General Accident Insurance Co of America v. Aggreko L L C

Filing 43

MEMORANDUM RULING re 20 MOTION for Summary Judgment filed by General Accident Insurance Co of America, 21 MOTION for Partial Summary Judgment filed by Aggreko L L C : Based on the foregoing, General Accidents Motion for Summary Judgment, [#20], will be denied. Aggrekos Motion for Partial Summary Judgment, [#21], will be granted as to General Accidents breach of contract claims. The Court will defer ruling on General Accidents Motion for Summary Judgment on the unjust enrichment claims for the reasons set forth above. Consistent with Federal Rule of Civil Procedure 56(f), each party is to file a supplemental brief via ECF of no longer than five (5) pages in length in response to the question posed by the Court in section III(B)(2) of this Ruling, or to advise the Court that no such brief will be forthcoming, on or before 1:00 p.m. CST on Friday, December 28, 2012. Signed by Judge Tucker L Melancon on December 17, 2012. (crt,Bacon, C)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
General Accident Insurance Co. of America

Civil Action No. 11-cv-1682

versus

Judge Tucker L. Melançon

Aggreko, LLC

Magistrate Judge C. Michael Hill
RULING

Before the Court is plaintiff General Accident Insurance Company of America’s (General
Accident) Motion for Summary Judgment, R. 20, its Memorandum in Support, R. 20-2,
defendant Aggreko, LLC’s (Aggreko) Memorandum in Opposition, R. 25, and General
Accident’s Reply Memorandum in Support, R. 33. Also before the Court is Aggreko’s Motion
for Partial Summary Judgment, R. 21,1 its Memorandum in Support, R. 21-3, General Accident’s
Response, R. 24, and Aggreko’s Reply Memorandum in Support, R. 35.
For the reasons that follow, the Court will deny General Accident’s Motion for Summary
Judgment, R. 20, and will grant in part and deny in part Aggreko’s Motion for Partial Summary
Judgment, R. 21. Due to the parties’ failure to adequately address all claims in their motions and
supporting and opposition memoranda filed in connection therewith, the Court must defer issuing
a final Judgment until the parties have been given the opportunity to file supplemental briefs in
accordance with the Order that will issue herein. Under Fifth Circuit precedent and Federal Rule
of Civil Procedure 56(f), a court may not grant summary judgment sua sponte on a ground not
raised by the parties, see Wernecke v. Garcia, 452 F. App’x 479, 482 (5th Cir. 2011), which the

1

Although styled a Motion for Partial Summary Judgment, in the Court’s view of the arguments made in its
supporting memoranda, Aggreko’s Motion in effect asks the Court to grant summary judgment on all of General
Accident’s claims.

1

Court would otherwise be inclined to do, without giving notice to the parties in order for them to
brief the issue.
I. PROCEDURAL HISTORY
There is no dispute between the parties as to the material facts. On March 17, 2000,
General Accident issued a commercial general liability policy to Aggreko (Policy No. 000991814) (“Policy”) covering the period from October 1, 1999 to October 1, 2000. R. 20-4, p. 1. Under
the Policy, General Accident agreed to pay damages on Aggreko’s behalf in “excess of any
deductible amounts.” R. 20-4, p. 39. The deductible amount set by an endorsement to the Policy
was $41,250.00 per occurrence. R. 20-4, p. 39. The Policy stated in pertinent part that General
Accident “may pay any part or all of the deductible amount to effect settlement of any claim or
‘suit’” on behalf of its insured, Aggreko. R. 20-4, p. 40. “[U]pon notification of the action
taken,” the Policy stated that Aggreko would “promptly reimburse [General Accident] for such
part of the deductible amount as has been paid by [General Accident]” to effect such a settlement
of a claim or suit. R. 20-4, p. 40.
General Accident made fifteen separate payments to third parties settling property
damage and personal injury claims against Aggreko that arose during the Policy’s coverage
period. Lynne Young Aff., R. 20-3. The first of these payments was made on July 20, 2000, and
the final payment was made on January 17, 2002. R. 20-3; see R. 21-3. Each payment was
subject to the Policy’s deductible reimbursement provision. R. 20-4, p. 40. On December 15,
2010, Lynne Young, financial manager at OneBeacon Insurance, the successor entity to General
Accident, sent a one-page letter to Aggreko, notifying Aggreko that it owed General Accident the
sum of $117,181.00, representing the total of the deductible amounts paid by General Accident to
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third parties on behalf of Aggreko. R. 20-6.2
The parties stipulated that the December 15, 2010 letter from Young was the first notice
Aggreko received of payments made under the Policy, the amounts of the settlements, and the
deductibles owed that form the basis of this litigation. R. 16. Aggreko failed to reimburse
General Accident after receipt of the December 15 letter, and General Accident filed its
complaint on September 19, 2011 alleging liability for breach of contract and unjust enrichment
under Louisiana law. R. 1.3 In their June 15, 2012 Rule 26(f) Report, the parties stipulated that
the total payment made by General Accident on behalf of Aggreko under the Policy was
$159,131.87, rather than the $117,181.00 as stated in Young’s letter. R. 16. Aggreko
subsequently conceded in its September 17, 2012 Motion for Partial Summary Judgment that
three claims settled under the Policy, representing $84,640.38 of the amount stipulated to in the
Rule 26(f) Report as having been paid by General Accident, fell within ten years of General
Accident’s filing this suit. R. 21-3, p. 2.4
II. SUMMARY JUDGMENT STANDARD
A motion for summary judgment shall be granted if the pleadings, depositions, and
affidavits show that there is no genuine issue as to any material fact and that the moving party is
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Appended to Young’s letter were the relevant portions of the Policy and the endorsement, as well as a
summary of the claims that were settled during the coverage period and the respective settlement amounts. R. 20-6.
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The parties have agreed to treat each individual payment as giving rise to a “separately-enforceable claim
for reimbursement.” R. 20-2; R. 16. As Aggreko’s failure to reimburse each payment made by General Accident on
behalf of Aggreko under the Policy would represent a separate breach of contract or a separate unjust enrichment, the
Court will treat each payment separately for purposes of analyzing the relevant legal issues. For the sake of brevity,
the Court will refer to the two bundles of claims as the “breach of contract claims” or as the “unjust enrichment
claims” for purposes of this Ruling.
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The three payments to which Aggreko refers are: (1) No. 32 LP 002061 in the sum of $2,140.30, paid
October 1, 2001 (2) No. OFA-00825W -01-01 in the sum of $41,250.00, paid December 30, 2001; and (3) No. 38 LP
374901 in the sum of $41,250.00, paid January 17, 2002. See R. 21-3, p. 2-3, 8.

