Hanover Insurance Company v. Plaquemines Parish Government
Filing
822
ORDER AND REASONS that Catco's 704 Motion for Partial Summary Judgment is granted; Lexington's 730 Motion for Summary Judgment is granted in part and denied in part; Cajun Comfort's 742 Motion to Dismiss for Failure to State a Claim is denied. 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 are two Motions for Summary Judgment (Docs. 704 &
730) and a Motion to Dismiss (Doc. 742). For the following reasons, Catco's
Motion for Partial Summary Judgment (Doc. 704) is GRANTED, Lexington's
Motion for Partial Summary Judgment (Doc. 730) is GRANTED IN PART and
DENIED IN PART, and Cajun Comfort's Motion to Dismiss (Doc. 742) is
DENIED.
BACKGROUND
The facts and procedural history of this case are long, complex, and have
1
been detailed in several of the Court's prior orders.1 Familiarity with those
orders is assumed.
Presently before the Court are several motions asking the Court to
determine whether Cajun Comfort, LLC and its insurers, United Fire and
Indemnity Company and Lafayette Insurance Company ("the Cajun Comfort
Insurers"), must furnish a defense to Catco General Contractors, LLC ("Catco").
A brief history of the issue of Catco's defense is required. Catco served as the
general contractor for the construction of the Bootheville-Venice Community
Center ("the Project"), and Cajun Comfort served as the electrical contractor. Its
involvement in this litigation began on May 29, 2013, when the Plaquemines
Parish Government asserted a third-party demand against it based on alleged
defects in the building's construction. Beginning in March of 2014, counsel for
Catco issued correspondence to the various subcontractors who had performed
work on the Project seeking defense, indemnity, and insurance coverage from
each respective entity. Initially only Lexington Insurance Company
("Lexington"), the insurer of glass contractor New Orleans Glass Company,
agreed to furnish such a defense. In April of 2015, Lexington filed a Motion for
Partial Summary Judgment against the remaining subcontractors and their
insurers, seeking contribution to Catco's defense. The Court denied this motion
without prejudice, granting Lexington leave to file necessary cross-claims
against the entities who refused to contribute to Catco's defense. The majority
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).
2
of the subcontractors' insurers have subsequently agreed to contribute to Catco's
defense; however, the Cajun Comfort Insurers remain obstinate.
Both Catco and Lexington have filed independent motions for summary
judgment seeking judgment that the Cajun Comfort Insurers owe Catco a
defense under their policies.2 Lexington further asserts a claim for contribution
for the litigation expenses that it has already expended in providing Catco's
defense.3 The Cajun Comfort Insurers filed an omnibus opposition to these
Motions.4
In its Motion, Lexington Insurance also argues that Cajun Comfort owes
Catco a defense under the "defense and contribution" provisions of its
subcontract with Catco. Cajun Comfort has responded with a Motion to Dismiss
Lexington's claim for contribution.5
LEGAL STANDARD
I. Summary Judgment
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."6 A genuine issue of fact exists only
2
Docs. 704, 730.
3
Doc. 730.
4
Doc. 768.
5
Doc. 742.
6
Fed. R. Civ. P. 56(c) (2012).
3
"if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party."7
In determining whether the movant is entitled to summary judgment, the
Court views facts in the light most favorable to the non-movant and draws all
reasonable inferences in his favor.8 "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."9 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."10 "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."11 "We do not . . . in the absence of any proof, assume
that the nonmoving party could or would prove the necessary facts."12
Additionally, "[t]he mere argued existence of a factual dispute will not defeat an
7
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
8
Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).
9
Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
10
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
11
John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th Cir.
2004) (internal citations omitted).
12
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)).
