Employers Insurance v. Jennie V'S Seafood, LLC
Employers Insurance v. Jennie V'S Seafood, LLC
Opinion of the Court
ORDER AND REASONS
Before the Court is the Motion for Summary Judgment of defendant Jennie V’s Seafood, LLC (“Jennie V’s”).
I. BACKGROUND
Bon Secour Fisheries, Inc., a seafood processor and wholesale distributor located in Alabama,
2. Seller [Jennie Vs] agrees to defend, indemnify, and hold harmless Buyer [Bon Secour] ... (individually, an “indemnitee”) from all actions, suits, claims, demands, and proceedings (“Claims”) and any judgments, damages, losses, debts, liabilities, penalties, fines, costs and expenses (including reasonable attorneys’ fees) resulting therefrom whether arising out of contract, tort, strict liability, misrepresentation, violation of applicable law and/or any cause whatsoever:
(III) brought ... against any Indemnitee for the recovery of damages for the injury, illness and/or death of any person, or loss or damage arising out of or alleged to have arisen our [sic] of (a) the delivery, sale, resale, labeling, use of [sic] consumption of any product, or (b) the negligent acts or omissions of Seller; provided, however, that Seller’s indemnification obligations hereunder shall not apply to the extent that Claims are caused by the negligence of the Buyer.
Seller’s agreement to maintain and provide insurance on behalf of Buyer under Paragraph 3 is a result of the requirement for indemnity and defense outlined in this paragraph....
3. Seller agrees to maintain in effect insurance coverage with reputable insurance companies covering ... commercial general liability, including product liability and excess liability, all with such limits as are sufficient in Buyer’s reasonable judgment, to protect Seller and Buyer from the liabilities insured against by such coverages---- Buyer shall be named as an additional insured ... with respect to the commercial general liability policy including products liability.6
According to Employers, Jennie Vs holds a commercial general liability insurance policy with Atain Specialty Insurance Company.
On September 29, 2009, Annie and Walter Lindsey filed suit against Bon Secour and Jennie Vs, among others, in Tennessee state court.
After the Lindseys filed this lawsuit, Employers and Bon Secour requested that Jennie Vs defend and indemnify Bon Sec-
Employers also asked that Jenny V’s or Atain defend and indemnify Bon Secour pursuant to the Atain policy, which plaintiff alleges should have covered Bon Sec-our in accordance with the contract.
On August 3, 2012, the Lindseys settled their claims against Bon Secour and released Bon Secour in exchange for a payment of $325,000.
On December 13, 2012, Employers sued Jennie V’s and Atain for declaratory relief and for costs incurred as a result of the Lindsey lawsuit.
II. STANDARD
Summary judgment is warranted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers “all of the evidence in the record but refrains from making credibility determinations or weighing the evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and conclusions of law* are insufficient to either support or defeat a motion for summary judgment.” Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party “must come forward with evidence which would ‘entitle it to a directed verdict if the evidence went uncontroverted at trial.’ ”
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party’s claim. - See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324, 106 S.Ct. 2548. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue for trial. See, e.g., id. at 325, 106 S.Ct. 2548; Little, 37 F.3d at 1075 (“Rule 56 ‘mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.’” (quoting Celotex, 477 U.S. at 332, 106 S.Ct. 2548)).
III. DISCUSSION
A. The Parties’ Arguments
The dispute in this case centers around the indemnity clause of the agreement, which provides in relevant part that Jennie Vs
agrees to defend, indemnify, and hold harmless [Bon Secour] ... from all ... claims ... and any judgments, damages, losses, debts, liabilities, penalties, fines, costs and expenses (including reasonable attorneys’ fees) resulting therefrom ...
(Ill) brought ... against [Bon Sec-our] for the recovery of damages for the injury, illness and/or death of any person, or loss or damage arising out of or alleged to have -arisen ou[t] of (a) the delivery, sale, resale, labeling, use o[r] consumption of any product, or (b) the negligent acts or omissions of [Jennie V’s]; provided, however, that [Jennie V]’s indemnification obligations hereunder shall not apply to the extent that Claims are caused by the negligence of [Bon Secour]21
Jennie V’s contends that this agreement does not require it to defend and indemnify Bon Secour in connection with the Lindsey lawsuit, for two related reasons. First, Jennie Vs argues that the Lindseys’ injuries occurred as a result of the negligence of Bon Secour. Second, Jennie Vs claims that its duty to defend and indemnify would have been triggered only after a judicial determination that Bon Secour was faultless — a determination that never occurred, because Bon Secour voluntarily settled the Lindsey lawsuit.
