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Chet Morrison Contractors, L.L.C. v. Onebeacon American Insurance Co.

United States District Court, E.D. Louisiana

March 17, 2015

CHET MORRISON CONTRACTORS, L.L.C. Plaintiff,
v.
ONEBEACON AMERICAN INSURANCE COMPANY; MARKEL AMERICAN INSURANCE COMPANY; AND CONTINENTAL INSURANCE COMPANY, SECTION: R (2) Defendants.

ORDER AND REASONS

SARAH S. VANCE, District Judge.

Defendants Onebeacon American Insurance Company and Markel American Insurance Company move the Court to dismiss plaintiff's claims under Federal Rule of Civil Procedure 12(b)(6). The Court grants the defendants' motion because the hull and machinery insurance policy at issue does not provide defense coverage to plaintiff.

I. Background

A. The Underlying "Offshore Marine" Litigation

On October 29, 2010, Offshore Marine Contractors, Inc. filed suit in this Court alleging that Palm Energy Offshore, LLC and Chet Morrison Well Services, LLC failed to pay for the charter of one of Offshore Marine's vessels, the L/B Nicole Eymard. Offshore Marine also claimed that Palm Energy and Chet Morrison breached a separate oral agreement that the parties allegedly formed after one of the legs of the L/B Nicole Eymard became stuck. Under the terms of the alleged oral contract, Palm Energy and Chet Morrison promised to pay Offshore Marine for repair costs and lost charter fees if Offshore Marine cut the legs of the vessel to free it.[1]

Chet Morrison later sued Palm Energy and H.C. Resources, LLC ("HCR") alleging that if Chet Morrison were found to have chartered the L/B Nicole Eymard, Palm Energy and HCR were obligated to pay Chet Morrison the cost of the charter, plus a 15% markup and interest for untimely payments. On February 6, 2013, the Court consolidated the two cases for trial.[2]

On June 24, 2013 the Court conducted a two-day bench trial and summarized its findings as follows:

(1) [Chet Morrison] is liable to [Offshore Marine] for the charter of the L/B Nicole Eymard for the Chandeleur 37 job, which took place from July 15 to July 27, 2008. HCR is in turn liable to [Chet Morrison] for the full amount of those charter fees.
(2) [Chet Morrison] is liable to OMC for the charter of the vessel for the West Delta 55 job, which took place from July 28 to August 18, 2008. [Palm Energy] is in turn liable to [Chet Morrison] for the full amount of those charter fees.
(3) Neither [Chet Morrison] nor [Palm Energy] is liable for the repair costs and downtime charter associated with the decision to cut the leg of the vessel.[3]

B. The Instant Litigation

Following the conclusion of the Offshore Marine litigation, Chet Morrison sued defendants Onebeacon America Insurance Company, Markel American Insurance Company, and Continental Insurance Company alleging that all three insurance companies failed to undertake Chet Morrison's defense in the Offshore Marine litigation despite Chet Morrison's status as an "additional insured" under the insurance policies underwritten by the defendants. Thus, Chet Morrison seeks remuneration of the amount it was cast in judgment as well as defense costs associated with the Offshore Marine litigation. Chet Morrison also asserts derivative statutory bad faith claims relating to the denial of those defense costs.

Onebeacon and Markel, as the underwriters for the hull and machinery policy ("H&M policy"), now move the Court to dismiss Chet Morrison's claims against them. Onebeacon and Markel contend that the H&M policy provides first-party property insurance and does not contain any provision ...


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