Fruge et al v. Ulterra Drilling Technologies L P et al

Filing 127

MEMORANDUM RULING. Signed by Judge Tucker L Melancon on 7/13/10. (crt,Jordan, P)

F ruge et al v. Ulterra Drilling Technologies L P et al

Do c. 127

U N IT E D STATES DISTRICT COURT W E S T E R N DISTRICT OF LOUISIANA L A F A Y E T T E DIVISION M ic h a el Fruge, et al v e rs u s U lte rra Drilling Technologies, L.P., et al C iv il Action No. 07-789 J u d g e Tucker L. Melançon M a g is tra te Judge Hanna

M E M O R A N D U M RULING B e f o re the Court are defendant, Chubb Custom Insurance Company's ("Chubb") M o tio n for Summary Judgment [Rec. Doc. 65], defendant, Amerisure Mutual Insurance C o m p a n y 's ("Amerisure") Memorandum in Opposition [Rec. Doc. 76], and Chubb's Reply [R e c . Doc. 98]; Amerisure's Cross-Motion for Summary Judgment and/or Declaratory Ju d g m en t [Rec. Doc. 78], Chubb's Memorandum in Opposition [Rec. Doc. 88], Amerisure's R e p ly [Rec. Doc. 98], plaintiffs, Michael J. Fruge ("Fruge") and Liliana Fruge's (co llec tiv el y "plaintiffs"), Memorandum in Opposition to Amerisure's Motion for Summary J u d g m e n t [Rec. Doc. 89], and Amerisure's Reply [Rec. Doc. 95].1 For the reasons that fo llo w , Chubb's Motion for Summary Judgment [Rec. Doc. 65] will be granted and A m e ris u re 's Cross-Motion for Summary Judgment and/or Declaratory Judgment [Rec. Doc. 7 8 ] will be denied. For the foregoing reasons, Amerisure's Motion to Dismiss [Rec. Doc. 7 0 ] and Chubb's Motion to Strike [Rec. Doc. 71] will be denied as moot.

Also before the Court are Amerisure's M o tio n to Dismiss, R. 70, Chubb's Memorandum in Opposition a n d M o t io n to Strike R. 72, 71, Amerisure's Reply and M e m o r a n d u m in Opposition to Chubb's Motion to Strike R. 8 2 , 74, and Chubb's Supplemental Memorandum R. 101. Amerisure requested in its Opposition to Chubb's Motion t o Strike that its Motion to Dismiss be combined with its Motion for Summary Judgment. R. 78. The Court will th e r e f o r e consider Amerisure's motions together.

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Dockets.Justia.com

I . BACKGROUND T h is case arises out of a claim for personal injuries allegedly sustained by Fruge while e m p lo y e d by Nabors Drilling USA, Inc. ("Nabors") as a driller, assigned to work on a land b a se d drilling rig operated by Nabors and Ulterra MWD, L.P. ("Ulterra MWD"). Fruge c laim s that on August 5, 2006, he suffered "career-ending injuries" when an MWD nipple a n d sensor exploded from the stand pipe manifold and violently struck him. R. 89, p. 2. P la in tiffs filed their Complaint on May 2, 2007, seeking damages for injuries resulting fr o m the accident. R. 1, ¶VIII. As defendants, plaintiffs named Ulterra Drilling

T e c h n o lo g ie s , L.P. ("Ulterra Drilling"), and Ulterra MWD alleging that each is liable for the d a m a g e s incurred as a result of the accident.2 R. 1, ¶IX. Plaintiffs filed a Second

