Sheppard v. Liberty Mutual Insurance Company et al

Filing 406

ORDER AND REASONS - Liberty Mutual's Motion for Summary Judgment is GRANTED. This Order applies only to claims against Liberty Mutual in its individual capacity, and has no bearing on Sheppard's claims against Liberty Mutual in its limited capacity as the alleged insurer of purported Mosaic executives.. Signed by Judge Sarah S. Vance on 1/30/17. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JESSE FRANK SHEPPARD

CIVIL ACTION

VERSUS

NO. 16-2401

LIBERTY MUTUAL INSURANCE
COMPANY, ET AL.

SECTION “R” (3)

ORDER AND REASONS
Liberty Mutual Insurance Company, in its individual capacity, moves
for summary judgment on the grounds that plaintiff Jesse Frank Sheppard
has failed to show that Liberty Mutual had any duty towards Sheppard. For
the following reasons, Liberty Mutual’s motion is granted.

I.

BACKGROUND
This suit was originally filed in the Civil District Court for the Parish of

Orleans.1 Defendant Mosaic Global Holdings Inc. removed the action to this
Court on March 22, 2016. 2 In his complaint, Sheppard alleges that he was
exposed to asbestos “[o]n a daily basis” as an employee of Mosaic’s

1
2

R. Doc. 1 at 1.
Id.

predecessor company, Freeport Sulphur Company.3 This exposure allegedly
caused Sheppard to develop asbestos-related cancer, lung cancer, and/or
mesothelioma.4 Although Sheppard stopped working for Freeport in the
early- to mid-1990s, 5 Sheppard’s asbestos-related ailments were first
diagnosed in October 2015. 6
In addition to Freeport/Mosaic, Sheppard sues several defendants
involved in the manufacture, distribution, and sale of asbestos-containing
products that Sheppard allegedly encountered in the course of his work.7
Sheppard also brings claims against insurance companies that allegedly
provided coverage to defendants for asbestos-related claims and withheld
information from Sheppard about the danger of asbestos. 8
Sheppard brings claims for “negligence, intentional tort, fraud, and
strict liability,” and alleges that all defendants are “jointly, severally, and in

R. Doc. 1-1 at 5.
Id. at 6.
5
Sheppard’s complaint is inconsistent on this point. Sheppard alleges
variously that his tenure at Freeport, and exposure to asbestos, ran from
“approximately 1967 through 1992,” from “approximately 1967 through
1994,” and “from 1967 through 1976.” R. Doc. 1-1 at 5, 6.
6
R. Doc. 1-1 at 6.
7
Id. at 6, 7.
8
Id. at 3, 4, 8.
2
3

4

solidio liable.”9 He seeks damages for, among other things, physical and
mental pain, loss of life, loss of income, and medical expenses. 10
During Sheppard’s tenure at Mosaic, Liberty Mutual Insurance
Company issued several worker’s compensation/employer’s liability and
comprehensive general liability policies to Mosaic. 11

In his complaint,

Sheppard alleges that Liberty Mutual “knew or should have known of the
hazardous health effects of asbestos, but failed to inform or intentionally
concealed that information from Mr. Sheppard and his co-employees.”12
Liberty Mutual now moves for summary judgment on these claims on the
grounds that Sheppard has failed to meet his burden to show that Liberty
Mutual had any duty towards Sheppard. 13

II.

LEGAL 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); see also Celotex Corp. v.

Id. at 29.
Id.
11
R. Doc. 259-2 at 3-7.
12
R. Doc. 1-1 at 5.
13
Sheppard also brings a direct action against Liberty Mutual as the
insurance carrier for individual safety officers at Mosaic who are deceased or
cannot be located. This Order does not concern those allegations.
3
9

10

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 v. Precision
Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at
1075. “No genuine dispute of fact exists if the record taken as a whole could
not lead a rational trier of fact to find for the non-moving party.” EEOC v.
Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).
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
4

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 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
Under Louisiana’s general negligence statute, Louisiana Civil Code
article 2315, courts conduct a “duty-risk analysis” to determine whether to
impose liability. See Audler v. CBC Innovis Inc., 519 F.3d 239, 249 (5th Cir.
5

2008) (quoting Lemann v. Essen Lane Daiquiries, Inc., 923 So. 2d 627, 63233 (La. 2006)).

