Hanover Insurance Company v. Superior Labor Services, Inc. et al, No. 2:2011cv02375 - Document 555 (E.D. La. 2018)
Court Description: ORDER AND REASONS denying Lexington Insurance Company's 519 Motion for Summary Judgment and 529 Supplemental Motion for Summary Judgment. Signed by Judge Susie Morgan on 2/21/2018. (Reference: 14-1933, 16-2490)(clc)
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Hanover Insurance Company v. Superior Labor Services, Inc. et al Doc. 555 U N ITED S TATES D ISTRICT COU RT EASTERN D ISTRICT OF LOU ISIAN A H AN OVER IN SU RAN CE COMPAN Y, Plain tiff CIVIL ACTION VERSU S N O. 11-2 3 75 c/ w 14 -19 3 0 , 14 -19 3 3 , 16 -2 4 9 0 SU PERIOR LABOR SERVICES, IN C., ET AL., D e fe n d an ts SECTION : “E” ( 2 ) Ap p lie s t o : 14 -19 3 3 , 16 -2 4 9 0 ORD ER AN D REAS ON S Before the Court is Lexington Insurance Com pany’s (“Lexington”) m otion for sum m ary judgm ent against Allied Shipyard, Inc. (“Allied”). 1 Allied has filed an opposition, 2 and Lexington has filed a reply. 3 For the reasons that follow, the Court D EN IES the m otion. BACKGROU N D On J anuary 23, 20 17, Lexington filed two motions for partial summ ary judgm ent regarding its duty to defend Allied against the claim s m ade in the underlying St. Pierre and Adam s lawsuits as an additional insured under the 20 0 0 -20 0 1 Lexington Policy and the 20 0 8-20 0 9 Lexington Policy, both issued to Masse Contracting, Inc. (“Masse”). 4 On J uly 12, 20 17, the Court granted the m otions. 5 With respect to the 200 0 -20 0 1 Lexington Policy, the Court found Lexington does not owe Allied any defense or indem nity in the 1 R. Doc. 519 as supplem ented by R. Doc. 529. Unless otherwise indicated, “R. Doc.” refers to record docum ents in the consolidated m atter, No. 11-2375. 2 R. Doc. 538. 3 R. Doc. 547. 4 R. Docs. 443, 444. 5 R. Doc. 50 9. 1 Dockets.Justia.com underlying state lawsuits. 6 With respect to the 20 0 8 -20 0 9 Lexington Policy, the Court found that, although Allied qualified as an additional insured under that policy, 7 Lexington, as Allied’s excess insurer, owes no duty to defend Allied until Allied has exhausted its available prim ary insurance. 8 On J uly 12, 20 17, the Court also granted State National Insuran ce Com pany’s (“State National”) m otion for sum m ary judgm ent on the issue of its duty to defend Allied as an additional insured under State National’s policies issued to Masse (the “Masse Policies”). 9 In its m otion for sum m ary judgm ent, State National argued Allied could not sustain its burden of proof in establishing additional insured status, pointing to the Masse Policies’ “Additional Insured Endorsem ent,” which requires a claim ant to show, am ong other things, that Masse was obligated to include the claim ant as an additional insured for the work perform ed by Masse pursuant to: (1) a “written contract”; (2) in effect during the policy period; and (3) executed prior to the “occurrence” of the “bodily injury” or “property dam age.”10 State National argued the 1995 Master Work Contract between Masse an d Allied, under which Allied claim ed it should be afforded additional insured status, does not qualify as a “written contract” requiring Masse to nam e Allied as an additional insured because the 1995 Master Work Contract does not constitute a com plete and enforceable agreem ent for Masse to perform work for Allied. 11 6 Id. at 24. Id. at 28 . 8 Id. at 35. 9 R. Doc. 510 . 10 Id. at 20 . See R. Doc. 242-4 at 25; R. Doc. 242-6 at 15. The Masse Policies define “your work” as “(1) [w]ork or operations perform ed by you or on your behalf; and (2) [m ]aterials, parts or equipm ent furnished in conn ection with such work or operations.” R. Doc. 242-3 at 16; R. Doc. 242-5 at 16. “Your work” includes “(1) Warranties or representations m ade at any tim e with respect to the fitness, quality, durability, perform ance or use of ‘your work’; and (2) [t]he providing of or failure to provide warnin gs and instructions.” Id. 11 R. Doc. 466-1. 