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Crosstex Energy Services, LP v. Texas Brine Company, LLC

Court of Appeals of Louisiana, First Circuit

December 21, 2017

CROSSTEX ENERGY SERVICES, LP, CROSSTEX LIG, LLC, AND CROSS TEX PROCESSING SERVICES, LLC
v.
TEXAS BRINE COMPANY, LLC, ET AL.

         APPEALED FROM THE 23rd JUDICIAL DISTRICT COURT ASSUMPTION PARISH, LOUISIANA DOCKET NUMBER 34, 202 HONORABLE JASON VERDIGETS, JUDGE

          Leopold Z. Sher James M. Garner Peter L. Hilbert, Jr. Martha Y. Curtis Neal J. Kling Jeffrey D. Kessler New Orleans, Louisiana and Robert Ryland Percy, III Gonzales, Louisiana and Travis J. Turner Gonzales, Louisiana and Eric J. Mayer Houston, Texas Attorneys for Defendant/ Third Party-Plaintiff/ Appellant, Texas Brine Company, LLC

          Mary S. Johnson Ingrid K. Laurendine Mandeville, Louisiana Attorneys for Third-Party Defendants/ Appellees, National Union Fire Insurance Company of Pittsburg, Pa., And AIG Specialty Insurance Company in their respective capacities as alleged pre-2012 insurers of Texas Brine Company, LLC)

          BEFORE: WHIPPLE, C.J., MCDONALD, and CHUTZ, JJ.

          McDONALD, J.

         In this appeal, an insured appeals a summary judgment in favor of its insurers concluding the insurers did not owe the insured a duty to defend against the plaintiffs' claims in the underlying litigation and dismissing the insured's third party demand against the insurers with prejudice. We affirm.

         FACTS AND PROCEDURAL HISTORY

         This suit is one of several arising from the August 2012 appearance of a sinkhole near Bayou Corne in Assumption Parish, Louisiana. EnLink f/k/a Crosstex[1], the plaintiffs in the underlying litigation, own and operate a natural gas pipeline that traverses the edge of a salt dome. Texas Brine[2] operates brine production wells, including the Oxy Geismar #3 well, on property above the salt dome. EnLink filed suit against Texas Brine, among others, alleging the sinkhole was caused, in whole or part, by the failure of the Oxy Geismar #3 salt cavern and that the sinkhole engulfed a section of EnLink's pipeline, rendering the pipeline displaced, damaged, and unusable.

         In response to EnLink's suit, Texas Brine filed a third party demand for declaratory judgment seeking defense and indemnity from insurers, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union) and AIG Specialty f/k/a AISLIC[3](sometimes, collectively AIG Insurers), under certain pre-2012 liability policies issued to Texas United Corporation.[4] In due course, the AIG Insurers filed a motion for summary judgment, claiming they had no duty to indemnify or defend Texas Brine in this suit, because EnLink's alleged damages did not occur during the effective dates of any of the relevant policies, the last of which indisputably expired on March 1, 2009, more than three years before the sinkhole appeared. In a judgment signed February 14, 2017, the district court granted summary judgment in favor of the AIG Insurers, in their capacities as Texas Brine's pre-2012 insurers, and dismissed Texas Brine's third party demand against them.[5]

         Texas Brine appealed from the judgment. While the appeal was pending, EnLink apparently settled its claims against Texas Brine and those claims were dismissed. According to Texas Brine, however, this appeal still presents the issue of whether genuine issues of material fact exist such that the AIG Insurers owed Texas Brine a duty to defend Texas Brine on the EnLink claims against it until the date those claims were resolved and dismissed.

         Texas Brine contends the district court erred in granting summary judgment to the AIG Insurers because there are genuine issues of material fact as to when EnLink's damage began that preclude summary judgment on the AIG Insurers' duty to defend. Specifically, Texas Brine argues the pre-2012 AIG policies do not limit coverage to property damage that manifests itself during the policy period but should be interpreted to cover possible hidden property damage to EnLink that may have resulted from earth movement that may have occurred during the policy periods. Texas Brine also contends the district court erred, because another district court in other sinkhole-related cases denied summary judgment to insurers on the duty to defend issue.

         SUMMARY JUDGMENT

         A motion for summary judgment is a procedural device used to avoid a full-scale trial when there is no genuine issue of material fact. Jones v. Anderson, 16-1361 (La.App. 1 Cir. 6/29/17), 224 So.3d 413, 417. After an opportunity for adequate discovery, a motion for summary judgment shall be granted if the motion, memorandum, and supporting documents show there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. LSA-C.C.P. art. 966A(3). The only documents that may be filed in support of or in opposition to the motion are pleadings, memoranda, affidavits, depositions, answers to interrogatories, certified medical records, written stipulations, and admissions. LSA-C.C.P. art. 966A(4).

         The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law. LSA-C.C.P. art. 966D(1).

         Appellate courts review evidence de novo under the same criteria that govern the trial court's determination of whether summary judgment is appropriate. Jones, 224 So.3d at 417. Thus, appellate courts ask the same questions: whether there is any genuine issue of material fact and whether the mover is entitled to judgment as a matter of law. Id. Because it is the applicable substantive law that determines materiality, whether a particular fact in dispute is material can be seen only in light of the substantive law applicable to the case. Id.

         DUTY TO DEFEND

         Whether an insurance policy provides or precludes coverage is a dispute that can be properly resolved within the framework of a motion for summary judgment. George S. MayM'ICo. v. Arrowpoint Capital Corp., 11-1865 (La.App. 1 Or. 8/10/12), 97 So.3d 1167, 1171. The party seeking a declaration of coverage under an insurance policy must establish every fact essential to recovery and that the claim falls within the policy coverage. Id. Generally, the insurer's obligation to defend suits against its insured is broader than its obligation to indemnify for damage claims. Arceneaux v. Amstar Corp., 10-2329 (La. 7/1/11), 66 So.3d 438, 450. The issue of whether a liability insurer has the duty to defend a civil action against its insured is determined by application of the "eight-corners rule, " under which an insurer must look to the "four corners" of the plaintiffs petition and the "four corners" of its policy to determine whether it owes that duty. Maldonado v. Kiewit Louisiana Co., 13-0756 (La.App. 1 Cir. 3/24/14), 146 So.3d 210, 218. The insurer's duty to defend suits brought against its insured is determined by the factual allegations of the injured plaintiffs petition, with the insurer being obligated to furnish a defense unless it is clear from the petition that the policy unambiguously excludes coverage. See Arceneaux, 66 So.3d at 450. Thus, assuming the factual allegations of the petition are true, if there could be both coverage under the policy and liability to the plaintiff, the insurer must defend the insured regardless of the outcome of the suit. Id. Additionally, the court must liberally interpret the factual allegations of the petition in determining whether they bring the plaintiff's claim within the scope of the insurer's duty to defend the suit brought against its insured. Maidonado, 146 So.3d at 219. If a petition does not allege facts within the scope of coverage, however, an insurer is not legally required to defend a suit against its insured. Id.

         We now review de novo the documents filed by the parties in support of and in opposition to the AIG Insurers' motion for summary judgment See LSA-C.C.P. arts. 966A(4) and D(2). It is undisputed that the AIG Insurers provided insurance coverage to Texas United Corporation under policies effective from March 1, 1991 through March 1, 1995 and from March 1, 1996 through March 1, 2009 (the pre-2012 AIG policies). The AIG Insurers filed pertinent excerpts from the ...


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