Bourbon Heat, LLC v. Liberty Surplus Insurance Corporation
Filing
77
ORDER AND REASONS granting in part and denying in part 58 Motion for Partial Summary Judgment. Signed by Chief Judge Sarah S. Vance on 6/23/14. (jjs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BOURBON HEAT, LLC
CIVIL ACTION
VERSUS
NO: 13-2623
LIBERTY SURPLUS INSURANCE
CORP.
SECTION: R(1)
ORDER AND REASONS
Defendant Liberty Surplus Insurance Corp. ("Liberty") moves
for partial summary judgment.1 For the following reasons, the
Court grants Liberty's motion in part and denies it in part. The
Court holds that Liberty does not have an ongoing duty to defend
or indemnify Bourbon Heat, LLC ("Bourbon Heat") in state court
but that it may be liable for attorneys' fees in this action.
I.
Background
Bourbon Heat operates a nightclub in New Orleans.2 M.
Chadwick Pellerin, who resides less than 200 feet from Bourbon
Heat's nightclub, intervened in state court proceedings between
Bourbon Heat and the City of New Orleans.3 Pellerin alleged that
Bourbon Heat's nightclub was too loud and sought damages for
nuisance.4
1
R. Doc. 58.
2
R. Doc. 1-1 at 1.
3
R. Doc. 1-4.
4
Id. at 3-5.
Bourbon Heat asked Liberty, its general liability insurer,
to defend and indemnify it against Pellerin's petition.5 Liberty
refused to do so.6 Bourbon Heat filed this action against Liberty
in state court, alleging that Liberty "arbitrarily and
capriciously declined to provide coverage or legal defense to
Bourbon Heat."7 Bourbon Heat seeks damages, as well as
"attorney's fees and costs incurred in these proceedings."8
Liberty removed the suit to this Court on grounds of diversity
jurisdiction.9 It then filed a motion for judgment on the
pleadings, or, alternatively, summary judgment.10 The Court
denied that motion on October 15, 2013, holding that Liberty had
a duty to defend Bourbon Heat against Pellerin's state court
petition and that the questions of whether Liberty owed a duty to
indemnify and whether Liberty acted in bad faith in refusing
coverage could not be resolved at that time.11
5
R. Doc. 1-1 at 2.
6
Id.
7
Id. at 3.
8
Id. at 4.
9
R. Doc. 1.
10
R. Doc. 8.
11
R. Doc. 31.
2
On January 22, 2014, the state court dismissed Pellerin's
claims against Bourbon Heat, without prejudice.12 Liberty now
moves for partial summary judgment, on two grounds. First, it
asks the Court to recognize that Liberty has no further duty to
defend or indemnify Bourbon Heat against Pellerin's claims.13
Second, it asks the Court to "rule that no attorney's fees are
due regarding [Bourbon Heat's] litigation of the coverage issues
in this action."14
II.
Summary Judgment Standard
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); 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
refrains from making credibility determinations or weighing the
evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins.
Co., 530 F.3d 395, 398-399 (5th Cir. 2008). The Court must draw
reasonable inferences in favor of the nonmoving party, but
12
R. Doc. 58-5.
13
R. Doc. 58-3 at 1, 3; R. Doc. 69 at 1.
14
R. Doc. 58-3 at 1.
3
"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
v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985)
(quotation marks removed).
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 that 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) (quotation marks removed). The nonmoving party can
then defeat the motion by either countering with sufficient
evidence of its own, 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.
4
The nonmovant may not rest upon the pleadings but must
identify specific facts that establish a genuine issue for trial.
Id.; see also Little, 37 F.3d at 1075 ("Rule 56 'mandates the
entry 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.
Liberty Is Entitled to Summary Judgment on the Question of
Its Ongoing Duty to Defend.
Liberty asks the Court to recognize that it has no ongoing
duty to defend or indemnify Bourbon Heat in light of the state
court's dismissal of Pellerin's claims. This Court's October 15,
2013 order held that Liberty "has a duty to defend Bourbon Heat
against Pellerin's petition."15 Since Pellerin's petition has
been dismissed, it is self-evident that Liberty has no ongoing
duty to defend or indemnify Bourbon Heat against it. Further,
Bourbon Heat acknowledges that ongoing defense costs and
indemnity are no longer issues in this suit.16 Accordingly, the
15
R. Doc. 31 at 11.
16
See R. Doc. 61 at 3 ("[I]n a March 10, 2014 Order, the
Court already has noted that the State Court dismissed Pellerin's
Intervention and that the issues remaining in the instant action
are only Liberty's breach of its duty to Bourbon Heat of good
5
Court grants Liberty's request for partial summary judgment on
the question of its ongoing duty to defend or indemnify.
