Settoon Towing, L.L.C. v. St. Paul Surplus Lines Insurance
720 F.3d 268
| 5th Cir. | 2013Background
- Cathy M. Settoon allided with a Bayou Perrot oil well; spill occurred Jan 20, 2007, captain initially failed to report to Coast Guard or Settoon.
- Settoon's excess insurance consisted of SNIC (Bumbershoot 1) and umbrella policies NYMAGIC, Federal, and St. Paul (Bumbershoots 2 and 3).
- Endorsements to Bumbershoot 2 and 3 included an Absolute Pollution Exclusion with a 72-hour knowledge buyback and a 30-day written-notice requirement, plus a follow-form pollution buyback mechanism.
- SNIC delivered the Bumbershoot 1 policy late (binder issued Dec 2006; policy delivered Mar 2, 2007), delaying compliance with §22:873(A) delivery requirements.
- District court granted summary judgment that umbrella policies 2 and 3 are not liable due to 30-day notice noncompliance; SNIC is liable for Bumbershoot 1 due to late delivery; prejudgment interest to be recalculated; Fifth Circuit affirmed all but prejudgment interest calculation and remanded for adjustment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 30-day notice buyback conditions bar umbrella liability | Settoon contends prejudice or flexibility should excuse noncompliance | Umbrella insurers argue strict adherence to the buyback terms is required | Umbrella liability barred by 30-day notice condition precedent |
| Whether the main-body notice rule sustains delays beyond 30 days | Delay allowed if occurrence not yet a claim; endorsements control | Endorsements govern; notice in endorsements is binding | Endorsement terms control; failure to satisfy buyback notice remains fatal |
| Whether SNIC’s delayed delivery violates §22:873(A) and defeats reliance on exclusions | Delivery within reasonable time is required; delay harms insured | Binder delivery suffices; prejudice unnecessary | Delayed delivery violates statute; SNIC cannot rely on exclusions |
| Whether prejudgment interest should be awarded and from when | Louisiana law applies; interest from filing or demand date | Maritime law may apply; interest only from demand date under some rules | Louisiana law applies; prejudgment interest begins when Settoon paid third parties (not from demand) |
Key Cases Cited
- Gulf Island, IV v. Blue Streak Marine, Inc., 940 F.2d 948 (5th Cir. 1991) (notice provisions may be condition precedent to coverage)
- Matador Petroleum Corp. v. St. Paul Surplus Lines Ins. Co., 174 F.3d 653 (5th Cir. 1999) (prejudice not required for strict notice in pollution buybacks (claims-made style))
- Louisiana Maintenance Services, Inc. v. Certain Underwriters at Lloyd’s of London, 616 So.2d 1250 (La. 1993) (delivery violation precludes reliance on policy exclusions)
- Moon v. City of Baton Rouge, 522 So.2d 117 (La. Ct. App. 1987) (prejudgment interest applies to insureds’ portions of liability)
- Amoco Prod. Co. v. Tex. Meridian Res. Exploration Inc., 180 F.3d 664 (5th Cir. 1999) (ex delicto vs ex contractu damages; interest rules)