United States District Court, E.D. Louisiana
SCF WAXLER MARINE, LLC, ET AL.
M/V ARIS T, ET AL.
ORDER AND REASONS
ZAINEY UNITED STATES DISTRICT JUDGE.
the Court is a Motion for Partial Summary Judgment
(Rec. Doc. 160) filed by Valero Refining - New
Orleans, LLC, Motiva Enterprises, LLC, and Shell Chemical,
LP. Third-party defendants New York Marine and General
Insurance Co., Stonington Insurance Co., National Specialty
Insurance Co., and Certain Underwriters at Lloyd's of
London oppose the motion. The motion, noticed for submission on
August 9, 2017, is before the Court on the briefs without
consolidated cases arise out of an incident that occurred on
January 31, 2016, wherein the M/V ARIS T allided with various
vessels and facilities on the Mississippi River. The
resulting physical damage and economic losses are alleged to
ARIS T attributes fault to two south-bound tugs-the M/V
LORETTA CENAC and the M/V ELIZABETH M. ROBINSON-that it
claims blocked its safe passage upriver causing the ARIS T to
maneuver into various other vessels and stationary
facilities. Cenac Marine Services, LLC was owner and operator
of the LORETTA CENAC and it filed a limitation action in
defense of the claims asserted against it (CA16-1614).
Movants herein, Valero Refining - New Orleans, LLC, Motiva
Enterprises, LLC, and Shell Chemical, LP
(“Movants”) filed third-party complaints against
Cenac's insurers under the auspices of the Louisiana
Direct Action Statute, La. R.S. § 22:1269. The answers
of those insurers included a limitation of liability defense.
contend that Cenac's policies of insurance do not include
the language required by the Fifth Circuit to support a
limitation of liability defense in favor of a vessel's
insurers. Movants therefore seek partial summary judgment in
their favor, dismissing the limitation of liability defense
raised by Cenac's insurers in their answers to
Movants' third-party complaints. The motion is opposed by
Cenac's first and second excess insurers (the
“Excess Insurers”). The parties concur that the
resolution of the motion turns on the language contained in
Cenac's primary policy because the excess
policies are follow-form policies.
Crown Zellerbach Corp. v. Ingram Industries, Inc.,
783 F.2d 1296 (5th Cir. 1986), the en banc Fifth
Circuit overruled Olympic Towing Corp. v. Nebel Towing
Co., 419 F.2d 230 (5th Cir. 1969), and held
that a P&I policy's insurer could limit its liability
to that of the vessel owner's liability when the terms of
its policy allow it to do so. In reaching this holding, the
appellate court distinguished the situation where an insurer
attempts to invoke the federal Limitation of Liability Act-a
statutory defense provided for the benefit of its insured
(the ship owner) not the insurer-from the situation where an
insurer's policy contains language that allows it to
limit its exposure to that of the vessel owner (assuming that
it prevails on its limitation defense). Id. at 1300.
Importantly, the court explained how merely enforcing the
policy as written would not contravene Louisiana's Direct
Action statute, which on its face rejects any notion that the
statute serves as a means to impose new liabilities or
deprive the insurer of its valid policy defenses.
Id. at 1299.
primary policy of insurance contains the following statement:
The Assurer hereby undertakes to make good to the Assured or
the Assured's executors, administrators and/or
successors, all such loss and/or expense as the
Assured shall as owners of the vessel named herein have
become liable to pay and shall pay on account
of the liabilities, risks, events and/or happenings herein
set forth . . . .
(Rec. Doc. 168-1, Exhibit 1 at 983) (emphasis added).
language makes clear that if Cenac were to prevail on its
limitation defense, it would be indemnified solely for the
amounts for which it was actually liable. Thus, the
insurer's exposure to its own insured is limited solely
the Direct Action Statute overrides the “and shall
pay” language in the policy by giving Movants a right
of direct action against the insurer, it does not and cannot
increase the insurer's exposure beyond the express terms
of the policy. The Direct Action Statute could not be clearer
in that recovery via the direct action is within the terms
and limits of the policy and any action brought via the
direct action statute is subject to all of the lawful terms
and conditions of the policy, including the defenses. La.
R.S. § 22:1269(C), (D); see Gorman v. City of
Opelousas, 148 So.3d 888 (La. 2014). Movants'
position, which seeks to hold the insurer liable for amounts
beyond what it agreed to pay when it issued the policy, is
inimical to Louisiana law.
Crown Zellerbach does not suggest that federal
maritime law requires policy language that refers
specifically to the limitation of liability under federal
law. To be sure, the policy at issue in Crown
Zellerbach did contain more precise language than the
primary policy at issue in this case, but it simply does not
follow from anything in the opinion that special language is
required. Again, what Crown Zellerbach recognizes is
that nothing in maritime law or Louisiana law is contravened
when the insurer seeks to limit its liability to that of the
vessel owner when that is expressly what its policy allows.
while the Excess Insurers have no right to assert directly a
limitation of liability defense, they are not liable beyond