A plaintiff must prove each of five elements: (1) the

defendant had a duty to conform his conduct to a specific standard of care
(the duty element); (2) the defendant’s conduct failed to conform to the
appropriate standard of care (the breach element); (3) the defendant’s
substandard conduct was a cause-in-fact of the plaintiff's injuries (the causein-fact element); (4) the defendant’s substandard conduct was a legal cause
of the plaintiff's injuries (the scope-of-duty element); and (5) actual damages
(the damages element). See S.J. v. Lafayette Par. Sch. Bd., 41 So. 3d 1119,
1125 (La. 2010); see also Knight v. Kellogg Brown & Root Inc., 333 Fed. Appx
1, 6 (5th Cir. 2009) (applying Louisiana law). A plaintiff’s failure to prove
any one of these elements results in a determination of no liability. Knight,
333 Fed. Appx at 6.
In Louisiana, “[t]he threshold issue in any negligence action is whether
the defendant owed the plaintiff a duty, and whether a duty is owed is a
question of law.” Bufkin v. Felipe’s Louisiana, LLC, 171 So. 3d 851, 855 (La.
2014). Under the “Good Samaritan” Doctrine, “parties who voluntarily
assume certain duties for workplace safety must perform those duties in a
reasonable and prudent manner.” Bujol v. Entergy Servs., Inc., 922 So. 2d
1113, 1129 (La. 2004). Sheppard argues that Liberty Mutual voluntarily
6

undertook to inspect Mosaic’s facility, and otherwise involved itself in
Mosaic’s workplace safety regime, and thereby assumed a duty for safety at
Mosaic’s facilities. Neither Sheppard nor Mosaic, which filed an opposition
to Liberty Mutual’s motion, identify a single case holding that, under
Louisiana law, an insurer may assume a duty for the safety of its insured’s
employees by inspecting or otherwise involving itself in workplace safety.
Liberty Mutual issued several successive worker’s compensation
insurance policies to Mosaic between 1966 and 1988.14 Liberty Mutual
asserts, and neither Sheppard nor Mosaic disputes, that the actual insurance
policies entered into between Mosaic and Liberty Mutual have been lost. 15
Therefore, to argue that it undertook no duty relating to Sheppard’s safety,
Liberty Mutual points to form worker’s compensation “policy jackets”
corresponding to the years that Liberty Mutual insured Mosaic. These policy
jackets contain the following “Inspection and Audit” provisions:
(1)

GPO 2080 R1, dated October 1, 1966:

Inspection and Audit. The company and any rating authority
having jurisdiction by law shall each be permitted but not
obligated to inspect at any reasonable time the workplaces,
operations, machinery and equipment covered by this policy.
Neither the right to make inspections nor the making thereof nor
any report thereon shall constitute an undertaking on behalf of
or for the benefit of the insured or others, to determine or
14
15

R. Doc. 160-1 at 6.
Id.
7

warrant that such workplaces, operations, machinery or
equipment are safe. 16
(2)

GPO 2080 Ed. 6, dated March, 1975:

Inspection and Audit. The company and any rating authority
having jurisdiction by law shall each be permitted but not
obligated to inspect at any reasonable time the workplaces,
operations, machinery and equipment covered by this policy.
Neither the right to make inspections nor the making thereof nor
any report thereon shall constitute an undertaking on behalf of
or for the benefit of the insured or others, to determine or
warrant that such workplaces, operations, machinery or
equipment are safe or healthful, or are in compliance with any
law, rule or regulation. 17
(3)

GPO 4029 15628, dated April 1, 1984:

Inspection. We have the right, but are not obliged to inspect your
workplaces at any time. Our inspections are not safety
inspections. They relate only to the insurability of the workplaces
and the premiums to be charged. We may give you reports on
conditions we find. We may also recommend changes. While
they may help reduce losses, we do not undertake to perform the
duty of any person to provide for the health or safety of your
employees or the public. We do not warrant that your workplaces
are safe or healthful or that they comply with laws, regulations,
codes, or standards. Insurance rate service organizations have
the same rights we do under this provision. 18
An affidavit prepared by Steven M. Ginsburg, a Liberty Mutual Employee,
asserts that each policy issued by Liberty Mutual to Mosaic “would have

16
17
18

Id. at 10.
Id. at 14
Id. at 21.
8

included form [worker’s compensation] policy jackets,” all of which would
have included one of the three inspection provisions. 19
Louisiana courts have repeatedly held that language similar to these
three inspection provisions precludes a finding of a duty on the part of an
insurer to protect the safety of the insured’s employees. In Kennard v.
Liberty Mut. Ins. Co., 277 So. 2d 170, 171 (La. App. 1 Cir. 1972), Louisiana’s
First Circuit Court of Appeal considered a suit brought by an injured
employee against his employer’s worker’s compensation insurer.

