Tower National Insurance Company v. Dixie Motors LLC et al

Filing 25

ORDER AND REASONS denying 8 Motion to Dismiss and/or Stay Complaint for Declaratory Judgment, granting 6 Motion for Summary Judgment. Signed by Judge Ivan L.R. Lemelle on 5/20/2015. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TOWER NATIONAL INSURANCE
COMPANY

CIVIL ACTION

VERSUS

NO. 14-1634

DIXIE MOTORS d/b/a DIXIE
RV SUPERSTORES, ET AL.

SECTION "B"(2)

ORDER AND REASONS
This action arises out of an insurance coverage dispute.
Tower National Insurance Company (“Tower National”) issued to
Dixie Motors LLC d/b/a Dixie RV Superstores (“Dixie Motors”) an
insurance policy, effective from May 12, 2013 to May 12, 2014.
(“Policy”).1 On June 17, 2014, a petition for monetary damages
was filed in state court by Thomas A. Anzalone for injuries
sustained

on

or

about

August

11,

2013

while

on

a

sailing

vacation in the Bahamas, when Gregory A. Lala (“Lala”), the
owner of Dixie Motors negligently caused a golf cart to tip
over.2

(“underlying

lawsuit”).

The

petition

asserts

claims

against Tower National and alleges that the company had in full
force and effect a policy of liability insurance, insuring Dixie

1
2

Rec. Doc. No. 1 at 3.
Rec. Doc. No. 1 at 3.

1

Motors and Lala for the types and kinds of liability asserted in
the petition.3
Tower National filed the instant diversity action seeking
declaratory judgment pursuant to the Declaratory Judgment Act,
28 U.S.C. § 2201, that there is no coverage under the Policy for
either Dixie or Lala resulting from Lala’s operation of a golf
cart in the Bahamas. Tower National moves the Court for summary
judgment that the liability insurer owes no duty to defend or
indemnify Dixie Motors or its employee (Lala), in connection
with the underlying lawsuit.4 Defendants, Dixie Motors and Lala,
have filed a response, arguing in part, that Tower National’s
declaratory judgment action is not fully ripe as the issue of
the defendants’ liability in the underlying state court lawsuit
has not been resolved. Defendants also move the Court to dismiss
or

stay

this

action

on

the

grounds

of

abstention,

due

to

“parallel state proceedings.”
The questions presented are several. First, the Court must
determine whether the claims in this declaratory judgment action
are

justiciable.

Second,

the

Court

must

determine

how

to

exercise its broad discretion to decide, stay, or dismiss this
action.

Finally,

if

the

Court

finds

that

any

claims

are

justiciable, that it has authority to grant declaratory relief,
3
4

Rec. Doc. No. 1 at 3.
Rec. Doc. No. 1 at 4.

2

the Court must then determine whether under Louisiana law, Tower
National is entitled to summary judgment on the duty to defend
and duty to indemnify claims.
I.

LAW & ANALYSIS
a. Justiciability

Tower National seeks summary judgment in this declaratory
judgment action that it has no duty to defend or indemnify Dixie
Motors and Lala in the underlying lawsuit under the terms of the
Policy. A federal court may not issue a declaratory judgment
unless there exists an actual case or controversy. Am. States
Ins. Co. v. Bailey, 133 F.3d 363, 369 (5th Cir. 1998). In a
diversity action, the Court must apply the substantive law of
the forum state, as interpreted by the state’s highest court.
See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co.,
530

F.3d

395,

399

(5th

Cir.

2008).

Because

the

Policy

was

delivered in Louisiana, the Court interprets the Policy applying
Louisiana substantive law.5 See Thermo Terratech v. GDC EnviroSolutions, Inc., 265 F.3d 329, 334 (5th Cir. 2001).
Under Louisiana law, an insurer’s duty to defend is broader
than its duty to indemnify. See Elliott v. Cont'l Cas. Co., 949
So.2d 1247, 1250 (La. 2007) (citing Steptore v. Masco Constr.
Co., Inc., 643 So.2d 1213, 1218 (La. 1994)). Because the duty to
5

Rec. Doc. No. 6-6 at 1.