7 2 In opposition to State National’s m otion for sum m ary judgm ent, Allied argued the 1995 Master Work Contract was sufficient evidence on its own to dem onstrate its status as an additional insured under the Masse Policies, contending that, because “Allied did offer Masse work at the shipyard and Masse accepted, . . . the obligation in the Master Work Contract was fulfilled, becom ing ‘valid and enforceable.’”12 Allied did not attach any eviden ce of purchase orders or other agreem ents, written or oral, to establish that work was actually com pleted by Masse during State National’s policy periods. Looking to the Masse Policies’ term s, the Court held the 1995 Master Work Contract between Masse an d Allied, do[es] not provide for any specific work or services to be perform ed, but refer[s] in general term s of a need by one party for labor, services or m aterials, and the desire on the part of the other to furnish the sam e. Specific services are later called for under the m aster services agreem ent by work orders, purchase orders or sim ply invoices. 13 The Court concluded the 1995 Master Work Contract—standing alone—is not a bin ding contract between Masse and Allied. 14 Rather, the Master Work Contract only “sets forth [Masse and Allied’s] agreem ent to abide by certain term s should they enter into contractual relations in the future.”15 Because Allied failed to present sum m ary-judgm ent eviden ce of purchase orders or other agreem ents to create a genuine factual dispute with respect to whether the “[a]s 12 R. Doc. 452 at 4. R. Doc. 510 at 21 (quoting Livings v. Service Truck Lines of Tex., Inc., 467 So. 2d 595, 60 0 (La. Ct. App. 3 Cir. 4/ 10 / 1985)). 14 Hebert v. Kerr-McGee Corp., 618 F. Supp. 767, 772– 73 (W.D. La. Aug 22, 198 5) (“[A] m aster service agreem ent does not itself bind the parties to perform any services. It m erely sets forth their agreem ent to abide by certain term s should they contract to perform services in the future.”). 15 Id at 22; see also Matte v. Zapata Offshore Co. v. Tim co, Inc., 784 F.2d 628, 630 (5th Cir. 1986); see also Page v. Gulf Oil Corp., 775 F.2d 1311 (5th Cir. 1985) (finding the m aster service agreem ent “m erely sets out the rules of the gam e in the event that the parties decide to play ball”); Moser v. Am inoil, U.S.A., Inc., 618 F. Supp. 774, 779 (W.D. La. Aug. 22, 1985). “At best, the m aster service agreem ent creates a contingent and speculative obligation that is subject to a purely potestative suspensive condition on the part of the obligee, which obligation does not becom e valid and enforceable until the condition is fulfilled.” Id. 13 3 [r]equired by written contract” requirem ent in the Additional Insured Endorsem ent section of the Masse Policies was satisfied, the Court granted sum m ary judgm ent in favor of State National. 16 Notably, Lexington did not raise this issue in its first m otion for sum m ary judgm ent with respect to the 20 0 8 -20 0 9 Lexington Policy. 17 On August 9, 20 17, Allied sought recon sideration of the Court’s order granting State National’s m otions for sum m ary judgm ent. 18 In an effort to convince the Court to reconsider its granting of State National’s m otions, Allied attached checks from Allied to Masse and Superior, which Allied contended com m em orate paym ent for work perform ed under the 1995, 20 0 6, and 20 0 7 Master Work Contracts. 19 The Court den ied the m otion to reconsider, however, noting that the checks were not attached to Allied’s opposition to State National’s m otions for sum m ary judgm ent, and Allied did not even attem pt to argue that the checks were “newly discovered” and previously unavailable, such that the Court could consider them on the m otion for reconsideration. 