“As Owner” Clause of Protection and Indemnity Policy Bars Coverage

“As Owner” Clause of Protection and Indemnity Policy Bars Coverage

By: Andrea R. Jones

Naquin v. Elevating Boats, LLC, 2015 WL 1245757 2015 U.S.Dist.LEXIS 33586 (E.D. La. Mar. 18, 2015, Barbier, J.).Plaintiff, Larry Naquin (hereinafter “Naquin”) was injured while in the employ of Defendant Elevating Boats, L.L.C. (hereinafter “EBI”) when the pedestal supporting the crane which Naquin was operating snapped, causing Naquin to jump clear and injure his ankle and heel.He filed claims against EBI under both the Jones Act and, in the alternative, the Longshore Harbor Workers Compensation Act. After a 3 day jury trial on the merits, Naquin was awarded approximately 2.5 million dollars in damages under the Jones Act. Defendant-employer EBI appealed to the United States Court of Appeals for the Fifth Circuit which affirmed the trial court’s factual determination that Naquin was properly found to be a Jones Act “seaman” for purposes of the claim. However, the Fifth Circuit remanded the case for a new trial on the issue of damages.The trial court granted EBI leave to file a complaint against its insurer, State National Insurance Company (hereinafter “SNIC”), claiming that SNIC wrongly denied EBI’s claims regarding Plaintiff’s accident and that SNIC failed to defend and indemnify EBI in breach of the insurance contract in place between the two parties. This action, against SNIC and its underwriter, was successfully severed from the remanded damages case.SNIC filed a Motion for Summary Judgment claiming that there was no breach of contract, nor any act of bad faith on its part because the protection and indemnity insurance policy in place clearly excluded coverage for EBI in the attendant circumstances and because EBI failed to comply with the policy’s notice requirements.The insurance policy at issue stated that SNIC would indemnify EBI for any sums “…which the Assured, as owner of the Vessel, shall have become liable to pay, and shall have paid in respect of any casualty or occurrence during the currency of the Policy…”SNIC maintained that Naquin’s operation of the crane (which took place exclusively on land and for land based activities unrelated to the vessel itself) did not fall within the covered scope of the policy because the activities at issue did not implicate EBI as the “owner of the vessel.” EBI, on the other hand, maintained that Naquin’s activities fell within “any casualty or occurrence” and, therefore, coverage was available under the terms of the policy.Applying Louisiana law, Judge Barbier of the Eastern District of Louisiana ultimately agreed with SNIC. Insurance policies must be read so as to give effect to as many provisions within the policy as possible. In his written opinion, Judge Barbier stated that: “The only way to give meaning to both provisions of this policy is to construe the policy as limiting coverage to "any casualty or occurrence" which arises out of EBI's conduct "as owner of the Vessel." Thus, relying on Louisiana law and well settled principles of insurance contract construction, summary judgment was granted in favor of the third party insurer, denying indemnity for Naquin’s claims.