IN RE: TK BOAT RENTALS, LLC, as owner and operator of the M/V Miss Ida, for exoneration from or limitation of liability
CIVIL ACTION NO. 17-1545 c/w 17-2446 and 17-3657
SECTION M (4)
August 7, 2019
ORDER & REASONS
Before the Court are the following motions:
(1) the motion of defendants Andre Boudreau and GEICO Marine Insurance Company (“GEICO“) for summary judgment on their crossclaim against defendant Allianz Global Corporate and Specialty Marine Insurance Company (“AGCS“) for insurance coverage.1 AGCS opposes the motion,2 Boudreau and GEICO file a reply in support of the motion,3 and AGCS files a surreply;4
(2) AGCS‘s motion for summary judgment on its crossclaim against GEICO for insurance coverage.5 GEICO opposes the motion,6 and AGCS files a reply in support of the motion;7
(4) a motion of Extreme Fishing, LLC (“Extreme Fishing“) for summary judgment on its right to limitation of liability,12 to which claimants respond in opposition,13 and in further support of which Extreme Fishing replies.14
Having considered the parties’ memoranda and the applicable law, the Court issues this Order & Reasons.
I. BACKGROUND
This case arises out of a boating accident. Patrick Beck booked a fishing trip out of Venice, Louisiana, with Extreme Fishing through Troy Wetzel, Extreme Fishing‘s founder and sole member,15 for February 12, 2017.16 Wetzel generally books fishing trips by phone and hires a captain to operate one of the boats that he owns and leases to Extreme Fishing.17 For Beck‘s trip, Wetzel hired Boudreau, a licensed captain18 whom he had observed at work on scores of occasions over the course of three or four years, to captain Wetzel‘s M/V Kingfish.19 However, on February 11, 2017, the M/V Kingfish became inoperable when its port propeller inexplicably spun off into the marsh on another fishing trip.20 As a consequence, instead of using the M/V Kingfish for Beck‘s trip, Wetzel asked whether Boudreau could secure another vessel. Knowing that Chase St. Clair owned a fishing vessel, Boudreau received permission to use the M/V Super Strike for the trip.21
On the morning of February 12, 2017, Boudreau captained the M/V Super Strike for passengers Beck, his minor son, C.D.B., Justin McCarthy, Michael Harrell (collectively, “Plaintiffs“), Tracy Edwards, and Charles “Nick” Siria.22 Upon leaving the Venice Marina, fog limited visibility to approximately 50 to 75 yards.23 Boudreau operated boats in similar conditions approximately 15 to 20 times per year.24 His
To access the Gulf of Mexico, Boudreau planned to leave the Venice Marina, enter the Mississippi River from an area known as “The Jump,” proceed downriver off the right descending bank (the West Bank), and then cross the river to the East Bank just south of Andres Pond so as to avoid an area of known dredging activity and to exit the river and enter the Gulf through Pass a Loutre.28 Before crossing the river, the M/V Super Strike‘s port engine had stalled between four and six times.29 Boudreau testified that, after the third time, he called St. Clair to inquire about the condition of the engine, but could not reach him.30 Boudreau further testified that he was able to restart the engine each time after it stalled,31 and that both engines were operational as he crossed the river.32 The passengers testified that only the starboard engine was fully operational as they crossed the river.33
As the M/V Super Strike entered the Mississippi River, Boudreau testified that visibility was approximately 20 yards due to fog, and that visibility ranged between 10 and 20 yards throughout the remainder of the voyage.34 About three-quarters of the way across the river, Boudreau observed an unidentified object appear and then disappear on his radar, which prompted him to reduce his speed.35 Boudreau then observed another radar contact, what he later learned to be the M/V Miss Ida, proceeding in a westerly direction. Based on the radar signals, Boudreaux believed that the M/V Miss Ida was then crossing the river heading to the West Bank.36 Boudreaux testified that, by then, he had reduced the speed of the M/V Super Strike to about 20 miles per hour and that visibility was about 15 yards.37 As Boudreau continued to monitor the radar, he noticed that the M/V Miss Ida was then moving in a northerly, not westerly, direction. Boudreaux testified that he then put the M/V Super Strike in neutral, assuming that the vessels would pass each other starboard-to-starboard (with the M/V Super Strike nearer the East Bank).38 About 30 seconds later according to Boudreaux‘s estimate and before he could take evasive action, the M/V Miss Ida collided with the M/V Super Strike, which had
