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Comardelle v. Pennsylvania General Insurance Co.

United States District Court, E.D. Louisiana

November 18, 2014

MICHAEL COMARDELLE,
v.
PENNSYLVANIA GENERAL INSURANCE COMPANY, ET AL., Section I

ORDER AND REASONS

LANCE M. AFRICK, District Judge.

Before the Court is a motion[1] filed by defendant, Huntington Ingalls Incorporated ("Avondale"), for partial summary judgment regarding plaintiffs' Louisiana Civil Code Articles 1821-1823 claims relative to certain "buy-back" agreements. Plaintiffs have filed an opposition.[2] For the following reasons, the motion is GRANTED.

BACKGROUND

Plaintiffs allege that decedent, Michael Comardelle ("Comardelle"), was "exposed to asbestos and asbestos-containing products manufactured, distributed, and sold" by defendants during the course of his employment from 1963 through 1979.[3] Plaintiffs allege, "As a result of these exposures to toxic substances, including asbestos, [Comardelle] contracted cancer, mesothelioma, and lung cancer, which was first diagnosed on approximately September 25, 2013."[4] Comardelle died on May 3, 2014, and his widow and children were substituted as plaintiffs.[5]

Among a myriad of other claims, plaintiffs seek to recover from Avondale's executive officers individually via certain insurance policies purchased by Avondale which insured against the executive officers' individual liability for actions taken within the scope of their employment.[6] Highlands Insurance Company ("Highlands") and American Motorists Insurance Company ("American Motorists"), the insurers who issued the subject policies, [7] are now insolvent, [8] but plaintiffs assert that Avondale assumed its insurers' responsibilities under the policies pursuant to so-called "buy-back" agreements.[9] Plaintiffs claim that Avondale assumed the role of an "additional insurer" under the policies[10] and that it is obligated to plaintiffs for its executive officers' individual liability because Avondale stands in the shoes of Highlands and American Motorists.[11] Avondale asserts that it is not liable for its executive officers' individual liability under the policies.[12]

STANDARD OF LAW

Summary judgment is proper when, after reviewing the pleadings, the discovery and disclosure materials on file, and any affidavits, the court determines that there is no genuine issue of material fact. See Fed.R.Civ.P. 56. "[A] party seeking summary judgment always 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." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party's case. Id.; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986).

Once the party seeking summary judgment carries its burden pursuant to Rule 56, the nonmoving party must come forward with specific facts showing that there is a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The showing of a genuine issue is not satisfied by creating "some metaphysical doubt as to the material facts, ' by conclusory allegations, ' by unsubstantiated assertions, ' or by only a scintilla' of evidence." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue of material fact exists when the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The nonmoving party's evidence, however, "is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party's] favor." Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).

DISCUSSION

A. Louisiana Law[13]

The Louisiana Civil Code provides "special regulations for assumptions of obligations." La. Civ. Code art. 1821 cmt. (b); see generally Saul Litvinoff, 5 La. Civ. L. Treatise, Law of Obligations, ch. 10 (2d ed. 2012). "An obligor [Highlands and American Motorists] and a third person [Avondale] may agree to an assumption by the latter of an obligation of the former." La. Civ. Code art. 1821.[14] "A person [Avondale] who, by agreement with the obligor [Highlands and American Motorists], assumes the obligation of the latter is bound only to the extent of his assumption. The assuming obligor [Avondale] may raise any defense based on the contract by which the assumption was made." La. Civ. Code art. 1822.

B. The Buy-Back Agreements

The buy-back agreement between Avondale and Highlands states, "In exchange for the mutual covenants, promises and consideration which are described throughout this Agreement, the Settling Parties hereby agree to compromise, release and settle all claims arising out of or incident to the Policies and to undertake the acts and obligations set forth in this section."[15] In exchange for the payment of a one-time lump sum settlement, [16] the agreement states that Avondale "expressly releases, acquits and forever discharges... Highlands from any and all obligations arising under or related in any way to the Policies."[17] Avondale also agreed that its "interest in the Policies shall be deemed exhausted in its entirety" and that "any obligation of Highlands to [Avondale] under the Policies shall be void ab initio, and all past, present or future obligations to [Avondale] for liabilities known or unknown of any kind under the Policies are forever discharged."[18] Avondale agreed to defend and indemnify Highlands in the event that Highlands or its receiver are subject to "claims arising out of the Policies brought by third parties, additional insureds and/or individuals or entities claiming coverage under the Policies against Highlands, " including any claims brought against Highlands pursuant to the Louisiana Direct Action Statute.[19]

The buy-back agreement between Avondale and American Motorists is similar.[20] The recitals at the beginning of the agreement state that "the Parties intend to fully and forever extinguish all rights, duties and coverage under the POLICIES and to render them null and void, as if they had never been issued."[21] In exchange for the payment of a one-time lump sum settlement, [22] the agreement states that Avondale "hereby fully, forever, and irrevocably releases and discharges [American Motorists] from any and all INSURANCE COVERAGE CLAIMS[23] arising out of, or in any manner relating to, the POLICIES."[24] Avondale agreed that "all limits of liability, including, but not limited to, all occurrence and aggregate limits, of the POLICIES, are fully exhausted, "[25] and the agreement provides that "the POLICIES are hereby rescinded for all purposes, [are] null and void, and are void ab initio, as if they had never been issued."[26] Avondale also agreed to defend and indemnify American Motorists "against any ...


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