Employers’ responds that whether Bon Secour'was negligent is a disputed issue of material fact that precludes entry of summary judgment. It contends that, even though Bon Secour settled the underlying lawsuit, it may still pursue a post-settlement determination of fault in order to enforce the terms of the indemnity agreement. Employers also argues that the contract is ambiguous and thus factual development is required to determine the intent of the parties concerning Jennie V’s indemnity obligation.
In a diversity action, the Court applies state substantive law and the choice-of-law principles of the forum state. Turner v. Purina Mills, Inc., 989 F.2d 1419, 1421 (5th Cir. 1993). Under the Louisiana Civil Code, a contractual dispute in which the agreement at issue was negotiated and formed in Louisiana is generally governed by Louisiana Law. See Ross v. Digioia, No. 11-1827, 2012 WL 5877843, at *2-3 (E.D.La. Nov. 20, 2012) (citing La. Civ. Code art. 3537). Here, plaintiff asserts that the agreement was executed by Jennie V’s in Louisiana.
Under Louisiana law, courts apply general rules of contract interpretation to construe indemnity provisions. Liberty Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 1996). “Interpretation of a contract is the determination of the intent of the parties.” La. Civ.Code art. 2045. When the terms of a contract are clear and unambiguous and do not lead to absurd results, the Court interprets them as a matter of law. Pine Bluff, 89 F.3d at 246; see also La Civ.Code art. 2046 (“When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties’ intent.”). But “ambiguity in the terms of a contract gives rise to a fact question concerning the intent of the parties.” Pine Bluff, 89 F.3d at 246. In construing the indemnity contract at issue, the Court is mindful of two canons of construction that are relevant to this case. First, ambiguous indemnity contracts may not be construed to indemnify a party against losses resulting from its own negligence, because such an intention must be expressed in unequivocal terms. Reggio v. E.T.I., 15 So.3d 951, 953 (La. 2008). Second, ambiguous provisions in a contract “must be interpreted against the party who prepared the agreement.” S. States Masonry, Inc. v. J.A. Jones Constr. Co., 507 So.2d 198, 201 (La. 1987) (citing La. Civ.Code art. 2056).
In Pine Bluff, the Fifth Circuit applied the foregoing principles to a contractual indemnity provision substantially similar to the one at issue here. It provided that the defendant subcontractor, Pine Bluff, would indemnify the contractor, Newberg, from any claims “resulting from the performance of the work, provided that any such claim ... is caused in whole or in part by any negligent act or omission of [Pine Bluff] ... except to the extent it is caused in part by [Newberg].” Id. (second, third, and fourth alterations in original). The court held that this provision was ambiguous, because it could be fairly read either (1) to free Pine Bluff from any obligation to indemnify if the underlying claim were caused in any part by Newberg, or (2) to require Pine Bluff to indemnify Newberg only to the extent that Pine Bluff was at fault for the underlying claim under comparative negligence principles. Id. at 246-47. Accordingly, the Fifth Circuit held that the district court erred in interpreting the provision as a matter of law. Id. at 247.
The indemnity provision at issue in this case is similarly ambiguous. Just as in Pine Bluff, the agreement could fairly be read either to (1) free Jennie V’s from its indemnity obligation if Bon Secour were at fault at all in the underlying incident, or (2) require Jennie V’s to indemnify Bon Secour only for those costs and damages caused by the negligence of Jennie V’s. Bon Secour drafted the agree
Jennie V’s suggests, however, that Employers is not entitled to litigate this factual question. Jennie V’s argues that Employers may not seek a post-settlement determination of fault because Bon Secour waived its right to seek defense and indemnity from Jennie V’s by entering into a settlement agreement with the plaintiffs in Lindsey. Resolution of this issue requires the Court to analyze two Fifth Circuit cases that addressed a similar issue, Pine Bluff and Westchester Fire Insurance Co. v. Haspel-Kansas Investment Partnership, 342 F.3d 416 (5th Cir. 2003). In both Pine Bluff and Westchester, as in this case, the plaintiffs sought contractual indemnity for amounts they paid to settle a lawsuit against them.
In Pine Bluff, Pine Bluff, the contractual indemnitor, had contributed part of the settlement; Newberg, the contractual indemnitee, had contributed part;' and Pine Bluffs customer had contributed part. 89 F.3d at 245. The Fifth Circuit rejected Pine Bluffs argument that Newberg waived its right to seek indemnification by contributing to the settlement of the underlying lawsuit. It noted that “Newberg was simply one of several players participating in a single, global settlement” and that .Newberg had “contributed a lump sum equal to the amount contributed by Pine Bluff.” Id. at 248. The court concluded: -
■Louisiana law does not bar Newberg ! from pursuing a post-settlement deter■mination of fault through an action against Pine Bluff to enforce the terms of their indemnification agreement. Indeed, such ■ a bar would conflict with firmly established public policy encouraging settlements.
