Opinion
NO. 19-C-214
01-09-2020
NUCOR STEEL LOUISIANA, LLC AND NUCOR CORPORATION v. ZURICH AMERICAN INSURANCE COMPANY, ET AL.
Susan Buchholz First Deputy Clerk IN RE NUCOR STEEL LOUISIANA, LLC AND NUCOR CORPORATION APPLYING FOR SUPERVISORY WRIT FROM THE TWENTY-THIRD JUDICIAL DISTRICT COURT, PARISH OF ST JAMES, STATE OF LOUISIANA, DIRECTED TO THE HONORABLE KATHERINE TESS STROMBERG, DIVISION "C", NUMBER 37,964 Panel composed of Judges Susan M. Chehardy, Jude G. Gravois, and John J. Molaison, Jr.
WRIT GRANTED; JUDGMENT REVERSED; REMANDED.
In this writ application, relators, Nucor Steel Louisiana LLC and Nucor Corporation (collectively "Nucor') seek this Court's supervisory review of the trial court's ruling granting a partial summary judgment in favor of respondents, Lexington Insurance Company, ACE American Insurance Company, Aspen Specialty Insurance Company, Axis Insurance Company Policy, Certain Underwriters at Lloyd's, London subscribing to Policy No. AJY100809D13, Certain Underwriters at Lloyd's, London subscribing to Policy No. DP960613, Certain Underwriters at Lloyd's, London subscribing to Policy No. DP940313, General Security Indemnity Company at Arizona, Liberty Mutual Fire Insurance Company, Liberty Surplus Insurance Corporation, Tokio Marine and Nichido Fire Insurance Company, Ltd. Policy No. LCP648001-01, Starstone Specialty Insurance Company (f/k/a Torus Specialty Insurance Company), Westport Insurance Corporation Policy No. 31-3-75521, and Zurich American Insurance Company (collectively "Property Insurers"). For the following reasons, we grant this writ application, reverse the partial summary judgment rendered in favor of Property Insurers, and remand to the trial court for further proceedings.
Facts and Procedural History
This dispute concerns the rights and obligations of Nucor and Property Insurers under insurance contracts to be interpreted under North Carolina law.
While North Carolina's substantive law controls in resolving the issues before us based on the policies' choice-of-law provision, the use of Louisiana's procedural law on summary judgment is appropriate. See Markzannes v. Bermuda Star Line, Inc., 545 So.2d 537 (La. 1989) (per curiam).
Nucor, based in North Carolina, is a manufacturer of steel and steel products. In 2011, Nucor began construction of a direct reduced iron ("DRI") processing facility in Convent, Louisiana (the "Convent Site"). In May 2011, Nucor contracted with Dome Technology, Inc. to construct three iron ore storage domes at the Convent Site. Nucor entered into several insurance contracts related to its Louisiana Convent Site: namely, a Builder's Risk policy designed to provide coverage for losses arising during the course of construction and testing of the facility, and an all-risk property policy referred to as Nucor's Property Insurance Program. In September 2013, before completion of the facility and before any of the domes had been fully loaded, one of the domes collapsed. The collapse allegedly destroyed the dome, its associated systems, and a substantial amount of the iron ore pellets stored therein. In February 2017, Nucor filed suit against the various insurers seeking coverage under the policies for the losses it sustained as a result of the dome collapse. Property Insurers reconvened seeking a declaration that the Convent Site was not covered under the Property Insurance Program because the facility had not been 100% accepted by Nucor as of the date of loss. Alternatively, Property Insurers sought equitable reformation of the policies on the basis that the parties labored under a mutual mistake.
In a judgment dated September 11, 2018, Nucor dismissed all of its claims against the Builder's Risk Insurers.
Nucor and Property Insurers filed cross motions for partial summary judgment each seeking to enforce the plain language of the insurance contracts, with each party arguing that the subject language was consistent with the parties' mutual intent as to insurance coverage for the Convent Site. The specific policy language at issue provides that the Convent Site would be added to the Property Insurance Program "effective the latter of April 15, 2013 or when the project is 100% accepted by the Named Insured, but not to surpass July 15, 2013."
The matter came for hearing on the parties' cross motions on December 13, 2018. At the close of the hearing, the trial judge took the matter under advisement and ordered a briefing schedule. On February 22, 2019, the trial court issued judgment, with written reasons, granting Property Insurers' motion for partial summary judgment and denying Nucor's motion for partial summary judgment, holding that the property policies comprising the 2013 Nucor Property Insurance Program did not cover the Convent Site at the time of the 2013 dome collapse. Specifically, the trial court held that the "100% accepted" policy language was clear and unambiguous that coverage for the Convent Site would not attach until the dome construction was complete and Nucor accepted 100% of the work. Nucor seeks review of that ruling.
The trial court did not reach the Property Insurers' alternative argument seeking reformation of the policies.
On March 13, 2019, Nucor filed a motion to designate the February 22, 2019 judgment as a final judgment for purposes of appeal, which was denied by the trial court on April 30, 2019. Also on March 13, 2019, Nucor timely filed a notice of intent to seek supervisory writs challenging the February 22, 2019 judgment.
