Fugro McClelland Marine Geosciences, Inc. v. Steadfast Insurance Company et al

Filing 62

MEMORANDUM AND RECOMMENDATIONS re 23 MOTION for Summary Judgment Against Fugro-McClelland Marine Services, Inc.; ORDER DENYING 35 MOTION to Strike 34 Reply to Response to Motion (Summary Judgment Evidence of FMMG), and DENYING AS MOOT 38 MOTION for Leave to File Supplemental Affidavits or MOTION for Continuance. Objections due within 10 days of service of this order. (Signed by Magistrate Judge Stephen Wm Smith) Parties notified. (jmarchand)

F u g r o McClelland Marine Geosciences, Inc. v. Steadfast Insurance Company et al

D o c . 62

U N IT E D STATES DISTRICT COURT S O U T H E R N DISTRICT OF TEXAS H O U S T O N DIVISION F UGRO-M CC LELLAND MARINE G EOSCIENCES, INC., P l a i n t i ff , vs. S TEADFAST INSURANCE CO. AND L EXINGTON INSURANCE CO., D e fen d a n ts. § § § § § § § § §

C IVIL ACTION H-07-1731

M E M O R A N D U M AND RECOMMENDATION T h is insurance dispute is before the court on defendant Steadfast Insurance C o m p a n y' s motion for summary judgment (Dkt. 23). Having reviewed the parties'

s u b m is s io n s , all matters of record, and the law, the court recommends that Steadfast's motion b e denied.1 B a c k gro u n d P la in tif f Fugro-McClelland Marine Geosciences, Inc. (FMMG) was sued in federal c o u rt in the Eastern District of Louisiana by J. Ray McDermot Engineering, L.L.C. and o th e rs for breach of contract and negligent performance of services (the McDermot lawsuit). S te a d f a s t Insurance Company issued a Commercial General Liability Policy to FMMG.

1

Steadfast objects to FMMG's summary judgment evidence because the accompanying affidavits do not expressly set forth each element of the business records exception to the hearsay rule. FED. R. EVID. 803(6). FMMG's evidence is of the exact nature as that submitted by Steadfast, i.e., letters and e-mail communications between lawyers. There is no question as to the authenticity of the evidence. FMMG's evidence has sufficient indicia of trustworthiness to be admissible. See FED. R. EVID. 807. Steadfast's motion to strike FMMG's summary judgment evidence (Dkt. 35) is denied, making FMMG's motion to supplement or for continuance (Dkt. 38) moot.

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L e x in g t o n Insurance Company issued a Professional Liability Policy to FMMG. FMMG a ss e rte d coverage for indemnity and defense of the McDermot lawsuit under both policies. F M M G settled the McDermot lawsuit for $3.7 million. FMMG funded the settlement out o f its own pocket. FMMG filed this federal lawsuit on May 23, 2007 to collect the settlement a m o u n t and defense costs from its insurers.2 S u m m a r y Judgment Standards S u m m a ry judgment is appropriate if no genuine issues of material fact exist, and the m o v in g party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The party m o v in g for summary judgment has the initial burden to prove there are no genuine issues of m a te ria l fact for trial. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 991 (5th C ir. 2001). Dispute about a material fact is "genuine" if the evidence could lead a reasonable ju ry to find for the nonmoving party. In re Segerstrom, 247 F.3d 218, 223 (5th Cir. 2001). " A n issue is material if its resolution could affect the outcome of the action." Terrebonne P a r is h Sch. Bd. v. Columbia Gulf Transmission Co., 290 F.3d 303, 310 (5th Cir. 2002). A summary judgment movant who bears the burden of proof on a claim must e s ta b lis h each element of the claim as a matter of law. Fontenot v. Upjohn Co., 780 F.2d 1 1 9 0 , 1194 (5th Cir. 1986). If the movant meets this burden, "the nonmovant must go b e yo n d the pleadings and designate specific facts showing that there is a genuine issue for

2

The district court adopted this court's recommendation and denied FMMG's motion to enforce an alleged settlement of this lawsuit. This court granted FMMG leave to amend its complaint to assert a claim for breach of the alleged settlement agreement (Dkt. 61). 2

tria l." Littlefield v. Forney Indep. Sch. Dist., 268 F.3d 275, 282 (5th Cir. 2001) (quoting T u b a c e x , Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995)). If the evidence presented to rebut the summary judgment is not significantly probative, s u m m a ry judgment should be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 2495 0 (1986). In determining whether a genuine issue of material fact exists, the court views th e evidence and draws inferences in the light most favorable to the nonmoving party. Id. a t 255. A n a ly sis S te a d f a s t contends that it is not liable to FMMG as a matter of law for three reasons: (1 ) FMMG breached the voluntary payment/consent-to-settle provision of the insurance p o lic y issued by Steadfast; (2) FMMG's lawsuit is barred by the "no action" provision of the p o lic y, which provides that FMMG may not sue Steadfast to recover on a settlement that was n o t signed off on by Steadfast; and (3) FMMG breached the provision of the policy requiring it to cooperate with Steadfast in the investigation or settlement of a claim. In response, FMMG denies many of Steadfast's factual allegations. FMMG contends th a t Steadfast breached its duty to pay defense costs, relieving FMMG of its obligation to se c u r e Steadfast's consent to settlement. Moreover, FMMG contends that its counsel did c o o p e ra te with Steadfast and provided detailed updates and reports, but that Steadfast refused to meaningfully participate in settlement.

3

T h e court finds that numerous fact issues preclude summary judgment. These include is s u e s of when and by whom the insurance policy was first breached, and whether Steadfast w a s in fact denied an opportunity to participate in mediation of the underlying lawsuit.3 C o n c lu s io n and Recommendation F o r the reasons discussed above, the court recommends that Steadfast's motion for s u m m a ry judgment (Dkt. 23) be denied. T h e parties have ten days from service of this Memorandum and Recommendation to f ile written objections. Failure to file timely objections will preclude appellate review of f a c tu a l findings or legal conclusions, except for plain error. See FED. R. CIV. P. 72. Signed at Houston, Texas on May 2, 2008.

3

In a non-jury trial, the judge is the ultimate trier of fact. In such cases, the court may grant summary judgment where a trial would not enhance the court's ability to draw inferences and conclusions. Nunez v. Superior Oil Co., 572 F.2d 1119, 1123-24 (5th Cir. 1978); In re Placid Oil Co., 932 F.2d 394, 398 (5th Cir. 1991). Assessments of credibility, however, come into sharper focus upon hearing live witnesses. Placid Oil, 932 F.2d at 398. Because the motion for summary judgment has been referred to this magistrate judge for report and recommendation only, the court defers factual determinations to the district court at trial. 4