Forest Oil Corporation v. Ace Indemnity Insurance Co.

Full title: FOREST OIL CORPORATION v. ACE INDEMNITY INSURANCE CO., ET AL

Court: United States District Court, E.D. Louisiana

Date published: Oct 14, 2004

Civil Action No: 04-0435 Section: "J" (3) (E.D. La. Oct. 14, 2004)

Opinion

Civil Action No: 04-0435 Section: "J" (3).

October 14, 2004

CARL BARBIER, District Judge

Before the Court are two motions filed by Coastal Production Services ("Coastal"). Specifically, Coastal filed a Motion for Summary Judgment against Gemini Insurance Company ("Gemini")¹ and a Motion for Summary Judgment against Ace Indemnity Insurance Co. ("Ace").²

1 Rec. Doc. 36.

2 Rec. Doc. 37.

BACKGROUND

On August 24, 2004, this Court entered an Order and Reasons disposing of six summary judgment motions filed by and against various parties in this action.³ On August 27, 2004, this Court ordered counsel to inform the Court by letter if and how its August 24th ruling affected the pending motions.⁴ The Court has reviewed the memoranda submitted and finds that its previous Order and Reasons disposes of Coastal's Motion for Summary Judgment filed against Gemini. With respect to Coastal's Motion for Summary Judgment filed against Ace, the Court finds that Ace had a duty to defend, at its expense, any claim or proceeding brought against Coastal covered by its insurance. Accordingly, Ace must indemnify Coastal for attorneys fees and costs expended by Coastal in defense of claims made by Forest.

DISCUSSION

A. Coastal's Motion for Summary Judgment against Gemini

Coastal's Motion for Summary Judgment against Gemini seeks past and future defense costs and indemnity for the claims made against Coastal by Forest Oil Corporation. The general liability policy issued by Gemini to Coastal excludes coverage for workers' compensation benefits.⁵ As previously noted by this Court, the workers' compensation exclusion is not affected by the fact that a claim may arise out of a contractual indemnity agreement.⁶ Notably, the policy does not exclude liability assumed by Coastal under an insured contract, however, under the policy, "insured contract" is defined as:

d. Workers' Compensation and Similar Laws

5

Coverage A. Bodily Injury and Property Damage Liability

Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies.

Exclusions

Any obligation of the insured under a workers' compensation, disability benefits or unemployment compensation law or any similar law.

6 Order and Reasons, p. 17 (Rec. Doc. 40).

That part of any other contract or agreement pertaining to your business . . . under which you assume tort liability of another party to pay for "bodily injury" or "property damage" to a third person or organization. Tort liability means a liability that would be imposed by law in the absence of a contract or agreement.

The contractual indemnity claim does not seek recovery of an assumed tort liability. The obligation owed to Hudson, the injured employee, subsists under workers' compensation law, not tort law. Consequently, the obligation does not stem from an "insured contract" and there is no coverage under Gemini's policy. For these reasons, and the reasons additionally provided in the Court's August 24, 2002 Order and Reasons, Coastal's Motion for Summary Judgment on its cross-claim against Gemini Insurance Company is DENIED.

B. Coastal's Motion for Summary Judgment against Ace

This Court has previously found that the Ace policy provides coverage for the claims of Forest Oil as the alternate employer ("borrowing employer") of Coastal's employee. The remaining issue is whether Ace owes Coastal indemnity for attorneys fees and costs for Ace's refusal to defend Coastal against claims made by Forest. The policy issued by Ace to Coastal provides:

PART ONE — WORKERS COMPENSATION INSURANCE

. . .

C. We Will Defend

We have the right and duty to defend at our expense any claim, proceeding or suit against you for benefits payable by this insurance.

. . .

PART TWO — EMPLOYERS LIABILITY INSURANCE

. . .

D. We Will Defend

We have the right and duty to defend, at our expense, any claim, proceeding or suit against you for damages payable by this insurance.⁷

7 Memo of Ace Indemnity Insurance Company In Opposition to Motion for Summary Judgment of Coastal Production Services, Inc., Exh. "A", p. 1, 3.

Forest's suit against Coastal contained claims against Coastal for reimbursement and indemnification for workers' compensation benefits that were insured by Ace. Ace's policy provides that Ace has a duty to defend Coastal at Ace's expense. Therefore, Ace owes Coastal indemnity for attorneys fees and costs for Ace's refusal to defend Coastal against claims made by Forest. Accordingly, Coastal's Motion for Summary Judgment against Ace Indemnity Insurance Company is GRANTED.

Counsel for Coastal Production Services, Inc. is hereby ORDERED to submit a Motion for Fees and Costs, with supporting documentation, within fifteen days of entry of this order.