On February 23, 2017, TK Boat Rentals, owner and operator of the M/V Miss Ida, filed a limitation-of-liability action related to the accident.45 On March 24, 2017, Plaintiffs instituted an action for damages against several defendants, including Extreme Fishing, TK Boat Rentals, Wetzel, Boudreau, St. Clair, and GEICO (which Plaintiffs allege was St. Clair‘s insurer on the date of the collision).46 On April 19, 2017, St. Clair and Boudreau, owner and operator of the M/V Super Strike, jointly filed a limitation-of-liability action.47 The two limitation actions and Plaintiffs’ suit for damages were consolidated into this action.48 Plaintiffs eventually added a claim against AGCS, the alleged insurer of Wetzel49 and Extreme Fishing.50
On February 15, 2018, Boudreau and GEICO filed a crossclaim against AGCS, alleging that AGCS‘s policy provided coverage to Boudreau for Extreme Fishing‘s use of St. Clair‘s vessel.51 On September 5, 2018, AGCS filed a crossclaim against GEICO, asserting that Extreme Fishing is entitled to coverage under GEICO‘s policy as the bareboat charterer of the M/V Super Strike, and that AGCS is the excess insurer and entitled to reimbursement from GEICO for all defense costs incurred to date related to the defense of Extreme Fishing.52 In granting AGCS leave to file its crossclaim against GEICO, the Court noted that it was not then deciding whether AGCS had standing to assert the claim.53
A. The AGCS Policy
It is undisputed that Wetzel carried an insurance policy issued by AGCS for the M/V Kingfish that was in effect on the
2. Temporary Substitute Watercraft – If your Watercraft is out of normal use because of a covered loss, we will cover damages you are legally obligated to pay for bodily injury or property damage arising from the maintenance, use, or control of a temporary substitute Watercraft. The temporary substitute Watercraft must be of a similar type, value, and length as the Watercraft that is out of normal use. But we do not cover temporary substitute Watercraft being used for any purpose other than replacing your Watercraft while it is out of normal use due to a covered loss.56
Based upon the foregoing provisions and the allegations of Plaintiffs’ complaint against Boudreau, the Court previously determined that AGCS has a duty to defend Boudreau.57
In the section entitled “General Rules and Conditions,” the AGCS policy lists several duties of the insured purporting to be preconditions to coverage,58 including the insured‘s obligations to report to the insurer any loss or damage within 48 hours after arrival in port, provide notice in writing of the claim within 60 days of the occurrence, and make the watercraft and other damaged property available for AGCS‘s inspection when reasonably required by AGCS.59 The AGCS policy also contains an “other insurance” clause that states: “If, at the time of a covered loss or damage, there is any other insurance that would apply to the property in the absence of this policy, the insurance under this policy will only apply as excess insurance over the other insurance.”60
B. The GEICO Policy
It is also undisputed that St. Clair carried an insurance policy issued by GEICO for the M/V Super Strike that was in effect on the date of the collision.61 The GEICO policy provides coverage for a bareboat charterer as follows:
While the Insured Boat is under Charter Use, then “you“, “your“, “insured“, and ”insured person” are defined as the Named Insured(s) on the Declarations Page and any operator that you designate that holds all required Federal, State, and local licenses and permits. While the insured boat is in service as a Bareboat Charter ..., then “you“, “your“, ”insured“, and ”insured person” also include a charterer operating the insured boat, a licensed captain, a certified instructor, and the Management Company named on this endorsement.
* The definition of Charter Use is deleted in its entirety and replaced with the following:
- is defined as the use of the boat for:
- Bareboat Charters,
- crewed charters carrying six (6) or less passengers for the purpose of charter fishing, sightseeing, or dinner cruises only.
All other Commercial use is excluded. 62
Under the policy, the term “bareboat charter” means “a legal bareboat charter as defined by the United States Coast Guard in the Code of Federal Regulations and any applicable endorsement to these regulations.”63 The Court has previously ruled as a matter of law that Extreme Fishing was the bareboat charterer of the M/V Super Strike at the time of the collision.64
The GEICO policy also contains an “other insurance” clause that states:
If there is any other available insurance that would apply in the absence of this policy, this insurance shall apply as excess over the other insurance. However, with respect to Coverage A and Coverage E, the combined amount of available insurance shall not exceed the applicable limits of this policy for any loss. When this policy and any other policy covers on the same basis, either excess or primary, we will pay only our share. Our share is the proportion that the Limit of Insurance of our policy bears to the total of the limits of all the policies covering on the same basis.
