Stephen Gabarick v. Laurin Maritime (America), Inc
650 F.3d 545
5th Cir.2011Background
- Collision between M/V Tintomara and barge DM-932 in the Mississippi River, spilling oil and triggering multiple suits; IINA deposited $985,000 of its $1 million policy into court via interpleader.
- Policy: SP-23 form with modifications provides $1 million per occurrence; deductible of $15,000; IINA defense costs are at issue.
- District court held defense costs erode the policy limits and granted partial release of funds; barge owner ACL and Laurin Maritime appealed.
- Court treated interpleader fund allocations as tentative, not final dispositions for Rule 54(b) purposes, and declined to determine allocation merits on appeal.
- Policy interpretation under Louisiana law: defense costs generally included within P&I limits; collision clause language is severable and not controlling on defense-cost erosion.
- Court affirmed the erosion ruling in part and dismissed other appellate challenges as non-final or non-appealable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defense costs erode the policy limits | ACL contends defense costs are included within the policy limits | IINA argues defense costs are included within the limits per SP-23 form | Defense costs erode the policy limits |
| Whether the district court's fund allocations were a final, appealable order | ACL sought review of interpleader fund distribution | IINA contends allocations are non-final and not reviewable | Allocation orders were tentative; no final appealable order on funds |
| Whether the SP-23 P&I coverage unambiguously includes defense costs within the liability limit | Barge owner asserts ambiguity due to collision-clause language | Policy unambiguously includes defense costs within the limit; collision clause is severable | Policy clearly includes defense costs within limits; collision clause not controlling on defense-cost erosion |
| Whether Louisiana law should favor the insured under the circumstances | ACL argues insured-favored interpretation under Louisiana law | Sophisticated insured with broker; presumption does not apply | Presumption for insured does not apply; contract is unambiguous in favor of defense-cost inclusion |
Key Cases Cited
- Exxon Corp. v. St. Paul Fire & Marine Ins. Co., 129 F.3d 781 (5th Cir. 1997) (defense costs included within P&I limits in some policies)
- Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948 (5th Cir. 2009) (presumption for insured not available for sophisticated insured)
- Seacor Holdings, Inc. v. Commonwealth Ins. Co., 635 F.3d 675 (5th Cir. 2011) (Louisiana law on interpreting insurance contracts and ambiguity)
- Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1 (1980) (finality requirement for Rule 54(b) judgments)
- Peterson v. Schimek, 98-1712 (La. 3/2/99), 729 So. 2d 1024 (La. 1999) (state-law interpretation principles cited by court)