624 F. App'x 854
5th Cir.2015Background
- Max Welders held a marine excess "Bumbershoot" liability policy issued by Liberty covering offshore oilfield contractor operations (policy period June 1, 2003–June 1, 2004).
- In 2003 a crane operator employed by Max Welders transported a Shaw employee (Cash) from an offshore platform to a vessel; Cash was severely injured and later sued multiple defendants.
- Liberty issued a declination of coverage, citing the policy’s exclusion for liability “arising out of the ownership, use or operation of ... platforms” (the Platform Exclusion).
- Max Welders settled Cash’s claim for $400,000 (after primary insurer paid limits) and sued Liberty for coverage, seeking reimbursement plus attorney’s fees and costs; proceedings were tried on the briefs.
- The district court found the term “use” ambiguous, admitted extrinsic evidence, concluded the exclusion did not apply, and ordered Liberty to reimburse Max Welders $400,000 plus fees, costs, and interest.
- The Fifth Circuit reversed as to coverage and the award of fees/costs, holding the Platform Exclusion unambiguous and applicable; other portions of the judgment were affirmed.
Issues
| Issue | Plaintiff's Argument (Max Welders) | Defendant's Argument (Liberty) | Held |
|---|---|---|---|
| Whether the Platform Exclusion ("ownership, use or operation of ... platforms") bars coverage for the crane-transport injury | "Use" is ambiguous; incidental/non-extractive uses (transferring personnel) are not the platform’s intended use, so exclusion should not apply | "Use" plainly covers activities performed on the platform, including transport by crane; exclusion unambiguously bars coverage | Exclusion applies; "use" is unambiguous and coverage is barred (reversed district court) |
| Whether insured is entitled to attorney's fees and costs (including fees defending underlying suit) under the policy | Entitled to fees both for defense of Cash’s claim and for pursuit of coverage | No coverage; therefore fees and costs award must be reversed | Reversed award of attorney’s fees, costs, and interest as tied to reversed coverage ruling |
Key Cases Cited
- Janex Oil Co., Inc. v. Hanover Compressor Co., 694 So.2d 415 (La. Ct. App. 1997) (upholding bumbershoot exclusion for liabilities arising from operation of platforms)
- Elliott v. Continental Casualty Co., 949 So.2d 1247 (La. 2007) (if exclusion language has two reasonable meanings, interpretation favoring coverage controls)
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (insurance policies construed to ascertain parties’ common intent)
- Lehmann v. GE Global Ins. Holding Corp., 524 F.3d 621 (5th Cir. 2008) (bench-trial standard of review: factual findings for clear error, legal issues de novo)