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Gilchrist Construction Co. LLC v. Travelers Indemnity Co.

United States District Court, W.D. Louisiana, Lake Charles Division

January 11, 2019





         Before the Court is a Motion to Dismiss filed by one of the defendants, Arch Insurance Company (“Arch” or “the Defendant”). See Record Document 25. Arch contends that coverage did not exist under policies issued by it to Gilchrist Construction Company, LLC (“Gilchrist”) and therefore it also had no duty to defend Gilchrist. See Id. For the reasons that follow, the Motion to Dismiss is GRANTED.


         I. Procedural History.

         This matter arises from a petition filed by Gilchrist in the Thirty-Third Judicial District Court, Allen Parish, Louisiana, against The Travelers Indemnity Company and Arch Insurance Company, and individual defendants Juanita Fontenot (“Fontenot”) and T. June Wilder (“Wilder”). See Record Document 1, Ex. 3 (state court record). Gilchrist asserts breach of contract claims against the insurers and seeks declaratory judgments against them based on their denial of defense and indemnity to Gilchrist, in alleged violation of commercial general liability policies acquired by Gilchrist from those insurers. See id. at 4-9. Gilchrist's claims against Arch are in connection with a lawsuit brought by Fontenot and Wilder to recover damages from Gilchrist for trespass and breach of contract. The Fontenot/Wilder lawsuit arose from an agreement between the parties to buy and sell dirt from the Fontenot/Wilder property and to temporarily store debris on their property from a nearby road construction project. See id. at 5-7. Gilchrist alleges that it was forced to defend itself in the Fontenot/Wilder suit and that neither of its insurers has indemnified it for the $5, 559, 000 verdict, plus costs and fees, awarded to Fontenot and Wilder. See id.

         In the instant suit, Gilchrist raised no claims against Fontenot and Wilder but instead named them as “interested parties” in its claim for declaratory judgment against the insurers. See id. at 8-9, ¶¶ 39 & 49. The insurers removed the suit to this court on the basis of diversity jurisdiction, 28 U.S.C. § 1332, alleging that Fontenot and Wilder were improperly joined to defeat jurisdiction. See Record Document 1. Gilchrist moved to remand, contesting the allegations of improper joinder. See Record Document 19. Magistrate Judge Kay recommended that the motion to remand be denied and that Fontenot and Wilder be dismissed without prejudice as improperly joined, and this Court adopted her recommendation. See Record Documents 34 and 40.

         While the motion to remand was pending, Arch filed the instant motion to dismiss for failure to state a claim. See Record Document 25. Gilchrist sought, and was granted, an extension of time to file an opposition to Arch's motion to dismiss, requesting ten days after a ruling issued as to the motion to remand to file its opposition. See Record Documents 31 and 32. Gilchrist has now filed an opposition to Arch's motion and Arch has filed a reply. See Record Documents 41 and 43.

         II. Relevant Allegations and Policy Provisions.

         Arch insured Gilchrist through a commercial general liability policy, which was renewed twice. See Record Document 25 at Exs. C, D and E.[1] After the underlying Fontenot/Wilder lawsuit was filed in 2012, Gilchrist requested that Arch provide a defense and indemnity under the policies. Arch denied defense and indemnity coverage for the claims.

         In their state court complaint, Fontenot and Wilder asserted that Gilchrist's actions violated Louisiana law through failure to perform the contract with them in good faith and failure to perform its duties and obligations under the contract. See Record Document 25, Ex. 2 at ¶ 13. They alleged that “Gilchrist [] filled in the pit from which they extracted Petitioner's dirt with worthless dirt, debris, concrete, wood and trash from elsewhere” and that Gilchrist “under-measured and underpaid for the dirt that it did haul from Petitioner's land.” Id. at ¶¶ 7 and 9. They further asserted that “Gilchrist has continually and maliciously made an outright refusal to pay Petitioner the amounts owed under contract or to remove the debris they dumped on Petitioner's land in violation of the contract.” Id. at ¶ 12. They alleged that the “continual presence of the dirt, debris, concrete, wood, and trash on Petitioner's property also constitutes an ongoing and continuing trespass by Gilchrist.” Id. at ¶ 13. Fontenot and Wilder referred to “Gilchrist's bad faith refusal to faithfully perform its obligations” when detailing the damages they had suffered. Id. at ¶ 14.

         The Arch policy provides coverage to Gilchrist for “bodily injury” and “property damage.” See Record Document 25 at Ex. C. The relevant coverage provisions and exclusions of the policies state:



         1. Insuring Agreement

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. . . .
b. This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
(2) The “bodily injury” or “property damage” occurs during the policy period. . . .

         2. ...

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