20 The Court denied Allied’s m otion for reconsideration, but left open the issue of whether evidence of an oral work order could transform a “blanket” Master Service Agreem ent into a com plete and enforceable contract, thereby satisfying the Masse Policies’ “written contract” requirem ent under the “Additional Insured Endorsem ent.”21 On J uly 21, 20 17, the Court ordered that: any party m ay file a m otion for sum m ary judgm ent with respect to Allied’s status as an additional insured, but only if the insurance policy at issue contains an additional insured endorsem ent requiring the existen ce of a com plete, enforceable written contract between the nam ed insured and the 16 R. Doc. 510 at 27. See R Doc. 444. 18 R. Doc. 532. 19 R. Doc. 532-4. 20 R. Doc. 537 at 5; see Schiller v. Phy sicians Res. Grp. In c., 342 F.3d 563, 567 (5th Cir. 20 0 3). 21 R. Doc. 537 at 6– 9 & nn .29, 35. Because Allied offered evidence of oral work orders only belatedly, the Court did not consider the evidence in its rulin g. Id. 17 4 additional insured and there exists no eviden ce of purchase orders or other agreem ents necessary to m ake an enforceable contract. 22 Pursuant to the Court’s J uly 21, 20 17 order, Lexington now seeks sum m ary judgm ent on the issue of whether Allied can sustain its burden of proof in establishing insured status under the 20 0 8-20 0 9 Lexington Policy. LAW AN D AN ALYSIS The 20 0 8-20 0 9 Lexington Policy, just as the Masse Policies at issue in State National’s m otion for sum m ary judgm ent, requires additional insureds be established “by written contract.”23 Lexington now argues Allied cannot sustain its burden of proof in establishing additional insured status, pointing to the 20 0 8-20 0 9 Lexington Policy’s “Additional Insured Endorsem ent,” which requires a claim ant to show, am ong other things, that Masse was obligated to include the claim ant as an additional insured for the work perform ed by Masse pursuant to a “written contract.”24 Allied points to the 1995 and 20 0 7 Master Work Contracts between Masse an d Allied as proof of its insured status. The Master Work Contracts provide Allied and Masse “desire to m ake an agreem ent whereby [Masse] would furnish labor, services, equipm ent, and/ or m aterials . . . to [Allied’s] custom ers.”25 The Master Work Contracts further provide “If at any tim e during the term hereof, [Allied] desires work to be perform ed for a particular job or project, [Allied] shall advise [Masse] of the particulars of the work and the location thereof . . . Nothing herein shall require that [Allied] use [Masse’s] services, and [Masse] shall not be required to work for [Allied] hereunder.”26 22 R. Doc. 515. Com pare R. Doc. 242-4 at 25; R. Doc. 242-6 at 15 w ith R. Doc. 529-4 at 36. 24 R. Doc. 510 at 25– 27. 25 R. Docs. 533-4, 533-5. 26 Id. 23 5 As the Court previously explained, the 1995 and 20 0 7 Master Work Contracts— standing alone—are not binding contracts between Masse and Allied. 27 Rather, the Master Work Contracts at issue in this case are “blanket” agreem ents, as each contem plates future work orders. 28 As a result, to dem onstrate the 1995 and 20 0 7 Master Work Contracts constitute com plete and enforceable written agreem ents, Allied m ust present eviden ce of purchase orders or other agreem ents to establish that work was actually com pleted during the 20 0 8-20 0 9 Lexington Policy period. 29 Unlike its opposition to State National’s m otion for sum m ary judgm ent, Allied now offers: (1) checks issued by Allied to Masse for work done during the 20 0 8-20 0 9 policy period; 30 (2) testim ony from Gavin Callias, who states “[t]he work perform ed and services provided to Allied by Masse were pursuant to the Master Work Contracts entered into between Allied and Masse on J une 30 , 1995 . . . and on August 10 , 20 0 7”; 31 and (3) deposition testim ony from Antony Boudreaux, who, in response to the question of whether “the first docum ent that is generated in term s of the work Masse[] perform s 27 R. Doc. 510 at 21 (quoting Livings v. Service Truck Lines of Tex., Inc., 467 So. 2d 595, 60 0 (La. Ct. App. 3 Cir. 4/ 10 / 1985)); see also Hebert v . Kerr-McGee Corp., 618 F. Supp. 767, 772– 73 (W.D. La. Aug 22, 1985) (“[A] m aster service agreem ent does not itself bind the parties to perform any services. It m erely sets forth their agreem ent to abide by certain term s should they contract to perform services in the future.”). 