2016.74 The presence of all three factors
mandates abstention. The want of any one factor defeats mandatory abstention.75 Because
the first factor has not been met, abstention is not mandatory.

Travelers Ins. Co. v. Louisiana Farm Bureau Fed’n, Inc., 996 F.2d 774, 776 (5th Cir. 1993) (citing Tex.
Emps. Ins. Ass’n v. Jackson, 862 F.2d 491, 506 (5th Cir. 1988)). The Anti-Injunction 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.
71 Travelers, 996 F.2d at 776 (citing Jackson, 862 F.2d at 506); Sherwin-Williams Co. v. Holmes Cty., 343
F.3d 383, 387 (5th Cir. 2003).
72 Jackson, 862 F.2d at 506.
73 Even though Lexington did not add Allied as a defendant-in-intervention until July 10, 2017, Lexington’s
original complaint in intervention, filed on April 13, 2016, claimed Lexington had no duty to defend Masse
with respect to the third-party demands asserted by Allied against Masse. R. Doc. 354. In Allied’s thirdparty demand against Masse, Allied sought to be named as an additional insured on Masse’s insurance
policies. See R. Doc. 443-10.
74 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. R. Doc. 444-15.
75 Sealed v. Sealed, 33 F.3d 1379 (5th Cir. 1994).
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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.76 In Wilton v. Seven Falls Co., the
Supreme Court held that the discretionary standard of Brillhart v. Excess Ins. Co. of
America77 governs a district court’s decision to stay a declaratory judgment action during
the pendency of parallel state-court proceedings.78 “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.”79 There are three overarching
considerations in the Supreme Court’s analysis in Brillhart: federalism, fairness, and
efficiency.80 “Despite the circuits’ different expressions of the Brillhart factors, each
circuit’s formulation addresses the same three aspects of the analysis.”81
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;
(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;

Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995).
Brillhart v. Excess Ins. Co. of America, 316 U.S. 491 (1942).
78 Wilton v. Seven Falls Co., 515 U.S. 277, 284 (1995).
79 Id. at 282.
80 Sherwin-Williams, 343 F.3d at 390.
81 Id.
76
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(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.82
1.

Nature of Pending State Court Action

The first Trejo factor requires comparison of the declaratory judgment action with
the underlying state-court action.83 “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.”84
Lexington’s federal complaint in intervention and Allied’s third-party demand
filed in state court are parallel, as they both seek a declaration as to Lexington’s duty to
defend and indemnify Allied as an additional insured under Lexington’s policies issued to
Masse. As a result, the first Trejo factor weighs against exercising jurisdiction.

Sherwin-Williams, 343 F.3d at 388, 390.
See id. at 393–94.
84 See Sherwin-Williams, 343 F.3d at 394 n.5.
82
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2.

Suit Filed in Anticipation of Lawsuit

The St. Pierre lawsuit was filed on December 8, 2010,85 and the Adams lawsuit was
filed on December 28, 2010.86 Lexington filed its complaint in intervention in federal
court on April 13, 2016.87 Allied’s cross-claim against Lexington was filed on August 18,
2016.88 Lexington likely was aware that its insurance coverage of Masse as an insured or
Allied as an additional insured would become an issue in the pending Consolidated StateCourt Lawsuit. Therefore, Lexington may have filed its complaint in intervention in
anticipation of becoming a party to the pending Consolidated State-Court Lawsuit.89 The
second Trejo factor weighs against exercising jurisdiction.90
3.

Forum Shopping

That Lexington could have intervened and requested declaratory judgment in the
Consolidated State-Court Lawsuit does not necessarily demonstrate forum shopping.91
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.92 “The record does not support a finding that [Lexington] engaged in

R. Doc. 443-12.
R. Doc. 443-3.
87 Great American E&S Ins. Co. v. Masse Contracting, Inc., et al., No. 16-2490 (E.D. La.).
88 R. Doc. 443-15. Even though Lexington did not add Allied as a defendant-in-intervention in federal court
until July 10, 2017, Lexington’s original complaint in intervention, filed on April 13, 2016, claimed
Lexington had no duty to defend Masse with respect to the third-party demands asserted by Allied in state
court against Masse. R. Doc. 354. In Allied’s third-party demand in state court against Masse, Allied sought
to be named as an additional insured on Masse’s insurance policies. See R. Doc. 443-10.
89 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).
90 See U.S. Fire, 2015 WL 1416490, at *4.
91 See id.
92 See Sherwin-Williams, 343 F.3d at 399.
85

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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 Lexington to
proceed in this action while the Consolidated State-Court Lawsuit remain pending. No
party will be prejudiced if this Court decides whether Lexington has a duty to defend
Masse as an insured or Allied as an additional insured before resolution of the
Consolidated State-Court Lawsuit. The fourth Trejo factor weighs in favor of exercising
jurisdiction.
5.

