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XL Specialty Insurance Co. v. Bollinger Shipyards, Inc.

United States District Court, E.D. Louisiana

February 26, 2015

XL SPECIALTY INSURANCE COMPANY,
v.
BOLLINGER SHIPYARDS, INC., ET AL., Section: R(2)

ORDER AND REASONS

SARAH S. VANCE, District Judge.

This insurance coverage dispute concerns two claims-made liability policies issued to plaintiff Bollinger[1]-one each by defendants American International Specialty Lines Insurance Company and Illinois National Insurance Company. Defendant AIG Claims, Inc. administered both policies. The parties have filed cross motions for summary judgment.[2] For the following reasons, the Court denies Bollinger's motion and grants the motion filed by American International, Illinois National, and AIG.

I. BACKGROUND

A. Procedural Background

This insurance coverage dispute arises out of a lawsuit brought against Bollinger by the United States under the False Claims Act, 31 U.S.C. §§ 3729, et seq., regarding a ship conversion project that Bollinger completed for the United States Coast Guard. The Court has described the factual and procedural history of the underlying suit elsewhere[3] and will not repeat it here.

In an effort to obtain coverage for the costs of defending the underlying suit, Bollinger filed claims with and eventually sued a number of its insurers in addition to the insurers involved in these motions. The Court consolidated the suits against the other insurers with a declaratory judgment action brought against Bollinger by yet another insurance carrier.[4]

After Bollinger sued the three defendants involved in these motions in state court, they removed to federal court on the basis of diversity jurisdiction under 28 U.S.C. § 1332.[5] The suit was then consolidated with the other insurance actions pending before this Court.[6] Bollinger filed a motion to remand the suit, [7] which the Court denied.[8]

B. Factual Background

Two insurance policies are potentially relevant to Bollinger's coverage claims in this suit. First, American International insured Bollinger under a "Directors, Officers and Private Company Liability Insurance Policy" (commonly referred to as a "D&O policy"), with policy number XXX-XX-XX and a "Policy Period" of December 31, 2005 to December 31, 2006.[9] Second, Illinois National Insurance Company insured Bollinger under a D&O policy with policy number XXX-XX-XX and a "Policy Period" of May 1, 2008 to May 1, 2009.[10]

The policies are substantively identical in all respects critical to the Court's analysis, so the Court summarizes their key terms together. The first page of both policies provides the following notice in boldface font:

NOTICE: EXCEPT TO SUCH EXTENT AS MAY OTHERWISE BE PROVIDED HEREIN, THE COVERAGE OF THIS POLICY IS GENERALLY LIMITED TO LIABILITY FOR ONLY THOSE CLAIMS THAT ARE FIRST MADE AGAINST THE INSUREDS DURING THE POLICY PERIOD AND REPORTED IN WRITING TO THE INSURER PURSUANT TO THE TERMS HEREIN. PLEASE READ THE POLICY CAREFULLY AND DISCUSS THE COVERAGE THEREUNDER WITH YOUR INSURANCE AGENT OR BROKER.[11]

Both policies go on to provide, in relevant part, that they will "pay the Loss of [Bollinger] arising from a... Claim first made [against Bollinger]... during the Policy Period or the Discovery Period[12] (if applicable) and reported to the Insurer pursuant to the terms of [the] policy."[13] "Claim" is a defined term meaning, among other things, "a written demand for monetary or non-monetary relief (including any request to toll or waive any statute of limitations)."[14]

In the motions now before the Court, Bollinger asserts that the United States "first made" a covered "Claim" against it on two separate occasions. First, Bollinger contends that a "preserve evidence letter" dated December 14, 2006 constitutes a "Claim" falling within the policy period of American

International Policy Number XXX-XX-XX. American International disputes that a preserve evidence letter qualifies as a "Claim" under the policy. Second, Bollinger contends that a Tolling Agreement that Bollinger entered into with the United States on December 23, 2008 also constitutes a "Claim." The Tolling ...


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