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entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Little v. Liquid Air Corp., 37 F.3d
1069 (5th Cir. 1994) (en banc). Initially, the party moving for summary judgment must
demonstrate the absence of any genuine issues of material fact. When a party seeking summary
judgment bears the burden of proof at trial, it must come forward with evidence which would
entitle it to a directed verdict if such evidence were uncontroverted at trial. Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986). As to issues which the non-moving party has the burden of
proof at trial, the moving party may satisfy this burden by demonstrating the absence of evidence
supporting the non-moving party's claim. Id. If the moving party fails to carry this burden, his
motion must be denied. If he succeeds, however, the burden shifts to the non-moving party to
show that there is a genuine issue for trial.5 Id. at 322–23. Once the burden shifts to the
respondent, he must direct 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. P. 56(e). There must be sufficient evidence favoring
the non-moving party to support a verdict for that party. Anderson, 477 U.S. at 249; Wood v.
Houston Belt & Terminal Ry., 958 F.2d 95, 97 (5th Cir. 1992). There is no genuine issue of
material fact if, viewing the evidence in the light most favorable to the non-moving party, no
reasonable trier of fact could find for the non-moving party. Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587 (1986).
If no issue of fact is presented and if the mover is entitled to judgment as a matter of law,

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W here the nonmoving party has the burden of proof at trial, the moving party does not have to produce
evidence which would negate the existence of material facts. It meets its burden by simply pointing out the absence
of evidence supporting the non-moving party's case. Celotex Corp., 477 U.S. at 325. To oppose the summary
judgment motion successfully, the non-moving party must then be able to establish elements essential to its case on
which it will bear the burden of proof at trial. A complete failure of proof by the nonmoving party of these essential
elements renders all other facts immaterial. Id at 322.

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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 must be satisfied that no reasonable trier of fact could have found for the non-moving party.
Id.
III. LAW AND ANALYSIS6
A. General Accident’s Breach of Contract Claims
To decide the motions before the Court, two issues related to General Accident’s breach
of contract claims must be resolved, the first being whether General Accident’s breach of
contract claims for reimbursement for deductibles paid on behalf of Aggreko under the Policy are
barred by Louisiana’s prescription statute, Article 3499. General Accident contends that its
December 15, 2010 letter, notifying Aggreko of the reimbursement amounts owed pursuant to
the Policy, marked the beginning of the prescriptive period. R. 20-2, p. 5. Therefore, General
Accident argues, it filed its Complaint well within the prescriptive period. R. 20-2, p. 5.
Aggreko, on the other hand, asserts that the prescriptive period for each payment that General
Accident made on its behalf commences on the date of payment, and as all but three of the
deductible payments were made more than ten years prior to the filing of this litigation,

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Although the Policy lists its “Place of Issue” as Philadelphia, Pennsylvania, R. 20-4, p. 3, the parties do
not dispute that Louisiana state law should be applied by the Court in resolving the issues before it. This action was
filed in the W estern District of Louisiana pursuant to federal diversity. See 28 U.S.C. § 1332. Accordingly, the
Court must apply the substantive law, including the conflict-of-law rules, of the forum state, Louisiana. See Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); Duhon v. Union Pac. Ress. Co., 43 F.3d 1011, 1013 (5th
Cir. 1995). Under the Louisiana choice-of-law regime, “an issue of conventional obligations is governed by the law
of the state whose policies would be most seriously impaired if its law were not applied to that issue.” La. Civ. Code
Ann. art. 3537. Among the relevant considerations under Article 3537 are “the pertinent contacts of each state to the
parties and the transaction,” the “object of the contract,” the “place of domicile . . . or business of the parties,” and
the “nature, type, and purpose of the contract.” Id. As these factors all favor the application of Louisiana state law to
the interpretation of the insurance policy issued to cover Aggreko, a Louisiana corporation, Louisiana state law will
be applied to decide the legal issues before the Court.