When this insurance is excess, we will have no duty to defend an insured against a claim or suit if any other insurer has a duty to defend an insured against that claim or suit.65
II. PENDING MOTIONS
A. Insurance Coverage Claims
Boudreau and GEICO now move for summary judgment against AGCS for insurance coverage under the AGCS policy issued to Wetzel.66 Boudreau and GEICO contend that the undisputed facts establish that Boudreau and the M/V Super Strike fall within the express terms of the “temporary substitute watercraft” clause.67 Further, Boudreau and GEICO contend that any coverage GEICO owes to Boudreau is excess to AGCS‘s coverage under GEICO‘s “other insurance” clause.68 In response, AGCS argues that several disputed facts exist to preclude coverage for Boudreau under the “temporary substitute watercraft” clause. AGCS first suggests that GEICO judicially admitted being a co-primary insurer with AGCS in its crossclaim and discovery answers, and, in any event, AGCS‘s policy excludes primary coverage where other primary insurance exists.69
GEICO responds that AGCS lacks standing to pursue a coverage claim on behalf of Extreme Fishing because AGCS is not an insured, additional insured, or third-party beneficiary.71 In reply, AGCS attaches a declaration of Extreme Fishing‘s attorney that purports to evidence Extreme Fishing‘s assignment to AGCS of the insured‘s rights against GEICO for payments made or to be made by AGCS under its policy.72
GEICO moves to strike AGCS‘s reply as impermissibly asserting a new argument and to strike the exhibits submitted with the reply as incompetent summary judgment evidence.73 AGCS responds that it had already addressed the assignment-of-rights argument in its original memorandum in support of its motion for summary judgment, but AGCS does not directly address GEICO‘s contention that the exhibits are inadmissible.74
B. Limitation of Liability
Extreme Fishing moves for summary judgment on its right to limit its liability. As the bareboat charterer of the M/V Super Strike at the time of the collision,75 Extreme Fishing contends it has a right to limit its liability under
In opposition, Plaintiffs contend that Boudreau‘s negligence in failing to check for and identify unseaworthy conditions of
Also in opposition to Extreme Fishing‘s motion to limit its liability, GEICO, Boudreau, and St. Clair briefly argue that “[t]here are issues of fact concerning whether any alleged problems with the port engine were a cause of this collision,” as would point to Extreme Fishing‘s knowledge of Boudreau‘s negligent operation of or failure to inspect the vessel, or Extreme Fishing‘s own failure to implement inspection policies.87 In support of this argument, GEICO, Boudreau, and St. Clair cite the deposition testimony of several Plaintiffs who, in contrast to Boudreau and Rogers, contend that only the port engine was operating when the M/V Super Strike crossed the river.88
TK Boat Rentals also opposes Extreme Fishing‘s motion, re-urging an argument the Court previously rejected in dismissing TK Boat Rentals’ negligent entrustment claim. TK Boat Rentals contends that it now presents summary judgment evidence that Extreme Fishing violated
In reply, Extreme Fishing argues that, as previously held by the Court, it owes no duty to provide a seaworthy vessel to passengers like Plaintiffs.91 With regard to its alleged duty to discover purported defects in the M/V Super Strike‘s engines prior to sailing, Extreme Fishing argues that no respondent to the motion to limit liability has met its burden to show that the condition of the engines caused or contributed to the collision. “Whether or not the port engine on the [M/V Super Strike] was operating properly ... is ultimately a red herring because there has been no evidence produced by the opposing parties that the condition of the [M/V Super Strike‘s] port engine had anything to do
III. LAW & ANALYSIS
A. Summary Judgment Standard
Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing
A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The substantive law identifies which facts are material. Id. Material facts are not genuinely disputed when a rational trier of fact could not find for the nonmoving party upon a review of the record taken as a whole. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Equal Emp‘t Opportunity Comm‘n v. Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014). “[U]nsubstantiated assertions,” “conclusory allegations,” and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Anderson, 477 U.S. at 249-50; Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994). In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 2008). Furthermore, a court must assess the evidence, review the facts, and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Tolan v. Cotton, 572 U.S. 650, 656 (2014); Daniels v. City of Arlington, 246 F.3d 500, 502 (5th Cir. 2001). Yet, a court only draws reasonable inferences in favor of the nonmovant “when there is an actual controversy, that is, when both parties
