Opinion
Civil Action No. OO-3600, Section "T"(4)
January 24, 2002
Before this Court is a Motion for Summary Judgment (Document No. 53) filed on behalf of defendant. Lexington Insurance Company ("Lexington"), pursuant to Rule 56(c) of the Federal Rules of Civil Procedure. This matter came for hearing before the undersigned without oral argument. The Court, having studied the legal memoranda and exhibits submitted by the parties, the record, and the applicable law, is fully advised on the premises and ready to rule.
ORDER AND REASONS
I. BACKGROUND
Plaintiff, United Rentals, filed this lawsuit against numerous defendants seeking recovery for the damage to forklifts which United Rentals had rented to Maritrend, Inc. ("Maritrend"). On December 18, 1999, Maritrend was transporting forklifts owned by United Rentals and rented by Maritrend aboard a deck barge in the Mississippi River when the barge listed, causing the forklifts to fall into the river. United Rentals eventually recovered the forklifts and sold the forklifts for salvage.
Maritrend filed a Third-Party Complaint against Lexington, alleging that Lexington has a duty to defend and indemnify Maritrend for the claims asserted by the plaintiff against Maritrend pursuant to the Commercial General Liability ("CGL") Insurance Policy Lexington issued to Maritrend. In this Third-Party Complaint, Maritrend also tendered Lexington to plaintiff as a direct defendant.
Prior to the loss of United Rentals' forklifts, Lexington issued a CGL policy to Maritrend, Policy No. 5537147 ("CGL Policy"). Lexington also issued a Property Insurance Policy to Maritrend Lexington paid $97,500.00 to United Rentals for the property damage to the forklifts, which represented the limits of Lexington's Property Policy less Maritrend's deductible.
On November 13, 2001, Lexington filed this Motion for Summary Judgment based on their allegation that the CGL Policy excludes coverage for property rented to Maritrend, and that the CGL Policy excludes coverage for attorneys' fees.
II. LAW AND ANALYSIS
A. Law on 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. Law on Insurance Contracts.
Louisiana insurance law governs this controversy, and under Louisiana law, general rules of contract interpretation apply. Williamson v. J.C. Penny Life Ins. Co., 226 F.3d 408 (5th Cir. 2000). The ordinary meaning of the text governs in the absence of an absurd result, and each provision is read in light of the others. Id. In case of ambiguity, Louisiana courts construe insurance contracts against the insurer and in favor of coverage. Id. The insurer must clearly express any exclusions from liability, and any doubt or ambiguity is resolved against the insurer. Provost v. Unger, 949 F.2d 161 (5th Cir 1991); St Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d 336 (5th Cir. 1997). Under Louisiana Law, if the words of an insurance policy are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent and the agreement must be enforced as written. Etienne v. Automobile Ins. Co., 759 So.2d 51, 54 (La. 2000). Insurers are entitled to limit their liability and impose and enforce reasonable conditions upon policy obligations they contractually assume.Id.
C. The CGL Policy Excludes Property Rented to Maritrend.
It is undisputed that the damaged forklifts at issue in this mailer were rented to Maritrend by United Rentals. Lexington argues that the CGL Policy issued to Maritrend excludes coverage for property rented to the insured. The CGL Policy reads, in pertinent part:
II EXCLUSIONS
This insurance does not apply:
L. to property damage to:
1. property owned or occupied by or rented to the Named Insured;
( See CGL Policy, p. 5 of 16.)
This clause is unambiguous and clearly states that the CGL Policy does not cover property rented to Maritrend. Therefore, under this exclusion. Lexington did not provide coverage for the forklifts at issue.
However, Maritrend argues that the above cited exclusion [exclusion (L)] was deleted from the CGL by the express terms of Endorsement No. 1 to the Policy at issue. Endorsement No. 1 reads, in pertinent part:
V BROAD FORM PROPERTY DAMAGE LIABILITY COVERAGE (Including Completed Operations)
The insurance for property damage liability applies, subject to the following additional provisions:
A. Exclusions (L) and (P) are replaced by the following:
1. To property owned or occupied by or rented to the Insured, or, except with respect to the use of "Elevators", to property held by the Insured for sale or entrusted to the Insured for storage or safekeeping;
2. Except with respect to liability under a written agreement as specified in subdivision (4) of the definition of incidental contract or the use of "Elevators":
a. to property while on premises owned by or rented to the Insured for the purpose of having operations performed on such property by or on behalf of the Insured;
b. to tools or equipment while being used by the Insured in performing his operations;
( See Endorsement No. 1, p. 5 of 12 and p. 6 of 12.)
Maritrend argues that even if both the original CGL and the Endorsement have an exclusion provision for property rented to the insured, the forklifts are still covered by the CGL because section (b) [cited above] creates an exception to the exclusions set out in the Endorsement. Maritrend contends that the forklifts at issue are `tools or equipment . . . used . . . in performing his operations,' and therefore they are covered by the CGL. However, this is not the case.
Section (b) does not create an exception to the exclusions. Instead, it lists yet another exclusion. Therefore, the forklifts at issue are not covered by the CGL whether they are classified as property rented to Maritrend, or they are classified as tools or equipment used in performing operations. Both exclusions are clear and explicit, and they must be enforced as written.
Maritrend also argues that subdivision (4) of the definition of incidental contract, which is mentioned in the above cited provisions, creates another exception to the listed exclusions. However, this is not the case either. Subdivision (4) concerns projects for public authority. The current matter does not involve a project for public authority.
Subdivision (4) reads: "to any obligation for which the Insured may be held liable in an action on a contract by a third party beneficiary for bodily injury or property damage arising out of a project for public authority; but this exclusion does not apply to an action by the public authority or any other person or organization engaged in the project."
D. Lexington Has No Duty to Defend Against this Lawsuit.
An insurer's duty to defend suits brought against its insured is determined by the allegations of the plaintiff's Complaint. Steptore v. Masco Construction Co., 643 So.2d 1213, 1218 (La. 1994). The insurer is obligated to furnish a defense to the insured unless the Complaint unambiguously excludes coverage. Id.
United Rentals' Complaint seeks damages for property rented to Maritrend. As discussed above, the CGL Policy issued to Maritrend by Lexington excludes coverage for property rented to Maritrend. Therefore, the Complaint states a claim unambiguously excluded from coverage by Lexington. Lexington has no duty to defend Maritrend against United Rentals' lawsuit, and Lexington does not owe Maritrend any of the costs that Maritrend has incurred or may incur in defending this lawsuit.
III. CONCLUSION
Because the forklifts at issue, whether classified as rental property or classified as tools or equipment. are excluded from coverage by the CGL Policy issued to Maritrend by Lexington, Lexington's Motion for Summary Judgment is Granted. In addition, because United Rentals' Complaint excludes coverage under the CGL Policy, Lexington has no duty to defend Maritrend, nor is Lexington responsible for attorneys' fees.
Accordingly,
IT IS ORDERED that the Motion for Summary Judgment (Document No. 53) filed on behalf of Defendant, Lexington, be, and the same is hereby, GRANTED.
IT IS FURTHER ORDERED that the Cross-Motion for Summary Judgment (Document No. 59) filed on behalf of Defendant, Maritrend, be, and the same is hereby, DENIED.
IT IS FURTHER ORDERED that the claims filed against Lexington by Maritrend be, and the same is hereby, DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that the claims filed against Lexington by United Rentals be, and the same is hereby, DISMISSED WITH PREJUDICE.