Lamar Advertising Company et al v. Liberty Mutual Fire Insurance Company

Filing 21

RULING denying 10 Motion for Partial Summary Judgment; granting 12 Motion for Summary Judgment. Signed by Judge James J. Brady on 7/2011. (CMM) Modified on 7/6/2011 to mark as a written opinion. (CMM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
LAMAR ADVERTISING COMPANY, ET AL.
CIVIL ACTION
VERSUS
NO. 10-620-JJB
LIBERTY MUTUAL FIRE INSURANCE COMPANY
RULING
This matter is before the Court on cross motions for summary judgment.
Plaintiff Lamar Advertising Company, et al. (“Lamar”) filed a motion (doc. 10) for
partial summary judgment, which defendant Liberty Mutual Insurance Company
has opposed (doc. 17). Liberty Mutual also filed a cross motion for summary
judgment (doc. 12), which plaintiff has opposed (doc. 16). Oral argument is not
necessary.
The insurance policy at issue was in place as of January 2005 and at the
time that plaintiff incurred damage to its billboards, highway signs, and outdoor
advertising displays (“billboards”) as a result of Hurricanes Ike and Gustav. Both
parties agree the hurricanes were a covered peril under the policy. Plaintiff’s suit
argues its billboards were covered under the policy as “Unscheduled Locations.”
Defendant has denied plaintiff’s claims, asserting that plaintiff’s billboard losses
were not covered as “Unscheduled Locations” because plaintiff failed to report
the billboards as required for coverage. In its motion for partial summary
judgment, plaintiff requests that this court recognize the Description of
Operations it provided in its initial application as “reporting” sufficient to satisfy
the policy requirements and extend Unscheduled Location coverage to the
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billboards. In its cross motion for summary judgment, defendant requests that
the court find the Description of Operations does not satisfy the reporting
requirement for Unscheduled Locations. Instead, defendant contends the
billboards are covered, if at all, only as Miscellaneous Non-scheduled Locations.
Thus, both parties agree the primary issue before the court is whether or not
Lamar’s inclusion of the billboards in its initial application and “Description of
Operations” satisfies the reporting requirement in the policy.
Summary judgment is appropriate when the pleadings, answers to
interrogatories, admissions, depositions, and affidavits on file indicate there is no
genuine issue of material fact and that the moving party is entitled to judgment as
a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). Interpretation of an insurance contract presents a question of law and is
therefore an issue appropriate for determination by summary judgment. Martco
Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 878 (5th Cir. 2009).
In a diversity case involving “the interpretation of insurance policies issued
in Louisiana for property located in Louisiana,” Louisiana substantive law is
controlling. In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007).
Under Louisiana law 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 Louisiana Civil Code. Cadwallader v. Allstate Ins. Co., 848 So. 2d 577, 580
(La. 2003). The first step required by Louisiana law is to determine whether the
relevant language is ambiguous on its face. Consol. Co. v. Lexington Ins. Co.,
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616 F.3d 422, 429 (5th Cir. 2010). Where the policy language at issue is “clear
and explicit,” words must be given their “generally prevailing meaning,” no further
interpretation may be made in search of the parties’ intent, and the insurance
contract must be enforced as written. LA. CIV. CODE art. 2046; Cadwallader, 848
So. 2d at 580. If the policy language is not clear, the court may consider extrinsic
evidence to determine the intent of the parties, typically construing language in
accordance with general use. In re Katrina Canal Breaches Litig., 495 F.3d at
206; LA. CIV. CODE art. 2045. Any ambiguity remaining after the application of
rules of construction should be interpreted in favor of the insured. LA. CIV. CODE
art. 2056.
A term in an insurance policy is not ambiguous simply because it is not
defined. Sumner v. Mathes, 52 So. 3d 931 (La. App. 4 Cir. 2010). Terms of an
insurance policy are ambiguous when they are susceptible to two or more
reasonable interpretations. Bonin v. Westport Ins. Corp., 930 So. 2d 906, 911
(La. 2006); Cadwallader, 848 So. 2d at 580. Furthermore, a court is not permitted
to construe clear and explicit terms of a policy as ambiguous, Muller v. A-1
Mobile Shredding, L.L.C., 33 So. 3d 285, 288 (La. App. 5 Cir. 2010), and should
not strain to find ambiguity in an insurance policy where none exists. Burns v.
Couvillion, 53 So. 3d 540, 546 (La. App. 3 Cir. 2010).
The definition of Unscheduled Locations under the policy is as follows:
Unscheduled locations means:
1. Real property reported to us, but not shown in the Schedule,
which you owned or occupied before the effective date; and
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2. Locations reported to us, but not shown on the Schedule, at
which you had personal property before the effective date
other than new locations.
Plaintiff argues that, since no reporting method was specified, it had full
discretion as to the nature and method of reporting, and that the Description of
Operations1 in the initial application “provided all the information . . . required.”
Conversely, defendant argues that the policy is clear, the plain meaning of the
term “report” applies, and plaintiff’s Description of Operations fails to satisfy the
reporting requirements for coverage of the billboards as Unscheduled Locations.
Rather, the defendant contends the billboards are covered under the
Miscellaneous Non-Scheduled Location Extension.
The plaintiff counters that, in addition to its contention that the Description
of Operations satisfies the plain meaning of the word “report,” case law supports
a finding that plaintiff’s actions satisfied the reporting requirement. Plaintiff
contends that the court in Stan-Blast Abrasives Co. v. Lexington Ins. Co., 532
So. 2d 861 (La. App. 4 Cir. 1988) held that, where an insurer failed to specify a
reporting method, the reporting method was left to the discretion of the insured
and the insured’s verbal report satisfied the requirement. Defendant rightly
responds that plaintiff’s use of Stan-blast is errant.2 Instead, defendant argues
that, while the court in Stan-blast did find that an insured’s verbal report was
sufficient where the insurer did not specify a reporting method, the applicable rule
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The Description of Operations in the initial application described Lamar as “one of the largest and most
experienced owners and operators of outdoor advertising structures in the United States” and stated,
“[c]urrently, Lamar operates more than 149,000 billboards and more than 97,500 logo sign displays
across the country.”
2
Lamar does not appear to be arguing that it ever verbally reported the billboards to Liberty Mutual.