After the movant demonstrates the absence of a genuine dispute, the nonmovant must articulate specific facts and point to supporting, competent evidence that may be presented in a form admissible at trial. See Lynch Props., Inc. v. Potomac Ins. Co. of Ill., 140 F.3d 622, 625 (5th Cir. 1998);
B. Boudreau and GEICO‘s Motion for Summary Judgment
1. Boudreau‘s Coverage Under the AGCS Policy
Boudreau and GEICO seek primary insurance coverage for Boudreau under the AGCS policy issued to Wetzel for the M/V Kingfish under the “temporary substitute watercraft” clause, which states in pertinent part: “If your Watercraft is out of normal use because of a covered loss, we will cover damages you are legally obligated to pay for bodily injury or property damage arising from the maintenance, use, or control of a temporary substitute Watercraft. The temporary substitute Watercraft must be of a similar type, value, and length as the Watercraft that is out of normal use.”94 Boudreau and GEICO assert that both conditions for coverage under the temporary substitute watercraft clause in the AGCS policy are satisfied: first, the M/V Kingfish was out of normal service on the date of the collision due to a covered loss; and, second, the M/V Super Strike is of a similar type, value, and length as the M/V Kingfish.95
The qualities of the substitute vessel are genuinely disputed. The AGCS policy requires that a temporary substitute watercraft be of “similar type, value, and length as the Watercraft that is out of normal use.”96 In support of its argument that the M/V Super Strike was of similar value to the M/V Kingfish, Boudreau and GEICO merely contend that Extreme Fishing charged the Plaintiffs the same amount for the charter of the substitute
2. GEICO‘s Primary or Excess Coverage
Boudreau and GEICO assert that the GEICO policy‘s “other insurance” clause renders AGCS the primary insurer for Boudreau and GEICO the excess. However, Boudreau and GEICO acknowledge AGCS‘s competing “other insurance” provision and allege in their crossclaim against AGCS that “[b]oth the [GEICO] and AGCS Policies provide primary coverage to Andre D. Boudreau for the February 12, 2017 incident involving the M/V SUPER STRIKE.”100 AGCS argues that Boudreau and GEICO‘s unamended pleading and corresponding interrogatory answer, which state that “[GEICO] and AGCS policies provide co-primary coverage
a. Judicial Admission
“A judicial admission is a formal concession in the pleadings or stipulations by a party or counsel that is binding on the party making them.” Martinez v. Bally‘s La., Inc., 244 F.3d 474, 476 (5th Cir. 2001). “A judicial admission ‘has the effect of withdrawing a fact from contention.‘” Blankenship v. Buenger, 653 F. App‘x 330, 335 (5th Cir. 2016) (quoting Martinez, 244 F.3d at 476) (emphasis in original). Accordingly, judicial admissions generally concern issues of fact and are inapplicable to questions of law. See Blankenship, 653 F. App‘x at 335 & n.15. “To qualify as a judicial admission, the statement must be (1) made in a judicial proceeding; (2) contrary to a fact essential to the theory of recovery; (3) deliberate, clear, and unequivocal; (4) such that giving it conclusive effect meets with public policy; and (5) about a fact on which a judgment for the opposing party can be based.” Jonibach Mgmt. Tr. v. Wartburg Enters., Inc., 750 F.3d 486, 491 n.2 (5th Cir. 2014) (quoting Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 329 (5th Cir. 2001)). Courts retain discretion to treat statements in briefs as judicial admissions, City Nat‘l Bank v. United States, 907 F.2d 536, 544 (5th Cir. 1990), as well as to relieve a party of the binding consequences of its judicial admission where justice requires. See, e.g., Kiln Underwriting, Ltd. v. Jesuit High Sch. of New Orleans, 2008 WL 4724390, at *12 (E.D. La. Oct. 24, 2008) (even if statements were construed as judicial admissions, binding effect waived for counsel‘s “honest mistake” and lack of prejudice to opposing party).
AGCS maintains that GEICO has judicially admitted that GEICO is Boudreau‘s primary insurer through GEICO‘s unamended crossclaim and interrogatory answer. This is only true if the Court were to accept a crimped reading of GEICO‘s pleading, which, fairly read, alleges that both GEICO and AGCS are Boudreau‘s primary insurers. The Court fails to see how such an allegation differs from AGCS‘s own alternative argument that the irreconcilable and mutually repugnant nature of GEICO‘s and AGCS‘s “other insurance” clauses, where each is said to be excess of the other, requires prorated liability under Louisiana law. If true, as a matter of law, both insurers would provide primary coverage to Boudreau, which is precisely what GEICO has alleged. Accordingly, the doctrine of judicial admission is not applicable. See Buenger, 653 F. App‘x at 335 n.15 (“The scope of judicial admissions is restricted to matters of fact which otherwise would require evidentiary proof, and does not include counsel‘s statement of his conception of the legal theory of a case.“) (quoting Glick v. White Motor Co., 458 F.2d 1287, 1291 (3d Cir. 1972)).
