XL Specialty Insurance Company v. Bollinger Shipyards, Inc. et al
Filing
131
ORDER AND REASONS - DENYING Bollinger's Motion 111 to Alter or Amend the Court's earlier order and GRANTING summary judgment in favor of National Union and Chartis. National Union and Chartis are dismissed from this case. Signed by Chief Judge Sarah S. Vance on 3/13/14.(Reference: 12-2167)(jjs, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
XL SPECIALTY INSURANCE COMPANY
CIVIL ACTION
NO: 12-2071
VERSUS
SECTION: R(2)
BOLLINGER SHIPYARDS, INC., ET AL.
ORDER AND REASONS
Bollinger Shipyards, Inc., Bollinger Shipyards Lockport,
L.L.C., and Halter Bollinger Joint Venture, L.L.C. (collectively
"Bollinger") move the Court for relief from the Court's January
3, 2014 order denying Bollinger's motion for summary judgment
against its insurer, National Union Fire Insurance Company of
Pittsburg, Pa., and National Union's claims administrator,
Chartis Claims, Inc.1 Because the Court finds that its earlier
order was not in error, the Court DENIES Bollinger's motion.
Furthermore, because Bollinger has failed to show that summary
judgment in favor of National Union and Chartis is not
appropriate, the Court grants summary judgment to those
defendants and dismisses them from the case.
1
R. Doc. 111; see also R. Doc. 113 (opposition to the
Court's proposed grant of summary judgment in favor of National
Union and Chartis).
I.
BACKGROUND
This lawsuit arises out of Bollinger's involvement in the
United States Coast Guard's Deepwater program to modernize its
fleet of water vessels, aircraft, and electronics systems.2 The
United States selected Integrated Coast Guard Systems (ICGS) to
serve as lead contractor of the program, and ICGS in turn
subcontracted a portion of that work to Bollinger.3 Bollinger was
responsible for converting eight 110-foot cutters into 123-foot
cutters.4 Bollinger delivered the first of these vessels to the
Coast Guard in March 2004.5 In September 2004, that vessel
suffered a structural casualty.6 According to the United States,
a subsequent Coast Guard and IGCS investigation revealed that
Bollinger had misrepresented the longitudinal strength of the
hulls of the cutters it delivered to the United States.7
On December 23, 2008, the United States executed a tolling
agreement with Bollinger.8 The agreement provided in relevant
part:
2
R. Doc. 76-5 at 4.
3
Id. at 5.
4
Id. at 5, 10.
5
Id. at 10.
6
Id. at 11.
7
Id.
8
R. Doc. 77-3.
2
WHEREAS, On December 5, 2008 the United States of America
informed Bollinger . . . that the United States . . .
[believes it] may have certain civil causes of action and
administrative claims against Bollinger under the False
Claims Act, 31 U.S.C. §§ 3729 et seq., other statutes and
regulations including the Program Fraud Civil Remedies
Act, 31 U.S.C. §§ 3801 et seq., equity, or the common
law, arising from Bollinger's performance of conversion
work on the U.S. Coast Guard Deepwater Program's 110 Foot
Island Class vessels . . .; and
WHEREAS, the parties have entered into
relating to the possible settlement of
States's above claims prior to suit;
discussions
the United
NOW, THEREFORE, . . . the United States and Bollinger
agree that, as consideration for the United States not
filing, or initiating claims against Bollinger under the
False Claims Act, 31 U.S.C. §§ 3729 et seq., or the
Program Fraud Civil Remedies Act, 31 U.S.C. §§ 3801 et
seq., on or before December 31, 2008, the period of time
between and including December 5, 2008 and May 5, 2009
shall be excluded when determining whether any civil or
administrative claims are time-barred by the statute of
limitations, laches, or any other time-related defenses.
Bollinger further agrees it will not . . . plead statute
of limitations, laches, or any other similar defense to
any civil or administrative action filed or initiated
against Bollinger on or before May 5, 2009 under the
False Claims Act, 31 U.S.C. §§ 3729 et seq., other
statutes and regulations, including the Program Fraud
Civil Remedies Act, 31 U.S.C. §§ 3801 et seq., equity or
the common law, based on the performance of conversion
work on the U.S. Coast Guard Deepwater Program's 110 Foot
Island Class vessels . . . .9
On July 29, 2011, the United States filed a complaint
against Bollinger based on allegations that "Bollinger knowingly
misled the Coast Guard to enter into a contract for the
lengthening of Coast Guard cutters by falsifying data relating to
9
Id. at 1.
