Employer Not Covered “As Owner of Vessel” in P&I Policy for Land Based Crane Operations

Employer Not Covered “As Owner of Vessel” in P&I Policy for Land Based Crane Operations

By: Alex Lauricella

Edited by: Bryan O’Neill

Naquin v. Elevating Boats, No. 15-30471, 2016 U.S. App. LEXIS 5329, 2016 WL 1138516 (5th Cir. March 22, 2016)In this insurance coverage dispute, Elevating Boats, LLC (EBI) appealed a summary judgment in favor of State National Insurance Company (SNIC). The dispute arose from a previous judgment in favor of Larry Naquin, an EBI land-based crane operator. In that matter, Mr. Naquin was injured while operating a land based crane relocating a test block when the pedestal of the crane snapped, causing the crane to fall over. Attempting to jump out of the crane house, Mr. Naquin sustained a broken left foot, broken right foot, and an abdominal hernia. Mr. Naquin later sued EBI pursuant to the Jones Act.  The jury concluded that Mr. Naquin was a Jones Act seaman and that his injuries were caused by EBI’s negligence. The Fifth Circuit later affirmed the jury verdict regarding status but reversed the judgment for emotional damages.EBI then filed a third-party complaint against its insurers, SNIC and Certain London Insurers (London Insurers) alleging that both SNIC and London Insurers breached their insurance contracts by denying EBI’s insurance claims arising from Mr. Naquin’s accident and by failing to defend and indemnify EBI. EBI also sought damages for bad faith pursuant to Louisiana Civil Code Art. 1997 and Louisiana Revised Statute 22:1973. SNIC moved for summary judgment, arguing that EBI was not entitled to coverage under its insurance policy because coverage did not extend to land-based accidents. In response, EBI contended that it was entitled to indemnity under the “any casualty or occurrence” language of the policy. The district court granted summary judgment to SNIC. Thereafter, EBI appealed to the Fifth Circuit, whose decision is the focus of the summary.The Fifth Circuit considered only whether summary judgment was proper on the grounds that the insurance policy did not cover EBI’s liability, and therefore, that SNIC exhibited no bad faith in denying coverage. In addressing this legal question, the court turned to the indemnity provision of the insurance policy, which provided that EBI’s insurers would indemnify it “for any sums which the Assured, as owner of the Vessel, shall have become liable to pay, and shall have paid in respect to any casualty or occurrence during the currency of the Policy . . .” Because no federal maritime rule governed this dispute, the court interpreted the provision pursuant Louisiana state law regarding contractual interpretation.[1]SNIC argued that “as owner of the Vessel” did not provide coverage for the land-based accident caused by EBI’s negligence. On the other hand, EBI urged that “any casualty or occurrence” did provide coverage for the accident. The court rejected EBI’s interpretation, concluding that the only way for both provisions to have effect is to read the policy as limiting coverage to “any casualty or occurrence” which results from EBI’s conduct “as owner of the Vessel.”In support, the court relied on its earlier decision in Lanasse v. Travelers Ins. Co.,[2] which involved an insurance policy similar to EBI’s. The Lanasse court required that “[t]here be at least some causal operational relation between the vessel and the resulting injury.” Because the accident did not arise out of EBI’s conduct as “owner of the Vessel,” i.e. the crane was land-based and did not operate in close proximity to the vessel, the court found that there was no causal operational relation between the vessel and Mr. Naquin’s injuries. Therefore, the policy did not cover EBI’s liability as platform/crane operator.As the insurance policy did not cover the land-based accident, the court also held that EBI’s claim of statutory bad faith also failed as a matter of law because it was not based on a valid underlying claim.[1] The pertinent rules considered by the court were: (1) “A contractual ‘provision susceptible of different meanings must be interpreted with a meaning that renders it effective and not with one that renders it ineffective,’ so as to avoid rendering any provision in the contract superfluous.” La. Civ. Code Ann. art. 2049; Berk-Cohen Assocs., LLC v. Landmark Am. Ins. Co., No. 07-9205, 2009 WL 3738152, at *3–4 (E.D. La. Nov. 5, 2009); and (2) “The provisions of the contract ‘must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.” La. Civ. Code Ann. art. 2050; First Am. Bank, 585 F.3d at 837.[2] 450 F.2d 580 (5th Cir. 1971).