AGCS cites Steptore v. Masco Construction Co., 643 So. 2d 1213 (La. 1994), for the proposition that GEICO has waived its coverage defense that it is excess because GEICO assumed the defense of Boudreau without obtaining a reservation of rights.105 AGCS contends that, with GEICO‘s claim to excess status, GEICO‘s interests are no longer completely aligned with Boudreau‘s, so counsel for GEICO and Boudreau has a conflict in the dual representation that is prohibited by Steptore.106 In response, GEICO argues that seeking primary insurance coverage for Boudreau under the AGCS policy is not a “coverage defense” barred by Steptore because GEICO seeks to obtain rather than deny insurance coverage for Boudreau.107 GEICO cites no law in support of this position but instead claims that more is needed to meet the “high standard of proof” to deprive Boudreau of his chosen counsel and show a conflict of interest as defined by Rule 1.7 of the Louisiana Rules of Professional Conduct.108
In Steptore, the Louisiana supreme court precluded an insurer from asserting a coverage defense when the insurer had already assumed defense of the insured without obtaining a reservation of rights or separate counsel. 643 So. 2d at 1215, 1217. Six months after the same counsel began representing the insured and the insurer, the insurer denied coverage for the insured due to the insured‘s breach of a warranty in the policy, and counsel withdrew representation from the insured. Id. The question before the court was whether the insurer had waived its coverage defense. Id. at 1214. The court noted that, under Louisiana law, an insurer is charged with knowledge of the terms of its own policy. Id. at 1216. An insurer also has a duty to investigate facts of which it has notice and which would cause a reasonable person to inquire further, and the insurer‘s failure to investigate “constitutes a waiver of all powers or privileges which a reasonable search would have uncovered.” Id. Reasoning that these waiver principles must be “applied stringently” to protect against potential conflicts of interests between insurer and insured (and citing Rule 1.7 of the Louisiana Rules of Professional Conduct), the court found the insurer‘s knowledge of facts that prompted its duty to investigate constituted a waiver of any coverage defenses when the insurer did not obtain a reservation of rights or separate counsel. Id. at 1217. The court reasoned that, from the beginning of litigation, the insurer, attorneys representing the insurer, and the insured had knowledge of the location of the insured‘s vessel, a fact that would breach the warranty. Id. The insurer‘s retention of the same counsel to defend it and the insured, without reserving its rights, constituted a waiver of this coverage defense. Id.
Unlike the warranty in Steptore, the “other insurance” clauses at issue here do not aim to deprive the insured of coverage. Rather, the “other insurance” clauses in the AGCS and GEICO policies merely govern the relationship between the two insurance providers in determining which will cover the insured in what capacity and percentage. See N. Am. Capacity Ins. Co. v. Brister‘s Thunder Karts, Inc., 2001 WL 766970, at *2-3 (E.D. La. July 9, 2001) (applying Steptore to waive insurer‘s denial of coverage based upon untimely submission of claim but not to analysis of competing
c. GEICO‘s and AGCS‘s Competing “Other Insurance” Clauses
GEICO contends that its “other insurance” clause makes it Boudreau‘s excess insurer. While GEICO acknowledges that AGCS‘s “other insurance” clause also purports to make AGCS Boudreau‘s excess insurer, GEICO points to specific language in the AGCS clause to urge that it does not apply, quoting the following: “If, at the time of a covered loss or damage, there is any other insurance that would apply to the property in the absence of this policy, the insurance under this policy will only apply as excess insurance over the other insurance.”109 GEICO construes the term “property” as used in AGCS‘s clause to mean only “the insured watercraft” and not the “temporary substitute watercraft,” because the term “property” is used only in connection with “the insured watercraft.” As a result, GEICO argues that the AGCS clause applies only when other insurance coverage exists for the M/V Kingfish, as opposed to the M/V Super Strike.110 Because the GEICO policy covers the M/V Super Strike, not the M/V Kingfish, GEICO says that the AGCS “other insurance” clause does not apply, AGCS is Boudreau‘s primary insurer under the “temporary substitute watercraft” provision, and GEICO‘s excess clause can be given effect.111
AGCS denies that the term “property” should be so narrowly construed, urging the Court to employ the ordinary definition of property: “something owned or possessed.”112 AGCS argues
that GEICO‘s interpretation absurdly creates greater coverage for a temporary substitute vessel than for the insured vessel and thereby renders the “other insurance” clause meaningless.113 Thus, AGCS argues that the ordinary definition of property it champions conforms with the object of the “other insurance” clause in its policy: namely, to avoid primary coverage where other insurance is available.114
Under Louisiana law, an insurance policy, like any other contract, is construed according to the general rules of contract interpretation set forth in the
On the other hand, ambiguous provisions and “equivocal provisions seeking to narrow an insurer‘s obligation” are strictly construed against the insurer and in favor of coverage. Id. (citations omitted). However, the rule of strict construction applies only if the ambiguous policy provision is susceptible to more than one reasonable interpretation. Id. (citations omitted). “The determination of whether a contract is clear or ambiguous is a question of law.” Id. (citation omitted). While the insured has the burden of proving that the circumstances constitute a covered claim, the insurer has the burden of proving that any exclusions apply. Doerr v. Mobil Oil Corp., 774 So. 2d 119, 124 (La. 2000).
The term “property” is not defined by the AGCS policy. Under the general principles of contract interpretation under Louisiana law, then, the Court will use the “ordinary and generally prevailing meaning.”