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Louisiana’s prescriptive statute bars General Accident’s recovery for all but those three payments
that total $84,640.38. R. 21-3, p. 2.
The second issue related to General Accident’s breach of contract claims is whether
Louisiana law bars those claims because General Accident waited an unreasonable amount of
time before making demand on Aggreko to reimburse it under the Policy. Aggreko asserts that
General Accident “should not be allowed an indefinite amount of time in which to bring its
reimbursement claims.” R. 21-3, p. 6. Relying on Louisiana Civil Code Article 1773, Aggreko
contends that General Accident’s “notice of demand for reimbursement was not brought within a
reasonable time period” as required by Louisiana law. R. 25, p. 7. General Accident asserts that
there is no “rule of law that would cut off these private parties’ right to bargain for a flexible
reimbursement deadline in this case.” R. 24, p. 4-5. General Accident further contends that to
impose such a deadline for demand would “essentially rewrite” the contractual language the
parties had agreed on. R. 24, p. 4-5.
1. Louisiana’s Prescriptive Period for Breach of Contract Claims
Under Louisiana law, a contract “is an agreement by two or more parties whereby
obligations are created, modified, or extinguished.” La. Civ. Code Ann. art. 1906. An insurance
policy is a specific type of contract “between the insured and the insurer and has the effect of law
between the parties.” Fleniken v. Entergy Corp., 99-3023, 99-3024, p. 6 (La. App. 1 Cir.
2/16/01); 790 So. 2d 64, 68, writs denied, 01-1269 (La. 6/15/01); 793 So. 2d 1250, and 01-1295
(La. 6/15/01); 793 So. 2d 1252. As a contract, an insurance policy “should be construed by using
the general rules of interpretation of contracts set forth in the Louisiana Civil Code.”
Cadwallader v. Allstate Ins. Co., 02-1637, p. 3 (La. 6/27/03); 848 So. 2d 577, 580. In general,
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the “[i]nterpretation of a contract is the determination of the common intent of the parties.” La.
Civ. Code Ann. art. 2045. Whether the language used in the contract “is clear or ambiguous is a
question of law.” Cadwallader, 02-1637 at 4, 848 So. 2d at 580.
In interpreting the contract, the words of the contract “are to be construed using their
plain, ordinary and generally prevailing meaning, unless the words have acquired a technical
meaning.” Id. at 3, 848 So. 2d at 580 (citing La. Civ. Code Ann. art. 2047). When the words
used 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. Thus, if the wording of an
insurance policy contract is clear and unambiguous, then the contract “must be enforced as
written.” Cadwallader, 02-1637 at 4, 848 So. 2d at 580. Accordingly, “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.7 A contract is ambiguous under
Louisiana law only “when it is uncertain as to the parties’ intentions and susceptible to more than
one reasonable meaning under the circumstances and after applying established rules of
construction.” Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 181 (5th Cir. 2007) (quoting
Lloyds of London v. Transcon. Gas Pipe Line Corp., 101 F.3d 425, 429 (5th Cir. 1996)).
“Parties are free” under Louisiana law, in insurance contracts as with any contractual
agreement, “to contract for any object that is lawful, possible, and determined or determinable.”
La. Civ. Code Ann. art. 1971. In this case, General Accident and Aggreko contracted for the
Policy that covered Aggreko during the period from October 1, 1999 to October 1, 2000. R. 20-4,

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“The rules of construction do not authorize a perversion of the words or the exercise of inventive powers
to create an ambiguity where none exists or the making of a new contract when the terms express with sufficient
clearness the parties’ intent.” Id. at 3-4, 848 So. 2d at 580.

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p. 1. The Policy included the specific provision at issue here in section D of the endorsement:
We[, General Accident,] may pay any part or all of the deductible amount
to effect settlement of any claim or “suit” and, upon notification of the
action taken, you[, Aggreko,] shall promptly reimburse us for such part of
the deductible amount as has been paid by us.8
R. 20-4, p. 40. The Court finds the foregoing provision to be clear, explicit, and unambiguous.
See Cadwallader, 02-1637 at 4, 848 So. 2d at 580.
Under the clear language of the contract, Aggreko had an obligation to “promptly
reimburse” General Accident for the deductible amounts General Accident paid upon notice of
the payments having been made. R. 20-4, p. 40. The obligation to reimburse was triggered
expressly by General Accident’s “notification of the action taken.” R. 20-4, p. 40. This provision
taken as a whole constitutes an “uncertain” term for performance of a contractual obligation
dependent on the occurrence of an event, i.e., General Accident’s notification of payment made
on Aggreko’s behalf. Such a provision is explicitly authorized by the Louisiana Civil Code. See
La. Civ. Code Ann. art. 1778 (“A term for the performance of an obligation . . . is uncertain when
it is not fixed but is determinable either by the intent of the parties or by the occurrence of a
future and certain event.”). Under the Policy, Aggreko’s conceded failure to reimburse General
Accident for the monies paid on Aggreko’s behalf after notification by General Accident of the
settlements made and the deductible amounts thereof would constitute a breach of the insurance
contract.
As any breach by Aggreko could occur only after it failed to promptly reimburse General

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The endorsement entitled “Deductible Liability Insurance” that modified specific policy terms is included
as part of the Policy. La. Rev. Stat. Ann. § 22:881 (“Every insurance contract shall 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.”).

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Accident in response to General Accident’s notification, General Accident’s claims for breach of
contract would fall well within Louisiana’s prescriptive statute for personal actions.9 Article 3499
states that “[u]nless otherwise provided by legislation, a personal action is subject to a liberative
prescription of ten years.” La. Civ. Code Ann. art. 3499. It is well-settled that Article 3499
covers breach of contract claims. See, e.g., Phillip v. Home Ins. Co., 95-406, p. 4 (La. App. 5
Cir. 2/27/96); 671 So. 2d 943, 946, writ denied, 96-1238 (La. 6/28/96); 675 So. 2d 1124. Thus,
the “ten year prescriptive period for contracts does not begin running until the date the contract is
allegedly breached.” Plainview Area Ass’n, Inc. v. La. Dep’t of Transp. & Dev., 02-0503, p. 3
(La. App. 3 Cir. 12/11/02); 832 So. 2d 1172, 1174; see also Loewer v. Tex. Gas Transmission
Co., 615 F. Supp. 1, 2 (W.D. La. 1984) (applying Article 3499); Roba, Inc. v. Courtney, 09-0508,
p. 8 (La. App. 1 Cir. 8/10/10); 47 So. 3d 500, 507; Hartwig Moss Ins. Agency, Ltd. v. Kelly, 961423 (La. App. 4 Cir. 1/29/97); 688 So. 2d 196, 197 n.1; Phillip, 95-406 at 4, 671 So. 2d at
946.10 This is so because “the cause of action”—here, General Accident’s breach of contract
claim—“cannot be asserted before it accrues, and it must follow that any prescriptive period for
asserting the cause of action cannot begin to run until the cause of action comes into being.”

