Opinion
CIVIL ACTION 02-2062 SECTION "T"(3)
November 13, 2003
Before the Court is a Motion for Summary Judgment (Document 8) filed on behalf of the Third Party Defendant, SAFECO Lloyd's Insurance Company ("Safeco"). The parties waived oral argument and the matter was taken under submission on October 22, 2003. The Court, having considered the arguments of the parties, the Court record, the law and applicable jurisprudence, and noting that the Plaintiff did not file an opposition, is fully advised in the premises and ready to rule.
ORDER AND REASONS
I. Background
The plaintiffs allege that a spill and/or release of toxic and/or hazardous materials (ammonia) took place on or about December 31, 2000 and again on April 22, 2001 at the Brown's Dairy facility on Baronne Street in New Orleans. Third party plaintiff, DD Maintenance Millwright Services, Inc. ("DD"), allegedly installed the refrigeration system at Brown's Dairy and plaintiffs contend this refrigeration system was the cause of the releases which are the subject of this litigation.
On September 9, 2002, DD filed a third party complaint against Safeco, alleging they have a duty to indemnify it in connection with the case. On or about May 24, 2003, DD filed a motion for summary judgment in which the issue presented was whether Texas or Louisiana law applies to the insurance coverage issues raised in DD's third party complaint. This Court denied DD's motion, finding that Texas law should apply to the interpretation of the pollution exclusion. Further, the Court found that DD had not proved that there is no genuine issue of material fact regarding Safeco's duty to defend DD.
II. Safeco's Arguments in Support of Motion for Summary Judgment
Safeco argues that this Court has decided the issue presented in this motion when the Court entered a Judgment denying DD's motion for summary judgment on July 2, 2003, finding that Texas law applies to the interpretation of the insurance policies at issue. They further argue that DD failed to meets its burden of proving that there is no genuine issue of material fact concerning Safeco's duty to defend DD. Therefore, Safeco suggests that the present motion can be determined by reference solely to the July 2, 2003 Judgment.
Safeco contends that summary-judgment is appropriate on behalf of an insurer in an insurance coverage dispute when there is no coverage under the policy. Therefore, Safeco contends that because there is no coverage for DD under the policies issued by them, they have no duty to defend DD in connection with the plaintiffs' claim, and are entitled to a judgment declaring that its policies do not cover this claim and that it has no duty to defend DD in this action.
Snug Harbor, Ltd. v. Zurich, Inc., 968 F.2d 538, 544-45 (5th Cir.).
Safeco submits that this Court has already ruled that Texas law applies in this case and, under Texas law, the pollution exclusion applies and coverage is precluded. They cite both Texas and Louisiana jurisprudence which supports their argument that this Court should enforce the pollution exclusion and find that the insurer is entitled to summary judgment. Further, Safeco contends that DD never argued that the pollution exclusion does not apply under Texas law. Rather, their sole argument was that Louisiana law applies and that under Louisiana's interpretation of the pollution exclusion, there was a fact issue that precluded summary judgment in Safeco's favor, despite the clear language of the policy.
`National Union Fire Ins., Co. v. CBI Industries, Inc., 907 S.W.2d 517 (Tex. 1995); Zaiontz v. Trinity Universal Ins. Co., 87 S.W.3d 565 (Tex.App.-San Antonio, 2002) (Affirming the trial court's granting of summary' judgment in favor of the insurer and applying the pollution exclusion to the release of fumes from a smoke and fire eliminator within the interior of a smoke-damaged airplane); Shell Oil Co. v. Hollywood Marine, Inc., 97-106 (La.App. 5 Cir. 10/15/97), 701 So.2d 1038 (Holding that under Texas law, the trial court correctly granted summary judgment in favor of the insurer on the oasis of the pollution exclusion); and The Travelers Group, Inc. v. O.C.S., Inc., 914 F. Supp. 126 (E.D.La. 1996) (Granting summary judgment on behalf of the insurer under Texas law).
In conclusion, Safeco argues that in this case, the pollution exclusion applies, and they have no duty to defend and/or indemnify DD with respect to the plaintiffs' underlying claim. Therefore, Safeco submits that they are entitled to summary judgment dismissing DD's third party complaint.