In reconciling competing “other insurance” clauses, Louisiana law teaches that courts should attempt to give both clauses effect and find them mutually repugnant if doing so leaves the insured with no coverage. Graves v. Traders & Gen. Ins. Co., 214 So. 2d 116, 117 (La. 1968). To enforce conflicting provisions that deprive the insured of coverage “would render all insurance nugatory and produce an absurdity which neither the insured nor the insurers contemplated.” Id. at 118. When clauses are found to be mutually repugnant, Louisiana courts have held each insurer liable in proportion to the policy limits or treated each insurer as the co-primary insurer. See, e.g., Shelter Mut. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 993 So. 2d 236, 239 (La. App. 2008) (excess vs. excess); Penton v. Hotho, 601 So. 2d 762, 768 (La. App. 1992) (excess vs. pro rata); Dette v. Covington Motors, Inc., 426 So. 2d 718, 720 (La. App. 1983) (escape vs. excess); Lamastus & Assoc. v. Gulf Ins. Co., 260 So. 2d 83, 86 (La. App. 1972) (excess vs. pro rata). However, Louisiana courts have not established a blanket equitable remedy that would rewrite potentially conflicting provisions; rather, courts adhere to the terms of the policies as written. See Am. Int‘l Specialty Lines Ins. Co., 352 F.3d at 265-68.
Here, AGCS‘s policy plainly provides an excess clause, as it states: “If, at the time of a covered loss or damage, there is any other insurance that would apply to the property in the absence of this policy, the insurance under this policy will apply only as excess insurance over the other insurance.”115 GEICO‘s policy, on the other hand, includes both an excess clause and a pro rata clause:
If there is any other available insurance that would apply in the absence of this policy, this insurance shall apply as excess over the other insurance. However, with respect to Coverage A and Coverage E, the combined amount of available insurance shall not exceed the applicable limits of this policy for any loss. When this policy and any other policy covers on the same basis, either excess or primary, we will pay only our share. Our policy bears to the total of the limits of all the policies covering on the same basis.116
However, GEICO‘s pro rata clause applies only when other insurance, either excess or primary, covers a loss on the same basis; it does not provide primary coverage. The pro rata rate is further delineated
Reading the two “other insurance” clauses together, application of GEICO‘s excess clause conflicts with AGCS‘s excess clause, in that each clause purports to make that insurer excess over the other as primary, and thus leaves Boudreau with no primary coverage. As a result, the excess clauses are mutually repugnant and ineffective, and the Court must treat each insurer as co-primary, determining liability from the remaining provisions of the “other insurance” clauses. 15 WILLIAM SHELBY MCKENZIE & H. ALSTON JOHNSON, III, LOUISIANA CIVIL LAW TREATISE: INSURANCE LAW & PRACTICE § 7:19 (4th ed. 2018); Graves, 214 So. 2d at 118; see also Gaskin v. Jowers, 775 F.2d 621, 627 (5th Cir. 1985) (after determining excess clauses were incompatible, analyzed compatibility between apportionment clauses). The only remaining verbiage of the “other insurance” clauses here is GEICO‘s pro rata clause. Application of GEICO‘s pro rata clause would require GEICO and AGCS to pay in proportion to their policy limits, which is precisely the result under Louisiana law even in the absence of a pro rata clause. Therefore, assuming each policy provides insurance coverage, the Court holds that the excess clauses are mutually repugnant and cancel each other, making GEICO and AGCS co-primary insurers responsible for their pro rata share of the loss.
C. AGCS‘s Motion for Summary Judgment
AGCS seeks summary judgment on its crossclaim that GEICO owes insurance coverage to Extreme Fishing. GEICO raises both procedural and substantive arguments in opposition to the motion.
1. GEICO‘s Motion to Strike
As a preliminary matter, the Court will address GEICO‘s motion to strike AGCS‘s reply and attached exhibits filed in support of its motion for summary judgment. GEICO initially argues that the reply and exhibits should be stricken because AGCS impermissibly raises in its reply the “new” argument that Extreme Fishing assigned its rights to AGCS.117 GEICO is wrong. AGCS briefed its assignment-of-rights theory in its original memorandum in support of the motion for summary judgment.118
GEICO next argues that the exhibits must be stricken because they are not competent evidence to support AGCS‘s motion for summary judgment.119 Attacks on the competency of evidence to support a summary judgment motion should be made in an objection under
“‘Hearsay’ means a statement that: (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement.”
Here, assuming the assignment was confected by counsel as agents for the parties, the email exchange may not be hearsay at all to the extent it effectively embodies, like any other contract, Extreme Fishing‘s assignment of rights to AGCS. Regardless, the content of the emails may be presented at trial by the testimony of their authors, as agents of the contracting parties and having personal knowledge of the assignment. See, e.g., Pritchard v. S. Co. Servs., 92 F.3d 1130, 1135 (11th Cir. 1996) (an affidavit “can be reduced to admissible form at trial” by calling the affiant as a witness). Because the content of the emails may be presented in a form admissible at trial, McMahon‘s declaration and the emails are competent summary judgment evidence.
2. AGCS‘s Standing
GEICO contends that the Court need not consider the merits of AGCS‘s motion for summary judgment because AGCS lacks standing to seek insurance coverage for Extreme Fishing under GEICO‘s policy.125 GEICO states that AGCS has submitted no evidence to show that AGCS is
The Court has concluded that the email exchange and declaration are competent summary judgment evidence, but the existence of an assignment of rights is not dispositive in determining AGCS‘s standing to pursue its claim of coverage for Extreme Fishing under the GEICO policy.