B.
Bourbon Heat May Be Entitled to Attorneys' Fees.
Liberty's second argument is that, as a matter of law, it
has no obligation to pay Bourbon Heat's attorneys' fees in this
coverage action. This argument is in error. "It is wellestablished Louisiana law that an insured may not recover
attorneys' fees in connection with insurance coverage litigation
unless a statute or the insurance contract specifically provides
for them." Henry's Marine Service, Inc. v. Fireman's Fund Ins.
Co., No. 02-3682, 2004 WL 1146066, at *1 (E.D. La. May 17, 2004).
Here, Bourbon Heat alleges violations of Louisiana Revised
Statute 22:1892.17 "[T]hat statute allows the award of attorney's
fees for litigating coverage issues . . . if the insurer acted
arbitrarily and capriciously." Howell v. Am. Cas. Co. of Reading,
Penn., 691 So. 2d 715, 727 (La. Ct. App. 1997); see La. R.S.
22:1892(B)(1) (formerly cited as La. R.S. 22:658).
faith and fair dealing, its arbitrary refusal to pay defense
costs, the amount of these costs that must be paid to Bourbon
Heat and the amount of Bourbon Heat's attorneys' fees and costs
in the instant action and penalties.").
17
R. Doc. 1-1 at 3.
6
Liberty makes a purely legal argument, contending that
attorneys' fees are never compensable in suits of this kind.18
The three cases it cites in support, however, indicate that an
insured may recover attorneys' fees if authorized by contract or
statute. See Steptore v. Masco Constr. Co., Inc., 643 So. 2d
1213, 1218 (La. 1994); Menard v. Lafleur, 737 So. 2d 844, 846
(La. Ct. App. 1999); Benoit v. Md. Cas. Co., 689 So. 2d 610, 612
(La. Ct. App. 1997). In Steptore, which does not involve
allegations of bad faith, the Louisiana Supreme Court held that
the insurer waived an otherwise apparently valid defense to
coverage by supplying its insured with a defense and not
reserving its right to deny coverage. Steptore, 643 So. 2d at
1217. The court held that attorneys' fees may be awarded in a
coverage dispute if authorized by contract or statute, but stated
that the parties had not "directed [it] to any statute providing
for attorney's fees in this instance." Id. at 1218.
Here, by contrast, Bourbon Heat directs the Court to
Louisiana Revised Statute 22:1892, which authorizes an award of
reasonable attorneys' fees when an insurer declines coverage
"unreasonabl[y] or without probable cause." Black Stallion
Enters. v. Bay & Ocean Marine, LLC, No. 09-6656, 2011 WL 1598913,
at *3 (E.D. La. April 25, 2011); see XL Specialty Ins. Co. v.
Bollinger Shipyards, Inc., 954 F. Supp. 2d 440, 444 (E.D. La.
18
R. Doc. 58-3 at 3-4.
7
2013) ("Section 22:1892 . . . cover[s] an insurer's duty to
defend an insured if required under the terms of a policy.");
Cunard Line Ltd. Co. v. Datrex, Inc., 26 So. 3d 886, 894 (La. Ct.
App. 2009) ("[Section 22:1892] has been found applicable by the
courts [to] failures of insurers to defend their insured and the
Court finds it applicable here."). Liberty does not contest, or
even acknowledge, this statutory authorization.19 Nor does it
argue that there is no evidence that it acted in bad faith or
proffer evidence that it acted in good faith. Indeed, Bourbon
Heat contends that Liberty failed to pay defense costs even after
this Court found a duty to defend.20
The Court holds that Liberty may be liable for attorneys'
fees in this suit if its refusal to defend Bourbon Heat against
Pellerin's claims was arbitrary or capricious. Liberty has failed
to show that it is entitled to judgment as a matter of law on
this issue.
IV.
Conclusion
For the foregoing reasons, Liberty's motion for partial
summary judgment is GRANTED IN PART and DENIED IN PART. The Court
holds that Liberty has no ongoing duty to defend or indemnify
Bourbon Heat against Pellerin's state court petition, and that
19
See R. Docs. 58-3, 69.
20
R. Doc. 61 at 8.
8
Liberty may be liable for attorneys' fees in this action under
Louisiana Revised Statute 22:1892(B)(1).
23rd
New Orleans, Louisiana, this _____ day of June, 2014.
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
9
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