240 So. 3d 932
La. Ct. App.2017Background
- On August 3, 2012 a sinkhole near Bayou Corne damaged and displaced an EnLink natural gas pipeline; EnLink sued Texas Brine and others for damages.
- Texas Brine operated the Oxy Geismar #3 salt cavern, alleged to have failed and caused the sinkhole.
- Zurich issued commercial liability policies to the named insured for three consecutive one-year periods that expired March 1, 2012 (last pre-2012 policy); no Zurich policy was in force on the August 2012 sinkhole date.
- Texas Brine sought defense and indemnity from Zurich under the pre-2012 policies, arguing hidden subsidence or earth movement occurring during those policy periods could have caused EnLink’s damage.
- The district court granted summary judgment to Zurich (dismissing Texas Brine’s third-party demand), and the court of appeal affirmed, applying the eight-corners rule and relying on the court’s prior Crosstex decision.
Issues
| Issue | Plaintiff's Argument (Texas Brine) | Defendant's Argument (Zurich) | Held |
|---|---|---|---|
| Duty to defend — timing of "property damage" | EnLink’s pipeline may have sustained hidden damage (subsidence) during pre-2012 policy periods, so Zurich must defend until claims were resolved | EnLink’s petition alleges discovery/manifestation in Aug 2012; pre-2012 policies require damage to "occur" during policy period, and none were in effect on Aug 3, 2012 | Court held Zurich had no duty to defend; EnLink’s petition did not allege property damage during the pre-2012 policy periods |
| Use of extrinsic evidence to create coverage question | Expert analyses (inSAR, opinions) show ground movement 2007–2011 and could support earlier damage | Under the eight-corners rule, insurer looks only to the petition and policy; extrinsic expert opinions cannot alter the duty to defend | Court held experts irrelevant to duty-to-defend analysis; they only speculated about possible pre-policy damage |
| Interpretation of policy trigger language ("occurs during the policy period") | Broadly interpret occurrence to include continuous/latent harm that may have started during policy term | Policy language requires property damage to "occur" within the policy period; loss-of-use deemed to occur when physical injury occurs; Zurich’s policies unambiguously limit coverage to damages occurring during the policy | Court held policy language bars coverage absent an allegation that damage occurred during the policy periods |
| Appropriateness of summary judgment | There are disputed factual issues about when damage began, precluding summary judgment | No material factual dispute relevant to duty to defend under eight-corners; plaintiff cannot create coverage by extrinsic proof | Summary judgment for Zurich affirmed |
Key Cases Cited
- Jones v. Anderson, 224 So.3d 413 (La. App. 1 Cir. 2017) (summary-judgment standard and appellate de novo review)
- Arceneaux v. Amstar Corp., 66 So.3d 438 (La. 2011) (insurer's duty to defend is broader than indemnity; duty measured by petition)
- Maldonado v. Kiewit Louisiana Co., 146 So.3d 210 (La. App. 1 Cir. 2014) (application of the eight-corners rule and liberal reading of petition allegations)
- Vaughn v. Franklin, 785 So.2d 79 (La. App. 1 Cir. 2001) (rejecting use of evidence outside petition to create duty to defend)
- George S. May Int'l Co. v. Arrowpoint Capital Corp., 97 So.3d 1167 (La. App. 1 Cir. 2012) (coverage/dispute suitable for summary-judgment framework)