3

defend does not depend on the outcome of the underlying law suit
but rather upon the allegations in the pleadings, a duty to
defend claim is ripe, and presents an actual case or controversy
when the underlying suit is filed. See e.g. W. Heritage Ins. Co.
v. River Entm’t, 998 F.2d 311, 312-13 (5th Cir. 1993); Elliott
v. Cont'l Cas. Co., 949 So.2d 1247, 1250 (La. 2007) (citing
Steptore v. Masco Const. Co., Inc., 643 So.2d 1213, 1218 (La.
1994). Therefore, Tower National’s duty to defend claim is ripe
and is determined solely by comparing the pleadings against the
insured with the insurance policy. See Suire v. Lafayette City–
Parish Consol. Gov't, 907 So.2d 37, 52 (La. 2005).
Under

Louisiana

law,

in

general,

an

insurer’s

duty

to

indemnify cannot be determined until after the underlying suit
has been resolved and the insured is found liable.

Allstate

Insurance Co. v. Employers Liability Assurance Corp., 445 F.2d
1278, 1281 (5th Cir. 1971); American Fidelity & Casualty Co. v.
Pennsylvania Threshermen & Farmers’ Mutual Cas. Insurance Co.,
280 F.2d 453 (5th Cir. 1950); see Quinlan v. Liberty Bank &
Trust Co., 575 So. 2d 336, 348-49 (La. 1990); Mossy Motors Inc.
v. Cameras Am., 898 So.2d 602, 607 (La. App. 4 Cir. 2005).
However, if “the same reasons that negate the duty to defend
likewise negate any possibility the insurer will ever have a
duty to indemnify,” the issue is properly addressed. Northfield

4

Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 529 (5th Cir.
2004)(applying Texas law). As this question of justiciability
may turn on conclusions reached on the duty to defend claim, the
Court leaves this narrow issue for resolution below.
b. Discretion to Exercise Jurisdiction
The Court next addresses whether it should abstain from
ruling on the duty to defend and indemnity claims. The parties
differ on the abstention standard to be applied. Defendants move
the Court to dismiss or stay pursuant to the doctrinal standard
enunciated in Brillhart v. Excess Ins. Co. of America, 316 U.S.
491 (1942). Plaintiff contends the proper (and more stringent)
standard is that set forth in Colorado River Water Conservation
Dist. v. United States, 424 U.S. 800, 817 (1976). The Court
agrees with the latter.
The Brillhart standard applies to a court’s determination
on

whether

to

dismiss

a

declaratory

judgment

action.

Orrix

Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir.
2000). However, “it is well settled in this circuit, that a
declaratory action that also seeks coercive relief is analyzed
under the

Colorado River

standard.”

New England Ins. Co. v.

Barnett, 561 F.3d 392, 397 (5th Cir. 2009). “[W]hen an action

5

contains

any

claim

for

coercive

relief,”

including

counterclaims, Colorado River applies. Id.6
Here, Plaintiff’s complaint presents a declaratory judgment
action.

Defendants’

arbitrarily

and

answer

claims

capriciously

that

failed

“the
to

plaintiff

has

consider

the

aforementioned insurance policy endorsement which unambiguously
extends coverage,” and seeks “all applicable damages, attorney’s
fees....”7 The inclusion of a request for coercive relief in the
form of damages and attorney’s fees “indisputably removes this
suit from the ambit of a declaratory judgment action.” Id. at
395 (quoting Southwind Aviation, Inc. v. Bergen Aviation, Inc.,
23 F.3d 948, 950 (5th Cir. 1994)(per curiam)). Thus, Colorado
River

abstention

doctrine,

rather

than

Brillhart

abstention

doctrine, governs the Court’s abstention determination.
Under the Colorado River doctrine, “the district court’s
discretion
governed

by

to
a

dismiss

is

‘narrowly

broader

‘exceptional

circumscribed’
circumstances

and

is

standard.”