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“Liberative prescription is a mode of barring of actions as a result of inaction for a period of time.” La.
Civ. Code Ann. art. 3447; see Taranto v. La. Citizens Prop. Ins. Corp., 10-0105, p. 5 (La. 3/15/11); 62 So. 3d 721,
726 (describing prescription under Louisiana’s “civilian tradition” as the loss of “certain rights as the result of the
passage of time”). Accordingly, Louisiana’s prescription statutes “are designed to prevent old and stale claims from
being prosecuted.” Wells v. Zadeck, 11-1232, p. 7 (La. 3/30/12); 89 So. 3d 1145, 1149.
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The case Aggreko relies on for the position that the prescriptive period commences at a point other than
the time a contract is breached in fact supports General Accident’s position. See Donald G. Lambert Contractor, Inc.
v. Parish of Jefferson, 97-140, p. 7 (La. App. 5 Cir. 9/17/97); 700 So. 2d 894, 897, writ denied, 97-2557 (La.
12/19/97); 706 So. 2d 459 (“It is well settled that the ten year prescriptive period for liberative prescription
commences to run at the time of the breach [of the contract] or at the time the cause of action arises. . . . Those
breaches of [defendant’s] contractual responsibilities, if they occurred, occurred sometime between 1972 and 1974
when the construction project was underway. That is at least twenty years prior to suit being filed against it. Thus,
they are clearly barred.”) (emphasis added).

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August v. Grand Lake Constr., 02-632 (La. App. 5 Cir. 12/30/02); 837 So. 2d 78, 80 (citing
Orleans Parish Sch. Bd. v. Pittman Constr. Co., 260 So. 2d 661, 667 (La. 1972)). Although
“[o]rdinarily” the party raising the prescription defense “bears the burden of proof” as to the
applicability of the defense, “if prescription is evident on the face of the pleadings” as Aggreko
has made it in its Answer to General Accident’s Complaint, R. 8, “the burden shifts to the
plaintiff to show the action has not prescribed.” Wells, 11-1232 at 7, 89 So. 3d at 1149.
“Generally, prescription statutes are strictly construed against prescription and in favor of the
claim sought to be extinguished by it. . . . [The construction] which favors maintaining, as
opposed to barring an action, should be adopted” when choosing between two constructions of a
prescription statute. Id. at 6-7, 89 So. 3d at 1149.
As the undisputed facts establish that General Accident notified Aggreko on December
15, 2010 of the claims General Accident settled on behalf of Aggreko and the amounts of the
deductibles therefore during the period in which Aggreko, the insured, was covered under the
Policy, R. 20-6, p. 1, General Accident has met its burden in showing that the breach of contract
claims alleged in its Complaint, R. 1, fall within Article 3499's ten-year prescriptive period
covering such claims. The cases cited by General Accident make clear that the prescriptive
period did not begin to run until Aggreko allegedly breached its obligations under the contract to
“promptly reimburse” General Accident after General Accident notified Aggreko of the
settlements made on its behalf.11 Aggreko’s arguments regarding the distinctions between the

11

In Smyth v. Board of Commissioners for Atchafalaya Basin Levee District, the contract at issue stated
that “‘It is further agreed and understood that the said party [the Board of Commissioners] . . . is to lend itself with
all its rights, power and privileges and perogatives [sic] to perfect its title or the title acquired under this agreement
to all lands which it could have . . ., and to do so whenever requested by [the plaintiffs].’” 87 F. Supp. 138, 139 (E.D.
La. 1949), aff’d, 187 F.2d 11 (5th Cir. 1951), cert. denied, 342 U.S. 821 (1951). W hen the plaintiffs filed suit
seeking a judgment against the Board declaring that the Board was required to execute and deliver the instrument

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factual contexts surrounding the contract disputes in those cases and the case at bar are without
merit, as it is the contractual language—and the parties’ alleged breaches of those contracts—that
make these cases directly on point.
The Court does not find any of the cases cited by Aggreko applicable to the case at bar.
Aggreko relies heavily on United States v. Bellard, 674 F.2d 330 (5th Cir. 1982), as a foundation
for its position that “prescription should begin to run upon payment of the deductibles.” R. 35, p.
2. The factual scenario in Bellard, in which the United States government was a guarantor of a
loan under the Federal Insured Student Loan Program, Bellard, 674 F.2d at 333, is readily
distinguished from this case. The Fifth Circuit’s opinion went to great lengths to distinguish the
concept of an insurer from a surety or a guarantor. Aggreko ignores the court’s clear language,
asserting that the “facts of Bellard are analogous to the instant case because the insurance
contract between General Accident and Aggreko contains indemnification elements” and that

following the plaintiffs’ demand for such action and the Board’s refusal, the Board raised the defense of prescription.
Id. at 139-40, 144. The district court stated that the “obligation assumed by the Board at the time of the execution of
the contact [sic] was to lend its assistance whenever requested so to do.” Id. at 144. Therefore, “since there was no
fixed period stipulated in the contract within which the obligations assumed by the Board were to be performed,” the
“right of action which plaintiffs are seeking to enforce in this suit, did not arise until plaintiffs made demand upon
the Board.” Id. (emphasis added). The court thus found that the prescriptive period began to run when the plaintiffs
made their formal demand by letter, and as they filed suit alleging a breach of contract claim within ten years of this
demand, the prescription defense was inapplicable. Id. The Fifth Circuit affirmed the district court’s decision. Bd. of
Comm’rs, 187 F.2d at 12.
In Plainview, the plaintiffs contacted Louisiana’s Department of Transportation and Development (DOTD)
in 1993 to request upkeep pursuant to contracts area residents entered into with the state in 1958, in which the state
had agreed to continually improve and maintain a specific road in the area. Plainview, 02-0503 at 1-2, 832 So. 2d at
1173. DOTD did not comply, and the plaintiffs filed suit in 1995 to compel enforcement of the 1958 contracts and
defendants’ obligations under the contracts to maintain the road. Id. at 1, 832 So. 2d at 1173. In response, the
defendants asserted a prescription defense based on Article 3499, arguing that the ten-year prescriptive period had
come and gone after the contracts were executed in 1958. Id. at 2, 832 So. 2d at 874. The court in Plainview
rejected this defense, stating that the “ten year prescriptive period for contracts does not begin running until the date
the contract is allegedly breached.” Id. at 3, 832 So. 2d at 874 (citing Dauterive Contractors, Inc. v. Landry &
Watkins, 01-1112, p. 9 (La. App. 3 Cir. 3/13/02); 811 So. 2d 1242, 1249). Finding that the “only evidence that the
contracts at issue were breached is the refusal of DOTD to perform the requested maintenance on [the road in
question] in 1993,” the court held that the suit filed only two years later was therefore “timely” and denied the
prescription defense. Id.