Convenience of Federal Forum

The Consolidated State-Court Lawsuit is 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
6.

Judicial Economy

Lexington’s complaint in intervention in this Court has been pending for over a
year. All cases surrounding this controversy have been before this Court for over five
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. 443-3, 443-4, 443-5, 443-6, 443-7, 443-8, 443-9 (Adams Petitions for Damages); R. Doc.
443-12 (St. Pierre Petition for Damages).
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).
93

16

years. The issue of whether Lexington has a duty to defend Masse as an insured or Allied
as an additional insured in the Consolidated State-Court Lawsuit has been fully briefed
before this Court. Exercising jurisdiction is in the interest of judicial economy.96 This
factor weighs in favor of exercising jurisdiction.
7.

Interpretation of Decree from Parallel State Proceeding

Although a part of the Consolidated State-Court Lawsuit and this action are
parallel, filings by Allied in state court seeking a declaration of its rights to defense and
indemnity were made after the filing of Lexington’s complaint in intervention in this
Court.97 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 Consolidated State-Court Lawsuit to
determine whether Lexington has a duty to defend. The seventh Trejo factor weighs in
favor exercising jurisdiction.98
Four of the Trejo factors weigh in favor of exercising jurisdiction, while two weigh
against and one is neutral. The Court will exercise its discretion to hear the declaratory
judgment action on Lexington’s duty to defend Allied.

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 R. Doc. 443-15. Allied filed its third-party demand in state court on August 18, 2016, months after
Lexington filed its complaint in intervention in federal court on April 13, 2016.
98 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.
96

17

ALLIED’S STATUS AS AN ADDITIONAL INSURED
UNDER THE MASSE POLICIES
Lexington seeks summary judgment on Allied’s status as an additional insured
under its policies issued to Masse. Allied bears the burden of proving it is an “additional
insured” under both the 2000-2001 Lexington Policy99 and the 2008-2009 Lexington
Policy.
1. Provisions of the 2000-2001 Lexington Policy
Lexington issued a commercial general liability insurance policy to Masse
providing coverage from February 16, 2000 through February 16, 2001 (“2000-2001
Lexington Policy”).100
Lexington argues Allied does not qualify as an “Insured” under the 2000-2001
Lexington Policy, and as a result, Lexington owes no duty to defend Allied in either the
Adams or St. Pierre lawsuits.101
The 2000-2001 Lexington Policy contained the following insuring agreement for
bodily injury and property damage liability:
The Company will pay on behalf of the Insured all sums which the
Insured shall become legally obligated to pay as compensatory damages .
. . because of bodily injury or property damage to which this insurance
applies. . . .102
An “insured” is defined under the 2000-2001 Lexington Policy as:
[A]ny person or organization qualifying as an Insured in the Persons
Insured provision of this policy. The insurance afforded applies separately

Because the Court finds that Allied is not an additional insured under the 2000-2001 Lexington Policy,
the Court did not engage in an analysis with respect to Louisiana’s “Eight-Corners Rule.” If the Court had
engaged in this analysis, the result would be the same, as the 2000-2001 Lexington policy unambiguously
excludes coverage for the allegations of the Adams and St. Pierre plaintiffs because Allied is not an
additional insured.
100 R. Doc. 443-17.
101 R. Doc. 443-1.
102 R. Doc. 443-17 at 7 (emphasis in original).
99

18

to each Insured against whom claim is made or suit is brought except with
respect to the limits of the Company’s liability.103
The “Persons Insured” provision of the Policy provides:
III. PERSONS INSURED
Each of the following is an Insured under this insurance to the
extent set forth below:
A. if the Named Insured is designated in the Declarations as an
individual, the person so designated but only with respect to the conduct of
a business of which he is the sole proprietor, and the spouse of the Named
Insured with respect to the conduct of such business;
B. if the Named Insured is designated in the Declarations as a
partnership or joint venture, the partnership or joint venture so designated
and any partner or member thereof but only with respect to his liability as
such; [and]
C. if the Named Insured is designated in the Declarations as other
than an individual, partnership, or joint venture, the organization so
designated and any executive officer, director or stockholder thereof while
acting within the scope of this duties as such;104
Subsection A applies only if the named insured is an individual, and Subsection B
applies only if the named insured is a partnership or joint venture. Masse is designated in
the Declarations as a corporation.105 As a result, subsection C of the “Persons Insured”
provision applies. Thus, to qualify as an “Insured” under the 2000-2001 Lexington Policy,
Allied must either be a Named Insured, an “executive officer, director or stockholder” of
the Named Insured, or Allied must be granted additional insured status by an
endorsement in the policy.
In the Declarations section of the policy, the only Named Insured is Masse
Contracting Inc.106 Allied admits it is not a Named Insured named in the Declarations,
R. Doc. 443-17 at 13 (emphasis in original).
R. Doc. 443-17 at 11–12 (emphasis in original).
105 R. Doc. 443-17 at 4.
106 R. Doc. 443-17 at 4.
103