III. D D's Arguments in Opposition to Motion for Summary Judgment
D D does not disagree that Texas has a strong interest in regulating insurance contracts written in Texas and delivered to Texas corporations, however, it is their position that under the conflicts of law provision set forth in the Louisiana Civil Code, Louisiana's interests would be more heavily impaired if its law were not applied. DD argues that Louisiana's contacts are stronger and more pertinent than those of Texas and requests a reconsideration of the Court's ruling that Texas law applies to the coverage issues in this case.
D D argues that if Louisiana law applies to this action, it is clear that the pollution exclusion at issue would not relieve Safeco of its duty to defend and indemnify DD in this suit. Accordingly, they contend that this is not a case where the pollution exclusion is meant to relieve Safeco of its obligation to defend and indemnify DD in this action.
D D notes that under Louisiana and Texas law, the duty to defend is distinct from the duty to indemnify. Relying on the holding of the Louisiana Fifth Circuit Court of Appeals in Scottsdale Insurance Company v. Those Certain Underwriters Subscribed to Policy LPKO762 at Lloyd's of London, DD argues that, in Louisiana, "the insurer's duty to defend suits brought against its insured is determined by the allegations of the plaintiffs petition, and the insurer is obligated to defend the insured, unless the petition unambiguously excludes coverage. " Further, "the duty to defend is determined solely from the plaintiffs' pleadings and the face of the policy, without consideration of extraneous evidence." Similarly, under Texas law, "an insured's duty to defend `is determined by the allegations of the petition when considered in light of the policy provisions without reference to the truth or falsity of such allegations."
Scoltsdale Insurance Company v. Those Certain Underwriters Subscribed to Policy LPKO762 at Lloyd's of London. 02-190 (La.App. 5 Cir. 6/26/02), 822 So.2d 805, 807-808.
Id. at 808.
Gulf Chemical and Metallurgical Corporation, et al v. Associated Metals and Minerals Corporation, et al., 1 F.3d 365, 369(5th Cir. 1993).
In conclusion, DD argues that Louisiana law should apply to determine whether the pollution exclusion in Safeco's liability policy issued to DD should exclude coverage for the ammonia release alleged in plaintiffs' petition. Further, even if this Court determines that Texas law applies, DD contends that the allegations of the plaintiffs' petition do not unambiguously exclude coverage in the case at bar, and regardless of whether Safeco has a duty to indemnify DD, Safeco has a duty to defend DD in this lawsuit.
IV. Law and Analysis of the Court
A. Law on Rule 56 Summary Judgment
The Federal Rules of Civil Procedure provide that summary judgment should be granted only "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." FED. R. Civ. P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Stults v. Conoco, Inc., 76 F.3d 651, 655-56 (5th Cir. 1996) (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13(5th Cir.) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)), cert. denied, 506 U.S. 832 (1992)). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis supplied); Tubacex, Inc. v. M/V RISAN, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Indus. Co., 475 U.S. at 588. Finally, the Court notes that substantive law determines the materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
B. Court's Analysis
Finding that Louisiana's differing interpretation of total pollution exclusion clauses from Texas's interpretation is not a "more serious impairment" than the strong interest Texas has in regulating insurance contracts written in Texas and issued to Texas companies, this Court has previously ruled, and stands by its finding, that Texas law applies in this case.
Further, this Court rejects DD's argument that regardless of whether Safeco has a duty to indemnify DD. they have a duty to defend DD in this lawsuit. DD relies on Scottsdale Insurance Company v. Those Certain Underwriters Subscribed to Policy LPKO762 at Lloyd's of London for the proposition that the insurer is obligated to defend the insured, unless the petition unambiguously excludes coverage. However, in this case, that argument is flawed. Relying on the jurisprudence cited by Safeco, this Court finds that the pollution exclusion in the insurance policy unambiguously applies to exclude damage coverage in this case. Therefore, Safeco has neither the duty to indemnify nor the duty to defend DD in this lawsuit. Because there can be no coverage, Safeco has shown that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law. Accordingly,
Scottsdale Insurance Company, 822 So.2d at 807.
IT IS ORDERED that the Motion for Summary Judgment filed on behalf of the Third Party Defendant, SAFECO Lloyd's Insurance Company, be and the same is hereby GRANTED.