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Rsui Indemnity Co. v. American States Insurance Co.

United States District Court, E.D. Louisiana

May 18, 2015

RSUI INDEMNITY COMPANY,
v.
AMERICAN STATES INSURANCE COMPANY, Section I

ORDER AND REASONS

LANCE M. AFRICK, District Judge.

Before the Court are: (1) a motion[1] for summary judgment concerning subrogation filed by defendant, American States Insurance Company ("ASIC"); (2) a motion[2] for partial summary judgment filed by ASIC as to claims by plaintiff, RSUI Indemnity Co. ("RSUI"), based on a legal malpractice theory; (3) a motion[3] for summary judgment filed by RSUI; (4) a motion[4] filed by ASIC to exclude attorney opinion testimony; (5) a motion[5] filed by ASIC to exclude RSUI's accident reconstruction expert; and (6) a motion[6] filed by RSUI to exclude ASIC's insurance expert. All motions are opposed and the matters are fully briefed and ripe for decision.

BACKGROUND

The facts of this case are set forth at greater length in RSUI Indemnity Co. v. American States Insurance Co., 768 F.3d 374 (5th Cir. 2014). Briefly, Ameraseal, L.L.C. ("Ameraseal") had a primary liability insurance policy with a $1, 000, 000 policy limit issued by ASIC and an excess insurance policy with a $4, 000, 000 policy limit issued by RSUI. Lamar Thomas ("Thomas"), an Ameraseal employee, was involved in a vehicular accident with Stacia Barrow ("Barrow"). Barrow sued Thomas and Ameraseal ("the insureds"), as well as ASIC (but not RSUI) in Louisiana state court. Eventually, after providing a defense which RSUI criticizes as inadequate, ASIC settled with Barrow shortly before trial for the $1, 000, 000 policy limits in exchange for a release of Thomas and Ameraseal, the scope of which release is disputed. Shortly thereafter, RSUI settled with Barrow on behalf of the insureds for an additional $2, 000, 000, and it now pursues that amount from ASIC based on ASIC's alleged mishandling of the underlying case.

The Court granted summary judgment in favor of ASIC, which the Fifth Circuit reversed. See 768 F.3d at 381-82. The Fifth Circuit held that "under the circumstances of this case, where an excess carrier alleges that a primary insurer in bad faith breached its duty to defend a common insured properly and caused exposure of the insured to an increase in the settlement value of the case above the primary policy limit, which the excess insurer must then satisfy on the insured's behalf, the excess insurer has a subrogated cause of action against the primary insurer for any payment above what it otherwise would have been required to pay." Id. at 382. The Fifth Circuit remanded for further proceedings. The parties have now filed various dispositive and evidentiary motions in advance of the upcoming bench trial.

DISCUSSION

I. Motions for Summary Judgment

A. 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 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).

B. ASIC's Motion for Partial Summary Judgment Regarding Subrogation

ASIC moves for summary judgment, contending that RSUI is subrogated to a nonexistent claim. It is undisputed that RSUI brings its claims against ASIC solely through subrogation to the claims that joint insureds may have had against ASIC.[7] ASIC contends that because it obtained a full release of the insureds' personal liability, the insureds have no claim for damages against ASIC and, therefore RSUI is subrogated to a nonexistent claim.[8] RSUI opposes the motion, contending that (1) the Fifth Circuit rejected ASIC's argument on appeal and (2) ASIC did not adequately secure a release of liability for the insureds, so the insureds (and consequently RSUI) do have a viable claim against ASIC.[9]

ASIC's argument hinges on whether its settlement with Barrow for the primary policy limits fully released the insureds from any personal exposure to excess liability. The Fifth Circuit addressed this issue, which the parties briefed on appeal, and concluded that it is intertwined with the merits of RSUI's bad-faith claim:

Similarly, American contends that its settlement with Barrow was a so-called Gasquet settlement under state law, which adequately protected the insured. RSUI disputes this assertion. We need not decide the proper characterization of the settlement under Gasquet because whether [ASIC] adequately protected the insured in the settlement goes to the merits of ...

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