S u p p le m e n ta l and Amending Complaint3 on November 21, 2007, adding Chubb, Nautilus In s u ra n c e Company 4 and Amerisure. O n November 5, 2005, Chubb issued two insurance policies to Ulterra MWD: (1) # 7 9 5 4 -9 6 -8 2 , providing commercial general liability coverage up to $1,000,000 per o cc u rren ce effective from November 2005 to November 2006 (the "Chubb CGL policy"); a n d (2) # 7954-96-83, providing umbrella coverage to Ulterra MWD up to $5,000,000 per
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On June 8, 2007, the Court issued a Partial Judgment of Dismissal, R. 9, dismissing Ulterra Drilling p u r s u a n t to plaintiffs' 41(a) Notice of Dismissal, R. 8. Plaintiffs filed a First Supplemental and Amending Complaint on M a y 10, 2007, naming Maverick D ir e c tio n a l Services, Ltd. ("Maverick") as an additional defendant; however, plaintiffs' claims against Maverick w e r e dismissed with prejudice by the Court's Judgment of October 28, 2009. R. 96. Nautilus Insurance Company provided liability coverage to Maverick during the period in which Fruge w a s allegedly injured. The Judgment of Dismissal terminating Maverick also dismissed Nautilus Insurance C o m p a n y . R. 96.
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o c c u rre n c e with a coverage period of November 2005 to November 2006 (the "Chubb u m b rella policy")(collectively the "Chubb policies").5 R. 66, Exh. E, F. O n December 30, 2005, Ulterra Drilling obtained two policies of insurance: (1) a p o licy from Amerisure (#CPP 2034223) which included general commercial liability c o v e ra g e to Ulterra Drilling from December 31, 2005 to December 31, 2006, with policy lim its of $1,000,000 per occurrence (the "Amerisure CGL policy"); and (2) a policy from A m e risu re (# CU2026199) which provided umbrella coverage to Ulterra Drilling up to $ 1 0 ,0 0 0 ,0 0 0 per occurrence from December 31, 2005 to December 31, 2006 (the "Amerisure u m b re lla policy")(collectively, the "Amerisure policies"). See generally R. 66, Exh. A, B; R . 76-5. Each of the Amerisure policies included an endorsement providing coverage to U lte rr a MWD as an insured. Id. In Endorsement A, "Named Insured Endorsement," the d e c la ra tio n s page was amended to include Ulterra MWD as a named insured for policy # C P P 2 0 3 4 2 3 , the Amerisure CGL policy. R. 66, Exh. A; R. 76-5. Similarly, the declaration p a g e for policy # CU2026199, the Amerisure umbrella policy, was amended by a "Named In s u re d Endorsement" to include Ulterra MWD as a named insured. R. 66, Exh. B. T h e record reflects that Chubb and Amerisure originally agreed to share in the defense o f Ulterra MWD as the alleged insurers and entered into a cost-sharing agreement on or a b o u t May 23, 2007, specifying that they would share the costs of defense of Ulterra MWD

Ulterra MWD applied for the Chubb policies through its insurance broker, William Rigg Company, and i n s u r a n c e brokerage and risk management firm. R. 78, Exh. 2 Affidavit of Cameron Jones.

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a s co-insurers. R. 88, Exh. 1, ¶ 5 Affidavit of Richard Rogers.6 Subsequently, by letter dated O c to b e r 19, 2007, Amerisure informed Chubb's Senior Litigation Examiner that it was w ith d ra w in g its agreement to defend Ulterra MWD in the underlying lawsuit, as the policies lis tin g Ulterra MWD as a named insured did not provide commercial general liability or u m b r e l l a coverage to Ulterra MWD. R. 66, Exh. D. Thereafter, on November 21, 2007, C h u b b filed an Answer to the Second Supplemental and Amending Complaint and a crossc la im against Amerisure. R. 31. In its cross-claim, Chubb seeks a declaration that Amerisure o w e s coverage and defense to Ulterra MWD under the relevant policies, recognition of A m e ris u re 's obligation to defend and indemnify Ulterra MWD, and reimbursement of m o n ie s expended by Chubb in defense of the insured. Id. C h u b b and Amerisure have filed Cross-Motions for Summary Judgment arguing that th e y are not the primary insurers for this accident. R. 65, 78. Chubb seeks a summary ju d g m e n t declaring that Amerisure must provide a defense for Ulterra MWD in the u n d e rly in g litigation, contending that Amerisure has a duty to defend because Ulterra MWD is named as an insured on each of the Amerisure policies. R. 65. Further, Chubb asserts that a n y coverage owed to Ulterra MWD is in excess of that provided by the Amerisure polices. Id . Amerisure opposes Chubb's motion and moves for a declaration that Chubb is the p rim a ry and singular insurer of Ulterra MWD, alleging that there is no coverage owed under th e Amerisure policies as the inclusion of Ulterra MWD is the result of a clerical error on the

Richard Rogers attests that he is Senior Litigation Examiner for Chubb & Son, a division of Federal I n s u r a n c e Company. R. 88-2, Exh. 1, p. 1.

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p a rt of Amerisure's insurance broker, William Rigg Company.7 R. 78. In support, Amerisure h a s submitted the affidavits of Ronald F. Thomason ( "Thomason"), chief financial officer o f Ulterra MWD and Ulterra Drilling, Cameron Jones ("Jones"), insurance broker and Vice P r e sid e n t of William Rigg Company, and Terry Steadman ("Steadman"), Senior Marketing U n d e rw riter for Amerisure, in support of its contention that Ulterra MWD was only m is ta k e n ly included on the policies. R. 76, Exh. 1, 2, 3. Additionally, Amerisure directs the C o u rt to the Amendments made to the policies "effective December 31, 2005" deleting U lte rr a MWD as an insured, subsequent to uncovering the alleged error. Id. II. SUMMARY JUDGMENT STANDARD

