Hanover Insurance Company v. Plaquemines Parish Government

Filing 752

ORDER AND REASONS granting in part 552 Motion for Summary Judgment. The Parish's and Hanover's claims against Praetorian Specialty Insurance Company are DISMISSED WITH PREJUDICE. The Motion is DENIED as to QBE Specialty Insurance Company. Signed by Judge Jane Triche Milazzo. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
HANOVER INSURANCE COMPANY

CIVIL ACTION

VERSUS

NO. 12–1680

PLAQUEMINES PARISH GOVERNMENT

SECTION "H"(5)

ORDER AND REASONS
Before the Court is a Motion for Summary Judgment (Doc. 552). For the
following reasons, the Motion is GRANTED IN PART.

The Parish's and

Hanover's claims against Praetorian Specialty Insurance Company are
DISMISSED WITH PREJUDICE.
BACKGROUND
The facts and procedural history of this case are long, complex, and have
been detailed in several of the Court's prior orders.1 Familiarity with those
1

See e.g., Hanover Ins. Co. v. Plaquemines Parish Gov't, 304 F.R.D. 494 (E.D. La. 2015);
Hanover Ins. Co. v. Plaquemines Parish Gov't, No. 12–1680, 2015 WL 4167745 (E.D. La. July
9, 2015).

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orders is assumed.
Presently before the Court are the Plaquemines Parish's ("the Parish" and
Hanover Insurance Company's ("Hanover") claims against Praetorian Specialty
Insurance Company ("Praetorian") and QBE Specialty Insurance Company
("QBE") (collectively "the Insurers").

Praetorian and QBE both issued

commercial general liability ("CGL") policies to Catco General Contractors, LLC
("Catco"). Praetorian's policy was in effect from June 1, 2008–June 1, 2009 and
QBE's policy was in effect from June 1, 2009–June 1, 2010. Both the Parish and
Hanover have asserted claims against the Insurers seeking coverage under the
policies as a result of Catco's alleged failure to properly construct the building.
Praetorian and QBE now move for summary judgment, claiming that their
polices exclude coverage for the claims asserted against Catco.
LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law."2 A genuine issue of fact exists only
"if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party."3
In determining whether the movant is entitled to summary judgment, the

2

Fed. R. Civ. P. 56(c) (2012).

3

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

2

Court views facts in the light most favorable to the non-movant and draws all
reasonable inferences in his favor.4 "If the moving party meets the initial burden
of showing that there is no genuine issue of material fact, the burden shifts to
the non-moving party to produce evidence or designate specific facts showing the
existence of a genuine issue for trial."5 Summary judgment is appropriate if the
non-movant "fails to make a showing sufficient to establish the existence of an
element essential to that party’s case."6 "In response to a properly supported
motion for summary judgment, the non-movant must identify specific evidence
in the record and articulate the manner in which that evidence supports that
party’s claim, and such evidence must be sufficient to sustain a finding in favor
of the non-movant on all issues as to which the non-movant would bear the
burden of proof at trial."7 "We do not . . . in the absence of any proof, assume
that the nonmoving party could or would prove the necessary facts."8
Additionally, "[t]he mere argued existence of a factual dispute will not defeat an
otherwise properly supported motion."9
LAW AND ANALYSIS

4

Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).

5

Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).

6

Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

7

John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.
2004) (internal citations omitted).
8

Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
9

Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).

3

The Insurers argue that two interrelated policy provisions bar coverage for
the claims asserted against Catco. Because the language of the two policies is
identical, the Court first discusses the proper interpretation of the provisions at
issue and then the merits of the Insurers' Motion.
I. The Policy Provisions
The Insurers rely on two policy provisions, the "work product" exclusion
and the "products-completed operations hazard" ("PCOH") provision. The work
product exclusion provides that coverage is not extended to property damage to:
(5) That particular part of real property on which you or any
contractors or subcontractors working directly or indirectly on your
behalf are performing operations, if the "property damage" arises
out of those operations; or
(6) That particular part of any property that must be restored,
repaired or replaced because "your work" was incorrectly performed
on it.
....
Paragraph (6) of this exclusion does not apply to "property damage"
included in the "products-completed operations hazard."10
In Supreme Services & Specialty Company v. Sonny Greer, Inc., the
Louisiana Supreme Court examined the effect of identically worded provisions.11
Supreme Services explained that "the work product exclusion reflects the
insurance company's intent to avoid the possibility that coverage under a CGL
policy will be used to repair and replace the insured's defective products and
faulty workmanship. A CGL policy is not written to guarantee the quality of the

10

Doc. 552–19, p. 16.