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General Accident’s “deductible liability insurance endorsement is essentially a contract for
suretyship.” R. 21-3, p. 6. The Bellard court observed:
Compensated surety contracts are not converted into contracts of insurance
simply because the third party is compensated. . . . [W]hile insurance
contracts are in many respects similar to surety company contracts . . .
there is a wide difference between the two contracts. Insurance has been
defined as a contract whereby one undertakes to indemnify another against
loss, damage or liability arising from an unknown or contingent event;
whereas a contract of suretyship is one to answer for the debt, default or
miscarriage of another. . . . The [surety] contract creates a tripartite
relation between the party secured, the principal obligor, and the surety,
and the rights, remedies and defenses of a surety cannot be disassociated
from this relationship although the contract is called one of insurance.
Id. at 334 (emphasis added) (quoting Madison Co. Farmers Ass’n v. Am. Employers Ins. Co., 209
F.2d 581, 584 (8th Cir. 1954)). Thus, the holding in Bellard that the prescriptive period begins
on the date when the guarantor satisfies the borrower’s delinquent obligation can only be
understood in the unique context of a contract of suretyship or guaranty. Here, there are only two
parties involved: an insurer and an insured. There is no lender, debtor, or third-party guarantor or
surety. The holding in Bellard is thus of no moment to this case.
Aggreko also urges the Court to apply the rationale from Specialty National Insurance
Co. v. U-Save Auto Rental of America, Inc., a district court decision from the Middle District of
Florida, to this case; however, the determinative fact on which the court’s holding is based in
Specialty is materially distinguishable from this case, and the court’s holding is therefore not
applicable.12

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Like this case, the dispute in Specialty involved a “claim for breach of a contractual provision that
obligated Defendants to repay Specialty [the insurer] for any deductible amounts paid to settle claims under the
insurance policy.” 2008 W L 4888864, at *5 (M.D. Fla. Nov. 12, 2008). The insurance policy provision at the center
of the dispute read as follows: “To settle any claim or ‘suit’ we may pay all or any part of any deductible shown in
the Schedule. If this happens, you must reimburse us for the deductible or the part of the deductible we paid.” Id. at
*2. The court rejected the insurer Speciality’s argument that it could “not have brought suit until Defendants

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2. Louisiana Law Requiring General Accident to Seek Reimbursement
Within a Reasonable Time
Although not barred by prescription, General Accident’s breach of contract claims must
be denied due to its failure to timely notify Aggreko of its demand for reimbursement. Citing
Article 1773, Aggreko asserts in its Memorandum in Opposition that “General Accident was
required under Louisiana law to seek reimbursement of the deductible payments within a
reasonable time period and it failed to do so.” R. 25, p. 6; see also R. 35, p. 3. General Accident
contests what it labels Aggreko’s “fallback” position that it “somehow lost its right to seek
reimbursement because it waited too long to make a demand” by arguing that Aggreko “never
resolves the central issue raised by these motions—i.e., when, exactly, prescription began to
run.” R. 33, p. 2. General Accident argues that Louisiana law concerning the “reasonable time”
relates only to the allowable period for bringing its suit, while not actually addressing Aggreko’s
argument related to the period of time allowed under Louisiana law for triggering Aggreko’s
contractual obligations for reimbursement. General Accident fails to address the applicability of
Article 1773 to this litigation or allege material facts indicating that its decision to wait nearly
nine years before notifying Aggreko was reasonable. As General Accident did not act within a
reasonable time before notifying Aggreko of its demand for reimbursement, Aggreko’s motion
for summary judgment as to General Accident’s breach of contract claims will be granted.
General Accident concedes that Aggreko is “correct” that it “does not possess some carte

breached their obligation to reimburse Specialty for the deductibles and such an obligation did not arise until
Specialty demanded payment and Defendants refused to pay.” Id. at 5. Citing the language of the insurance policy,
the court observed specifically that “[t]he only express condition precedent to the insured’s duty to reimburse is
Specialty’s settlement of a suit or claim.” Id. at *6 (emphasis added). This is the linchpin of General Accident’s
argument in the case at bar: the express condition precedent required to trigger the reimbursement duty of Aggreko,
the insured, is the notification provision that is entirely lacking from the contract in Specialty.

13

blanche authority to delay demand for reimbursement ad infinitum.” R. 33, p. 2. Under
Louisiana law, the Policy’s notification provision—“upon notification of the action taken”—that
triggers Aggreko’s obligation to “promptly reimburse” the insurer for deductibles paid on its
behalf is a suspensive condition: Aggreko’s corresponding obligation is conditional on
fulfillment of that notification provision. See La. Civ. Code Ann. art. 1767 (“A conditional
obligation is one dependent on an uncertain event. If the obligation may not be enforced until the
uncertain event occurs, the condition is suspensive.”).13 Under Article 1773, “[i]f no time has
been fixed for the occurrence of the event,” the suspensive condition that triggers the conditional
obligation “may be fulfilled within a reasonable time.” La. Civ. Code Ann. art. 1773 (emphasis
added); see Prudhomme, 06-516 at 7, 941 So. 2d at 107 (“As there is no indication that the
parties agreed upon a time period in which the judgment was to be signed, the terms of the
agreement can be viewed as needing to be fulfilled within a reasonable time.”).14
The current language of Article 1773 was adopted in 1984, and the Revision Comments
published with the Article’s amended text note that the “reasonable time” limitation was added
because under the previous text—which contained no such limitation on the time allowed for
fulfillment of the suspensive condition when no limit was expressly set by the contract—the
parties “could be bound under condition for life, or even for generations on end, which is not
practical.” Jarrell v. Carter, 632 So. 2d 321, 324 n.2 (La. App. 1 Cir. 1993), writ denied, 94-

13

Cf. Prudhomme v. Prudhomme, 06-516, p. 6 (La. App. 3 Cir. 9/27/06); 941 So. 2d 102, 106 (“The record
supports a finding that the terms ‘upon settlement of judgment’ and ‘upon judgment’ are indicative of a conditional
obligation.”).
14

See also Bunge Edible Oil Corp. v. M/V Torm Rask & M/V Fort Steele, 756 F. Supp. 261, 267 (E.D. La.
1991) (“[I]f an agreement which is subject to a suspensive condition does not provide a period of time in which the
condition must be fulfilled, the condition may be fulfilled within a reasonable time”) (citing Article 1773).