3
the structural strength of the converted vessels."10 The United
States' complaint alleged two violations of the False Claims Act,
as well as common law fraud, negligent misrepresentation, and
unjust enrichment.11
On August 3, 2011, days after the underlying suit was filed,
Bollinger put National Union and Chartis on notice of the suit.12
Bollinger held a Directors, Officers, and Private Company
Liability Insurance Policy with National Union ("the D&O
Policy").13 The policy covered defense costs and liability for
claims first made against Bollinger during the "Policy Period" of
March 1, 2011 to March 1, 2012.14
On August 4, Chartis acknowledged receipt of Bollinger's
claim.15 On August 30, Chartis informed Bollinger via letter that
the underlying suit was not covered under the D&O Policy because,
among other things, the United States' "claim" was first made in
December 2008, when the tolling agreement was executed -- over
two years before the Policy Period began.16 After multiple
10
R. Doc. 76-5 at 2.
11
Id. at 12-14.
12
R. Doc. 76-5 at 1.
13
See R. Doc. 76-13.
14
Id. at 1.
15
R. Doc. 76-6.
16
R. Doc. 76-7 at 2-3.
4
unsuccessful attempts to convince Chartis and National Union that
the D&O Policy covered the United States' lawsuit,17 Bollinger
sued Chartis and National Union in state court.18 In the state
court petition, Bollinger identified the D&O Policy by number and
description, and alleged that defendants' failure to pay the
defense costs Bollinger incurred in the underlying suit under
that policy was "arbitrary, capricious, and without probable
cause."19 Defendants removed the case to federal court on August
24, 2012, and the Court eventually consolidated it with this
matter.20
On September 24, 2013, Bollinger moved the Court for partial
summary judgment against National Union and Chartis.21 Bollinger
requested that the Court find, as a matter of law, that the D&O
Policy entitled Bollinger to the defense costs it incurred in the
underlying suit. The Court denied Bollinger's motion, holding
that the "claim" upon which the underlying suit arose was based
was first made in 2008, when Bollinger and the United States
17
See R. Docs. 76-8, 76-9, 76-10, 76-11.
18
See Bollinger Shipyards, Inc. et al. v. National Union
Fire Insurance Company of Pittsburg, Pa. et al., No. 12-cv-2167,
R. Doc. 1.
19
Bollinger Shipyards, Inc. et al. v. National Union Fire
Insurance Company of Pittsburg, Pa. et al., No. 12-cv-2167, R.
Doc. 1-2 at 4.
20
R. Doc. 19.
21
R. Doc. 76.
5
executed a tolling agreement, and hence that the claim fell
outside of the applicable policy period.22 The Court put the
parties on notice that it would grant summary judgment in favor
of National Union and Chartis if Bollinger failed to show cause
why such a ruling was inappropriate.23
Bollinger timely filed an opposition to the Court's proposed
grant of summary judgment in favor of National Union and
Chartis.24 Bollinger also filed a motion to alter or amend,
seeking relief from the Court's order denying Bollinger's motion
for summary judgment.25
II.
STANDARD
A.
Motion to Alter or Amend
Bollinger styled its motion as a "Motion For New Trial, To
Alter Or Amend The Judgment, And/Or For Relief From Judgment,"
and seeks relief under Federal Rule of Civil Procedure 59.26 But
the Court's earlier order denying Bollinger's motion for summary
judgment was not a "judgment" within the meaning of the Federal
Rules. Carter v. Coody, 297 F. App'x 317, 319 (5th Cir. 2008)
22
R. Doc. 102.
23
Id. at 13-14.
24
R. Doc. 113.
25
R. Doc. 111.
26
Id.; R. Doc. 123.
6
("An order denying a motion to dismiss or for summary judgment is
not a final order or judgment."); see also Fed. R. Civ. P. 54(a)
(defining "judgment" as "includ[ing] a decree and any order from
which an appeal lies"); Black's Law Dictionary 918 (9th ed. 2009)
(defining "judgment" as "[a] court's final determination of the
rights and obligations of the parties in a case"). Accordingly,
Rule 59 is not applicable here. The Court will consider
Bollinger's motion pursuant to Rule 60, under which the court may
relieve a party from an "order." See Broadway v. Norris, 193 F.3d
987, 989 (8th Cir. 1999) (motion styled as a motion to alter or
amend under Rule 59 must be considered under Rule 60 if it is
"directed [not] to a final judgment, but rather to a nonfinal
order").
Under Rule 60, the Court may relieve a party from a "final
judgment, order, or proceeding" for one of the following reasons:
(1)
(2)
(3)
(4)
(5)
(6)
mistake, inadvertence, surprise, or excusable
neglect;
newly discovered evidence that, with reasonable
diligence, could not have been discovered in time
to move for a new trial under Rule 59(b);
fraud (whether previously called intrinsic or
extrinsic), misrepresentation, or misconduct by an
opposing party;
the judgment is void;
the judgment has been satisfied, released or
discharged; it is based on an earlier judgment that
has been reversed or vacated; or applying it
prospectively is no longer equitable; or
any other reason that justifies relief.