Barnett, 561 F.3d at 394-95. The doctrine applies when parallel
state and federal proceedings exist. See Black Sea Inv., Ltd. v.
United Heritage Corp., 204 F.3d 647, 649 (5th Cir. 2000).

6

The U.S. Fifth Circuit Court of Appeals recognizes two exceptions to applicability of the Colorado River standard.
The Colorado River standard is not applied if the claims for coercive relief are frivolous or if the claim for coercive
relief were added as a means of defeating Brillhart. Barnett, 561 F.3d at 395-96. As the claims for coercive relief
have been asserted by defendants, seeking to invoke Brillhart, these exceptions do not apply.
7
Rec. Doc. No. 3 at 5.

6

For a court to abstain from exercising jurisdiction under
the Colorado River doctrine, it first must find that the federal
and

state

court

actions

are

“parallel.”

Hartford

Accident

&

Indem. Co. v. Costa Lines Cargo Servs., Inc., 903 F.2d 352, 360
5th Cir. 1990). Actions are parallel when the same parties are
litigating the same issues. See Republicbank Dallas, Nat’l Ass’n
v. McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987). Tower argues
that

because

the

state

court

action

does

not

encompass

defendants’ counterclaim asserted here, the two actions are not
parallel.
The underlying state action is brought by Anzalone against
Dixie Motors, Lala, State Farm, and Tower to compensate Anzalone
for damages, including medical expenses and lost wages.8 This
declaratory judgment action is brought by Tower against Dixie
Motors and Lala to determine whether Tower has a duty to defend
or

indemnify

in

connection

with

the

underlying

lawsuit.9

Certainly, the declaratory judgment claim is a subset of the
state court litigation; however, the two actions do not involve
the

exact

same

parties

and

issues,

and

are

not

parallel.

Republic Ins. Co. v. Housing Authority of New Orleans, No. 084748,

2012

WL

5384661,

at

*6

(E.D.

La.

Nov.

1,

2012).

The

counterclaim in the instant declaratory judgment action presents
8
9

Rec. Doc. No. 1 at 3.
Rec. Doc. No. 1 at 2.

7

an additional insurance contract claim, and the action does not
involve Anzalone or State Farm.
Even

assuming

abstention,

the

perfect

Court

symmetry

applies

the

is

not

Colorado

essential

River

for

abstention

factors to the federal and state actions in this matter, and
concludes that abstention is not required in this case.
i.
Neither

this

Assumption by Either Court of Jurisdiction
Over a Res
Court

nor

the

state

court

has

assumed

jurisdiction over any res or property in this case. The absence
of

this

factor,

weighs

against

abstention.

Murphy

v.

Uncle

Ben’s, Inc., 168 F.3d 734, 738 (5th Cir. 1999)(quoting Colo.
River, 424 U.S. at 813).
ii.
Both

the

The Relative Inconvenience of the Forums

federal

and

state

proceedings

are

located

in

southeastern Louisiana. Therefore, neither forum is more or less
convenient than the other. The absence of this factor weighs
against abstention. Id.
iii.

The Avoidance of Piecemeal Litigation

The overlap of issues between the federal and state court
actions

is

duplicative.

“The

prevention

of

duplicative

litigation is not a factor to be considered in an abstention

8

determination.” Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185,
1192

(5th

Cir.

“[D]uplicative

1988)(citing
litigation,

Colo.

wasteful

River,

424

though

it

U.S.
may

at
be,

817).
is

a

necessary cost of our nation’s maintenance of two separate and
distinct judicial systems possessed of frequently overlapping
jurisdiction.” Black Sea Inv., Ltd. v. United Heritage Corp.,
204 F.3d 647, 650 (5th Cir. 2000).
The real concern here is the danger of inconsistent rulings
with respect to a piece of property. Id. at 650-21. When, as
here, no court has assumed jurisdiction over a disputed res,
there is no such danger. This factor therefore weighs against
abstention.
iv.

The Order in Which Jurisdiction was Obtained
by the Concurrent Forums

The Supreme Court has stated that “priority should not be
measured exclusively by which complaint was filed first, but
rather in terms of how much progress has been made in the two
actions. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 21 (1983). The state court action was filed on June 17,
2014.