14

0700 (La. 4/29/94); 637 So. 2d 467 (emphasis in original) (quoting §(b) of the 1984 Revision
Comments to La. Civ. Code Ann. art. 1773). The Louisiana First Circuit in Jarrell noted that the
“redactors of the Louisiana Civil Code,” in amending the text of Article 1773, “recognized the
practicality of limiting the time in which a condition may be fulfilled when no time has been
fixed. . . . Otherwise, as so cautioned by the redactors, the parties could be bound ad infinitum.”
Id. 15 It is precisely this result that Aggreko seeks to avoid, arguing that under Article 1773,
General Accident had to notify Aggreko of its demand for reimbursement pursuant to the
Policy’s notification provision within a more reasonable time than nine years.
The Court finds that General Accident’s decision to wait nearly nine years from the date
the final payment was made to a third party under the Policy until sending the one-page demand
letter and the appended summary of payments made was unreasonable under Article 1773 as a
matter of law. There is no factual basis in the record—and General Accident has offered no
explanation in its numerous filings—providing the slightest justification for the nearly nine-year
delay that might support an argument that this delay could be considered reasonable. General
Accident admits that “there are no ‘dimmed memories’ or ‘lost evidence’ in this case” and that
“[a]ll of the reimbursement claims have been fully documented.” R. 33, p. 3. As General
Accident failed to address Aggreko’s argument for denial of the breach of contract claims under

15

Cf. Morvant v. Russell & Clemmons, Inc., 11 So. 2d 45, 48 (La. App. 1 Cir. 1943) (“W here a party to a
contract undertakes to do some particular act, the performance of which depends entirely on himself, and the contract
is silent as to the time of performance, the law implies an engagement that it shall be executed within a reasonable
time, without reference to extraordinary circumstances.”) (internal citations omitted). The court in Morvant did not
provide true guidance as to the definition of a “reasonable time,” noting only that “[p]erhaps as accurate a definition
of reasonable time as may be given is that it is such time as is necessary conveniently to do what the contract requires
should be done.” Morvant, 11 So. 2d at 48 (quoting 17 Corpus Juris Secundum, Contracts § 17). The court
determined that a period of time just shy of two years for the defendant to liquidate certain accounts and repay debts
to the plaintiff under their contractual agreement was “more than a reasonable time” to do so under the facts of the
case. Id.

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Article 1773, General Accident has offered no basis whatsoever for the Court to determine that
the delay could have been reasonable based on the undisputed facts. The failure to fulfill the
suspensive condition within a reasonable time makes Aggreko’s conditional obligation to
reimburse General Accident unenforceable, thereby prohibiting the possibility of breach on the
part of Aggreko for failing to reimburse General Accident after receipt of the December 2010
notice. Thus, General Accident’s breach of contract claims must be dismissed as a matter of law.
The limited Louisiana jurisprudence related to Article 1773 supports this conclusion.16
Aggreko’s motion for summary judgment on General Accident’s breach of contract claims will
be granted.
B. General Accident’s Unjust Enrichment Claims
1. Application of Louisiana’s Prescriptive Statute to the Unjust Enrichment
Claims
General Accident’s Complaint also states a claim for unjust enrichment as to each
deductible payment it made on behalf of Aggreko under the Policy for which it was not
reimbursed. R. 1, ¶¶ 16-17. But for a cursory mention in its Motion for Summary Judgment and
supporting memoranda, General Accident does not address the unjust enrichment claim in
significant detail. See R. 20-2, p. 2 (“Plaintiff’s complaint asserts causes of action for breach of

16

See Bunge Edible, 756 F. Supp. at 267 (holding that the plaintiff’s failure to fulfill the suspensive
condition in a contract— to obtain an agreement from a vessel owner to waive a limitations period— within two
months of the defendants’ conditional agreement to also waive the limitations period, was unreasonable under Article
1773, rendering the defendants’ conditional obligation unenforceable in the lawsuit); Prudhomme, 06-516 at 7-8,
941 So. 2d at 107 (holding that defendant, by failing to return a riding lawnmower within eight months of signing a
settlement agreement with his ex-wife— a suspensive condition of that settlement— had waited an “arguably
unreasonable period of time” under Article 1773, which rendered enforcement of the remainder of the obligations
under the settlement agreement “invalid”); Stoessell v. D’Luca, 07-0435, p. 3 (La. App. 1 Cir. 12/21/07); 2007 W L
4480777, at *3 (unpublished decision) (holding that “three years is more than a reasonable time period” under
Article 1773 for the parties to fulfill the suspensive condition— the application for certain permits—after they
executed a real estate contract, and as the “suspensive condition was unfulfilled,” the option under the contract— the
conditional obligation— was “no longer enforceable”).

16

contract and unjust enrichment.”). In fact, General Accident repeatedly asserts in its Motion for
Summary Judgment that the “sole” issue in the suit is “whether Plaintiff’s claims for breach of
contract are barred under Louisiana’s ten-year prescriptive statute for personal actions.” R. 20-2,
p. 1. Throughout its motion and memoranda filed in support thereof, General Accident refers to
its causes of action as “claims for reimbursement,” see R. 20-2, p. 3-4; R. 24, p. 1. It is unclear, in
light of General Accident’s assertions regarding the “sole issue” in the case, whether these socalled “claims for reimbursement” are intended to encompass both the breach of contract claims
and the unjust enrichment claims or just the former. General Accident also fails to outline the
elements that comprise a claim for unjust enrichment under Louisiana law, or to marshal the
evidence on which the Court might grant summary judgment on those claims, although its
statements imply that the Court’s summary judgment ruling would dispose of the case in its
entirety.
Aggreko’s Motion for Partial Summary Judgment, on the other hand, “asks this Court to
dismiss any and all of General Accident’s reimbursement claims on deductible payments that
were paid by General Accident.” R. 21. Aggreko’s defense, as originally asserted in its Answer,
R. 8, was that General Accident’s claims were subject to Article 3499's prescriptive period of ten
years on “personal actions.” R. 21-3, p. 5. Aggreko conceded in its Motion that three of General
Accident’s claims for reimbursement totaling $84,640.38, asserted in the form of either breach of
contract or unjust enrichment claims, were not time-barred under the prescriptive statute because
they were paid on October 1, 2001, December 30, 2001, and January 17, 2002. The dates for
these three payments fall within ten years of the filing of the Complaint on September 19, 2011.
R. 21-3, p. 2-3, 8. Although Aggreko also did not discuss the elements of the unjust enrichment
17