A motion for summary judgment shall be granted if the pleadings, depositions and a ffid a v its show that there is no genuine issue as to any material fact and that the moving p a rty is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Little v. Liquid Air Corp., 3 7 F.3d 1069 (5th Cir.1994) (en banc). Initially, the party moving for summary judgment

Cameron Jones, a broker with William Rigg Company, stated in his affidavit that he placed insurance c o v e r a g e for Ulterra MWD with Chubb, not Amerisure and that he later discovered, after plaintiff filed this claim, t h a t Ulterra MWD was mistakenly added as a named insured on the Amerisure policies. Specifically, he attested to t h e following: In December of 2005, at the request of Mr. [Ronald] Thomason, a primary and umbrella general lia b i lity insurance policy was obtained for [Ulterra] Drilling from Amerisure. . .The Amerisure general lia b i lity policy was only intended to insure [Ulterra] Drilling and not [Ulterra] MWD, as [Ulterra] M W D was separately insured under the Chubb policy. When [the companies] received notice of the F r u g e claim, I review e d the insurance policies and discovered that [Ulterra] MWD had been m i s t a k e n l y added as a named insured under the Amerisure [policy] issued to [Ulterra] Drilling. . . . Neither [Ulterra] MWD nor [Ulterra] Drilling paid any premiums to Amerisure for the purpose of a d d i n g [Ulterra] MWD as a named insured under the Amerisure policy. The addition of [Ulterra] M W D to [Ulterra] Drilling's general liability policy was the result of a clerical mistake made by A m e ris u r e . R. 76, Exh. 3, ¶¶ 15-17.

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m u s t demonstrate the absence of any genuine issues of material fact. When a party seeking s u m m a r y judgment bears the burden of proof at trial, it must come forward with evidence w h ich would entitle it to a directed verdict if such evidence were uncontroverted at trial. C e lo tex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). As to is s u e s which the non-moving party has the burden of proof at trial, the moving party may s a ti s fy this burden by demonstrating the absence of evidence supporting the non-moving p a rty 's claim. Id. If the moving party fails to carry this burden, his motion must be denied. I f he succeeds, however, the burden shifts to the non-moving party to show that there is a g e n u in e issue for trial. Id. at 322-23. 8 Once the burden shifts to the respondent, he must d ire c t the attention of the court to evidence in the record and set forth specific facts sufficient to establish that there is a genuine issue of material fact requiring a trial. Celotex Corp., 477 U .S . at 324; Fed.R.Civ.Pro. 56(e). The responding party may not rest on mere allegations or d e n ia ls of the adverse party's pleadings as a means of establishing a genuine issue worthy of tria l, but must demonstrate by affidavit or other admissible evidence that there are genuine is s u e s of material fact or law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S .C t. 2505, 91 L.Ed.2d 202 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1 5 9 8 , 26 L.Ed.2d 142 (1970); Little, 37 F.3d at 1075. There must be sufficient evidence

Where the nonmoving party has the burden of proof at trial, the moving party does not have to produce e v i d e n c e which would negate the existence of material facts. It meets its burden by simply pointing out the absence o f evidence supporting the non-moving party's case. Celotex Corp., 477 U.S. at 325. To oppose the summary ju d g m e n t motion successfully, the non-moving party must then be able to establish elements essential to its case on w h i c h it will bear the burden of proof at trial. A complete failure of proof by the nonmoving party of these essential e l e m e n t s renders all other facts immaterial. Id. at 322.

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fa v o rin g the non-moving party to support a verdict for that party. Anderson, 477 U.S. at 249; W o o d v. Houston Belt & Terminal Ry., 958 F.2d 95, 97 (5th Cir.1992). There is no genuine is s u e of material fact if, viewing the evidence in the light most favorable to the non-moving p a rty , no reasonable trier of fact could find for the non-moving party. Matsushita Elec. Indus. C o . v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If no issue of fact is presented and if the mover is entitled to judgment as a matter of law, the court is required to render the judgment prayed for. Fed.R.Civ.P. 56(c); Celotex Corp., 477 U.S. at 322. Before it can find that there are no genuine issues of material fact, however, the court m u s t be satisfied that no reasonable trier of fact could have found for the non-moving party. Id . I I I. LAW AND ANALYSIS A . Chubb and Amerisure's Cross-motions for Summary Judgment C h u b b seeks a summary judgment declaring that Amerisure must provide a defense fo r Ulterra MWD in the underlying lawsuit. Chubb contends that Amerisure issued a CGL a n d umbrella insurance policy, covering Ulterra MWD as an insured, providing full and c o m p l e te coverage to Ulterra MWD for all of plaintiffs' claims. Chubb maintains that any co v era g e afforded under the Chubb policies is in excess to that provided by the Amerisure c o m m e rc ia l general liability and umbrella policies. Amerisure argues that Chubb's requested s u m m a ry judgment is improper. Amerisure submits that Ulterra MWD is not an insured u n d e r the CGL policy because Ulterra MWD was listed on the Endorsements page by