The

federal

court

action

was

filed

July

15,

2014.10

According to Tower, “significant progress has been made in the
federal court case, while hardly any progress has been made in

10

Rec. Doc. No. 1 at 2.

9

Dr.

Anzalone’s

personal

injury

state

court

case.”11

The

“Underlying Lawsuit... does not have a trial date, discovery is
still ongoing....”12 Tower correctly notes that jury trial in
this matter is set for July 13, 2015, and that this matter could
be resolved on its pending motion for summary judgment.

The

Court concludes that as the federal court action is further
along, this factor weighs against abstention.
v.

Whether and to What Extent Federal Law
Provides the Rules of Decision on the Merits

Both actions are governed by state tort and insurance law.
However, the fact that no federal law issue exists here does
not, alone, weigh in favor of abstention. Evanston Ins. Co., 844
F.2d at 1193 (citing Colo. River, 424 U.S. at 817). The “task is
to ascertain whether there exist ‘exceptional circumstances,’
the

‘clearest

of

justifications,’

that

can

suffice

under

Colorado River to justify the surrender of that jurisdiction.”
Moses H. Cone, 460 U.S. at 26. As the cases pose basic insurance
questions,

and

plaintiffs

exceptional

circumstances

have

that

made

call

for

no

showing

of

any

abstention

in

this

matter. Therefore, this factor is at most neutral. See Black
Sea, 204 F.3d at 651.

11
12

Rec. Doc. No. 13 at 9.
Rec. Doc. No. 13 at 9.

10

vi.

This
weighs

factor

against,

The Adequacy of the State Proceedings in
Protecting the Rights of the Party Invoking
Federal Jurisdiction
“can

not

only

for,

be

a

neutral

abstention.”

factor

Evanston,

or
844

one

that

F.2d

at

1193. Both actions are governed by state insurance law. As such,
this factor is neutral.
vii.

Summary of Colorado River Factors

Four factors clearly weigh against abstention, while two
are

neutral.

No

factor

supports

staying

the

federal

court

action. The Court finds a stay unwarranted in this case and
addresses the motion for summary judgment.
c. Whether Tower National is Entitled to Summary
Judgment that it Owes no Duty to Defend Dixie Motors
and/or its Employee in the Underlying Personal
Injury Lawsuit
Under Federal Rule of Civil Procedure 56(c), the Court will
grant a party’s motion for summary judgment if:13
the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no
genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law.

13

Although the parties do not raise or address the issue of whether Anzalone is a required party under Fed. R. Civ.
P. 19, the Court addresses it here. Anzalone has no reasonable interest in whether Tower National owes a duty of
defense to Dixie Motors and Lala under the Policy. But even if it did, it is inconceivable how disposing of this
declaratory judgment action could leave any of the parties with a “substantial risk” of incurring inconsistent
obligations. See U.S. Fire Ins. Co. v. A-Port, LLC, Civ. Action No. 14-441, 2015 WL 1416490, at *2 (E.D. La. Mar. 26,
2015).

11

A genuine issue of material fact exists if the evidence is
such that a reasonable jury could return a verdict in favor of
the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242 (1986).
Louisiana

has

adopted

the

“Eight

Corners

Rule”:

the

insurer’s duty to defend suits against its insured is determined
by the allegations of the injured plaintiff’s petition, with the
insurer being obligated to furnish a defense unless the petition
unambiguously

excludes

coverage.

See

Martco

Ltd.

P’ship

v.

Wellons, Inc., 588 F.3d 864, 872 (5th Cir. 2009); American Home
Assur. Co. v. Czarniecki, 230 So.2d 253, 259 (La. 1970). In
determining

the

duty

to

defend,

the

court

should

liberally

construe and accept as true the allegations of the petition. See
id.
The Court has authority to grant declaratory relief in this
diversity

action.14

Louisiana

insurance

In

this

policy,

diversity
the

Court

action
must

contemplating
apply

a

Louisiana

substantive law, as interpreted by the state’s highest court.