cause of action in any detail, it is clear from its motion and supporting memoranda it sought
summary judgment on both the breach of contract and unjust enrichment claims through
application of Louisiana’s prescription statute.
None of General Accident’s claims for unjust enrichment are prescribed under Louisiana
law. Unjust enrichment claims, like breach of contract claims, are governed by the ten-year
prescriptive period under Article 3499. See, e.g., Trust for Melba Margaret Schwegmann v.
Schwegmann Family Trust, 09-968, p. 9 (La. App. 5 Cir. 9/14/10); 51 So. 3d 737, 743; Onstott v.
Certified Capital Corp., 05-2548, p. 5 (La. App. 1 Cir. 11/3/06); 950 So. 2d 744, 747; Johnson v.
Hardy, 98-2282 (La. App. 1 Cir. 11/5/99); 756 So. 2d 328, 332 n.4. As with breach of contract
claims, a claim for unjust enrichment “cannot be asserted before it accrues.” See August, 02-632,
837 So. 2d at 80. Although “[o]rdinarily” the party raising the prescription defense “bears the
burden of proof” as to the applicability of the defense, “if prescription is evident on the face of
the pleadings” as Aggreko has made it in its Answer, R. 8, “the burden shifts to the plaintiff to
show the action has not prescribed.” Wells, 11-1232 at 8, 89 So. 3d at 1149. “In the absence of
evidence, the objection of prescription must be decided upon the facts alleged in the petition, and
all allegations contained therein are accepted as true.” Id.
“The claim of unjust enrichment arises when ‘[a] person . . . has been enriched without
cause at the expense of another person[.]’” Bennett v. Dauzat, 07-1555, p. 4 (La. App. 3 Cir.
5/21/08); 984 So. 2d 215, 218 (quoting La. Civ. Code Ann. art. 2298) (emphasis added). The
statutory source for the unjust enrichment cause of action is found in Article 2298 of the
Louisiana Civil Code, which states that a “person who has been enriched without cause at the
expense of another person is bound to compensate that person.” La. Civ. Code Ann. art. 2298.
18

“The root principle of an unjustified enrichment . . . is that the plaintiff suffers an economic
detriment for which he should not be responsible, while the defendant receives an economic
benefit for which he has not paid.” Scott v. Wesley, 589 So. 2d 26, 27 (La. App. 1 Cir. 1991).
“Under Louisiana law, the requisite elements of a claim for unjust enrichment are: (1) an
enrichment; (2) an impoverishment; (3) a connection between the enrichment and the
impoverishment; (4) an absence of justification or cause for the enrichment and impoverishment;
and (5) no other available remedy at law [for the impoverishee].” Pinegrove Elec. Supply Co.,
Inc. v. Cat Key Constr., Inc., 11-660, p. 5 (La. App. 5 Cir. 2/28/12); 88 So. 3d 1097, 1100 (citing
cases).
An “enrichment” is “an economic benefit received by [a defendant’s] estate, whether by
an addition to it or by a prevention of an economic detriment to it, without his furnishing
compensation intended to be adequate for it.” Gray v. McCormick, 94-1282, p. 11 (La. App. 3
Cir. 10/18/1995); 663 So. 2d 480, 486 (quoting Justice Albert Tate, Jr., The Louisiana Action for
Unjustified Enrichment, 50 Tul. L. Rev. 883 (1976), 51 Tul. L. Rev. 446 (1977)). Therefore, “[a]
person is enriched when his assets increase, without adequate compensation, or his liabilities
diminish.” Gulfstream Servs., Inc. v. Hot Energy Servs., Inc., 04-1223, p. 6 (La. App. 1 Cir.
3/24/05); 907 So. 2d 96, 101, writ denied, 05-1064 (La. 6/17/05); 904 So. 2d 706. As to the
fourth element of the unjust enrichment cause of action, “in practical terms,” the “absence of
justification . . . means that ‘no legal cause justifies the enrichment . . . in the sense that no lawful
contract or provision of law was intended to permit the enrichment or to prevent the
impoverishment or to bar attack on the enrichment or the impoverishment[.]’” Kilpatrick v.
Kilpatrick, 27,241, p. 7 (La. App. 2 Cir. 8/23/95); 660 So. 2d 182, 187, writ denied, 95-2579 (La.
19

12/15/95); 664 So. 2d 444 (quoting Tate, The Louisiana Action for Unjustified Enrichment).
Although General Accident’s argument against prescription of its unjust enrichment
claims is couched in somewhat ambiguous terms, under the facts as alleged in its Motion for
Summary Judgment, which are not disputed by Aggreko, General Accident has sustained its
burden to establish that the action has not prescribed. The cause of action for unjust enrichment
did not accrue until Aggreko, without legal cause, refused General Accident’s December 2010
demand for reimbursement pursuant to the Policy. It is arguable that Aggreko was “enriched” at
the time General Accident made each payment to a third party, as it was at this point that
Aggreko did not incur the economic detriment of paying from its own coffers to satisfy claims
made by third parties against it. However, such “enrichment” was not “without legal cause or
justification” until Aggreko failed to honor its contractual obligations to General Accident under
the Policy. The making of payments by General Accident to third parties on behalf of Aggreko
did not establish a cause of action for unjust enrichment; to the contrary, General Accident
expressly undertook this responsibility under the Policy as Aggreko’s insurer. Enrichment
without legal justification was complete only when Aggreko breached its contractual obligation
to reimburse General Accident “upon notification” by General Accident. This occurred at the
earliest in December of 2010. General Accident’s claims for unjust enrichment are therefore
well within Louisiana’s ten-year prescriptive period governing such claims. Thus, Aggreko’s
motion for summary judgment on this basis must be denied.
2. Grant of Summary Judgment on the Unjust Enrichment Claims Cannot
Be Made at This Time
Aggreko has proffered no other legal basis for the Court to consider in order to grant
summary judgment on General Accident’s unjust enrichment claims, although such a basis likely
20