Legal Analysis
Appellate courts review a judgment granting or denying a motion for summary judgment de novo, asking the same questions as the trial court to determine whether summary judgment is appropriate. Champagne v. Ward, 03-3211 (La. 1/19/05), 893 So.2d 773, 776; Mealy v. Lopez, 16-77 (La. App. 5 Cir. 5/26/16, 193 So.3d 539, 542. Specifically, an appellate court must determine whether any genuine issues of material fact exist and whether the mover is entitled to judgment as a matter of law. La. C.C.P. art. 944(A)(3). A fact is "material" if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of a legal dispute. Smith v. Our Lady of the Lake Hosp., Inc., 93-2512 (La. 7/5/94), 639 So.2d 730, 751. An issue is "genuine" if it is such that reasonable persons could disagree. Summary judgment is not appropriate unless only one conclusion could be reached by reasonable persons. Foster v. Pinnacle Entm't, Inc., 16-8 (La. App. 5 Cir. 4/27/16), 193 So.3d 288, 294. In determining whether there are any genuine issues of material fact, courts cannot consider the merits, make credibility determinations, evaluate testimony, or weigh evidence. Boros v. Lobell, 15-55 (La. App. 5 Cir. 9/23/15), 176 So.3d 689, 693.
Similarly, under North Carolina law, appellate courts review a trial court's ruling on a motion for summary judgment de novo. Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 285 (2007). Summary judgment is appropriate where "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 any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c) (2007). "[A]n issue is genuine if it is supported by substantial evidence," DeWitt v. Eveready Battery Co., 355 N.C. 672, 681, 565 S.E.2d 140, 146 (2002), which is that amount of relevant evidence necessary to persuade a reasonable mind to accept a conclusion. Id. Further, "[a]n issue is material if the facts alleged would constitute a legal defense, or would affect the result of the action, or if its resolution would prevent the party against whom it is resolved from prevailing in the action." Pennington, 356 N.C. at 579, 573 S.E.2d at 124 (quoting Koontz v. City of Winston-Salem, 280 N.C. 513, 518, 186 S.E.2d 897, 901 (1972). Rule 56 does not authorize the court to resolve disputed material issues of fact, but rather to determine if such issues exist. North Carolina Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 178, 182, 711 S.E.2d 114, 116 (2011). "Summary judgment may not be used to resolve factual disputes which are material to the disposition of the action. Nor may summary judgment be used where conflicting evidence is involved. Where there is any question regarding the credibility of [a party's] evidence ... or if there is a question which can be resolved only by the weight of the evidence, summary judgment must be denied. Federal Paper Board Co. v. Kamyr, Inc., 101 N.C.App. 329, 333, 399 S.E.2d 411, 414 (internal citations omitted), disc. review denied, 328 N.C. 570, 403 S.E.2d 510 (1991). "The factual truth must be clear and undisputed for summary judgment to be granted." Camby v. Railway Co., 39 N.C.App. 455, 459, 250 S.E.2d 684, 687, disc. review denied, 297 N.C. 298, 254 S.E.2d 919 (1979).
The interpretation of and application of insurance policy provisions to undisputed facts is a question of law that can properly be resolved on a motion for summary judgment. Integon Nat. Ins. Co. v. Phillips, 212 N.C.App. 623, 625, 712 S.E.2d 381, 383 (2011); McGuire v. Draughon, 170 N.C.App. 422, 424-25, 612 S.E.2d 428, 430 (2005). However, a summary judgment declaring lack of coverage under an insurance policy may not be rendered unless there is no reasonable interpretation of the policy, when applied to the undisputed material facts shown by the evidence in support of the motion for summary judgment, under which coverage could be afforded. Davis v. Scottsdale Ins. Co., 13-255 (La. App. 5 Cir. 10/30/13), 128 So.3d 471, 475-77.
Under North Carolina law, it is a "well-established principle that 'an insurance policy is a contract and its provisions govern the right and duties of the parties thereto,'" and should be construed in accordance with the intentions of the parties. Gaston County Dyeing Machine Co. v. Northfield Ins. Co., 351 N.C. 293, 299-300, 524 S.E.2d 558, 563 (2000) (quoting Fidelity Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796 (1986)). "The various terms of the policy are to be harmoniously construed, and if possible, every word and every provision is to be given effect ... [I]f the meaning of the policy is clear and only one reasonable interpretation exists, the courts must enforce the contract as written; they may not, under the guise of construing an ambiguous term, rewrite the contract or impose liabilities on the parties not bargained for and found therein." Gaston County, 351 N.C. at 299-300, 524 S.E.2d at 563 (quoting Woods v. Nationwide Mut. Ins. Co., 295 N.C. 500, 505-06, 246 S.E.2d 773, 777 (1981). No ambiguity exists in a contract unless the court finds that the language of the policy is fairly and reasonably susceptible to either of the constructions for which the parties contend. Wachovia Bank & Trust Co. v. Westchester Fire Insurance Co., 276 N.C. 348, 354 172 S.E.2d 518, 522 (1970). As in other contracts, the goal of construction of terms in the insurance policy is to arrive at the insurance coverage intended by the parties when the policy was issued. Id.
