817 F.3d 235
5th Cir.2016Background
- EBI operated a land-based crane whose pedestal weld failed, causing the crane to topple and injure Naquin; a co-worker was killed. Naquin sued EBI under the Jones Act; a jury found EBI negligent and awarded damages (liability affirmed on appeal; damages remanded).
- EBI sued its insurers (SNIC and London Insurers) for breach of the Protection & Indemnity Policy and statutory bad-faith damages after insurers denied coverage and defense/indemnity. Claims against insurers were severed for separate adjudication.
- SNIC moved for summary judgment, arguing the Policy only indemnified liability arising from EBI’s conduct “as owner of the Vessel,” so it did not cover the purely land-based crane incident; SNIC also argued EBI failed to satisfy notice requirements.
- The district court granted summary judgment to SNIC, concluding the Policy did not cover Naquin’s incident and thus SNIC’s denial was not in bad faith; it later denied EBI’s Rule 59(e) reconsideration motion.
- On appeal, the Fifth Circuit reviewed de novo, applying Louisiana contract interpretation principles to the maritime insurance policy and examined whether a sufficient causal nexus existed between the vessel and the injury to trigger coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Policy’s “as owner of the Vessel” language cover EBI’s liability for the land-based crane accident? | Policy’s “any casualty or occurrence” language provides blanket coverage for liabilities irrespective of location. | Coverage limited to liabilities arising from EBI’s conduct as vessel owner; purely land-based, non-vessel operations are excluded. | Held: Policy limited to casualties arising out of EBI’s conduct as vessel owner; no coverage for the land-based incident. |
| Was there a sufficient causal/operational relation between the vessel and the injury to trigger P&I coverage? | EBI attempted to craft a causal link to the vessel to invoke coverage. | The accident resulted from EBI’s negligent welding/operator conduct; the vessel was merely an inert locale. | Held: No causal operational relation; Lanasse controls—where injury stems from non-vessel operations, vessel-owner liability does not arise. |
| Did SNIC need to give EBI actual notice explaining the Policy’s vessel-owner limitation? | EBI argued lack of actual notice of the coverage limitation. | Policy language was sufficiently clear; no separate actual notice required. | Held: No requirement for SNIC to provide additional actual notice; Policy wording was clear. |
| Can EBI maintain a statutory bad-faith claim if coverage is properly denied? | EBI asserted statutory bad-faith damages for denial of coverage. | Because there is no valid underlying coverage claim, bad-faith claim fails as a matter of law. | Held: Bad-faith claim dismissed—no underlying coverage, so no basis for statutory bad faith. |
Key Cases Cited
- Naquin v. Elevating Boats, L.L.C., 744 F.3d 927 (5th Cir. 2014) (underlying negligence finding and factual record about defective weld and land-based crane failure)
- Lanasse v. Travelers Ins. Co., 450 F.2d 580 (5th Cir. 1971) (P&I coverage requires at least some causal operational relation between vessel and injury)
- Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir. 1991) (apply state contract law to maritime insurance where no controlling federal rule)
- Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864 (5th Cir. 2009) (insurance policy interpretation is a legal question reviewed de novo)
- First Am. Bank v. First Am. Transp. Title Ins. Co., 585 F.3d 833 (5th Cir. 2009) (Louisiana contract interpretation governs insurance contracts)