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m is ta k e , the result of a clerical error, and the policies have since been reformed to correct the erro r. Accordingly, Amerisure has filed an opposition as well as a cross-motion for summary jud g m en t seeking to have Chubb declared as primary insurer under its policies with Ulterra MWD. 1 . Standing Issue I n Amerisure's cross-motion for summary judgment, it argues that Chubb lacks s ta n d in g to assert its cross-claim against Amerisure, as Chubb is not a party to the insurance c o n tra c t between Amerisure and Ulterra Drilling. R. 78, p. 27. Specifically, Amerisure a rg u e s that Chubb has no insurable interest under the policy, has no right to assert a claim fo r breach of contract, nor does it have a right to demand insurance coverage under a contract to which it is not a party. Id. Thus, Amerisure alleges that Chubb has "no standing to d e m a n d payment to [Ulterra] MWD under an insurance contract that was issued to a third p a rty ." In support, Amerisure points to Louisiana jurisprudence dictating that "under L o u isia n a law a claimant must possess an insurable interest in a claim under the policy in q u e stio n in order to recover on an insurance policy covering the claim." Id. at 29; See g e n e r a lly Young v. State Farm Fire & Casualty Ins. Co., 426 So.2d 636 (La.App. 1 Cir. 1 9 8 2 ) writs denied, 433 So.2d 148, 171 (La. 1983). In response, Chubb argues that

L o u is ia n a law recognizes its right of action against Amerisure under the equitable doctrine o f contribution, as they are both solidary obligors, bound by their obligation to Ulterra MWD, a mutual insured. Additionally, Chubb alleges that the "other insurance" clauses in the

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p o licies provide it with a separate right and cause of action against Amerisure. The Court a g re e s . See generally Great Southwest Fire Ins. Co. v. CNA Ins. Cos., 557 So.2d 966, 9686 9 (La. 1990)(finding insurers of mutual insured to be solidarily liable for the damages in c u rre d by the insured); Graves v. Traders & General Ins. Co., 214 So.2d 116, 119 (La. 1 9 6 8 )(ho ld in g each insurer liable in proportion to respective limits under the policies).9 2 .C o v e ra g e under the Amerisure Policies T h e declarations page of the Amerisure CGL policy refers to Endorsement A, which is entitled "Named Insured Endorsement." Endorsement A provides, in pertinent part: T h e Named Insured and Mailing address portion in the Declarations are a m e n d e d to read as follows: U L T E R R A DRILLING TECHNOLOGIES, INC R O C K B IT HOLDINGS INC. R B I GP, LLC R O C K B IT INTERNATIONAL SUBSIDIARIES, LLC U L T E R R A MWD, LP R . 66, Exh. A; R. 76-5, Amerisure CGL Policy. Similarly, under the Amerisure umbrella p o lic y , and the attached endorsement, entitled "Named Insured Endorsement," the policy s p e c ifie s that the endorsement modifies the umbrella liability policy by providing the fo llo w in g :

Counsel for Chubb points out, and the Court agrees, that the cases cited by Amerisure in support of its argument th a t Chubb lacks legal standing are clearly distinguishable from the case at bar. Specifically, the cases cited by A m e r is u r e involve outside individuals, such as a victim attempting to bring suit against another party's insurance c o m p a n y . The plaintiffs' claims were dismissed because they were not a proper party as the insurance contract is b e tw e e n the insured and insurer, not the plaintiff and insurer. In the present case, the Court is faced with a defendant c o - in s u r e r ' s cross-claim against another defendant co-insurer based on the subrogation rights granted by the "other in s u r a n c e " clauses in the respective policies.