Fed. R. Civ. P. 60(b). In deciding a Rule 60(b) motion, the Court
must "balance the principle of finality of a judgment with the
7
interest of the court in seeing that justice is done in light of
all the facts." Hesling v. CSX Transp., Inc., 396 F.3d 632, 638
(5th Cir. 2005). The Fifth Circuit has cautioned that relief
under Rule 60(b) is an "extraordinary remedy," because the
"desire for a judicial process that is predictable mandates
caution in reopening judgments." In re Pettle, 410 F.3d 189, 191
(5th Cir. 2005) (quoting Carter v. Fenner, 136 F.3d 1000, 1007
(5th Cir. 1998)).
B.
Summary Judgment
Summary judgment is warranted when "the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994). When assessing whether a dispute as to any material fact
exists, the Court considers "all of the evidence in the record
but refrain[s] from making credibility determinations or weighing
the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness
Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). All reasonable
inferences are drawn in favor of the nonmoving party, but
"unsupported allegations or affidavits setting forth 'ultimate or
conclusory facts and conclusions of law' are insufficient to
either support or defeat a motion for summary judgment." Galindo
8
v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see
also Little, 37 F.3d at 1075.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party "must
come forward with evidence which would 'entitle it to a directed
verdict if the evidence went uncontroverted at trial.'" Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1264-65 (5th
Cir. 1991). The nonmoving party can then defeat the motion by
either countering with evidence sufficient to demonstrate the
existence of a genuine dispute of material fact, or "showing that
the moving party’s evidence is so sheer that it may not persuade
the reasonable fact-finder to return a verdict in favor of the
moving party." Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
of the nonmoving party's claim. See Celotex, 477 U.S. at 325.
The burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists. See id. at 324. The
nonmovant may not rest upon the pleadings, but must identify
specific facts that establish a genuine issue for trial. See,
e.g., id.; Little, 37 F.3d at 1075 ("Rule 56 'mandates the entry
9
of summary judgment, after adequate time for discovery and upon
motion, against a party who fails to make a showing sufficient to
establish the existence of an element essential to that party's
case, and on which that party will bear the burden of proof at
trial.'" (quoting Celotex, 477 U.S. at 322)).
III. DISCUSSION
A.
Motion to Alter or Amend
Bollinger argues that the Court's earlier order denying
summary judgment to Bollinger "contained two clear errors."27
Bollinger contends, first, that the Court failed to take into
account the "Continuity Dates" of the D&O Policy,28 and second,
that the Court "did not examine the meaning of the Discovery
Period provisions in the D&O Policy."29 Neither argument has
merit.
The Court held that Bollinger was not entitled to defense
costs in the underlying suit because the claim upon which the
suit was based was first made against Bollinger in December 2008,
before the applicable policy period began.30 Bollinger contends
that, because the claim was made "between the Continuity Dates
27
R. Doc. 111-2 at 3.
28
Id.
29
Id. at 6.
30
R. Doc. 102 at 13.
10
and the end of the D&O Policy," the underlying suit is covered.31
Bollinger is incorrect. The D&O Policy, by its plain terms, is
"limited to liability for only those claims that are first made
against the insureds during the policy period."32 The Policy
Period is defined as March 1, 2011, to March 1, 2012.33 The
Continuity Dates do not change the policy period. Instead, they
delimit the scope of the following exclusion from coverage:
The insurer shall not be liable to make any payment for
Loss in connection with a Claim made against an Insured:
. . .
(e) alleging,
arising
out
of,
based
upon
or
attributable to as of the Continuity Date, any
pending
or
prior:
(1)
litigation;
or
(2)
administrative
or
regulatory
proceeding
or
investigation of which an insured had notice, or
alleging any Wrongful Act which is the same or
Related Wrongful Act to [sic] that alleged in such
pending or prior litigation or administrative or
regulatory proceeding or investigation.34
In other words, the purpose of the Continuity Dates is to exclude
from coverage claims arising out of, based on, or attributable to
litigation or administrative proceedings that were pending before
those dates. See generally Janet R. Davis & Gary L. Gassman, The
Ins and Outs of Employment Practices Liability Insurance Coverage
and Claims, Brief, Winter 2013, at 22, 31 ("In order to cap the
31
R. Doc. 111-2 at 5.
32
R. Doc. 76-13 at 1 (emphasis added); see also id. at 6.
33
Id. at 1.
34
See id. at 11-12.
11
insurer's potential liability . . . [claims made liability
insurance] policies frequently include 'retroactive dates' or
'continuity dates' that preclude coverage for claims occurring
prior to a specified date . . . . Thus, not every claim first
made during the policy period will be covered." (citation
omitted)). Accordingly, the Court reaffirms its holding that
Bollinger is not entitled to defense costs under the D&O Policy
because the United States' claim in the underlying lawsuit was
first made outside of the policy period.
