Collins v. A.B.C. Marine Towing, L.L.C. et al

Filing 197

ORDER & REASONS that the Excess Underwriters' Motions for Summary Judgment and Partial Summary Judgment, 67 , 155 and 156 are DENIED and ABC Marine's Cross-Motion 141 for Partial Summary Judgment is GRANTED. Signed by Judge Eldon E. Fallon on 8/17/15. (Reference: All Cases)(dno)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

MICHELLE COLLINS, INDIVIDUALLY AND
*
AS PERSONAL REPRESENTATIVE OF THE ESTATE *
OF MICHAEL COLLINS
*
*
VERSUS
*
*
A.B.C. MARINE TOWING, L.L.C. AND
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BOARD OF COMMISSIONERS PORT
*
OF NEW ORLEANS
*

CIVIL ACTION

NO. 14-1900
SECTION: “L” (3)

ORDER & REASONS
Before the Court are four motions: (1) Third-Party Defendants’ and Declaratory CounterClaimants, Certain Underwriters at Lloyd’s, London’s (“Excess Underwriters”) Motion for
Summary Judgment as to the claim for coverage by A.B.C. Marine Towing, LLC (“ABC
Marine”) (R. Doc. 67) 1; (2) ABC Marine’s Cross-Motion for Partial Summary Judgment (R.
Doc. 141); (3) Excess Underwriters’ Motion for Partial Summary Judgment as to Boh Bros.
Construction Co., L.L.C.’s (“Boh Bros.”) first-party property damage claims (R. Doc. 155); and
(4) Excess Underwriters’ Motion for Partial Summary Judgment as to tort liability coverage (R.
Doc. 156). Having reviewed the parties’ briefs and the applicable law, the Court now issues this
Order and Reasons.
I.

BACKGROUND
This case arises out of a fatal allision with the Florida Avenue Bridge, which spans the

Inner Harbor Navigational Canal in Orleans Parish, Louisiana. On, or about, August 12, 2014,
the M/V CORY MICHAEL (“CORY MICHAEL”) was towing the 4600 Ringer Crane Barge
and Manitowic 4600 Ringer Crane (collectively the “Crane Barge”) through the Canal from the
1

This motion was originally filed as a Motion for Judgment on the Pleadings and thereafter converted by the Court
to a Motion for Summary Judgment.

Intercostal waterway towards the Mississippi River. The COREY MICHAEL was owned and
operated by ABC Marine whereas the Crane Barge was owned by Boh. Bros. At approximately
midnight on August 13, 2014, the mast of Crane Barge allided with the bridge, causing the crane
boom to fall onto the pilot house from which Michael Collins was operating the CORY
MICHAEL, resulting in his death. Several other crew members claim injury from this allision.
At the time of the incident, ABC Marine had a Master Service Agreement (“MSA”) with
Boh Bros., regarding the chartering of vessels to Boh Bros. Specifically, the MSC contained the
following defense and indemnity obligations:
OWNER [ABC Marine] hereby agrees to defend, indemnify, and hold
harmless BOH BROS.. from and against any and all demands, liabilities,
claims, suits, judgments, proceedings, orders, causes of action, damages,
losses, costs and expenses…whether on account of bodily injury to or
death of any person , property damage (including, but not limited to any
immovable or movable property of BOH BROS. or others, whether now in
existence or hereinafter acquired or constructed)… regardless of the
underlying legal or equitable theory, and howsoever and whenever the
same may arise, be caused or be claimed, incurred by, asserted against,
suffered by or claimed against or sought from BOH BROS. that arise
directly or indirectly out of, results from or is the (sic) connection with
[ABC Marine’s] activities relating to or the operations of the Vessel or the
performance of this Agreement. [ABC Marine’s] activities relating to or
the operations of the Vessel or the performance of this Agreement. [ABC
Marine’s] defense and indemnity obligations hereunder shall apply and be
binding on [ABC Marine] even if it is alleged or even proven that the
fault, negligence or liability, in whole or in part, of BOH BROS. played
any part in causing or contributing to the incident or claim giving rise to
the request for defense and indemnification by BOH BROS…
Master Services Contract § 11, attached as Exhibit A to R. Doc. 155.
ABC Marine also had several insurance policies in effect, both primary and excess, upon
which ABC Marine made demands for coverage and indemnity for Boh Bros.’ claim against
ABC following the underlying incident. The primary underwriters accepted coverage for Boh
Bros. claim against ABC Marine and at present are finalizing a settlement agreement. At issue in
the present motions is policy number TMU-405821 (“Excess Policy”) issued by the Excess