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T h e Named Insured in ITEM 1 of the Declarations is amended to read as follows: U L T E R R A DRILLING TECHNOLOGIES, INC R O C K B IT HOLDINGS INC. R B I GP, LLC R O C K B IT INTERNATIONAL SUBSIDIARIES, LLC U L T E R R A MWD, LP R . 66-2, Exh. B, Amerisure Umbrella policy. " U n d e r Louisiana law,1 0 `[a]n insurance policy is a contract between the parties and s h o u ld be construed by using the general rules of interpretation of contracts set forth in the L o u is ia n a Civil Code.'" In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2 0 0 7 ) (quoting Cadwallader v. Allstate Ins. Co., 848 So.2d 577, 580 (La. 2003)). An in s u ra n c e policy is a conventional obligation that constitutes the law between the insured and in s u re r, and the agreement governs the nature of their relationship. La.Civ.Code art.1983. A s such, courts are guided by certain principles of construction and should interpret in s u ra n c e policies the same way they do other contracts by using the general rules of contract in te rp re ta tio n . See generally Supreme Services and Specialty Co., Inc. v. Sonny Greer, Inc., 9 5 8 So.2d 634 (La. 2007); Ledbetter v. Concord Gen. Corp., 665 So.2d 1166, 1169 (L a .1 9 9 6 ); Crabtree v. State Farm Ins. Co., 632 So.2d 736 (La. 1994). The purpose of

The parties agree that Louisiana law governs the interpretation of the insurance policies. This action was filed i n the Western District of Louisiana pursuant to federal diversity. See 28 U.S.C. § 1332. Accordingly, the Court must a p p l y the substantive law, including the conflict-of-law rules, of the forum state Louisiana. See Klaxon Co. v. Stentor E l e c . Mfg. Co., 313 U.S. 487, 496 (1941). Under the Louisiana choice-of-law regime, the law of the state where the i n s u r a n c e contract was issued and executed generally governs the interpretation of that contract. Woodfield v. Bowman, 1 9 3 F.3d 354, 360 (5th Cir.1999).When there is no conflict, no conflict-of-law analysis is necessary, and the forum law a p p l i e s . Mumblow v. Monroe Broadcasting, Inc., 401 F.3d 616, 620 (5th Cir.2005). Thus, we apply the forum law of L o u is ia n a .

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lia b ility insurance is to afford the insured protection from damage claims. Insurance c o n tra c ts , therefore, should be interpreted to effect, not deny, coverage. Yount v. Maisano, 6 2 7 So.2d 148, 151 (La.1993). The extent of coverage is determined from the intent of the p a rtie s as reflected by the words of the insurance policy. Ledbetter, 665 So.2d at 1169. The ro le of the judiciary in interpreting insurance contracts is to ascertain the common intent of th e insured and insurer as reflected by the words in the policy. La.Civ.Code art.2045; L e d b e tte r, 665 So.2d at 1169. An insurance contract must be construed according to the e n tire ty of its terms and conditions as set forth in the policy. La.Rev.Stat. Ann. § 22:881 (2 0 0 9 ). "The words of a contract must be given their generally prevailing meaning." L a .C iv .C o d e Ann. art. 2047 (2008). When the words of an insurance contract are clear and e x p lic it and lead to no absurd consequences, courts must enforce the contract as written and m a y make no further interpretation in search of the parties' intent. La.Civ.Code art. 2046; H e r b e r t v. Webre, 982 So.2d 770, 773 (La. 2008). F r o m a clear reading of the Amerisure policies, it is evident that both the CGL and the u m b re lla policies expressly cover Ulterra MWD as an insured. See R. 66, Exh. A; R. 76-5; R . 66, Exh. B. Chubb argues that because Ulterra MWD is an insured under each of the p o lic ie s, Amerisure owes a duty to defend and indemnify Ulterra MWD "up to and inclusive o f all limits provided in the primary and umbrella policies." R. 65. Amerisure responds, a rg u in g that Ulterra MWD was improperly listed as an insured on the Endorsement pages a p p e n d e d to the Amerisure policies. R. 76. In support, Amerisure has filed the affidavits of

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T h o m a so n , Jones and Steadman, stating that Ulterra MWD was never an intended insured u n d e r the Amerisure policies as no premiums were paid by or for Ulterra MWD, and no a p p lic a tio n for insurance was submitted by Ulterra MWD. R. 76, Exh. 1, 2, 3 Affidavits of T h o m a s o n , Jones and Steadman. Chubb has moved to strike the affidavits, alleging that they c o n stitu te impermissible parol evidence. Amerisure submits that it was Chubb, not

A m e ris u re , that issued primary and excess policies to Ulterra MWD in exchange for the p a y m e n t of premiums. Amerisure argues that "[n]either MWD nor Drilling applied for any ty p e of liability insurance from Amerisure to insure MWD. . .[t]here are no applications . . .[or] evidence of any payment by MWD or Drilling to Amerisure for Amerisure to insure M W D ." 1 1 Cameron Jones, the insurance broker employed by William Rigg Company, te stifie d that he, at the request of Ulterra Drilling, applied for liability insurance coverage fro m Amerisure to provide liability insurance coverage for Drilling only, and in accordance w ith Ulterra Drilling's application, Amerisure calculated the premiums to be paid by Ulterra D rillin g based on the nature of Ulterra Drilling's business and the risks described therein.
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A m e ris u re adds that the error was subsequently corrected on a policy change form stating a n effective date of December 31, 2005, when Ulterra MWD was deleted from the policies w ith the mutual consent of all parties. R. 76, Exhs. 1, 2, 3; R. 76-4, Exh. 3. Conversely,