4
otherwise properly supported motion."13
II. Motion to Dismiss
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts "to state a claim to relief that is plausible on its face."14 A claim is
"plausible on its face" when the pleaded facts allow the court to "draw the
reasonable inference that the defendant is liable for the misconduct alleged."15
A court must accept the complaint’s factual allegations as true and must "draw
all reasonable inferences in the plaintiff’s favor."16 The court need not, however,
accept as true legal conclusions couched as factual allegations.17 To be legally
sufficient, a complaint must establish more than a "sheer possibility" that the
plaintiff’s claims are true.18
The complaint must contain enough factual
allegations to raise a reasonable expectation that discovery will reveal evidence
of each element of the plaintiff's claim.19 If it is apparent from the face of the
complaint that an insurmountable bar to relief exists and the plaintiff is not
entitled to relief, the court must dismiss the claim.20
13
Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
14
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 547 (2007)).
15
Id.
16
Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
17
Iqbal, 556 U.S. at 678.
18
Id.
19
Lormand, 565 F.3d at 255–57.
20
Jones v. Bock, 549 U.S. 199, 215 (2007).
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LAW AND ANALYSIS
I. Duty Owed by the Cajun Comfort Insurers
At the outset, the Court notes that Louisiana law applies to this dispute
concerning the Cajun Comfort Insurers' duty to defend.21 The Cajun Comfort
Insurers have argued that they do not owe a defense to Catco under their
insurance policies. When determining whether an insurance company has a duty
to defend a suit against its insured, Louisiana courts apply the so-called "eight
corners rule."22 Under this rule, the court looks only to the four corners of the
petition and the four corners of the insurance policy.23 An insurer has a duty to
defend against the suit if, assuming all allegations in the petition to be true,
there would be both liability to the plaintiff and coverage under the policy.24 "An
[insurer's] duty to defend arises whenever the pleadings against the insured
disclose even a possibility of liability under the policy."25 "In other words, the
test is not whether the allegations unambiguously assert coverage, but rather
whether they do not unambiguously exclude coverage."26 "Under this analysis,
the factual allegations of the plaintiff's petition must be liberally interpreted to
21
United Fire and Cas. Co. v. Hixon Bros. Inc., 453 F.3d 283 (5th Cir. 2006) (noting that
federal court must apply Louisiana law to insurance policies issued and delivered in
Louisiana).
22
Vaughn v. Franklin, 785 So. 2d 79, 84 (La. App. 1 Cir. 2001).
23
Id. (citing Am. Home Assur. Co. v. Czarniecki, 230 So. 2d 253, 259 (La. 1969)).
24
Id.
25
Steptore v. Masco Const. Co., 643 So. 2d 1213, 1218 (La. 1994).
26
Johnson v. Misirci, 955 So. 2d 715, 718 (La. App. 4 Cir. 2007).
6
determine whether they set forth grounds which raise even the possibility of
liability under the policy."27 "[A]n insurer's duty to defend lawsuits against its
insured is broader than its liability for damage claims."28 Indeed, "a duty to
defend...exist[s] if there is at least a single allegation in the petition under which
coverage is not unambiguously excluded."29
All parties acknowledge that the Cajun Comfort Insurers issued
Commercial General Liability policies to Cajun Comfort for the relevant policy
periods. These policies contain identical Additional Insured Endorsements by
which Catco is covered for "property damage" arising from Cajun Comfort's "acts
or omissions." Nevertheless, the Cajun Comfort Insurers maintain that
Plaquemines Parish's Third Party Complaint against Catco does not state a
covered claim. This contention is without merit. As noted above, in determining
whether or not an insurer owes a duty to defend, the Court must apply the
"eight-corners rule," looking only to the petition and the terms of the policy itself.
An examination of the Parish's Third Party Demand and the Parish's
Third Supplemental, Amended, and Restated Third Party Demand reveals
claims that raise at least the possibility of liability under these policies. The
initial demand alleges damages caused by acts of negligence that directly relate
to work done by various subcontractors on the project.30
The Amended
Complaint specifically alleges that Catco and its subcontractors failed to
27
Id. See also Czarniecki, 230 So. 2d at 259.