A plaintiff must establish standing as to each claim asserted. Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645, 1650 (2017). The “‘irreducible constitutional minimum’ of standing consists of three elements.” Spokeo, 136 S. Ct. at 1547 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). The plaintiff must demonstrate that it has “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. (citing Lujan, 504 U.S. at 560-61; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000)).
“In addition to the limitations on standing imposed by
Here, GEICO cites Williams v. Certain Underwriters of Lloyd‘s of London, 398 F. App‘x 44, 47 (5th Cir. 2010), and Brown v. American Modern Home Ins. Co., 2017 WL 2290268, at *4 (E.D. La. May 24, 2017), for the proposition that an insured, an additional named insured, and a third-party beneficiary of an insurance policy are the only persons who can bring suit against the insurer for coverage under the
The Brown decision is more instructive. There, the court read Cotton v. Certain Underwriters at Lloyd‘s of London, 831 F.3d 592, 593 (5th Cir. 2016), which was decided after Williams, as holding that a non-insured and non-third-party beneficiary had standing to pursue a coverage claim where the plaintiffs alleged they would be harmed “by underpayment of insurance proceeds and they would indirectly benefit from judgment against the insurers.” Brown, 2017 WL 2290268, at *3. Here, AGCS alleges that it has incurred and will continue to incur costs in defending Extreme Fishing that it would avoid as the excess insurer of Extreme Fishing if GEICO were held to owe primary coverage.131 In doing so, AGCS alleges an indirect injury that results from GEICO‘s refusal to insure Extreme Fishing as the primary insurer, and AGCS would benefit by a judgment on coverage against GEICO. Therefore, even though AGCS is not the named or additional insured or a third-party beneficiary under the GEICO policy, AGCS has Article III standing to pursue its claim against GEICO. See id.
3. Oral, Partial Assignment of Rights
Having determined that AGCS has standing, the Court turns to the merits of AGCS‘s summary judgment motion. AGCS attempts to meet its burden of demonstrating an entitlement to recover under the GEICO policy by arguing that it steps into the shoes of Extreme Fishing - an additional insured named in the GEICO policy endorsement as bareboat charterer - through an oral, partial assignment of rights. Under Louisiana law, an assignment of rights may be made by oral contract. La. Mobile Imaging, Inc. v. Ralph L. Abraham, Jr., Inc., 21 So. 3d 1079, 1082 (La. App. 2009). To prove the existence of an oral contract valued at more than $500, there must be “at least one credible witness and other corroborating circumstances.”
GEICO contends, though, that Extreme Fishing‘s assignment of rights to AGCS was complete rather than partial, thus precluding Extreme Fishing from judicially enforcing any rights under the GEICO policy, and so creating a conflict.135 Under
4. Insurance Coverage
In its motion, AGCS seeks a summary judgment recognizing that Extreme Fishing, as bareboat charterer, and Wetzel, Extreme Fishing‘s owner, are entitled to primary coverage against Plaintiffs’ claims under the GEICO policy issued to cover the M/V Super Strike. AGCS argues that the plain language of the policy provides coverage for a charterer when the insured vessel is used for a bareboat charter. Because the Court has previously ruled that Extreme Fishing was a bareboat charterer of GEICO‘s insured vessel, the M/V Super Strike, on the day of the collision,139 AGCS contends that Extreme Fishing and Wetzel are covered by GEICO‘s policy.140 The Court agrees.
The GEICO policy states in pertinent part:
While the insured boat is in service as a Bareboat Charter ..., then ”you“, ”your“, ”insured“, and ”insured person” also include a charterer operating the insured boat, a licensed captain, a certified instructor, and the Management Company named on this endorsement.141
Under the policy, the term “bareboat charter” means “a legal bareboat charter as defined by the United States Coast Guard in the Code of Federal Regulations and any applicable endorsement to these regulations.”142 The GEICO policy clearly and unambiguously provides coverage for “a charterer operating the insured boat” - Extreme Fishing - when the “insured boat is in service as a Bareboat Charter” - as the M/V Super Strike was on the day of the collision.143 As decided above, GEICO‘s layer of coverage for Extreme Fishing and Wetzel is co-primary with the coverage AGCS owes to them.
D. Extreme Fishing‘s Motion for Summary Judgment - Limitation of Liability
Under the
To determine whether a vessel owner is entitled to limitation, a court conducts a two-step analysis:
First, the court must determine what acts of negligence or conditions of unseaworthiness caused the accident. Second, the court must determine whether the shipowner had knowledge or privity of those same acts of negligence or conditions of unseaworthiness. Knowledge or privity of any fact or act causing the accident is not enough for denial of limitation; it is only knowledge or privity of negligent acts or unseaworthy conditions which trigger a denial of limitation. And, although the petitioner in limitation bears the burden of proving lack of privity or knowledge, the initial burden of proving negligence or unseaworthiness rests with the libellants.