Underwriters to ABC Marine, for a term of one-year beginning May 5, 2014. The Excess Policy
is written to provide coverage for ABC Marine’s business: “Insured operates 2 tugs and 1
pushboat involved in oilfield construction and/or fleeting activities.” (R. Doc. 67-3 at 1). On
March 24, 2015, ABC Marine filed a Third-Party Complaint against Excess Underwriters with
respect to damage to the Crane Barge, alleging that the “Excess Policy provides excess property
damage, protection and indemnity, collision and towers liability, contractual and other
coverages, with limits of at least an additional $9,000,000.00 on top of the primary coverage of
ABC Marine’s underlying policies.” Id. at ¶8.
II.

PRESENT MOTIONS
Three motions for summary judgment by the Excess Underwriters and one cross-motion

for summary judgment by ABC Marine are before this Court. The disagreement at the center of
these four motions is whether the Excess Policy provides coverage for damage to the Crane
Barge owned by Boh Bros. that was in the tow of ABC Marine’s CORY MICHAEL at the time
of the incident underlying the suit. The Excess Underwriters argue that the Excess Policy
excludes coverage to ABC Marine for damage to property in its “care, custody or control,”
which includes Boh Bros.’ Crane Barge. ABC Marine argues that the “care, custody, or control”
provision does not exclude coverage for ABC Marine’s exposure as a tower, for property
damage to a third party tow. As this disagreement is dispositive to all four motions, the Court
will analyze the motions as one.
III.

LEGAL STANDARD
Summary judgment is appropriate when “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.” Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56(c)); 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 (5th Cir.2008).
Under Federal Rule of Civil Procedure 56(c), the moving party bears the initial burden of
“informing the district court of the basis for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex,
477 U.S. at 322. When the moving party has met its Rule 56(c) burden, “[t]he non-movant
cannot avoid summary judgment ... by merely making ‘conclusory allegations' or
‘unsubstantiated assertions.’” Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th
Cir.2002) (quoting Little, 37 F.3d at 1075). “The mere existence of a scintilla of evidence in
support of the plaintiff's position will be insufficient; there must be evidence on which the jury
could reasonably find for the plaintiff.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253
(1986). All reasonable inferences are drawn in favor of the nonmoving party, but a party cannot
defeat summary judgment with conclusory allegations or unsubstantiated assertions. Little, 37
F.3d at 1075. A court ultimately must be satisfied that “a reasonable jury could not return a
verdict for the nonmoving party.” Delta, 530 F.3d at 399.
IV. LAW AND ANALYSIS
A. Applicable Law
It is indisputable and, in fact, both parties agree, that Louisiana law governs the
construction of marine insurance policies unless displaced by a controlling federal maritime law.
Ingersoll-Rand Financial Corp. v. Employers Ins. Of Wausau, 771 F.2d 910, 912 (5th Cir. 1985);