104

19

and that it cannot sustain its burden of establishing it was an executive officer, director,
or stockholder of Masse Contracting, Inc. during the 2000-2001 Lexington Policy
period.107 The issue, then, is whether the 2000-2001 Lexington Policy contains an
endorsement under which Allied qualifies as an additional insured such that it is entitled
to coverage from Lexington.
There is no standard additional insured endorsement in the 2000-2001 Lexington
Policy. Instead, Allied argues first that Lexington owes coverage to it in the Adams and
St. Pierre lawsuits under the 2000-2001 Lexington Policy Broad Form Commercial
Liability Endorsement.108 Allied argues second that Lexington owes coverage to it in the
Adams and St. Pierre lawsuits under the 2000-2001 Lexington Policy Endorsement
#006.
a. Broad Form Commercial Liability Endorsement
Under the 2000-2001 Lexington Policy, Lexington agreed to pay on behalf of
Masse, the Insured, all sums for which Masse becomes legally obligated to pay as
compensatory damages.109 Lexington will not pay Masse sums that it is legally obligated
to pay as damages if the claims for “bodily injury or property damage” result from Masse’s
“assumption of liability in a contract or agreement” unless Masse’s liability for damages
is “assumed in a contract or agreement that is an incidental contract, provided the bodily
injury or property damage occurs subsequent to the execution of the contract or
agreement.”110
“Incidental Contract” under the 2000-2001 Lexington Policy is defined as:

R. Doc. 443-2 at 3, ¶ 7; R. Doc. 491 at 2, ¶ 7
R. Doc. 450.
109 R. Doc. 443-17 at 7.
110 Id. (emphasis added).
107

108

20

[A]ny written (1) lease of premises, (2) easement agreement, except in
connection with construction or demolition operations on or adjacent to a
railroad, (3) undertaking to indemnify a municipality required by municipal
ordinance, except in connection with work for the municipality, (4)
sidetrack agreement, or (5) elevator maintenance agreement.111
The Broad Form Commercial Liability Endorsement extends the definition of “Incidental
Contract” to include a sixth category, “any written contract or agreement relating to the
conduct of the Named Insured’s business.”112
Allied argues the 1995 Master Work Contract between Allied and Masse is an
“Incidental Contract” under the 2000-2001 Lexington Policy, as the Master Work
Contract is related to the conduct of Masse’s business as a ship fitter for Allied, and the
damages alleged by the Adams and St. Pierre plaintiffs occurred after the signing of the
Master Work Contract in 1995.113 Allied argues the endorsement’s exclusion of coverage
for damages by reason of the assumption of liability in a contract does not apply because
the Master Work Contract is an Incidental Contract. The Court agrees that the 1995
Master Work Contract, is an Incidental Contract, but this does not entitle Allied to
coverage under the 2000-2001 Lexington Policy.114
The Broad Form Commercial Liability Endorsement is relevant only to Lexington’s
obligation to pay its Insured, Masse. The Broad Form Commercial Liability Endorsement
modifies neither the “Persons Insured” section nor the definitions of “Insured” or “Named

111
112

Id. at 13.
Id. at 20. The Broad Form Commercial Liability Endorsement provides:
“The insurance afforded with respect to liability assumed under an “Incidental Contract” is subject
to the following additional exclusions:

1. to “Bodily Injury” or “Property Damage” for which the “Insured” has assumed liability
under any “Incidental Contract”, if such injury or damage occurred prior to the execution
of the “Incidental Contract.”
113 R. Doc. 450 at 2.
114 R. Doc. 450 at 2.

21

Insured” of the 2000-2001 Lexington Policy. Stated simply, the policy and the Broad
Form Commercial Liability Endorsement together provide only that Lexington will pay
Masse for liability assumed by Masse in a contract that relates to Masse’s business. For
the Broad Form Commercial Liability Endorsement to afford coverage to Allied, Allied
would have to be an “Insured” under the 2000-2001 Lexington Policy, and it is not.115
Lexington does not owe coverage to Allied by virtue of the Broad Form Commercial
Liability Endorsement.
b. Endorsement #006—The “Other Insurance” Endorsement
Allied sought leave of Court to file a supplemental memorandum in opposition to
Lexington’s motion for summary judgment, to argue that it is a “Person Insured” under
“Endorsement #006” of the 2000-2001 Lexington Policy and is, therefore, owed a
defense in the Adams and St. Pierre lawsuits.116 Endorsement #006 is a Primary/NonContributory Insurance Endorsement, which replaces the “Other Insurance” section of
the 2000-2001 Lexington Policy.117
Endorsement #006, in pertinent part, provides:
In consideration of the payment of the premium, it is hereby understood
and agreed that Part C, Other Insurance of Section VII, Conditions, is
deleted in its entirety and replaced by the following:

Allied bears the burden of proving its status as an additional insured. WH Holdings, LLC v. ACE
American Ins. Co., No. 07-7110, 2013 WL 2286107, *3 (E.D. La. May 23, 2013) (finding the party seeking
additional insured status “bears the burden of proof as to its status as an insured under the [insurer’s]
policy. [Lexington] does not bear the burden of negating [Allied’s] claim to insured status. In Louisiana, an
insured must meet the initial burden of establishing that the policy affords coverage for an incident and
that the incident falls within the policy’s terms. This initial burden applies to those insureds whose status
as such is not in question and therefore have undisputed rights to seek coverage under the policy. If a bona
fide insured must prove coverage, then it follows rather easily that a party like [Allied] with no privity to the
insurer who seeks coverage as an insured on a policy bears the burden of proof on insured status. This
conclusion is buttressed by Louisiana Civil Code article 1831 which states that ‘[a] party who demands
performance of an obligation must prove the existence of the obligation.’”).
116 R. Doc. 479.
117 R. Doc. 443-17 at 38.
115

22

5. Other insurance: when both this insurance and other insurance apply to
a loss on the same basis, whether the other insurance is stated as primary,
excess or contingent, the company shall not be liable under this policy for a
greater proportion of the loss than that stated in the applicable contribution
provision below:
(b) Contribution by limits: If any of such other insurance does not provide
for contribution by equal shares, the company shall not be liable for a
greater proportion of such loss than the applicable limit of liability under
this policy for such loss bears to the total applicable limit of liability of all
valid and collectable insurance against such loss.
Notwithstanding the foregoing, the company agrees that such insurance as
is afforded by this policy for the benefit of certificate holders included as
persons insured shall be primary and non-contributing insurance, but only
as respects a claim, loss or liability arising out of insured operations or
work on behalf of the named insured performed under a written contract
between the name insured and the certificate holder that requires the
named insured to maintain such primary and non-contributory insurance
and to include the certificate holder as a person insured thereunder.118
Allied argues it is provided coverage under Endorsement #006 through its 1995
Master Work Contract with Masse because that agreement required Masse to obtain
general liability insurance and name Allied as an additional insured under the policy. 119
Allied contends the Master Work Contract makes it a “Person Insured” under
Endorsement #006 of the 2000-2001 Lexington Policy.120
Like the Broad Form Commercial Liability Endorsement, Endorsement #006—an
“Other Insurance” endorsement—is not triggered unless Allied first establishes its status
as an additional insured.121 First, Endorsement #006 provides insurance for the benefit
of the certificate holder included as a person insured. Allied is not a certificate holder or
a person insured. Endorsement #006 modifies neither the “Persons Insured” section nor

R. Doc. 443-17 at 38–39 (emphasis added).
R. Doc. 234-7 at 3–4.
120 R. Doc. 479 at 2.
121 See Wallace v. Boyte Enters., Inc., 385 So. 2d 916, 918–29 (La. Ct. App. 2 Cir. 1980) (finding that because
the insurance policy at issue did not provide coverage to entities claiming additional insured status, neither
entity was afforded “other insurance” under the policy’s endorsement).
118
119

23

the definitions of “Insured” or “Named Insured” of the 2000-2001 Lexington Policy.
Endorsement #006 applies only when “both this insurance and other insurance apply to
a loss on the same basis,”122 meaning coverage must be established under the 2000-2001
Lexington Policy, and at least one other insurance policy, before the endorsement applies.
Even then, the endorsement only applies to certificate holders included as persons
insured. To be entitled to coverage from Lexington, Allied would have to establish its
status as an “Insured” under the 2000-2001 Lexington Policy and that the insuring
agreement has been triggered.
As discussed above, Allied has failed to establish it is an “Insured” under the 20002001 Lexington Policy, because it is not (1) listed as a Named Insured in the Declarations,
(2) an executive officer, director or stockholder of Masse, or (3) afforded coverage through
an “additional insured” endorsement in the policy.
Because Allied cannot meets its burden of proving its status as an additional
insured under the 2000-2001 Lexington Policy, Lexington owes Allied no defense or
indemnity in the underlying Adams and St. Pierre lawsuits claims under the 2000-2001
Lexington Policy.123
2. Provisions of the 2008-2009 Lexington Policy
Lexington issued a policy to Masse that provided coverage from November 15,
2008 through November 15, 2009 (“2008-2009 Lexington Policy”).124