28 “[I]t is com m on practice for com pan ies contractin g for work in the oilfield to enter into contracts in two stages. Typically, they first sign a ‘blan ket contract’ that m ay rem ain in place for an extended period of tim e. Later, they issue work orders for the perform ance of specific work, which usually incorporates the term s of the blan ket contract . . . . [W]here a contract consists of two parts, a blan ket ‘con tract followed by a later work order, the two m ust be interpreted together.’” Grand Isle Shipy ard, Inc. v. Seacor Marine, LLC, 58 9 F.3d 778, 80 4 n.6 (5th Cir. 20 0 9); see also Dom ingue v. Ocean Drilling & Expl. Co., 923 F.2d 393, 396 (5th Cir. 1991) (statin g that a court “m ust read [a] blan ket agreem ent m odified by the later work order together as the actual contract”); M oser, 618 F. Supp. at 779 (stating that a “m aster service agreem ent creates a contingent and speculative obligation that is subject to a purely potestative suspensive condition on the part of the obligee, which obligation does not becom e valid and enforceable until the condition is fulfilled.”). 29 R. Doc. 537 at 5. 30 R. Doc. 533-2 at 3– 32. 31 R. Doc. 533-2 at 1– 2. 6 under the Master Service Agreem ent would be the invoice once the work is perform ed,” answered “That’s correct.”32 Having provided the eviden ce described above, Allied stands in a different posture in this case than it did against State National. Thus, the Court now addresses the issue left open in its previous ruling on Allied’s m otion for reconsideration: whether the work orders or other agreem ents necessary to transform the 1995 and 20 0 7 Master Service Agreem ents into com plete, binding “written” agreem ents m ay be m ade orally. 33 As this action requires the interpretation of in surance policies issued in Louisiana, Louisiana’s substantive law controls. 34 Under Louisiana law, an insurance policy “is a contract between the parties and should be construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code.”35 The Louisiana Civil Code states “Interpretation of a contract is the determ ination of the com m on intent of the parties,”36 and an insurance contract “shall be construed according to the entirety of its term s and conditions.”37 Whether contract language is clear or am biguous is a question of law. 38 The words of a contract “are to be construed using their plain, ordinary and generally prevailing m eaning, unless the words have acquired a technical m eaning.”39 When a contract’s language is “clear an d explicit an d lead[s] to no absurd consequences, no further interpretation m ay be m ade in search of the parties’ intent.”40 If the wording of the policy 32 R. Doc. 533-6 at 2. See Dom ingue, 923 F.2d at 396 (stating that a court “m ust read [a] blan ket agreem ent m odified by the later work order together as the actual contract”). 34 Am . Int’l Specialty Lines Ins. Co. v . Canal Indem . Co., 352 F.3d 254, 260 (5th Cir. 20 0 3). 35 Cadw allader v. Allstate In s. Co., 8 48 So. 2d 577, 580 (La. 20 0 3). 36 La. Civ. Code art. 20 45. 37 La. Rev. Stats. § 22:654. 38 Cadw allader, 848 So.2d at 580 . 39 Id. (citing La. Civ. Code An n. art. 20 47). 40 La. Civ. Code art. 20 46. 33 7 is unam biguous, then the contract “m ust be enforced as written.”41 A contract is am biguous, however, “when it is uncertain as to the parties’ intentions and susceptible to m ore than one reasonable m eaning under the circum stances and after applying established rules of construction.”42 Looking to the term s of the 1995 and 20 0 7 Master Service Agreem ents, whether oral work orders are sufficient to create a valid and enforceable contract is am biguous. The Master Work Contracts contain the following language: If at any tim e during the term hereof, [Allied] desires work to be perform ed for a particular job or project, Shipyard