Id. (citations omitted).
The Fifth Circuit reached a different result in Westchester. There, the plaintiff, Westchester, was an insurer that had issued an excess insurance policy to K & B Drug Stores. K & B- leased a store in a strip shopping center from the defendant, Haspel-Kansas, the owner of the shopping center. Westchester, 342 F.3d at 417-18. An individual, who suffered a gunshot wound in the parking lot of the shopping center sued K & B and Haspel-Kansas for negligence. Id. at 418. After voluntarily dismissing his claims against Haspel-Kansas .in state court, the gunshot victim settled his claims against K & B .Id. Westchester then filed a federal suit against Haspel-Kansas for. indemnity based on the lease between K & B and Haspel-Kansas, which provided that Haspel-Kansas would “hold [K & B] harmless of and from any responsibility for injury to person or damage to property resulting from any occurrence in, on, or about the Shopping Center outside of the leased premises, including ;... parking, areas, not due to the negligence of [K & B].” Id. at 421. The federal trial court found that Haspel-Kansas’s conduct was not the cause-in-fact of the gunshot victim’s, injuries and therefore •ruled that Westchester could not receive contribution from Haspel-Kansas. Id. at 418-19. The court also held that Westchester could not benefit from the indem
The Fifth Circuit affirmed both of the lower court’s rulings. Of most relevance here, the court held that K & B could not pursue an indemnity claim against HaspelKansas because K & B had “unilaterally decidefd] to- settle” the underlying negligence suit, “thereby creating K & B’s ‘responsibility’ under the indemnity provision,” even though K & B did not admit liability as part of the settlement. Id. at 422. The court concluded that “neither K & B nor Westchester should benefit from the indemnity provision where ... only its unilateral decision to avoid risk forms the basis for the so-called ‘responsibility’ which triggers the obligation to indemnify under the lease.” Id. The court noted that a contrary result would be “perverse,” because it would give indemnitees “the incentive to settle even frivolous claims in order to avoid the costs and risks associated with litigation, and then demand indemnity for the pay-out.” Id. Pine Bluff was distinguished on the grounds that “unlike New-berg, Haspel-Kansas did not participate in the settlement of the underlying suit.” Id.
The Court finds that this case is closer to Pine Bluff than to Westchester. As in Pine Bluff, both the indemnitee and indemnitor contributed money to settle the underlying lawsuit. In contrast, in Westchester, the indemnitee made a unilateral decision to settle the underlying lawsuit after the state court plaintiff had voluntarily dismissed the alleged indemnitor from the lawsuit, and the federal district court found that the alleged indemnitor had not caused the state court plaintiffs injury. Indeed, as noted above, Westchester distinguished Pine Bluff on precisely the basis that “unlike Newberg, Haspel-Kansas did not participate in the settlement of the underlying suit.” Westchester, 342 F.3d at 422.
Since there has been no judicial finding as to the negligence, or lack thereof, of Jennie V’s or Bon Secour in the Lindsey lawsuit, Employers’ is “not bar[red] ... from pursuing a post-settlement determination of fault through an action against [Jennie V’s] to enforce the terms of their indemnification agreement.” Pine Bluff, 89 F.3d at 248. “[S]uch a bar would conflict with firmly established public policy encouraging settlements.” Id.
Indeed, Bon Secour explicitly denied fault in the underlying lawsuit in the settlement agreement it executed with the Lindseys.
IV. CONCLUSION
For the foregoing reasons, Jennie V’s motion for summary judgment is DENIED. .
. R. Doc. 15.
. R. Doc. 1 at 2.
.Id. at 5.
.Id. at 2-3.
. Id. at 2.
. R. Doc. 1-1 at 1-2.
. R. Doc. 1 at 4.
. Id.
. Id. at 5.
. R. Doc. 1-2 at 6.
. Id. at 8-13.
. R. Doc. 1 at 6.
. Id.
. Id.
. Id.
. Id. at 7; R. Doc. 28-1.
. R. Doc. 1 at 7.
. R. Doc. 1.
. Id. at 10.
.R. Doc. 15.
. R. Doc. 1-1 at 1 (emphasis added).
. R. Doc. 1 at 2.
. R. Doc. 28-1 at 1.
Reference
- Full Case Name
- EMPLOYERS INSURANCE COMPANY OF WAUSAU v. JENNIE V'S SEAFOOD, LLC and Atain Specialty Insurance Company
- Cited By
- 2 cases
- Status
- Published