R. Doc. 443-17 at 38.
The Court notes that even if Allied qualified as an additional insured and was therefore entitled to
coverage under the 2000-2001 Lexington Policy, Lexington would not have a duty to defend Allied in the
St. Pierre lawsuit. As discussed in the Court’s Order on Great American’s Motion for Partial Summary
Judgment, the St. Pierre plaintiffs allege they resided near the Allied shipyard for approximately eight years
before the filing of their complaint in 2010. Thus, any exposure causing bodily injury or property damage
of the St. Pierre plaintiffs occurred between 2002 and 2010, after the 2000-2001 Lexington Policy was in
effect.
124 R. Doc. 444-17.
122
123

24

Lexington argues Allied does not qualify as an “Insured” under the 2008-2009
Lexington Policy, and as a result, Lexington owes no duty to defend Allied in the Adams
or St. Pierre lawsuits.125
The 2008-2009 Lexington Policy contained the following insuring agreement for
bodily injury and property damage liability:
We will pay those sums that the insured becomes legally obligated to pay as
damages because of “bodily injury” or “property damage” to which this
insurance applies. We will have the right and duty to defend the insured
against any “suit” seeking those damages. However, we will have no duty to
defend the insured against any “suit” seeking damages because of “bodily
injury” or “property damage” to which this insurance does not apply.126
The 2008-2009 Lexington Policy defines an “Insured” as “any person or
organization qualifying as such under SECTION II – WHO IS AN INSURED.”127 The
“Who is an Insured” provision of the 2008-2009 Lexington Policy provides:
I. If you are designated in the Declarations as:
***
d. An organization other than a partnership, joint venture or limited
liability company, you are an insured. Your “executive officers” and
directors are insureds, but only with respect to their duties as your
officers or directors. Your stockholders are also insureds, but only
with respect to their liability as stockholders.128
Thus, to qualify as an “Insured” under the 2008-2009 Lexington Policy, Allied
must either be named as an insured in the Declarations, an executive officer, director, or
stockholder of the insured named in the Declarations, or Allied must be granted
additional insured status by an endorsement in the policy.

R. Doc. 444-1.
R. Doc. 444-17 at 7.
127 R. Doc. 444-17 at 7.
128 R. Doc. 444-17 at 18–19.
125

126

25

In the Declarations section of the policy, the Named Insured is Masse Contracting
Inc.129 Allied admits it is not a Named Insured and cannot sustain its burden of
establishing it was an executive officer, director, or stockholder of Masse Contracting, Inc.
during the 2008-2009 Lexington Policy period.130 The issue, then, is whether the 20082009 Lexington Policy contains an endorsement under which Allied qualifies as an
additional insured such that it is entitled to coverage from Lexington.
a. Additional Insured Required by Written Contract Endorsement
Unlike the 2000-2001 Lexington Policy, the 2008-2009 Lexington Policy contains
an “Additional Insured Required by Written Contract” Endorsement (“Additional Insured
Endorsement”).131 The Additional Insured Endorsement provides:
A. Section II – Who Is An Insured is amended to include any person or
organization you are required to include as an additional insured on this
policy by a written contract or written agreement in effect during this policy
period and executed prior to the “occurrence” of the “bodily injury” or
“property damage.”
B. The insurance provided to the above described additional insured under
this endorsement is limited as follows:
1. COVERAGE A BODILY INJURY AND PROPERTY DAMAGE
(Section I – Coverages) only.
2. The person or organization is only an additional insured with
respect to liability arising out of “your work” or “your product” for that
additional insured.132
“You” or “your” in the 2008-2009 Lexington Policy refers to “the Named Insured shown
in the Declarations, and any other person or organization qualifying as a Named Insured
under this policy.”133 Thus, any reference to “you” or “your” in the 2008-2009 Lexington

R. Doc. 444-17 at 4.
R. Doc. 444-2 at 3, ¶ 8; R. Doc. 492 at 2, ¶ 8.
131 R. Doc. 444-17 at 36–37.
132 R. Doc. 444-17 at 36.
133 R. Doc. 444-17 at 7.
129

130

26

Policy is to Masse. The 2008-2009 Lexington Policy defines “your work” as “(1) [w]ork or
operations performed by you or on your behalf; and (2) [m]aterials, parts or equipment
furnished in connection with such work or operations.”134
It is undisputed that the Master Work Contract between Allied and Masse required
Masse to procure insurance and name Allied as an additional insured. The issue, then, is
whether Allied’s liability arises out of Masse’s work for Allied.135
Focusing on the language in the Additional Insured Endorsement, that Allied’s
liability must “arise out of [Masse’s] work . . . for [Allied],”136 Lexington argues Allied is
only provided coverage under the Additional Insured Endorsement if the Adams and St.
Pierre plaintiffs allege that Allied is vicariously liable for Masse’s actions.137
In support of its argument, Lexington relies on Maldonado v. Kiewit Louisiana
Co.138 The court in Maldonado found that the additional insured policy provision at issue
limited coverage to the additional insured’s vicarious liability for the fault of the named
insured.139 However, the language of the additional insured endorsement in Maldonado
differs significantly from the 2008-2009 Lexington Policy’s Additional Insured
Endorsement. The endorsement in Maldonado stated the insurer would provide coverage
to the additional insured “only to the extent that [the additional insured] is liable for
‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ caused by [the
named insured’s] acts or omissions or the acts or omissions of those action on [the named

