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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. 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

          Glen E. Mercer Kourtney T. French New Orleans, Louisiana and Philip Robert King Chicago, Illinois Attorneys for Third-Party Defendant/ Appellee Zurich American Insurance Company Pro Hae Vice

          BEFORE WHIPPLE, C.J., MCDONALD, AND CHUTZ, JJ .

          MCDONALD, JUDGE.

         In this appeal, an insured appeals a summary judgment in favor of its insurer concluding the insurer 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 insurer, 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 and one of its insurers, Zurich American Insurance Company (Zurich), 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 Zurich, 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[4] liability policies issued to Texas United Corporation.[5]

         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 date of any of the relevant policies, the last of which indisputably expired on March 1, 2009, more than three years before the sinkhole appeared. Zurich filed a motion for summary judgment, and partially joined in the motion for summary judgment filed by the AIG Insurers, claiming it 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 its relevant policies, the last of which indisputably expired on March 1, 2012, five months before the sinkhole appeared.[6]

         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. Texas Brine appealed that judgment. In a judgment signed March 1, 2017, the district court granted Zurich's motion for summary judgment and Zurich's partial joinder in the motion for summary judgment filed by the AIG Insurers, dismissing all claims asserted by Texas Brine against Zurich, with prejudice. Texas Brine appealed the judgment.[7]

         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 Zurich 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 that the district court erred in granting summary judgment to Zurich because there are genuine issues of material fact as to when EnLink's damage began that preclude summary judgment on Zurich's duty to defend. Specifically, Texas Brine argues the pre-2012 Zurich 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 that 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 on 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 in dispute is material can be seen only in light of the substantive law applicable to the case. Id.

         DUTY ...


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