Opinion
Civ. No. 99-2964 SECTION "G".
March 24, 2000.
MEMORANDUM AND ORDER
Background
Plaintiffs Trust Joist Macmillan, and/or Macmillan Bloedel Limited, and their insurer/subrogee American Home Assurance Company, individually and as issuing agent for Camarin Company, Ltd. ("Trus Joist"), bring suit against defendant companies and their insurers for negligence and breach of a maritime contract.
Plaintiffs contracted with defendant, Transportation Consultants, Inc., individually and d/b/a as TCI Trucking and Warehousing Services (TCI) to ship twelve steel bedplates from Taihei Machinery Works, Ltd. in Japan, to Natchitoches, Louisiana, and/or New Orleans, Louisiana. TCI contracted with defendants Neeb Kearney and Co, Inc., and/or The Kearney Companies, Inc. ("Kearney") to store the bedplates in their warehouse in New Orleans, Louisiana. Defendants, Liberty Mutual Insurance Company ("Liberty Mutual") and Scottsdale Insurance Company ("Scottsdale"), provide insurance to the defendants TCI and Kearney, respectively.
Plaintiffs allege that while the bedplates were in the warehouse, they were allowed to become wet by standing in fresh water and/or salt water, thereby suffering extensive damage. Plaintiff further alleges that the defendants failed to notify the plaintiffs of the damage, which thereby caused the bedplates to suffer additional damage.
Defendant, Scottsdale, now moves for summary judgment dismissing all claims asserted by plaintiffs and finding it has no duty to defend or indemmify Kearney, on grounds that plaintiffs' allegations and the undisputed facts show that the alleged damage resulted from floodwater and rust, both of which are excluded perils under the relevant policy.
Scottsdale's motion is opposed by plaintiffs, defendant Kearney, and co-defendant TCI.
Discussion
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law."
Where, as here, the moving party bears the burden of proof at trial, it must come forward with evidence which would "entitle it to a directed verdict if the evidence went uncontroverted at trial." The nonmoving party may defeat the motion by demonstrating the existence of a genuine dispute of material fact or by showing that "the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." However, the nonmovant may not rest on mere conjecture, general denials, vague statements or allegations. As in any summary judgment motion, the inferences drawn from the underlying facts must be viewed in a light most favorable to the nonmoving party. Finally, the substantive law determines 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.
Under Louisiana law, an insurer asserting that a policy exclusion precludes coverage has the burden of proving that the exclusion applies to the particular loss before the court.Calcasieu-Marine Nat'l Bank of Lake Charles v. American Employers' Ins. Co., 533 F.2d 290 (5th Cir. 1976).
See Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991) (citations omitted).
Id. at 1265.
See Anderson v. Liberty Lobby, 477 U.S. 242, 252 (1986).
See Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986).
See Anderson, 477 U.S. at 248.
To avoid liability to plaintiff and its duty to defend and indemnify its assured, Scottsdale relies on two exclusions contained in its policy. The first exclusion is one that excludes coverage for loss caused by flood or groundwater. "Flood" is defined as "flood, surface, water, waves, tidal water, or the overflow of a body of water all whether driven by wind or not." Scottsdale argues that plaintiff's allegations and certain documentary evidence, including discovery responses and reports and correspondence of various individuals involved in the inspection of the steel plates show, as an undisputed matter of fact, that the damage in this case was due to flooding caused by Hurricane Georges.
See Defendant's Exhibit A.
See id. at AAIS IM-7655 Ed. 1.0, p. 1, ¶ 1.
The reports and correspondence relied on by Scottsdale in support of summary judgment are not supported by sworn affidavit or properly authenticated. Even were they acceptable summary judgment evidence, however, they do not establish with sufficient certainty the cause of the damage. In fact, several of them suggest causes other than flood water or groundwater. Scottsdale has not carried its summary judgment burden on the flood exclusion.
See, e.g., Defendant's Exhibit F.
Second, Scottsdale relies on a "rust" exclusion. The pertinent policy language reads as follows:
2. We do not pay for loss or damage if one or more of the following exclusions apply to the loss:
a. Contamination or Deterioration — We do not pay for loss caused by contamination or deterioration including corrosion; decay; fungus; mildew; mold; rot; rust; or any quality, fault, or wekness in the covered property that causes it to damage or destroy itself.
See Defendant's Exhibit A at AAIS IM-7650 Ed. 1.0, Page 5, ¶ 2(a).
Scottsdale apparently suggests that merely because the bedplates are rusted, the rust exclusion precludes coverage. Clearly, however, the exclusion is designed to apply where corrosion, rust, or the like is the cause of property damage. It is not designed to preclude coverage when rust is the damage itself, as opposed to the cause of the damage. Even if there were some ambiguity about the meaning of this exclusion, for purposes of summary judgment any doubts should be resolved against exclusion. For this reason, summary judgment is not warranted pursuant to the rust exclusion.
Accordingly,
IT IS ORDERED that the motion for summary judgment of defendant Scottsdale Insurance Company IS DENIED.