shall advise Contractor of the particulars of the work and the location thereof. Contractor agrees to perform the work covered thereby diligently, efficiently and in accordance with all of the provisions and specifications of this Contract. . . . [Allied] shall pay Contractor for the work perform ed at the rate and for the consideration provided for in [Allied’s] purchase order or through other agreem ent. Paym ent of invoices will be m ade in accordance with the established [Allied] procedures following acceptance by [Allied] of work done by Contractor as being in full com pliance with all term s, conditions and requirem ents of the Contract and the specific job or project undertaken. 43 The contract does not state how Allied “shall advise” of work particulars and whether these “other agreem ents” or purchase orders m ay be oral or m ust be written. 44 Indeed, Allied offers evidence that the future work done pursuant to these Master Work Contracts was alw ay s initiated by oral instruction. 45 Because the 1995 and 20 0 7 Master 41 Cadw allader, 848 So.2d at 580 . Lloy ds of London v. Transcon. Gas Pipe Line Corp., 10 1 F.3d 425, 429 (5th Cir. 1996). 43 R. Docs. 533-4 (1995 Master Work Contract between Allied and Masse), 533-5 (20 0 7 Master Work Contract between Allied an d Masse). 44 Indeed, within the Master Work Contracts, the parties frequently specified that certain things m ust be done “in writing,” see, e.g., R. Doc. 529-3 at ¶ IX, an in struction conspicuously absent from the contract’s provisions regarding future work. 45 R. Doc. 533-6 at 2. 42 8 Work Contracts are “susceptible to m ore than one reasonable m eaning under the circum stances,”46 the Court finds the contracts are am biguous as to this issue. When a contract is am biguous, “the agreem ent shall be construed according to the intent of the parties.”47 “Intent is an issue of fact which is to be inferred from all of the surrounding circum stances.”48 “Consequently, when a contract is am biguous, the trier of fact must resolve the factual issue of intent, and judgm ent on the pleadings or sum m ary judgm ent is im proper.”49 Because in this case Allied has offered evidence to create a genuine issue of m aterial fact as to whether oral work orders transform ed the 1995 and 20 0 7 Master Work Agreem ents into com plete and enforceable contracts, the Court m ust deny Lexington’s m otion for summ ary judgm ent. Accordingly; CON CLU SION IT IS ORD ERED that Lexington Insurance Com pany’s m otion for sum m ary judgm ent against Allied Shipyard, Inc. is D EN IED . 50 N e w Orle a n s , Lo u is ian a, th is 2 1s t d ay o f Fe bru ary, 2 0 18 . ______________________ ______ SU SIE MORGAN U N ITED S TATES D ISTRICT J U D GE 46 Lloy ds of London, 10 1 F.3d at 429. Kusw a & Assocs., Inc. v. Thibaut Constr. Co., 463 So. 2d 1264, 1266 (La. 1985). 48 Id. (em phasis added); see also Liberty Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 1996) (“[A]m biguity in the term s of a contract gives rise to a fact question concernin g the intent of the parties.”). 49 Guidry v. Am . Pub. Life. In s. Co., 512 F.3d 177, 181 (5th Cir. 20 0 7); see also Investors Sy ndicate of Am ., Inc. v . City of Indian Rocks Beach, 434 F.2d 871, 877– 78 (5th Cir. 1970 ) (findin g that dism issal on the pleadin gs was error when the contract at issue was am biguous); Gertler v. City of N ew Orleans, 881 So. 2d 792, 796 (La. Ct. App. 20 0 4) (“If the lan guage of [a contract] is am biguous or susceptible to m ultiple interpretations, the intent of the parties m ust be determ ined and sum m ary judgm ent is inappropriate.”); Sanders v. Ashland Oil, In c., 696 So.2d 10 31, 10 35 (La. Ct. App. 1997) (stating that grantin g sum m ary judgm ent on an am biguous contract m ay be appropriate only in the very rare circum stance where “there is no issue of m aterial fact concernin g the pertinent intent” of the parties). 50 R. Doc. 519 as supplem ented by R. Doc. 529. 47 9
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