14

The Court's authority to grant declaratory relief on the duty-to-defend claim turns on whether subject matter
jurisdiction is proper. Subject matter jurisdiction is premised on diversity of citizenship. Under 28 U.S.C. § 1332(a),
jurisdiction is proper where (1) the parties are completely diverse, and (2) the amount in controversy exceeds
$75,000. Here, Tower National is a corporation in a corporation incorporated in the State of New York, with a
principal place of business in New York, New York. Defendant, Dixie Motors’ member Lala, is a citizen of Louisiana.
Accordingly Dixie Motors is a citizen of Louisiana. Lala is the only other Defendant. The parties are completely
diverse. It is undisputed that potential liability exceeds $75,000 in this case. Diversity jurisdiction is satisfied.

12

The

Louisiana

Supreme

Court

has

provided

the

following

summary of the rules governing the interpretation of insurance
policies:
Interpretation of an insurance policy usually involves
a legal question which can be resolved properly in the
framework of a motion for summary judgment. An
insurance policy is a contract between the parties and
should be construed using the general rules of
interpretation of contracts set forth in the Civil
Code. The judicial responsibility in interpreting
insurance contracts is to determine the parties’
common intent. Words and phrases used in an insurance
policy are to be construed using their plain, ordinary
and generally prevailing meaning, unless the words
have acquired a technical meaning.
An insurance policy should not be interpreted in an
unreasonable or a strained manner so as to enlarge or
to restrict its provisions beyond what is reasonably
contemplated by its terms or so as to achieve an
absurd conclusion. Unless a policy conflicts with
statutory provisions or public policy, it may limit an
insurer’s liability and impose and enforce reasonable
conditions upon the policy obligations the insurer
contractually assumes.
If
after
applying
the
other
general
rules
of
construction an ambiguity remains, the ambiguous
contractual provision is to be construed against the
insurer and in favor of coverage. Under this rule of
strict construction, equivocal provisions seeking to
narrow an insurer’s obligation are strictly construed
against
the
insurer.
That
strict
construction
principle, however, is subject to exceptions. One of
these exceptions is that the strict construction rule
applies only if the ambiguous policy provision is
susceptible to two or more reasonable interpretations.
For the rule of strict construction to apply, the
insurance policy must be not only susceptible to two
or more interpretations, but each of the alternative
interpretations must be reasonable.

13

Huggins v. Gerry Lane Enters., Inc., 957 So.2d 127, 129 (La.
2007)(quoting Bonin v. Westport Ins. Corp., 930 So.2d 906, 91011 (La. 2006))(emphasis added).
On liability coverage, the Policy provides:
We will pay all sums an “insured” legally must pay as
damages because of “bodily injury” or “property
damage” to which this insurance applies caused by an
“accident” and resulting from “garage operations”
other than the ownership, maintenance of covered
“autos.”15 (Hereinafter referred to as “other than
covered autos” provisions).
The following are “insureds” for “garage operations” other
than covered “autos”:
(1) You (Dixie Motors)
(2) Your partners (if you are a partnership), members
(if
you
are
a
limited
liability
company),
“employees”, directors or shareholders but only
while acting within the scope of their duties.16
On the right and duty to defend, the Policy provides:
“[w]e have the right and duty to defend any insured
against a suit asking for these damages. However we
have no duty to defendant against a suit seeking
damages for bodily injury or property damage to which
this insurance does not apply....17
The policy applies to “bodily injury” and “property damage”
only if:
(1)

The accident occurs in the coverage territory18

The coverage territory is:
(1)

The United States of America

15

Rec. Doc. No. 6-6 at 16, Policy, Garage Coverage Form, Section II Liability Coverage.
Rec. Doc. No. 6-6 at 17, Policy, Garage Coverage Form, 3. Who is An Insured.
17
Rec. Doc. No. 6-6 at 15 Policy, Garage Coverage Form, Liability Coverage. “Our duty to defend or settle ends
when the applicable Liability Coverage Limit of Insurance – “Garage Operations” – Other Than Covered Autos has
been exhausted by payment of judgments or settlements.”
18
Id.
16