Upon de novo review of the documentation submitted in support and in opposition to Property Insurers' partial motion for summary judgment on the issue of coverage for the Convent Site under the 2013 Nucor Property Insurance Program, we find that genuine issues of material fact exist that preclude granting partial summary judgment at this stage of the litigation. Specifically, we find the particular policy language that the Convent Site would be added to the Property Insurance Program "effective the latter of April 15, 2013 or when the project is 100% accepted by the Named Insured, but not to surpass July 15, 2013" [emphasis added] is fairly and reasonably susceptible to either of the constructions proposed by Nucor and the Property Insurers. The Property Insurers contend, and the trial court agreed, that the policy language is clear and unambiguous "in that the Convent [S]ite would not be added to the Property Insurance Program until it was [completed and] 100% accepted by Nucor." Because it is undisputed that the Convent Site was neither completed nor 100% accepted by Nucor prior to July 15, 2013—a condition precedent to coverage—Property Insurers aver the Convent Site was not covered under the Property Insurance Program on the date of loss.
According to Property Insurers, it was the mutual intent of the parties that if the Convent Site was not completed and 100% accepted by Nucor during the April 15, 2013 and July 15, 2013 window, the parties would renegotiate the date for which the Convent Site would be added to the Property Insurance Program for an additional premium. Moreover, Property Insurers argue that Nucor was also advised to purchase a Builder's Risk policy to cover the Convent Site during the construction phase and, upon completion and 100% acceptance, coverage for the site would roll over onto the Property Insurance Program. Thus, Property Insurers contend that the "100% acceptance" language was a "condition precedent" to coverage as it was never the intention of any underwriter to have overlapping insurance coverage under the Builder's Risk policies and property policies for the Convent Site at the same time.
To the contrary, Nucor proposes that the policy language clearly and unambiguously means that "the Convent Site would be added to the Property Insurance Program [and coverage would attach] no later than July 15, 2013." According to Nucor, through its insurance consultant, Marsh USA, Inc., it negotiated with the Property Insurers, for a premium of $500,000, coverage for the Convent Site to automatically roll onto the Property Insurance Program as early as April 15, 2013, but no later than July 15, 2013—regardless of whether the site was completed or 100% accepted by Nucor—in order to avoid having to procure property insurance during the height of Louisiana's hurricane season. Nucor contends that it wanted, proposed, and paid for insurance coverage for the Convent Site based on the precise language contained in the property policies and, according to that language, coverage became effective July 15, 2013.
Nucor contends that it understood that the Builder's Risk policies covered certain risks that were not covered by the Property Insurance Program (i.e., testing), therefore, Nucor opted to pay for both the Builder's Risk and the property policies for a short period of time to ensure that the Convent Site was fully protected. --------
In its written reasons for judgment, the trial court posited that to accept Nucor's interpretation of the pertinent language contained in the property policies would "render the '100% accepted' language meaningless." We disagree. Another reasonable interpretation of the policy language is that the property policies provided for three possible "effective" dates of coverage: (1) if the Convent Site was 100% accepted by Nucor prior to April 15, 2013, the Convent Site would not be added to the Property Insurance Program until April 15, 2013, as April 15, 2013 would constitute the "latter" effective date; (2) if the Convent Site was not 100% accepted by Nucor until after April 15, 2013, but before July 15, 2013, the Convent Site would be added to the Property Insurance Program effective on the actual date of Nucor's 100% acceptance; or (3) if the Convent Site was still not 100% accepted by Nucor as of July 15, 2013, the Convent Site would automatically be added to the Property Insurance Program effective no later than July 15, 2013.
Given these two competing, yet reasonable, interpretations of the pertinent policy language, we find the trial court erred as a matter of law in granting partial summary judgment declaring lack of coverage for the Convent Site under the 2013 Nucor Property Insurance Program on the date of loss at this stage of the proceedings. Although the trial judge's interpretation of the applicable language, "to mean that the Convent Site would be added to the Property Insurance Program no later than July 15, 2013 would render the '100% accepted' language meaningless," may very well be reasonable, Nucor adduced conflicting evidence presenting an alternative reasonable interpretation of the policy language. Thus, at this stage of the litigation, because there are supporting documents establishing that genuine issues of material fact exist with respect to a reasonable interpretation of the language included in the property policies regarding the date as to when the Convent Site would be added to the Property Insurance Program; i.e., "effective the latter of April 15, 2013 or when the project is 100% accepted by the Named Insured, but not to surpass July 15, 2013," the trial judge's grant of summary judgment was improper.
Accordingly, after de novo review of the competing motions for partial summary judgment filed by Nucor and Property Insurers, memoranda, and exhibits, we find that genuine issues of material fact preclude a partial summary judgment in favor of Property Insurers at this time. Thus, for the foregoing reasons, we grant the writ, reverse the trial court judgment, and remand the matter for further proceedings consistent with this opinion.
Gretna, Louisiana, this 9th day of January, 2020.