The affidavits of Ronald Thomason, CFO for Ulterra Drilling and Ulterra M W D , and Cameron Jones, the insurance b r o k e r, attest that MWD intended to obtain primary and excess comprehensive general liability insurance coverage from C h u b b alone. R. 76, Exhs. 1, 2. Amerisure contends that Ulterra Drilling is a manufacturer of drill bits, and as such is not engaged in the potentially h a z a r d o u s work that a drilling company, like Ulterra MWD would encounter on a day-to-day basis. R. 76, p. 11.
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C h u b b argues that the deletion is nothing more than an impermissible attempt at reformation b y Amerisure. 3 . Contract Interpretation and Reformation under La. R.S. 22:1262 " In general, under Louisiana law, extrinsic evidence cannot be used to `negate or vary' th e unambiguous terms of a written contract. See Patterson v. City of New Orleans, 686 S o .2 d 87, 90 (La.App. 4 Cir.,1996). `When the words of a contract are clear and explicit and l e a d to no absurd consequences, no further interpretation may be made in search of the p a rties ' intent.' La. Civ.Code Ann. art.2046; see also Steier v. Heller, 732 So.2d 787, 792 (L a .A p p . 2 Cir.,1999) (`When the terms of a written contract are clear, unambiguous, and le a d to no absurd consequences, parol evidence cannot be used to vary or explain the contract te rm s , and the parties' meaning or intent must be determined from the four corners of the c o n tra c t'); Patterson, 686 So.2d at 90. Only where a contract is ambiguous can a court base its interpretation on extrinsic evidence. See Id. A contract is ambiguous only if its terms are u n c le a r or susceptible to more than one interpretation, or the intent of the parties cannot be a s c e rta in e d from the language employed. See McDuffie v. Riverwood Int'l Corp., 660 So.2d 1 5 8 , 160 (La.App. 2 Cir.,1995)." Gebreyesus v. F.C. Schaffer & Associates, Inc., 204 F.3d 6 3 9 , 643 (5 th Cir. 2000). In the present case, the Amerisure policy unambiguously designates Ulterra MWD as a n insured under the policy. R. 66, Exh. A. Given the clarity of the insurance policies, A m e r is u r e and Ulterra MWD's subjective intent is wholly irrelevant. "[W]here extrinsic

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e v id e n c e of intent was introduced for the purpose of divesting persons qualifying as an in s u re d of their rights under the express terms of the policy [extrinsic evidence should not b e considered]." Washington v. Savoie, 634 So.2d 1176, 1179 (La.1994); See American E le c tr ic Power Company v. Affiliated FM Insurance Company, 556 F.3d 282 (5th Cir. 2009) (c itin g Washington, 634 So.2d at 1179). Because the named insureds under the policies are c le a r from the face of the insurance policies, the Court will not consider extrinsic evidence o f intent in order to determine the named insureds under the policies. Thus, finding no a m b ig u ity in the policies, the Court will enforce the Amerisure policies as written: as p ro v id in g commercial general liability and umbrella coverage to Ulterra MWD. A lte rn a tiv e ly , Amerisure requests that the Court reform the Amerisure policy to match t h e intent of Ulterra MWD and Amerisure as their being named as an insured under the p o lic y was merely a clerical error. "Under Louisiana law, a party may reform a written in s tru m e n t that does not reflect the true intent of the contracting parties. Valhi Inc. v. Zapata C o r p ., 365 So.2d 867, 870 (La.App., 1978). Reformation is an equitable remedy designed to correct an error in the contract. Id. The error `must be mutual', see, e.g., Pat S. Todd Oil C o . v. Wall, 581 So.2d 333, 336 (La.App. 3 Cir. 1991); and it must be `in the drafting of the instrum en t ... and not in making the contract which it evidences.'" Illinois Cent. Gulf R. Co. v . R.R. Land, Inc., 988 F.2d 1397, 1402 (5 th Cir.,1993) (quoting Phillips Oil Co. v. O.K.C. C o r p ., 812 F.2d 265, 275 (5th Cir. 1987)). "Before an instrument will be reformed, `there m u s t be clear proof of the antecedent agreement as well as an error in committing it to

