Clear Blue Spclt v. Landrieu Concrete
22-30375
5th Cir.May 1, 2025Background
- Landrieu Concrete and Cement Industries (Landrieu) used sand contaminated with sugar—delivered by Double R&J Trucking (R&J)—to make concrete, resulting in defective product that had to be removed and replaced.
- Landrieu made a claim under R&J’s insurance policy with Clear Blue Specialty Insurance Company (Clear Blue), which denied coverage and sought declaratory relief in district court.
- The insurance policy contained two forms: Commercial General Liability (CGL) and Business Auto Coverage (BAC), each with different exclusions.
- The district court granted summary judgment to Clear Blue, finding exclusions in the CGL Form barred coverage.
- Landrieu appealed, arguing coverage existed under both forms and Clear Blue's denial was in bad faith.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exclusion under CGL Form (Auto Exclusion) | Damage occurred when concrete failed (manifestation theory) | Damage occurred when sand was contaminated in truck (use theory) | Auto Exclusion applied; damage occurred at contamination during transport. |
| Definition of 'Use' and 'Maintenance' in CGL Exclusion | Washing truck isn’t 'maintenance'; use doesn’t mean contamination | Maintenance includes washing; use covers loading/unloading | 'Maintenance' includes washing; exclusion applies due to failure to clean truck. |
| Exclusion under BAC Form (Care, Custody, or Control) | Exclusion not triggered, as damage manifested after delivery | Exclusion applies; damage happened while transporting sand | CCC Exclusion applies; damage to sand occurred during insured’s transport. |
| Bad Faith by Insurer | Insurer liable for failing to settle claim within 30 days | Not liable; claim properly denied based on policy exclusions | No bad faith; denial was reasonable given clear policy exclusions. |
Key Cases Cited
- Barry Concrete, Inc. v. Martin Marietta Materials, Inc., 531 F. Supp. 2d 766 (M.D. La. 2008) (contamination of aggregate during transport is property damage, use of auto exclusion applies)
- Bolin v. Safeco Insurance Cos., 431 So. 2d 71 (La. Ct. App. 1983) (maintenance of vehicle includes washing under insurance policies)
- Korossy v. Sunrise Homes, Inc., 653 So. 2d 1215 (La. Ct. App. 1995) (manifestation theory for triggers of property damage in certain construction defect cases)
- Orleans Par. Sch. Bd. v. Scheyd, Inc., 673 So. 2d 274 (La. Ct. App. 1996) (manifestation theory not universally required; occurrence based on policy and facts)
- Baack v. McIntosh, 304 So. 3d 881 (La. Ct. App. 2020) (bad faith penalties unavailable where insurer has reasonable basis for denial)