TruSouth Oil L L C v. Burlington Insurance Co et al

Filing 135

MEMORANDUM RULING: denying 68 Motion for Summary Judgment; granting 86 Motion to Strike. Signed by Magistrate Judge Mark L Hornsby on 10/2/12. (crt,Delgado, S)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

TRUSOUTH OIL, LLC

CIVIL ACTION NO. 11-cv-0493
(consolidated w/11-cv-1256)

VERSUS
BURLINGTON INSURANCE COMPANY,
ET AL

MAGISTRATE JUDGE HORNSBY

MEMORANDUM RULING
TruSouth Oil, LLC (“TruSouth”) bought a petroleum product from PetroTech Energy,
LLC (“PetroTech”) and used it to make hydraulic fluid. TruSouth then sold its hydraulic fluid
to its customers, many of whom are in the logging business. PetroTech changed the formula
for its product but did not tell TruSouth that the new formula contained bio-oil, which some
experts say is not suitable for making hydraulic fluid. Customers who used TruSouth’s
hydraulic fluid began reporting problems with their equipment. TruSouth believes the
problems were caused by the bio-oil that came from PetroTech.
American International Specialty Lines Insurance Company provided insurance to
TruSouth. As TruSouth’s customers asserted claims of damaged or destroyed equipment
caused by the hydraulic fluid, the insurer, now known as Chartis Specialty Insurance Co.
(“Chartis”), paid them millions of dollars on behalf of TruSouth.
Two lawsuits were filed. TruSouth filed suit against PetroTech and PetroTech’s
commercial liability insurer, Burlington Insurance Company (“Burlington”), and asserted a
claim in redhibition and for unfair trade practices. The second suit was filed by Chartis and

named PetroTech as the only defendant. Chartis demanded that PetroTech reimburse it for
the amounts Chartis paid to TruSouth’s customers. The two suits, filed in state court, were
removed to this court and consolidated.
Before the court is a Motion for Summary Judgment (Doc. 68) filed by Chartis that
seeks a declaration from the court regarding the amount of coverage available under
Burlington’s policies. There are two policies at issue. Each policy has limits of $1,000,000
per occurrence and $2,000,000 aggregate. Chartis seeks a declaration from the court that
there were multiple “occurrences” of property damage that happened during the term of each
policy, so that the maximum $4,000,000 amount of coverage under the two policies is
available.
Burlington opposes the motion on the legal and factual merits. It also argues in its
brief and in a Motion to Strike (Doc. 86) that the court should not address Chartis’ motion
for summary judgment because Chartis has not asserted a claim against Burlington. Chartis
sued only a single defendant, PetroTech, in its lawsuit. TruSouth sued both PetroTech and
Burlington in its suit. And TruSouth did not join in Chartis’s motion for summary judgment
on the coverage issues.
Chartis responds that the consolidation of the cases, especially given the subrogation
nature of its claims, puts it in a position that it is entitled to seek summary judgment against
Burlington even though it has never sued Burlington. The court has reviewed the parties’
arguments regarding the effect of consolidation. Even if the cases were deemed a single case
for purposes of the final judgment rule and similar procedures, the fact remains that Chartis
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did not assert a claim, within that suit, against PetroTech. Courts routinely handle cases
involving numerous parties with cross-claims, counterclaims, and third-party demands, but
it does not entertain motions in those cases to define the rights between parties that are not
on opposite sides of at least one actual such claim.
It appears that Chartis could have sued Burlington, but it did not. TruSouth, who did
sue Burlington, presumably could have filed a similar motion regarding coverage, but it did
not. The deadlines for the addition of claims or parties and the filing of dispositive motions
have passed. To entertain Chartis’s motion would make an end run around the scheduling
order and pretend that Chartis did sue Burlington. The court recognizes that resolution of
this theoretical issue, to the extent it could be resolved on the summary judgment record,
might assist in resolving the case. But the lack of an actual claim between the two insurers,
coupled with the fact that Chartis will have to establish the liability of PetroTech before the
issue of Burlington’s available coverage becomes concrete, counsel against addressing the
merits of Chartis’s motion. For these reasons, Burlington’s Motion to Strike (Doc. 86) is
granted, and Chartis’s Motion for Summary Judgment (Doc. 68) is denied.
THUS DONE AND SIGNED in Shreveport, Louisiana, this 2nd day of October,
2012.

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