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w ritin g '. Pat S. Todd Oil Co., 581 So.2d at 336. The party seeking reformation must prove m u tu a l error by `clear and convincing evidence,' and parol evidence is admissible to show `th at the writing does not express the true intent or agreement of the parties.' First State B a n k & Trust Co. v. Seven Gables Inc., 501 So.2d 280, 285 (La.App. 1 Cir.1986), writ d e n ie d , 502 So.2d 103 (La.1987)." Illinois Cent. Gulf R. Co. at 1402. The record establishes that on September 6, 2007, after plaintiff's alleged August 5, 2 0 0 6 accident, Amerisure issued a "Policy Change" to the Amerisure policies "deleting U lte rra MWD, LP as a named insured" and stating that the policy changes were effective on D e c e m b e r 31, 2005. R. 78-7, Exh. 4; R. 78-8, Exh. 5. Louisiana Revised Statute 22:1262, p rev iou sly codified at Section 22:639, specifically prohibits the very action that Amerisure re q u e sts this Court take. This statute prohibits an insurance contract from being retroactively a n n u lle d by any agreement after an occurrence for which the insured may be liable. S p e c ific a lly , the statute provides the following: N o insurance contract insuring against loss or damage through legal liability fo r the bodily injury or death by accident of any individual, or for damage to th e property of any person, shall be retroactively annulled by any agreement b e tw e e n the insurer and insured after the occurrence of any such injury, death, o r damage for which the insured may be liable, and any such annulment a tte m p te d shall be void. L S A -R .S . 22:1262. Counsel for Chubb has succinctly summarized the controlling law regard in g post-accident reformation resulting in decreased coverage in his briefs to the Court. A s exhibited by Louisiana courts, reformation that limits the recovery of a third party tort v ic tim through post-accident invalidation of an instrument is unacceptable. See Washington 15

v . Savoie, 634 So.2d 1176, 1180 (La.1994) (refusing to reform a clerical mistake because re fo rm a tio n would limit the recovery of third-party tort victims); Lewis v. Saucer, 653 So.2d 1 2 5 4 , 1259 (La.Ct.App.1995) (noting that an "instrument may not be reformed or corrected to the prejudice of third parties who are authorized to rely on the integrity of the in s tru m e n t" ). Similarly, this Court is wary of permitting reformation of a policy post-accident a n d after the initiation of related legal proceedings, in fear that such action "would encourage b a d faith `cooperation' between an insurer who seeks to avoid payment of claims and a n a m e d insured whose premiums are fixed on the basis of its loss experience." Washington, 6 3 4 So.2d at 1180. In Washington, the court explained that although reformation of a policy p ro v is io n is valid as between insurer and insured when either party can prove a mistake w h ic h does not reflect their mutual intent, public policy precludes reformation of the e ffe c tiv e date of coverage when the change adversely affects the rights of persons insured u n d e r the policy to recover damages under the coverage provisions before the change. Id. A m e ris u re 's attempts to distinguish Washington on the basis that the policy involved th e re in addressed UM coverage are to no avail. Amerisure has not submitted, nor has the C o u rt been able to find any case law indicating that the principles of contract interpretation a s they apply to CGL and umbrella insurance polices differ in any recognizable way so as to m a k e the pronouncement in Washington inapplicable to the case at bar. Just as permitting c o rre c tio n s of typographical errors in the UM coverage rejections at issue in Washington w o u ld have been inconsistent with prior jurisprudence and the purpose of UM coverage,

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a llo w in g Amerisure to engage in after-the-fact reformation having the practical result of less c o v e ra g e 1 3 to an injured third party would invite insurers to engage in unsavory practices as a means of avoiding liability. B . Ranking the Policies I. CGL policies H a v in g determined that the Amerisure policies are enforceable and provide coverage to Ulterra MWD, the Court must address the issue of ranking. The Amerisure CGL policy c o n ta in e d an "other insurance" provision providing that Amerisure is primary except when th e excess insurance provision applies. Part (2) of the Excess Insurance provision applies a s follows: T h is insurance is excess over: . . . (2) Any other primary insurance available to you [the insured] covering liab ility for damages arising out of the premises or operations, or the products an d completed operations, for which you [the insured] have been added as an a d d itio n a l insured by attachment of an endorsement.14 R . 66, Exh. A, Amerisure CGL Policy, bate no. 210 (emphasis added). Likewise, the Chubb C G L policy provides that it is primary, except when the excess provision applies. R. 66, Exh.