R. Doc. 444-17 at 25. “Your work” includes “(1) Warranties or representations made at any time with
respect to the fitness, quality, durability, performance or use of ‘your work’; and (2) [t]he providing of or
failure to provide warnings and instructions.” Id.
135 See 444-17 at 36 (“The person or organization is only an additional insured with respect to liability arising
out of “your work” or “your product” for that additional insured.”).
136 R. Doc. 444-17 at 25.
137 R. Doc. 451.
138 146 So. 3d 210 (La. Ct. App. 1 Cir. 3/24/14).
139 Id. at 220.
134

27

insured’s] behalf.”140 On the other hand, the Additional Insured Endorsement in the
2008-2009 Lexington Policy provides coverage to an additional insured’s liability
“arising out of ‘[Masse’s] work’ or ‘[Masse’s] product’ for that additional insured.”141
The Adams petition alleges Masse and Allied “conducted sandblasting and
painting operations and have allowed dangerous byproduct to drift into the neighborhood
surrounding Allied Shipyard.”142 The St. Pierre petition alleges Allied “has been negligent
and/or otherwise at fault through its employees and/or agents.” 143 Allied’s supplemental
and amended third-party demand against Masse alleges Masse’s “actions and activities,
and failure to perform their contracted job responsibilities[,] initiated the claims of
the[Adams and St. Pierre] petitioners.”144 Allied’s cross-claim and third-party demand
against Masse and Superior’s insurers, which applies to the claims in both the Adams and
St. Pierre lawsuits, alleges Lexington’s insurance policy obligates it to defend Allied for
“those sums that Allied may become legally obligated to pay as a result of the operations
of Masse.”145 Both the Adams and St. Pierre plaintiffs allege that Allied was individually
at fault and that Allied is liable for the work of Masse, or, at least, the allegations do not
unambiguously exclude the possibility that Allied may be liable for Masse’s operations.
As a result, Allied’s liability arises out of Masse’s “work” for Allied. Allied qualifies as an
additional insured under the 2008-2009 Lexington Policy.146

Id. at 219 (emphasis added).
R. Doc. 444-17 at 25.
142 R. Doc. 444-6 at 3.
143 R. Doc. 444-12 at 2.
144 R. Doc. 444-11 at 2. The Adams plaintiffs adopted all allegations asserted against Allied and asserted the
same allegations against Masse. R. Doc. 444-6 at 3.
145 R. Doc. 444-15 at 4.
146 Jones v. Capitol Enters., Inc., 89 So. 3d 474, 485–87 (La. Ct. App. 4 Cir. 5/9/12).
140
141

28

THE DUTY TO DEFEND ALLIED—THE “EIGHT-CORNERS RULE”
Because the Court finds Allied is an additional insured under the 2008-2009
Lexington Policy, the Court must determine whether Lexington owes a duty to defend
Allied in the Adams and St. Pierre lawsuits. 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.147 A liability insurer’s duty to defend and the scope
of its coverage are separate and distinct issues.148 Under Louisiana law, an insurer’s duty
to defend is broader than its obligation to indemnify for damage claims.149
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. 150 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.151

Sher v. Lafayette Ins. Co., 2007-2441 (La. 4/8/08), 988 So. 2d 186, 192, on reh’g in part (July 7, 2008).
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.
149 Henly v. Phillips Abita Lumber Co., 2006-1856 (La. App. 1 Cir. 10/3/07), 971 So. 2d 1104, 1109.
150 Mossy, 898 So. 2d at 606.
151 Id. (citations omitted).
147

148

29

The duty to defend “arises whenever the pleadings against the insured disclose even a
possibility of liability under the policy.”152 The insurer has a duty to defend unless the
allegations in the petition for damages, as applied to the policy, unambiguously preclude
coverage.153 “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.”154
Ordinarily, when a party files a motion for summary judgment regarding the duty
to defend, the Court may consider only the plaintiff’s petition155 and the face of the
policies; the parties cannot present any evidence such as affidavits or depositions. 156
Factual inquiries beyond the petition for damages and the relevant insurance policy are
prohibited with respect to the duty to defend.157 Any ambiguities within the policy are
resolved in favor of the insured to effect, not deny, coverage.158
However, the insureds of Masse, including Lexington, were brought into the
Consolidated State-Court Lawsuit via Allied’s cross-claim and third-party demand.159 In
its cross-claim and third-party demand, Allied alleges it is entitled to defense and
indemnity in the event it is found liable for the claims alleged in the underlying Adams or
St. Pierre lawsuits.160 The obligation to defend may result from the allegations of a cross-