14

(2)
(3)
(4)
(5)

The territories and possessions
States of America;
Puerto Rico;
Canada; and,
Anywhere in the world if:

of

the

United

a. A covered “auto” of the private passenger type
is leased, hired, rented or borrowed without a
driver for a period of 30 days or less.19
b. The “insured’s” responsibility to pay damages
is determined in a “suit” on the merits, in the
United States of America, the territories and
possessions of the United States of America,
Puerto Rico or Canada or in a settlement we
agree to.20
The facts surrounding the incident are undisputed. Also,
Defendants appear to concede that the vehicle at issue in this
case may not constitute a ‘covered auto’; however, invoke the
aforementioned “other than covered autos” provision, along with
a 2013 Endorsement which forms part of the Policy and expands
the coverage territory as follows:
We also cover bodily injury, property damage or
personal and advertising injury that occurs
during
the
policy
period
shown
in
the
Declarations within the coverage territory.
For purposes of this endorsement, the coverage
territory is extended to anywhere in the world
if:
1. The
bodily
injury,
property
damage
or
personal and advertising injury is caused by
an insured who permanently lives within the
coverage territory while the insured is
temporarily outside of one of those places;
The original suit for damages resulting from such
bodily injury, property damage or personal and
19
20

Id. at 28, Coverage Territory (emphasis added).
Id.

15

advertising injury must
coverage territory.21

be

brought

within

the

In sum, Tower National’s duty to defend can exist where the
following relevant circumstances are present:
1. In

an

insured

original
within

suit
the

brought

coverage

against

territory

an
for

damages resulting from bodily injury;
2. Caused

by

resulting

an
from

insured
“garage

in

an

accident

operations”

other

than covered autos; and, which
3. Occurred anywhere in the world if the bodily
injury

is

permanently

caused

by

an

lives

within

insured
the

who

coverage

territory while the insured is temporarily
outside of the coverage territory.
At issue in this case is Item 2: whether Anzalone’s injury
resulted

from

operations’”

Dixie
means

Motors’
the

“garage

ownership,

operations.”

maintenance

or

“’Garage
use

of

locations for garage business and that portion of the roads or
other accesses that adjoin these locations.”22 Also, “[g]arage

21
22

Rec. Doc. No 6-6 at 45, Section VII(A), Garage Policy Extension Endorsement. Item 2 omitted.
Rec. Doc. No. 6-6 at 29, Policy, Section VI, Definitions: H.

16

operations” includes all operations necessary or incidental to a
garage business.23
Defendants contend that the allegations trigger the duty to
defend because it is claimed in the underlying lawsuit that Lala
was

leading

executives
accident,

a
and

company-sponsored
their

triggering

coverage

along

guests

business

trip

at

under

with
the

other
time

“operations

Dixie

of

the

necessary

or

incidental to a garage business.”24 The characterization of the
trip

as

company

the

First,

a

company

sponsored

trip

executives

is

decided

not

entirely

to

take

accurate.

their

annual

(income) bonus in the form of the sailing trip for six of the
participants.25 This is underscored by the fact that because the
bonuses

could

“business

not

guest”

cover

all

eight,

participants,

the

Barones,

participated

at

the

only

their

own

expense.26 A portion of the trip, including the cost of the sail
boat,

airfare,

and

golf

cart

rental

were

advanced

by

the

company; however, a portion of these payments were to be listed

23

Id. (emphasis added).
Rec. Doc. No. 14 at 14.
25
Rec. Doc. No. 6-5 at 8-22, Lala Deposition; Rec. Doc. No. 14 at 4. “Dixie Motors would issue a bonus to Lala and
[Stephen] Guidry as an executive ‘perq’ based on their performance. Lala and Guidry decided to take the bonus in
the form of a sailing trip to the Bahamas with Lala’s girlfriend, Yvonne King, and Guidry’s wife, Ashley...Lala
explained that as owner of Dixie motors he was entitled to a larger bonus than Guidry, which he exercised in the
form of an all-expense paid trip for the Anzalones. The Barones were not part of the bonus, but were invited along
at their own expense as loyal customers and good friends.”
26
Id.
24