Fireman’s Fund Ins. Co. v. Wilburn Boat Co., 300 F.2d 631, 633 (5th Cir. 1991); Albany Ins. Co.
v. Anh Thi Kieu, 927 F.2d 882 (5th Cir. 1991). Moreover, the parties further agree that any
dispute concerning this insurance would be interpreted according to Louisiana law. (R. Docs. 67
at 8, 113 at 6).
Under Louisiana law, “[a]n insurance policy is a contract between the parties and should
be construed by using the general rules of interpretation of contracts set forth in the Louisiana
Civil Code.” Cadwallader v. Allstate Ins. Co., 848 So.2d 577, 580 (La.2003). The Louisiana
Civil Code provides that “[i]nterpretation of a contract is the determination of the common intent
of the parties.” La. Civ.Code Ann. art. 2045 (1987); see also Cadwallader, 848 So.2d at 580; La.
Ins. Guar. Assoc. v. Interstate Fire & Cas. Co., 630 So.2d 759, 763 (La.1994). An insurance
contract must be “construed according to the entirety of its terms and conditions as set forth in
the policy, and as amplified, extended, or modified by any rider, endorsement, or application
attached to or made a part of the policy.” La.Rev.Stat. Ann. § 22:654 (2004). Interpretation of an
insurance contract generally involves a question of law. Bonin v. Westport Ins. Corp., 930 So.2d
906, 910 (La.2006) (citing Robinson v. Heard, 809 So.2d 943, 945 (La.2002)); see also La. Ins.
Guar. Assoc., 630 So.2d at 764.
“The words of a contract must be given their generally prevailing meaning.” La.
Civ.Code Ann. art. 2047 (1987); see also Cadwallader, 848 So.2d at 580. “When the words of a
contract are clear and explicit and lead to no absurd consequences, no further interpretation may
be made in search of the parties' intent.” La. Civ.Code Ann. art. 2046 (1987). “If the policy
wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract
must be enforced as written.” Cadwallader, 848 So.2d at 580. Where, however, an insurance
policy includes ambiguous provisions, the “[a]mbiguity ... must be resolved by construing the

policy as a whole; one policy provision is not to be construed separately at the expense of
disregarding other policy provisions.” La. Ins. Guar. Ass'n, 630 So.2d at 763 (citing La.
Civ.Code Ann. art. 2050 (1987) (“Each provision in a contract must be interpreted in light of the
other provisions so that each is given the meaning suggested by the contract as a whole.”)).
“Words susceptible of different meanings must be interpreted as having the meaning that best
conforms to the object of the contract.” La. Civ.Code Ann. art. 2048 (1987). “A provision
susceptible of different meanings must be interpreted with a meaning that renders it effective and
not with one that renders it ineffective.” Id. art. 2049 (1987).
Ambiguity may also be resolved through the use of the reasonable-expectations
doctrine—i.e., “by ascertaining how a reasonable insurance policy purchaser would construe the
clause at the time the insurance contract was entered.” La. Ins. Guar. Ass'n, 630 So.2d at 764
(quoting Breland v. Schilling, 550 So.2d 609, 610–11 (La.1989)). “The court should construe the
policy ‘to fulfill the reasonable expectations of the parties in light of the customs and usages of
the industry.’ ” Id. (quoting Trinity Indus., Inc. v. Ins. Co. of N. Am., 916 F.2d 267, 269 (5th
Cir.1990)). “A doubtful provision must be interpreted in light of the nature of the contract,
equity, usages, the conduct of the parties before and after the formation of the contract, and of
other contracts of a like nature between the same parties.” La. Civ.Code Ann. art. 2053 (1987).
“If after applying the other general rules of construction an ambiguity remains, the
ambiguous contractual provision is to be construed against the drafter, or, as originating in the
insurance context, in favor of the insured.” La. Ins. Guar. Ass'n, 630 So.2d at 764. Article 2056
of the Louisiana Civil Code provides: “In case of doubt that cannot be otherwise resolved, a
provision in a contract must be interpreted against the party who furnished its text. A contract
executed in a standard form of one party must be interpreted, in case of doubt, in favor of the

other party.” La. Civ.Code Ann. art. 2056 (1987). “Under this rule of strict construction,
equivocal provisions seeking to narrow an insurer's obligation are strictly construed against the
insurer.” Cadwallader, 848 So.2d at 580. “That strict construction principle 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.” Id. The fact that a
term is not defined in the policy itself does not alone make that term ambiguous. Am. Deposit
Ins. Co. v. Myles, 783 So.2d 1282, 1287 (La.2001). “An insurance contract, however, should not
be interpreted in an unreasonable or strained manner under the guise of contractual interpretation
to enlarge or restrict its provisions beyond what is reasonably contemplated by unambiguous
terms or achieve an absurd conclusion.” Cadwallader, 848 So.2d at 580. “Courts lack the
authority to alter the terms of insurance contracts under the guise of contractual interpretation
when the policy's provisions are couched in unambiguous terms.” Id.
B. Analysis
The claims asserted against ABC Marine fall within the insuring agreement of the Excess
Policy, which provides that “Excess Underwriters agree to indemnify ABC Marine “by reason of
liability: (a) imposed upon the ‘Insured’ by law or (b) assumed by the ‘Insured’ under an
‘Insured Contract’, for damages in respect of: [ ] (ii) ‘Property Damage’”. (R. Doc. 67-3 at 11).
Property damage is defined to “mean physical loss of, physical damage to or physical destruction
of tangible property of a ‘Third Party’, including loss of use of the tangible property so lost,
damaged or destroyed.” Id. at 26. Given that Boh Bros. made a claim against ABC Marine for
damage to Boh Bros. property, any amount ABC Marine owes for damage to the Crane Barge
necessarily falls within the insuring agreement. Thus, the burden shifts to the Excess