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).
153 Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009).
154 Treadway v. Vaughn, 633 So. 2d 626, 628 (La. Ct. App. 1993), writ denied, 635 So. 2d 233 (La. 1994).
155 As discussed below, the Court may also consider a third-party demand filed by the alleged insured.
156 Milano v. Bd. of Comm’rs of Orleans Levee Dist., 96-1368 (La. App. 4 Cir. 3/26/97), 691 So. 2d
1311, 1314.
157 Martco, 588 F.3d at 872.
158 Doerr v. Mobil Oil Corp., 2000-0947 (La. 12/19/00), 774 So. 2d 119, 124.
159 R. Doc. 444-15.
160 Id.
152

30

claim or third-party demand rather than solely from the original petitions.161 Allied’s
cross-claim and third-party demand incorporates the allegations of the Adams and St.
Pierre petitions, which are based on the plaintiffs’ exposure to harmful substances
emanating from the Allied shipyard. As a result, to the extent necessary, the Court will
consider Allied’s cross-claim and third-party demand, the underlying Adams and St.
Pierre petitions, and Lexington’s insurance policy issued to Masse to determine whether
Lexington owes a duty to defend or indemnify Allied.
1. The Allegations of the Consolidated State-Court Lawsuit and Allied’s CrossClaim and Third-Party Demand
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. 162
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.”163 The Adams plaintiffs allege Allied’s negligence
has “expos[ed] the residents to dust, sand, paint and various metals, as well as other
substances.”164 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

See, e.g., Gootee Constr., Inc. v. Travelers Prop. Cas. Co. of Am., No. 15-3185, 2016 WL 1545658 (E.D.
La. Apr. 15, 2016) (considering general contractor’s third-party demand along with subcontractor’s
insurance policy to determine whether insurer owed a duty to defend the subcontractor); Hanover Ins. Co.
v. Plaquemines Parish Gov’t, No. 12-1680, 2015 WL 5093452 (E.D. La.) (considering third party demand
to determine an insurer’s duty to defend).
162 R. Doc. 443-9.
163 R. Doc. 443-9.
164 R. Doc. 443-9.
161

31

Obstructive Pulmonary Disease, and migraine headaches.165 Allied filed a supplemental
and amended third-party demand against Masse, alleging Masse’s “actions and activities,
and failure to perform their contracted job responsibilities[,] initiated the claims of
the[Adams and St. Pierre] petitioners.”166 The Adams plaintiffs adopted all allegations
asserted against Allied and asserted the same allegations against Masse. 167
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 2010.168 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.”169 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.”170
On August 18, 2016, Allied filed a cross-claim and third-party demand against the
insurers of Masse, seeking a declaration of its status as an additional insured and of its
right to defense and indemnity under those policies.171 In its cross-claim against the
insurers of Masse, Allied alleges it executed a Master Work Contract with Masse in 1995,
which required Masse to obtain policies of insurance and to name Allied as an additional

R. Doc. 443-9.
R. Doc. 444-11 at 2.
167 R. Doc. 444-6 at 3.
168 R. Doc. 443-12.
169 Id.
170 Id.
171 R. Doc. 443-15.
165

166

32

insured.172 Allied further alleges it is entitled to defense and indemnity from Masse’s
insurers under the policies issued to Masse, but that none of Masse’s insurers have
provided Allied a defense or indemnity as an additional insured.173
Considering the eight corners of Allied’s cross-claim and third-party demand, the
underlying Adams and St. Pierre petitions, and Lexington’s insurance policy issued to
Masse, to determine whether Lexington owes a duty to defend Allied, the Court finds that
Lexington owes Allied defense as an additional insured under the Additional Insured
Endorsement, if other provisions of the policy are satisfied. Specifically, the Additional
Insured Endorsement contains a provision with respect to excess insurance, which may
preclude Lexington’s duty to defend Allied as an additional insured under the 2008-2009
Lexington Policy.
2. Lexington as an Excess Insurer Under the 2008-2009 Lexington Policy
Even though the Court has determined Allied is an additional insured under the
2008-2009 Lexington Policy issued to Masse, Lexington currently owes no duty to defend
Allied in the Adams and St. Pierre lawsuits. The Additional Insured Endorsement
precludes coverage for an additional insured until all other valid and collectible insurance
available to it is exhausted. The Additional Insured Endorsement of the 2008-2009
Lexington Policy provides:
Any coverage provided by this endorsement to an additional insured shall
be excess over any other valid and collectible insurance available to the
additional insured, whether primary, excess, contingent or on any other
basis unless a written contract or written agreement specifically requires
that this insurance apply on a primary or non-contributory basis.174