11

958 So. 2d 634 (La. 2007).

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insured's work or product."12 Thus, the work product exclusion unambiguously
excludes from coverage any obligation of the contractor to repair or replace the
defective work product of the contractor or his subcontractors.13
The PCOH provision addresses a different obligation. It provides that:
a. "Products-completed operations hazard" includes all "bodily
injury" and "property damage" occurring away from premises you
own or rent and arising out of "your product" or "your work" except:
(1) Products that are still in your physical possession; or
(2) Work that has not yet been completed or abandoned.
b. "Your work" will be deemed completed at the earliest of the
following times:
(1) When all of the work called for in your contract has been
completed.
(2) When all of the work to be done at the site has been
completed if your contract calls for work at more than one
site.
(3) When that part of the work done at a job site has been put
to its intended use by any person or organization other than
another contractor or subcontractor working on the same
project.
Work that may need service, maintenance, correction, repair or
replacement, but which is otherwise complete, will be treated as
completed.14
As explained in Supreme Services, the PCOH provision addresses the
insurer's liability for any damage caused as a consequence of the contractor's
faulty work, other than the repair or replacement of the faulty work itself.15 The
12

Supreme Services, 958 So. 2d at 641.

13

Id. at 644.

14

Doc. 552–19, p. 26.

15

Supreme Services, 958 So. 2d at 645.

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PCOH provision excludes coverage for damages caused by the defective work of
the contractor and its subcontractors but only while the contractor's work is
ongoing.16

Once the contractor's work is completed, the PCOH provision

operates to provide coverage for all damages caused by a contractor's faulty
work, except the obligation to repair or replace the faulty work itself.17 The
Louisiana Civil Law Treatise includes an excellent example illustrating the
operation of the PCOH provision:
For example, suppose the insured contracted to make and install a
sign on a commercial building. After the work was completed, the
sign fell due to defective installation, causing damage to the sign,
the building's canopy and a parked car and also bodily injury to a
pedestrian. The insurer covering the [PCOH] would cover all claims
for bodily injury and property damage except the contractor's
responsibility to repair and replace the sign, coverage for which
would be excluded under the product and work exclusions.18
Of course, if the sign in the example had fallen before the contractor finished
installing it, the CGL policy would afford no coverage for any of the damages.19
Therefore, under the reasoning of Supreme Services, the Insurers' policies
extend different coverage to Catco depending on whether the community center
was completed.

While the project remains incomplete, the policies

unambiguously exclude coverage for all damages arising out of Catco's failure,
or the failure of any of Catco's subcontractors, to properly complete their work,
16

Id.

17

Id.

18

15 LA. CIV. L. TREATISE, INSURANCE LAW & PRACTICE § 6:9 n.34 (4th ed.).

19

See Supreme Services, 958 So. 2d at 645.

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including the cost to repair or replace the faulty workmanship. Once the project
is completed, however, the policies provide coverage for any damages caused by
Catco's faulty work (or the faulty work of Catco's subcontractors), except the cost
to repair or replace the faulty work itself. In light of this conclusion, the Court
turns to the merits of the Motion.20
II. The Merits
A. QBE
As previously outlined, QBE does owe coverage to Catco if the project was
completed. Once the project is deemed completed, QBE's policy covers all
damages caused by Catco's defective work except the cost to repair or replace the
defective work. If, however, the building was never completed, QBE owes no
coverage. QBE argues that the building was never completed and that it owes
Catco no coverage.
The policy provides that Catco's work will be deemed completed at the
earliest of three possible times. The first, "when all of the work called for in
[Catco's] contract has been completed,"21 is the only one applicable here.22 It is
important to note that Catco's policy provides that completed work that still
20

The Parish, citing to pre-Supreme Services law, argues that the work product
exclusion and the PCOH provision are ambiguous. This contention was specifically rejected
in Supreme Services. Supreme Services, 958 So. 2d at 643. Accordingly, the Court declines to
entertain this argument here.
21

Doc. 552–19, p. 26.

22

The second is not applicable here because it relates to work at multiple sites and there
is no indication that the community center project involved more than one physical site. The
third condition, when the project has been put to its intended use, does not apply either. It is
undisputed that the community center has not been put to intended use.

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requires repair or replacement is deemed complete for the purpose of the policy.23
In order to prevail on this Motion, QBE must establish that Catco
completed all of the work required by its contract. The Court finds that there is
a genuine dispute of material fact regarding whether or not Catco completed the
work. While the building allegedly has a number of problems that require repair
work, QBE has not pointed to any specific work that remains incomplete.
Therefore, summary judgment is denied as to QBE.
B. Praetorian
The Court reaches a different result with regard to Praetorian.
Praetorian's policy was in effect from June 1, 2008–June 1, 2009. As the Court
has previously explained Praetorian owed no coverage as long as the building
remained incomplete. There is no dispute that, on June 1, 2009, the building
was still very much under construction. Accordingly, because the building was
not completed during the Praetorian policy period, coverage never attached. The
Parish's and Hanover's claims against Praetorian are DISMISSED WITH
PREJUDICE.

23

Id.

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CONCLUSION
For the foregoing reasons, the Motion is GRANTED IN PART. The
Parish's and Hanover's claims against Praetorian Specialty Insurance Company
are DISMISSED WITH PREJUDICE. The Motion is DENIED as to QBE
Specialty Insurance Company.
New Orleans, Louisiana, this 16th day of July, 2015.
____________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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