The Discovery Clause of the D&O Policy provides in relevant
part as follows:
[I]f [Bollinger] shall cancel or [Bollinger] or the
Insurer shall refuse to renew this policy, [Bollinger]
shall have the right to a period of either one, two or
three years following the effective date of such
cancellation or nonrenewal upon payment of the respective
"Additional Premium Amount" described below (herein
referred to as the "Discovery Period") in which to give
to the Insurer written notice of Claims first made
against [Bollinger] during said Discovery Period for any
Wrongful Act occurring prior to the end of the Policy
Period and otherwise covered by this policy.35
The Discovery Period is irrelevant to this lawsuit for two
reasons. First, as Bollinger admits in its motion to alter or
amend, Bollinger has renewed its policy year after year, and so
the discovery period has never been triggered.36 Second, even if
it were triggered, the Discovery Period operates to extend
35
R. Doc. 76-13 at 36.
36
R. Doc. 111-2 at 7.
12
coverage after the applicable policy period. But the claim giving
rise to the underlying suit was first made before the policy
period, so the Discovery Period could not affect whether that
claim is covered.
In sum, Bollinger is incorrect that the Court failed to
properly take account of the Continuity Dates and Discovery
Period of the D&O Policy in denying Bollinger's motion for
summary judgment. The Court thus DENIES Bollinger's motion to
alter or amend.
B.
Summary Judgment for Chartis and National Union
Bollinger argues that, even if the claim giving rise to the
underlying suit was "first made" in December 2008, summary
judgment in favor of Chartis and National Union is not
appropriate because a "prior policy issued by the same
underwriter" "may" provide coverage and defense for the
underlying suit.37 In support of this contention, Bollinger has
submitted the first page of a "Directors, Officers, and Private
Company Liability Insurance Policy" (Policy Number 457-01-39)
issued by Illinois National Insurance Company to Bollinger with a
Policy Period of May 1, 2008, to May 1, 2009.38
37
R. Doc. 113 at 2-3.
38
R. Doc. 113-2 at 2.
13
Bollinger cannot avoid summary judgment by pointing to
Policy Number 457-01-39, because Bollinger did not include a
claim based on that policy in its complaint -- indeed, this is
apparently the first time in this litigation that Bollinger has
even mentioned that policy. A plaintiff may not raise a new claim
in a brief at the summary judgment stage. Gilmour v. Gates,
McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004) ("At the
summary judgment stage, the proper procedure for plaintiffs to
assert a new claim is to amend the complaint in accordance with
Fed. R. Civ. P. 15(a). A plaintiff may not amend her complaint
through argument in a brief opposing summary judgment."); see
also U.S. ex rel. DeKort v. Integrated Coast Guard Sys., 475 F.
App'x 521, 522 (5th Cir. 2012) (citing Gilmour for this
proposition); Asociacion de Suscripcion Conjunta del Seguro de
Responsibilidad Obligatorio v. Juarbe-Jimenez, 659 F.3d 42, 53
(1st Cir. 2011) (same); Tucker v. Union of Needletrades, Indus. &
Textile Emps., 407 F.3d 784, 788 (6th Cir. 2005) (same); cf. 17
Steven Plitt, et al., Couch on Insurance § 245:22 (3d ed. 2013)
("[A] plaintiff's initial pleading must in some manner bring the
terms of the policy onto the record, at least where the policy
establishes the plaintiff's right.").39 Bollinger brought suit
39
Bollinger is correct, of course, that Rule 8(d) allows
a party to plead inconsistent claims in the alternative. See R.
Doc. 123 at 2. But Rule 8(d) does not help Bollinger here,
because it never pled a claim based on Policy Number 457-01-39 at
all.
14
against National Union and Chartis based on "Policy Number 01571-41-04, a Directors, Officers and Private Company Liability
Insurance Policy issued by National Union, covering the policy
period March 1, 2011 through March 1, 2012,"40 and accordingly it
may base its arguments for coverage on only that policy. Because
the Court finds that Bollinger is not entitled to defense costs
under Policy Number 01-571-41-04, summary judgment in favor of
National Union and Chartis is warranted.
IV.
CONCLUSION
For the foregoing reasons, the Court DENIES Bollinger's
motion to alter or amend its earlier order and grants summary
judgment in favor of National Union and Chartis. National Union
and Chartis are hereby dismissed from this case.
New Orleans, Louisiana, this 13th day of March, 2014.
__
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
40
Bollinger Shipyards, Inc. et al. v. National Union Fire
Insurance Company of Pittsburg, Pa. et al., No. 12-cv-2167, R.
Doc. 1-2 at 4.
15
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