exists based on the record before the Court. Under settled Fifth Circuit jurisprudence, “a district
court may not grant summary judgment sua sponte on grounds not requested by the moving
party.” Baker v. Metro. Life Ins. Co., 364 F.3d 624, 632 (5th Cir. 2004) (quoting John Deere Co.
v. Am. Nat’l Bank, Stafford, 809 F.2d 1190, 1192 (5th Cir. 1987)). Pursuant to Federal Rule of
Civil Procedure 56, a district court may grant summary judgment on grounds “not raised by a
party,” but must first give “notice and a reasonable time to respond.” Fed. R. Civ. P. 56(f)(2).
Notice is required if the district court is to rule on summary judgment sua sponte “even where
summary judgment may have been appropriate on the merits.” Atkins v. Salazar, 677 F. 3d 667,
678 (5th Cir. 2011) (internal citations omitted); see also Wernecke v. Garcia, 452 F. App’x 479,
482 (5th Cir. 2011) (“The district court’s having failed to give the [party against whom summary
judgment was entered] notice [of the grounds on which it ruled sua sponte], its . . . ruling [on this
issue] was improper under both Baker and Rule 56(f)(2).”).
Louisiana law dictates that the remedy of unjust enrichment “shall not be available if the
law provides another remedy for the impoverishment or declares a contrary rule.” La. Civ. Code
Ann. art. 2298. “Pursuant to La. Civ. Code art. 2298, the remedy of unjust enrichment is
subsidiary in nature, and shall not be available if the law provides another remedy. . . . The unjust
enrichment remedy is only applicable to fill a gap in the law where no express remedy is
provided.” Walters v. MedSouth Record Mgmt., LLC, 10-0353, p. 2 (La. 6/4/10); 38 So. 3d 243,
244 (internal quotation marks and citations omitted). “The mere fact that a plaintiff does not
successfully pursue another available remedy does not give the plaintiff the right to recover under
the theory of unjust enrichment.” Pinegrove, 11-660 at 6, 88 So. 3d at 1101. Under the fifth
element of the unjust enrichment claim, “it is not the success or failure of other causes of action,
21

but rather the existence of other causes of action, that determine whether unjust enrichment can
be applied.” Garber v. Badon & Ranier, 07-1497, p. 10-11 (La. App. 3 Cir. 4/2/08); 981 So. 2d
92, 100, writ denied, 08-1154 (La. 9/19/08); 992 So. 2d 943. “The existence of a ‘remedy’ which
precludes application of unjust enrichment does not connote the ability to recoup [the]
impoverishment by bringing an action against a solvent person. It merely connotes the ability to
bring the action or seek the remedy.” Carriere v. Bank of La., 95-3058 (La. 12/13/96); 702 So. 2d
648, 672 (on rehearing).17
In spite of what appears to be well settled law, Aggreko’s failure to address this potential
basis for the Court to consider granting summary judgment as to General Accident’s unjust
enrichment claims prevents the Court from doing so at this juncture. The Court will therefore
grant each party ten (10) days from the date of the entry of this Ruling to submit a brief on the
following issue or to advise the Court that no brief will be forthcoming:
Has General Accident failed to state a cause of action, requiring the grant of
summary judgment against it, for its unjust enrichment claims, because it had an
alternative remedy at law, breach of contract, available to it given the undisputed
facts of the case presently before the Court?
The parties are to address only the issue set out above in their supplemental briefs using pinpoint
citations to all applicable law, jurisprudential or statutory, in support of their respective positions,
and neither party’s brief is to exceed five (5) pages. No reply brief is to be filed by a party unless
requested by the Court to do so. The Court will reserve ruling on Aggreko’s motion for summary
judgment as to General Accident’s unjust enrichment claims until the parties have submitted
17

See also Sheets v. Yamaha Motors Corp., U.S.A., 849 F.2d 179, 184 (5th Cir. 1988) (“Louisiana law
makes clear that when an adequate remedy at law is available, the court may not resort to principles of equity.”);
Harris Builders, L.L.C. v. URS Corp., 861 F. Supp. 2d 746, 755 (E.D. La. 2012) (“The fact that [the plaintiff] has
pled an action in tort, which states a claim, demonstrates that another legal remedy is available.”) (citing Walters, 100353 at 2, 38 So. 3d at 244).

22

their supplemental briefs, or have advised the Court that no briefs or reply briefs will be
forthcoming.
IV. CONCLUSION
Based on the foregoing, General Accident’s Motion for Summary Judgment, R. 20, will
be denied. Aggreko’s Motion for Partial Summary Judgment, R. 21, will be granted as to
General Accident’s breach of contract claims. The Court will defer ruling on General Accident’s
Motion for Summary Judgment on the unjust enrichment claims for the reasons set forth above.
Consistent with Federal Rule of Civil Procedure 56(f), each party is to file a supplemental brief
via ECF of no longer than five (5) pages in length in response to the question posed by the Court
in section III(B)(2) of this Ruling, or to advise the Court that no such brief will be forthcoming,
on or before 1:00 p.m. CST on Friday, December 28, 2012.
It is the Court’s present intention to issue its Judgment on the parties’ motions for
summary judgment on unjust enrichment after giving due consideration to the parties’
supplemental briefs, if any there be.
THUS DONE AND SIGNED at Lafayette, Louisiana, this 17th day of December, 2012.

_______________________________
Tucker L. Melançon
UNITED STATES DISTRICT JUDGE

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