In plaintiffs' Memorandum in Opposition to Amerisure's M o tio n for Summary Judgment, plaintiffs allege, and the p a r t i e s do not dispute, that available insurance to plaintiffs will diminish from $17 million to $6 million if Amerisure is a b l e to reform its insurance contract with Ulterra MWD. R. 89, p. 2. Plaintiffs add that currently, plaintiff's injuries a lle g e d l y caused by the explosion are extensive, involving a fractured pelvis, humerus, lumbar vertebrae, fibular head a n d ribs, as well as injuries to his shoulder, elbow, scrotum and spinal cord. Id. At the time of the accident Mr. Fruge w a s forty-three years of age and earning $72,000 per year as a driller. Id. Plaintiffs' counsel represents that posta cc id e n t, Mr. Fruge is "totally and permanently disabled with past medical expenses nearing $200,000, and faces ongoing m e d i c a l treatment, medication and expenses with no ongoing wages and potential future surgery looming." Id.
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Part (1) of the Excess Insurance provision applies in circumstances related to fire, tenant, aircraft or w a te rc ra ft insurance, which is inapplicable to the present litigation.

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E , p. 39, Chubb CGL Policy, p. 23 of 34. The Chubb excess provision provides the fo llo w in g : T h i s insurance is excess over any other insurance, whether primary, excess, c o n tin g e n t or on any other basis: ... (D) that is insurance: (1 ) provided to you by any person or organization working under co n trac t or agreement for you; or (2) under which you are included as an insured. Id . (emphasis added). Chubb correctly points out that Ulterra MWD is included as a named insured by the " N a m e d Insured Endorsement" in the Amerisure policy, thus requiring a finding that Chubb b e considered as providing CGL coverage in excess of that provided by the Amerisure CGL p o l ic y . R. 66, Exh. A, bate no. 050. Under the Chubb policy, Ulterra MWD is the named in s u re d on the declarations page of the policy, and is not added as an "additional insured by an attachment of an endorsement" as required under the excess provision of the Amerisure p o lic y . See R. 66, Exh. E, p. 23 of 34. Thus, the clear language of the policies require that th e Amerisure CGL policy is primary and the Chubb CGL policy provides excess coverage fo r Ulterra MWD. Id. ii. Umbrella policies With respect to the umbrella policies, the "other insurance" clause in the Amerisure U m b re lla policy provides, "This insurance is excess over and shall not contribute with any o f the other insurance, whether primary, excess contingent or on any other basis." R. 66, Exh. 18

B , Amerisure Umbrella policy, p. 11 of 16, "Other Insurance". Similarly, the Chubb U m b re lla policy provides that "[t]his insurance is excess over any other insurance, whether p rim a ry , excess, contingent or on any other basis." R. 66, Exh. F, Chubb Umbrella policy, p . 25 of 34. Hence, these two umbrella policies are each excess over the Chubb and A m e ris u re CGL policies. See American Intern. Specialty Lines Ins. Co. v. Canal Indem. C o ., 352 F.3d 254, 258 (5th Cir.2003) (An "other insurance" "excess clause" provides that p o licy coverage will apply only as excess insurance over any other valid and collectible in s u ra n c e ). Further, both policies provide that they will pay only their share of the loss. R. 6 6 , Exh. B; F. "[W]hen two [insurance] policies afford the same layer of coverage and both co n ta in conflicting `other insurance' clauses which are irreconcilable, the policies must share lia b ility on a pro rata basis." Samuels v. State Farm Mut. Auto. Ins., Co., 939 So.2d 1235, 1 2 4 1 (2006) (citing Graves v. Traders and General Ins. Co., 252 La. 709, 214 So.2d 116 (19 6 8 )). The Umbrella policy issued by Amerisure has a $10,000,000.00 per occurrence limit, R . 66, Exh. B, and the Umbrella policy issued by Chubb has a $5,000,000.00 per occurrence lim it. Id. at Exh. F. Under the clear language of the policies and the applicable

jurisp rud en ce , the Amerisure and Chubb Umbrella Policies are in excess to the Amerisure a n d Chubb CGL policies, in proportion to their limits, that is a 2:1 ratio, respectively. A c c o rd in g ly , coverage under the policies for the accident at issue in this case ranks a s follows:

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1 . Primary policy - Amerisure CGL Policy #CPP2034223; 2 . Excess policy - Chubb CGL Policy #7954-96-82 3 . Amerisure Umbrella Policy #CU2026199 and Chubb Umbrella Policy #7954-96-83 require pro-rata division in proportion to policy limits of 2:1. I V . CONCLUSION F o r the foregoing reasons, Chubb's Motion for Summary Judgment [Rec. Doc. 65] w ill be granted and Amerisure's Cross-Motion for Summary Judgment [Rec. Doc. 78] will b e denied. Amerisure's Motion to Dismiss [Rec. Doc. 70] and Chubb's Motion to Strike [R e c . Doc. 71] will be denied as moot.

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