17

as account receivables from Lala.27 The Anzalones were treated at
no cost in the form of a birthday gift from Lala.
The foregoing is consistent with Lala’s claim that the trip
was “partially business and partially personal”28; however, this
assertion does not go to the heart of the issue: whether the
golf

cart

accident

operations

necessary

resulted
or

from

incidental

“garage
to

Dixie

operations”
Motors’

or

garage

business in recreational vehicle sales and service operations.
In

Travelers

interpreted

a

Indem.

similar

Co.

garage

v.

Nix,

operations

the

Fifth

policy

to

Circuit
determine

whether coverage existed for bodily injury arising out of a
shooting on the garage premises. 644 F.2d 1130 (5th Cir. Unit B
May 1981). The Fifth Circuit found that the policy only provided
coverage

for

liability

arising

out

of

the

conduct

of

the

business, or incidental to the business. The court further found
that the liability of the owner of the store, if any, arose out
of a purely personal altercation which was unrelated to the
operation of the business. The Fifth Circuit held that since the
policy did not provide coverage for personal liability arising
from personal matters, coverage did not exist. Id. at 1132; see
also

American

States

Ins.

Co.

v.

Estate

of

Neighbors,

No.

27

The airfare was only covered by Dixie Motors when issues arose with regard to the participants’ commercial
flights.
28
Rec. Doc. No. 6-5 at 10, Lala Deposition.

18

3:94CV179-B-A,

1995

WL

1945530,

at

*2

(N.D.

Miss.

Dec.

27,

1995)(“Since McCrory’s use of his automobile at the time of the
accident was not intended to benefit Quick Tune, the court finds
that the American States policy did not provide coverage for the
claim.....”).
In Renda v. Brown, the court there held that no coverage
existed under a garage operations policy. La. Ct. App. 563 So.2d
328 (1990). The policy provided that there would be coverage for
“an occurrence arising out of garage operations”. Id. at 333.
The vehicle at issue was a truck used primarily by the owner's
son

for

personal

reasons

and

occasionally

in

the

owner's

business. On the night in question, the son was using the truck
with permission but for a personal errand. A fatal accident
occurred. The court assumed the truck was principally used in
garage operations but held coverage did not exist because its
use at the time of the accident was purely personal. Id.
Here, the circumstances, according to LaLa himself, support
a similar conclusion:
Lala and Anzalone dropped their ladies at the dock,
and went to look for the others because they did not
know where to return the golf cart. While Lala was
driving with Anzalone as a passenger in the golf cart,
the left front tire struck a large pothole on the

19

pathway, which caused
injuring Anzalone.29

the

golf

cart

to

tip

over,

It is not suggested that the only two passengers in the
vehicle were engaged in Dixie Motors operations at the time of
the

accident.

occurring

However,

during

intended

to

a

Defendants

personal

confer

posit

excursion

entertainment

value

on

that
a

to

an

accident

trip,

two

of

partially
the

eight

participants, who happen to be business customers, but who were
not present at the time of the accident, is sufficient to show
that

the

accident

resulted

from

operations

incidental

to

a

garage business. “Such a rule, however, would strain the plain
and ordinary meaning of the language of the policy, bringing
within its ambit activities that the parties did not, at the
time of contracting, contemplate or intend to include.” American
States

v.

Estate

of

Nabors,

100

F.3d

953,

at

*1

(5th

Cir.

1996)(citing Travelers Indem. Co. v. Nix, 644 F.2d 1130, 1132
(5th Cir. Unit B May 1981)). “It is quite apparent that the
parties

in

contracting

for

this

insurance

policy

did

not

contemplate anything other than what the policy plainly intends:
coverage

for

liability

arising

out

of

the

conduct

of

the

business, or incidental to the business...the policy does not
provide coverage for personal liability arising from personal
matters and cannot be extended to provide coverage for such
liability. Travelers Indem. Co. v. Nix, 644 F.2d at 1132.
29

Rec. Doc. No. 14 at 6.