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from Stan-blast is that some form of reporting was required even where the
method was unspecified.
The court agrees with the defendant and finds that the term “report,” as
used in this insurance policy, is not ambiguous, based upon the plain meaning of
the term and as supported by case law. It is not necessary to isolate any single
definition of “report” since multiple reasonable definitions establish, at minimum,
that “report” necessitates that the insured “relate” or “give an account of” the
subject being reported.3 Plaintiff’s Description of Operations does not satisfy the
plain meaning of report for purposes of the insurance coverage at issue. Case
law also supports this finding. Even accepting plaintiff’s contention that the policy
at issue granted the insured discretion in the nature, extent, manner, or method
of reporting, the holding in Stan-blast shows that some form of reporting was still
required. Here, the plaintiff failed to meet any reasonable definition of report.
Thus, pursuant to the parties’ agreement, the billboards were not reported to the
defendant and therefore not covered as Unscheduled Locations under the policy
at issue. We need not address arguments regarding extrinsic evidence because,
in the absence of ambiguity, there is no need to consider extrinsic evidence. See
LA. CIV. CODE art. 2046; Doerr v. Mobil Oil Corp., 774 So. 2d 119, 124 (La.
2000).4
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Dictionary definitions may be used to determine plain meaning. Reilly-Benton Co. v. Liberty Mutual Ins.
Co., 278 So. 2d 24, 28 (La. 1973). The Merriam-Webster definition of report is “to give an account of;
relate . . . to describe as being in a specified state.” MERRIAM-W EBSTER, http://merriam-webster.com (last
visited June 13, 2011). The Oxford English Dictionary definition is “to give an account of; to relate,
recount, tell; to describe.” OXFORD ENGLISH DICTIONARY, http://www.oed.com (last visited June 13, 2011).
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Were the policy somehow deemed ambiguous, a consideration of the extrinsic evidence also weighs in
favor of defendant’s position. Plaintiff argues that information on the billboards was “continuously

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Given that plaintiff’s billboards were not covered as Unscheduled
Locations in the policy at issue, the Court also agrees with the defendant that
plaintiff’s claim of bad faith is meritless. A successful claim of bad faith generally
requires that the insured establish that the denied claim was in fact covered
under the disputed policy. Carter v. Davis, 673 So. 2d 362, 364 (La. App. 1 Cir.
1996). Here, the plaintiff has not met that burden. Additionally, an insurer who
has a “reasonable basis for denying coverage or reasonable doubts as to
whether coverage applies” is not acting in bad faith. Rainbow USA, Inc. v.
Nutmeg Ins. Co., 612 F. Supp. 2d 716, 732 (E.D. La. 2009). Here, the insurer
surely had a “reasonable basis” for denying the disputed claim since the disputed
damage was not reported and therefore not covered under the policy.
Accordingly, defendant’s motion (doc. 12) for summary judgment is hereby
GRANTED, and plaintiff’s motion (doc. 10) for partial summary judgment is
DENIED.
Signed in Baton Rouge, Louisiana, on July 5, 2011.







JUDGE JAMES J. BRADY
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

available” on their company web site via links to the Accounts Overview page and links to their filing with
the Security & Exchange Commission (SEC). To the extent this information is offered as evidence of
reporting, it may easily be dismissed since the information was not conveyed to the defendant as required
under the plain meaning of the word “report.” This information may also be dismissed to the extent it is
offered to demonstrate the intent of the parties; notably, the plaintiff states in SEC filings during the years
of the policy at issue that plaintiff made the business decision not to insure their product.

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