The

insurer’s policy stated that the insurer was “permitted but not obligated” to
inspect the premises covered by the policy, and that such inspections did not
“constitute an undertaking on behalf of or for the benefit of the insured or
others, to determine or warrant that such workplaces, operations, machinery
or equipment are safe.” Id. at 171. Based on this provision, the court found
it “clear that any inspections made by the insurer are made only in
connection with the contract between the insurer and its insured.” Id.
Accordingly, the court upheld the trial court’s grant of summary judgment
based on a finding of no duty on the part of the insurer. Id; see also Heath
v. B.J. Hughes, Inc., 431 So. 2d 68, 69 (La. Ct. App. 1983) (finding no duty
in case with “[a]lmost the exact factual setting and policy language [that]

19

Id. at 7.
9

confronted this court in Kennard” and stating that the “policy language
makes it clear that the inspections were made only in connection with the
contract of insurance, and not for the benefit of plaintiff.”).
In Taylor v. Jim Walter Corp., 731 F.2d 266 (5th Cir. 1984), the Fifth
Circuit considered a suit by plaintiffs who were injured in a plant explosion
and fire. The plaintiffs sued the plant owner’s insurer, which had periodically
inspected the plant, and alleged that the insurer’s negligent inspection was
among the causes of the explosion. Id. at 267. The insurance policy in
question permitted, but did not require, inspections and disclaimed any
resulting undertaking on behalf of the insured or others. Id. Relying on
Kennard and Heath, the Fifth Circuit stated that Louisiana law on this point
is “clear”: “the insurance carrier owed no duty to the employees of the
insured even though it conducted safety inspections of the work place.” Id.
(internal quotations and modifications omitted). Later Louisiana appellate
cases have reaffirmed this stance. See Kent v. Jomac Prod., Inc., 542 So. 2d
99 (La. App. 1 Cir. 1989); Tomasich v. U.S. Fid. & Guar. Co., 470 So. 2d 191
(La. App. 4 Cir. 1985).
The policy language considered in these cases is materially
indistinguishable from the provisions at issue here. All the policies grant the
insurer the right, but not the obligation, to inspect the insured’s premises
10

and disavow any undertaking on behalf of or for the benefit of the insured or
others concerning safety. Accordingly, the Court is bound by the clear
Louisiana law that such provisions negate any duty that might otherwise
arise from an insurer’s inspection of its insured’s premises. Liberty Mutual’s
motion must therefore be granted.
Sheppard, with an assist from Mosaic, attempts to resist this
conclusion in three ways.

First, Sheppard argues that because Liberty

Mutual cannot produce the actual policy jackets in question, an issue of fact
exists as to whether the policies included the provisions described above.
Second, Sheppard maintains that Liberty Mutual did more than merely
inspect Mosaic’s facility, and that Liberty Mutual’s actions suffice to give rise
to liability. Third, Sheppard argues that Liberty Mutual may be liable under
it comprehensive general liability policy in addition to its worker’s
compensation policies. These arguments are unavailing.
As an initial matter, the Court reiterates that Sheppard, as the plaintiff,
has the burden to show that Liberty Mutual had the duty alleged. Merely
poking holes in Liberty Mutual’s arguments against a duty will not suffice.
As to Sheppard’s first argument, he merely points out that the specific policy
jackets have been lost. But he points to no evidence tending to contradict
Ginsburg’s account that Liberty Mutual included form policy jackets with all
11

of its policies. Sheppard therefore cannot meet his burden to show that these
provisions do not serve to negate Liberty Mutual’s purported duty.
Sheppard’s second argument is unpersuasive because he fails to
meaningfully distinguish Liberty Mutual’s involvement in Mosaic’s safety
operation from the relationships at issue in Heath, Kennard, and Taylor.
Sheppard relies heavily on a single statement from Gerald Becker, Mosaic’s
former safety director, that Liberty Mutual was “very involved” and “a big
part” of Mosaic’s safety systems. 20 Despite this characterization, Becker
describes Liberty Mutual’s role as simply performing periodic inspections
and making safety-related suggestions to Mosaic. 21 Similarly, letters 22 and
memos 23 from Liberty Mutual describing the results of inspections and
providing guidance on safety procedures are communications that naturally
arise out of an inspection and do not serve to distinguish this case from the
many cases finding no duty on the part of the inspecting insurer.
Finally, Mosaic, on behalf of Sheppard, argues that Liberty Mutual’s
CGL policies are “not the subject of summary judgment” and argues that this
fact precludes summary judgment.

20
21
22
23

R. Doc. 253-4 at 25.
Id.
R. Doc. 253-5.
R. Doc. 253-7.
12

This argument, once again,

misapprehends Sheppard’s burden in this case. Neither Sheppard nor
Mosaic present any authority or evidence to suggest that these CGL polices
give rise to a duty. Even if Sheppard did make such an argument, Liberty
Mutual provides evidence that these policies included similar inspection
provisions to those found in the worker’s compensation policies. 24 This
argument is therefore unavailing.

IV.

CONCLUSION

For the foregoing reasons, Liberty Mutual’s Motion for Summary
Judgment is GRANTED. This Order applies only to claims against Liberty
Mutual in its individual capacity, and has no bearing on Sheppard’s claims
against Liberty Mutual in its limited capacity as the alleged insurer of
purported Mosaic executives.

New Orleans, Louisiana, this _____ day of January, 2017.
30th
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

24

R. Doc. 385-1.
13