R. Doc. 444-15 at 3.
R. Doc. 444-15 at 3.
174 R. Doc. 444-17 at 37 (emphasis added).
172
173

33

In Louisiana, “an excess insurer does not owe its insured a defense of a claim within
a primary insurer’s limits.”175 “[A]n excess insurance policy provides coverage that begins
only after a predetermined amount of primary coverage is exhausted.”176 It is not until the
claim exceeds the limits of an insured’s primary coverage that the excess insurer has a
duty to defend the insured.177 The rationale for limiting an excess insurer’s duty to defend
is rooted in the principle that covering only those damages in excess of the primary
insurer’s limits reduces the risk that an excess insurer will have to pay for losses incurred
by the insured. This reduced risk translates into reduced premiums, as “inexpensive
premiums reflect an excess insurer’s desire to limit its exposure and the insured’s
willingness to take on the corresponding level of risk.”178
It is undisputed that Gray Insurance Company provides primary insurance to
Allied.179 Allied further admits it has not exhausted its available primary insurance under
Gray’s policy.180 The 2008-2009 Lexington Policy provides that Lexington’s coverage to
an additional insured is excess unless “a written contract or written agreement specifically
requires that this insurance apply on a primary or non-contributory basis.”181 It is
undisputed that neither the 1995 nor the 2007 Master Work Contracts between Allied and
Masse require the coverage afforded to Allied to be primary or non-contributory.182 As a

Easton v. Chevron Indus., Inc., 602 So. 2d 1032, 1041 (La. Ct. App. 4 Cir. 5/28/1992), writ denied, 604
So. 2d 1315 (La. 1992), and writ denied, 604 So. 2d 1318 (La. 1992) (quoting Lumbermen’s Mutual Casualty
Co. v. Connecticut Fire Insurance Co., 239 So. 2d 472, 474 (La. Ct. App. 4 Cir. 6/6/1970), writ denied, 241
So. 2d 255 (1970)).
176 Id. (quoting Steve D. Thompson Trucking, Inc. v. Twin City Fire Ins. Co., 832 F.2d 309, 310 (5th Cir.
1987)).
177 See Am. Home Assur. Co. v. Czarniecki, 230 So. 2d 253, 260 (1969).
178 Lamarque Ford, Inc. v. Fed. Ins. Co., No. 10-4355, 2011 WL 2020566, at *5 (E.D. La. May 24, 2011)
(citing Harville v. Twin City Fire Ins. Co., 885 F.2d 276, 279 (5th Cir. 1989)).
179 R. Doc. 444-2 at 7, ¶ 23; R. Doc. 492 at 3, ¶ 23. Gray is currently providing a defense to Allied in the
Consolidated State-Court Lawsuit. Id.
180 R. Doc. 444-2 at 7, ¶ 25; R. Doc. 492 at 3, ¶ 25.
181 R. Doc. 444-17 at 37.
182 R. Doc. 444-2 at 7, ¶ 24; R. Doc. 492 at 3, ¶ 24; R. Doc. 444-19.
175

34

result, Lexington, as Allied’s excess insurer, owes no duty to defend Allied until Allied has
exhausted its available primary insurance. In the event Allied exhausts its available
primary insurance, as well as other excess insurance, Lexington’s duty to defend Allied
may arise. If such an event occurs, Allied may seek a declaration of Lexington’s duty to
defend it as an additional insured under the 2008-2009 Lexington Policy against the
claims made in the Adams and St. Pierre lawsuits.183
CONCLUSION
IT IS ORDERED that Lexington’s Motion for Summary Judgment with respect
to Allied’s status as an additional insured and to Lexington’s duty to defend Allied in the
Adams and St. Pierre lawsuits as an additional insured under the 2000-2001 Lexington
Policy is GRANTED.184
IT IS FURTHER ORDERED that Lexington’s Motion for Summary Judgment
with respect to Allied’s status as an additional insured and to Lexington’s duty to defend
Allied in the Adams and St. Pierre lawsuits as an additional insured under the 2008-2009
Lexington Policy is GRANTED.185
New Orleans, Louisiana, this 12th day of July, 2017.
_____________________________
SUSIE MORGAN
UNITED STATES DISTRICT JUDGE

Alternatively, Allied argues if it is not an additional insured under the Additional Insured Endorsement,
it is afforded coverage under the Contractual Liability Exclusion in the 2008-2009 Lexington Policy. R.
Doc. 451 at 2. The Contractual Liability Exclusion is just that—a coverage exclusion—and does not afford
any rights to Allied.
184 R. Doc. 443.
185 R. Doc. 444.
183

35