20

There is not a hint of use of the golf cart for garage
operations

or

activities

incidental

to

such

operations.

The

underlying pleading alleges facts that fall outside the policy
language. There is no ambiguity to be resolved against Tower
National, and thus the Court concludes Plaintiff is entitled to
summary judgment with respect to the duty to defend.
Finally, the Court addresses the unresolved issues relating
to the indemnity claim. Unlike the duty to defend, the duty to
indemnify

“is

triggered

by

the

actual

facts

that

establish

liability in the underlying lawsuit.” Guar. Nat’l Ins. Co. v.
Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir. 2000). Applying
the

same

interpretation

connection

with

concludes

that

Tower
on

of

the

National’s
these

Policy
duty

set
to

undisputed

forth

defend,

facts,

above
the

the

in

Court
policy

unambiguously excludes coverage and Tower National has no duty
to indemnify Dixie Motors and Lala. The duty of indemnity is
sometimes addressed before the resolution of the underlying suit
when the same reasons that negate the duty to defend likewise
negate any possibility the insurer will ever have a duty to
indemnify. See Western Alliance Ins. Co. v. Northern Ins. Co. of
New

York,

176

F.3d

825,

828

(5th

Cir.

1999)(“The

duty

to

indemnify may be justiciable in a declaratory judgment action
before determination of insured’s underlying liability if the

21

complaint does not trigger duty to defend and no facts can be
developed in the underlying suit that could trigger the duty to
indemnify.”); Morad v. Aviz, Civil Action No. 12-2190, 2013 WL
1403298, at *4 (E.D. La. April 5, 2013); see also Fireman’s Fund
Ins. Co. v. Sneed’s Shipbuilding, Inc., 803 F. Supp. 2d 530,
543-44 (E.D. La. Mar. 22, 2011)(Fallon, J.); Liberty Mut. Ins.
Co. v. Jotun Paints, Inc., 555 F. Supp. 2d 686, 710-11 (E.D. La.
April 2, 2008)(“the Court finds that the declaratory judgment
claims regarding Liberty’s duty to indemnify are appropriate for
determination,

despite

the

pending

state

court

lawsuits.”);

Gabarick v. Laurin Maritime (America), Inc., Civil Action Nos.
08-4007,

08—4156,

2009

WL

43096,

at

*8

(E.D.

La.

Jan.

7,

2009)(Africk, J.). In light of the conclusions reached on the
duty to defend claim, and exercising its discretion, the Court
finds

that

summary

judgment

on

the

question

of

the

duty

to

indemnify is also appropriate.
II.

CONCLUSION

Accordingly, and for the reasons enumerated above,
IT

IS

ORDERED

that

the

Motion

to

Dismiss

and/or

Stay

Complaint for Declaratory Judgment (Rec. Doc. No. 8) is DENIED.
IT IS FURTHER ORDERED that the Motion for Summary Judgment (Rec.
Doc. No. 6) is GRANTED and judgment be entered for the Tower
National on the issues of policy coverage. Success on the issue
22

of coverage is a predicate to any claim for bad faith. As the
Court

has

determined

Tower

National

owes

neither

a

duty

to

defend, nor a duty to indemnify Defendants in the underlying
lawsuit,

Defendant’s

counterclaim

is

hereby

DISMISSED

with

prejudice.30
New Orleans, Louisiana, this 20th day of May, 2015.

____________________________
UNITED STATES DISTRICT JUDGE

30

Under Louisiana law governing payment of insurance claims, the phrase “arbitrary and capricious” regarding an
insurer's refusal to pay a claim means vexatious or unjustified, without reasonable or probable cause or excuse; an
insurer does not act arbitrarily and capriciously when it withholds payment based on a genuine good faith dispute
about the amount of a loss or the applicability of coverage. La. Rev. Stat. Ann. § 22:1892(A)(1), (B)(1) (2012).

23