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Atlantic Specialty Insurance Co. v. Phillips 66 Co.

United States District Court, E.D. Louisiana

February 5, 2019

ATLANTIC SPECIALTY INSURANCE CO., ET AL.
v.
PHILLIPS 66 CO.

         SECTION “L” (1)

          ORDER AND REASONS

          ELDON E. FALLON UNITED STATES DISTRICT JUDGE

         There are five motions before the Court: Phillips 66 Company's Motion for Partial Summary Judgment on La. R.S. 9:2780.1 (R. Doc. 20) and Motion for Partial Summary Judgment on Atlantic Specialty Insurance Company's Duty to Defend (R. Doc. 21); Blanchard Contractors' Motion for Summary Judgment on La. R.S. 9:2780.1 (R. Doc. 32), Atlantic Specialty Insurance Company's Motion for Summary Judgment on Insurance Coverage (R. Doc. 30); and Excess Underwriters' Motion for Summary Judgment (R. Doc. 55). Having considered the parties' briefs and the applicable law, the Court now issues this Order and Reasons.

         I. BACKGROUND

         This insurance coverage dispute arises out of a natural gas pipeline explosion. A master services agreement (“MSA”) between Blanchard Contractors, Inc. (“Blanchard”) and Phillips 66 Company (“P66”) governed the work on the pipeline and included a “knock-for-knock” indemnity agreement, whereby Blanchard agreed to indemnify P66 for personal injury claims of Blanchard employees, regardless of fault, and vice versa. The MSA also required Blanchard to procure general liability insurance naming P66 as an additional insured.

         Employees of P66 and Blanchard were performing a “pigging” operation on a segment of the pipeline when the explosion occurred. The pipeline was carrying commingled, raw grade natural gas liquid from a gathering facility in Venice, Louisiana to the Enterprise Norco Fractionation Plaint in Norco, Louisiana, where it would be fractionated and processed. R. Doc. 20-3 at 2. Blanchard employees Desmond Calloway and Jacob Jambon sued P66 for personal injuries stemming from the explosion, and P66 demanded defense and indemnity from Blanchard. Blanchard presented P66's claims to its insurer, Atlantic Specialty (“Atlantic”), and Atlantic filed this declaratory judgment suit seeking a declaration that the indemnity and insurance provisions in the MSA are void and unenforceable under the Louisiana Anti-Indemnity Act, La. R.S. 9:2780.1. In response, P66 filed a counterclaim against Atlantic and a third-party demand against Blanchard, seeking a declaration that the indemnity and additional insured provisions of the MSA are valid and enforceable. Finally, Excess Underwriters subscribing severally to Policy No. TMU-407387 (“Excess Underwriters”) move for summary judgment that P66 is not an additional insured under their policy and is owed no coverage. R. Doc. 55.

         II. PRESENT MOTIONS

         1. Applicability of the Louisiana Anti-Indemnity Act

          P66 moves for partial summary judgment on its counterclaim and third party demand. P66 asks the Court to issue a judgment (1) declaring that the Louisiana Anti-Indemnity Act does not invalidate the indemnity and insurance provisions in the MSA and (2) dismissing with prejudice Plaintiffs' claims seeking a declaration that the indemnity and insurance provisions are unenforceable.

         Blanchard opposes and moves for summary judgment that the Louisiana Anti-Indemnity Act voids any duty to defend or indemnify P66 for personal injury claims of Blanchard employees.

         2. Atlantic Specialty's Duty to Defend

          P66 moves for partial summary judgment that Atlantic owes a duty to defend P66 in the underlying Calloway and Jambon suits. Atlantic opposes and moves for summary judgment holding that any duty to defend P66 is void under the Louisiana Anti-Indemnity Act.

         III. LAW AND ANALYSIS

         Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed.R.Civ.P. 56(c)). “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Id. A party moving for summary judgment bears the initial burden of demonstrating the basis for summary judgment and identifying those portions of the record, discovery, and any affidavits supporting the conclusion that there is no genuine issue of material fact. Id. at 323. If the moving party meets that burden, then the nonmoving party must use evidence cognizable under Rule 56 to demonstrate the existence of a genuine issue of material fact. Id. at 324.

         A genuine issue of material fact exists if a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1996). “[U]nsubstantiated assertions, ” “conclusory allegations, ” and merely colorable factual bases are insufficient to defeat a motion for summary judgment. See Hopper v. Frank, 16 F.3d 92, 97 (5th Cir. 1994); Anderson, 477 U.S. at 249-50. In ruling on a summary judgment motion, a court may not resolve credibility issues or weigh evidence. See Int'l Shortstop, Inc. v. Rally's Inc., 939 F.2d 1257, 1263 (5th Cir. 1991). Furthermore, a court must assess the evidence, review the facts and draw any appropriate inferences based on the evidence in the light most favorable to the party opposing summary judgment. See Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001); Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986).

         1. Applicability of the Louisiana Anti-Indemnity Act

         The Louisiana Anti-Indemnity Act (“LAIA) invalidates indemnity and insurance ...


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