Farrell Lines, Inc. v. Jones, 530 F.2d 7, 10 (5th Cir. 1976) (citations omitted). However, where the accident was caused by a navigational error or other negligence committed by the master or crew at sea, the vessel owner is entitled to limit liability so long as the owner exercised reasonable care in selecting the master. In re Kristie Leigh Enters., Inc., 72 F.3d 479, 481 (5th Cir. 1996) (quoting Cont‘l Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1377 n.15 (5th Cir. 1983), and Mac Towing, Inc. v. Am. Commercial Lines, 670 F.2d 543, 548 (5th Cir. 1982)).
As previously determined by the Court, Extreme Fishing owes no duty of seaworthiness to its passengers.145 As a consequence, the scope of Extreme Fishing‘s potential liability is narrowed to allegations of negligence under general maritime law. See In re Kristie Leigh, 72 F.3d at 481 n.2 (unseaworthiness not considered in limitation analysis where duty to provide seaworthy vessel did not extend to claimants).
The claimants here (including Plaintiffs, GEICO, Boudreau, St. Clair, and TK Boat Rentals) contend that Extreme Fishing had privity or knowledge of Boudreau‘s acts of negligence in operating the vessel and in failing to inspect the vessel for defects.146 Owners and bareboat charterers have “a duty to inquire about conditions and practices likely to produce or contribute to loss, unless appropriate means are adopted and adhered in order to prevent loss.” Gabarick v. Laurin Mar. (Am.), Inc., 900 F. Supp. 2d 669, 677 (E.D. La. 2012) (citing Avera v. Fla. Towing Corp., 322 F.2d 155, 156 (5th Cir. 1963)).
On this record, the Court cannot resolve the first prong of the limitation analysis: it cannot determine whether the engine‘s failure or Boudreau‘s failure to sound the horn caused or contributed to the collision. While Boudreau testified that he intended to put the M/V Super Strike in neutral, other passengers testified that the vessel never changed speed.147 Also contrary to Boudreau and Rogers’ testimony, the passengers testified that only the starboard engine was fully operational as the M/V Super Strike crossed the river.148 Additionally, Rogers’ testimony that the engines were in reverse just prior to the collision conflicts with Boudreau‘s testimony that the M/V Super Strike was in neutral.149 These disputed facts, together with the undisputed testimony about the earlier occurrences of engine stalling, raise questions about whether the engine failure contributed to the collision. Furthermore, it is undisputed that Boudreau did not use his horn to signal his intentions, that he never kept the horn within his reach in the wheelhouse, and that Wetzel hired Boudreau because of his experience fishing with Boudreau.150 It would be reasonable to infer from these facts that Extreme Fishing may have had knowledge of at least one of Boudreau‘s allegedly negligent practices, which compromises its ability to limit liability at this juncture. But, of course, Extreme Fishing rejects any such inference. Given the foregoing disputes, the Court cannot conclude on summary judgment that either Boudreau‘s failure to inspect the vessel or his failure to sound the horn was or was not a cause of the collision. Therefore, granting Extreme Fishing the right to limit its liability is inappropriate at this time. See Howard v. Offshore Liftboats, LLC, 2016 WL 74448, at *2 (E.D. La. Jan. 6, 2016) (“summary judgment is not available on claims for limitation of liability before it has been determined which acts of negligence or conditions of unseaworthiness caused the incident-in-question“) (citing In re OMI Envtl. Sols., 2014 WL 2158492 (E.D. La. May 23, 2014)).
IV. CONCLUSION
Accordingly, for the foregoing reasons,
IT IS ORDERED that the motion of Andre Boudreau and GEICO Marine Insurance Company for summary judgment (R. Doc. 192) is DENIED.
IT IS FURTHER ORDERED that the motion of Andre Boudreau and GEICO Marine Insurance Company to strike (R. Doc. 219) is DENIED.
IT IS FURTHER ORDERED that the motion of AGCS Marine Insurance Company for summary judgment (R. Doc. 211) is GRANTED IN PART. On the issue of competing “other insurance” clauses, the Court concludes that GEICO and AGCS are co-primary insurers responsible for their pro rata share of the loss. To the extent AGCS seeks relief in its motion for summary judgment at variance with the Court‘s ruling that AGCS and GEICO are co-primary insurers for the loss, the motion is DENIED IN PART.
IT IS FURTHER ORDERED that Extreme Fishing‘s motion for summary judgment on its right of limitation of liability (R. Doc. 247) is DENIED.
New Orleans, Louisiana, this 7th day of August, 2019.
BARRY W. ASHE
UNITED STATES DISTRICT JUDGE