Underwriters to prove an exclusionary provision applies. To do so, Excess Underwriters assert
that because the Crane Barge was being towed by ABC Marine’s COREY MICHAEL, the “care,
custody or control” exclusion applies. This conclusion is contrary to law for the following
reasons: (i) the “care, custody or control” exclusion is not applicable to towage contracts and (ii)
the contract language is ambiguous at best and therefore must be resolved in favor of the insured.
a. The “Care, Custody and Control Provision Does Not Apply to Towage
Contracts
It is undisputed that the Excess Policy provides an exclusion for “’Property Damage’ to
property [ ] in the care, custody or control of the ‘Insured’”. (R. Doc. 67-3 at 18). What is
disputed is whether this exclusion applies to ABC Marine’s towing operations. The starting
point for resolution of this dispute can be found in Stevens v. the White City, 285 U.S. 195
(1932). As explained by the Supreme Court in Stevens, under a towage contract, the tug is not a
bailee of the vessel in tow or its cargo. Stevens 285 U.S. at 200 (“A contract merely for towage
does not require or contemplate such a delivery as is ordinarily deemed essential to bailment.”).
Moreover, the Fifth Circuit has interpreted Stevens to mean that a towage contract “does not put
the tower in possession of the vessel or cargo.” Clifford v. Merritt-Chapman & Scott Corp., 57
F.2d 1021, 1025 (5th Cir. 1932); see also Houma Well Serv., Inc. v. Tug Capt. O'Brien, 312 F.
Supp. 257, 260 (E.D. La. 1970) (“The tower, on the other hand, is not a bailee. He neither takes
possession of the vessel nor responsibility for its cargo or crew; he undertakes merely to tow
it.”).
ABC Marine argues that this distinction between towage and bailment is significant
because bailment (or, in Louisiana, deposit) is synonymous with care, custody, and control
whereas towage is not. The United States Court of Appeals for the Sixth Circuit embraces this

understanding explaining that “[c]ustomarily when one speaks of something being in the ‘care,
custody, or control’ of another, reference is had to a legal relationship akin to that of ownership,
tenancy or bailment.” Am. Cas. Co. v. Timmons, 352 F.2d 563, 567 (6th Cir. 1965)(quoting Innis
v. McDonald, Ohio Com.Pl., 150 N.E.2d 441, aff’d Ohio App., 150 N.E.2d 447 (1956)).
Moreover, the Fifth Circuit and Louisiana law reinforces the understanding that bailment/deposit
is generally equated with control. See e.g., Navarro Pecan v. Penn America Ins., 34 Fed.Appx.
963 (5th Cir.2002)(holding that “because [the insured] is a depositary ... it is deemed to have
‘care, custody or control’ over the personal property it accepts for deposit.”); Crompton Greaves,
Ltd. v. Shippers Stevedoring Co., 921 F. Supp. 2d 697, 726 (S.D. Tex. 2013)(“The creation of a
bailment requires that possession and control over an object pass from the bailor to the bailee.”).
Although the Excess Underwriters cite to cases where the tower is found to have “control” of its
tow, these cases are distinguishable from the present case. For example, the Excess Insurers cite
to United States Fire Ins. Co.v. Gulf States Marine and Mining Co., 262 F.2d 565, 567 (5th Cir.
1959) where the Fifth Circuit found that the “barge was in charge and under the complete control
of the tug.” However, in United States Fire Ins., the barge was a bareboat charter i.e., the tug
chartered (and became the owner pro hac vice) the barge. This is unlike the present case because
ABC Marine did not charter the Barge Crane; it merely contracted with Boh Bros. to provide its
towage services to transport the Barge Crane.
While the Court both recognizes that there is no Fifth Circuit law directly on point to the
issue and appreciates Excess Insurers’ position that courts have found tugs to be in control of
barges in particular instances, the “purpose of liability insurance is to afford the insured
protection from damage claims.” Reynolds v. Select Properties, Ltd., 634 So. 2d 1180, 1183 (La.
1994). Therefore, “a provision which seeks to narrow the insurer's obligation is strictly