28
Johnson, 955 So. 2d at 718.
29
Yarborough v. Federal Land Bank of Jackson, 731 So. 2d 482 (La App. 2 Cir. 1999).
30
Doc. 15.
7
complete work on the building in a workmanlike manner, providing a veritable
litany of alleged defects in the building's construction.31 Included in this list of
defects is an allegation that "electrical conduit appears to have been improperly
imbedded into the plaster."32 To avoid the duty to defend, the insurer must show
that the complaint unambiguously excludes coverage. The Court finds that this
allegation by the Parish is sufficient to give rise to the possibility of a covered
claim, as it alleges a defect involving the electrical system.
The Complaint
therefore triggers a duty to defend on the part of the Cajun Comfort Insurers,
and they must participate in Catco's defense.33
II. Duty Owed by Cajun Comfort
Lexington's Motion further argues that Cajun Comfort itself should
participate in the defense of Catco based on the defense and indemnity
provisions of its subcontract with Catco. Cajun Comfort has responded to this
Motion with its own Motion to Dismiss the portions of Lexington's Cross-claim
asserting a right of contribution for Catco's ongoing defense. Notably, Cajun
Comfort takes no position on the duty to defend as it applies to its insurers.
The Louisiana Supreme Court has held that "an indemnity agreement is
a 'specialized form of contract which is distinguishable from a liability insurance
31
Doc. 216.
32
Doc. 216.
33
The Court further notes that neither Cajun Comfort nor its insurers have filed a
Motion to Dismiss. Indeed, the Court previously denied Cajun Comfort's Motion for Summary
Judgment on the Parish's claims against it.
8
policy.'"34 "An indemnitor is not liable under an indemnity agreement until the
indemnitee 'actually makes payment or sustains loss.' Thus. . .a cause of action
for indemnification for cost of defense does not arise until the lawsuit is
concluded and defense costs are paid.'"35
Subsequent courts have noted,
however, that though a claim for indemnity is premature until liability is
ultimately imposed, there is no blanket bar on the filing of third-party claims for
indemnity.36 Thus, though it is now premature to impose liability on Cajun
Comfort for Catco's defense, it is likewise premature to dismiss Lexington's
Cross-claim against Cajun Comfort. Due to the nature of indemnity agreements,
the Court must defer ruling on Lexington's Cross-claim as to Cajun Comfort
until a final determination of liability in this case has been made. The Court
therefore denies both Cajun Comfort's Motion to Dismiss and the portion of
Lexington's Motion for Summary Judgment seeking judgment against Cajun
Comfort for defense costs.
CONCLUSION
For the foregoing reasons, Catco's Motion for Partial Summary Judgment
is GRANTED and Lexington's Motion for Partial Summary Judgment is
GRANTED IN PART, inasmuch as the Court finds that United Fire and
34
Suire v. Lafayette City-Parish Consol. Gov., 907 So. 2d 37, 51 (La. 2008) (quoting Meloy
v. Conoco, Inc., 504 So. 2d 833, 839 (La. 1987)).
35
Id. (quoting Meloy, 504 So. 2d at 839) (internal citations omitted).
36
Winslow v. American Airlines, Inc., No. 07-236, 2008 WL 4469962, at *2 (E.D. La.
Sept. 29, 2008); Dean v. Entergy Louisiana, LLC, No. 10-887, 2010 WL 9447498, at *3 (La. App.
5 Cir. October 19, 2010).
9
Indemnity Company and Lafayette Insurance Company must contribute to the
defense of Catco. Lexington's Motion for Partial Summary judgment is DENIED
IN PART, inasmuch as it presently seeks defense costs from Cajun Comfort
itself. Cajun Comfort's Motion to Dismiss Lexington's Cross Claim is likewise
DENIED.
New Orleans, Louisiana, this 28th day of August, 2015.
____________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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