construed against the insurer, and, if the language of the exclusion is subject to two or more
reasonable interpretations, the interpretation which favors coverage must be applied.” Id. Given
these principles of construction and the reasonableness of ABC Marine’s position that “care,
custody, and control” is synonymous with bailment and not towage, the Court finds that the
exclusion does not apply to ABC Marine’s towage of the Crane Barge.
b. The Insurance Contract Is Ambiguous and Must be Construed in Favor
of the Insured
Although the Court need not analyze the issue further, there is ample additional evidence
that coverage of property damage to the Crane Barge is afforded by the Excess Policy. Namely,
reading the policy to exclude such coverage would lead to absurd consequences in violation of
Louisiana law. La. Civ.Code Ann. art. 2046 (1987) (“When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be made in search of
the parties' intent.”). Two months after denying coverage to ABC Marine, Trident Marine
Managers, the managing agent performing underwriting activities on behalf of the Excess
Underwriters, circulated Endorsement No. 1 to numerous parties, including ABC Marine.
Endorsement No. 1 effectively eliminated the “care, custody or control” exclusion. See (R. Doc.
53-3 at 3). Shortly thereafter, Trident Marine sent ABC Marine an email stating:
“please let this email serve as a RESCINDING notice on endorsement
#1… this was erroneously issued to the policy after specific instructions
from our underwriter to NOT issue it to ABC Marine. There were
hundreds of these endorsements issued and while we set this file to the
side to not be issued, somehow it did and got sent out.”
(R. Doc. 53-3 at 1). The notion that Excess Underwriters gratuitously and retroactively amended
every marine towage policy to extend tower’s liability coverage where none existed before is not
credible. Out of approximately 200 policyholders, ABC Marine was the only one denied the
benefit of the endorsement. Moreover, the fact that Excess Underwriters felt compelled to issue

the endorsement in order to clarify coverage issues related to the “care, custody or control”
exclusion for towing operations is strong evidence of the ambiguity inherent in the exclusion.
Considering the foregoing, the contract language is ambiguous at best. Thus, the
ambiguity must be resolved in favor of the insured “by ascertaining how a reasonable insurance
policy purchaser would construe the clause at the time the insurance contract was entered.” See
La. Ins. Guar. Ass'n, 630 So.2d at 764 (quoting Breland v. Schilling, 550 So.2d 609, 610–11
(La.1989)). “The court should construe the policy ‘to fulfill the reasonable expectations of the
parties in light of the customs and usages of the industry.’ ” Id. (quoting Trinity Indus., Inc. v.
Ins. Co. of N. Am., 916 F.2d 267, 269 (5th Cir.1990)). ABC Marine did not reasonably expect
that its purchase of $9 million in excess coverage provided tower’s liability so long as there was
no physical damage to the tow. In fact, the P& I Policy and the Hull Policy contain similar
“care, custody or control” exclusions and nonetheless recognized that damage to a non-owned
vessel, while being towed by ABC Marine (a towing company), is covered under the policies.
Further, as evidenced by the Excess Underwriters prompt issuance of Endorsement No. 1, it is
the reasonable expectation within the marine towage industry that when a tower pays its
premium in full for liability coverage, physical damage to the tow is covered. A contrary
interpretation would substantially limit coverage for a tower’s business activities, a result
disfavored by the Court.
IV.

CONCLUSION
Accordingly, IT IS ORDERED that the Excesss Underwriters’ Motions for Summary

Judgment and Partial Summary Judgment (R. Docs. 67, 155, 156) are DENIED and ABC
Marine’s Cross-Motion for Partial Summary Judgment (R. Doc. 141) is GRANTED.
New Orleans, Louisiana this 17th day of August, 2015.

United States District Judge