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Central Crude, Inc. v. Liberty Mutual Insurance Co.

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

July 16, 2019

CENTRAL CRUDE, INC.
v.
LIBERTY MUTUAL INSURANCE CO., ET AL.

          MAGISTRATE JUDGE KAY

          MEMORANDUM RULING

          JAMES D. CAIN, JR. UNITED STATES DISTRICT JUDGE.

         Before the court is a Motion for Summary Judgment [doc. 49] filed by defendant Great American Assurance Company ("Great American"). Plaintiff Central Crude, Incorporated ("Central Crude") opposes the motion and Great American has filed a reply. Docs. 53, 54. Accordingly, the matter is now ripe for review.

         I. Background

         This motion relates to a lawsuit filed by Central Crude in the Fourteenth Judicial District Court, Calcasieu Parish, Louisiana, on January 3, 2017. Doc. 1, att. 2, pp. 5-17. There Central Crude, a Louisiana corporation engaged in the acquisition and transport of crude oil, raised claims for declaratory relief and breach of contract against Liberty Mutual Insurance Company ("Liberty Mutual") as its commercial general liability ("CGL") insurer. Id. at pp. 5-6. The claims arise from Central Crude's attempts to obtain reimbursement for losses it incurred from an incident in January 2007, when crude oil was released from a pipeline running through Central Crude's land in Paradis, St. Charles Parish, Louisiana. The discharge, termed the "Paradis Incident" by Central Crude, resulted in damages to Central Crude's land and to adjacent property owned by others. See Id. at p. 7 ¶ 16, Central Crude notified the Louisiana Department of Environmental Quality ("LDEQ") of the incident, and eventually began remediation work under a plan approved by LDEQ in June 2009. Doc. 49, att. 4, pp. 5-7; doc. 49, art. 5, pp. 8-10.

         In the meantime, Columbia Gas Transmission Company ("Columbia Gas") filed suit against Central Crude in the 29th Judicial District Court, St. Charles Parish, Louisiana. Doc. 49, att. 3, pp. 4-13. There Columbia Gas sought damages incurred to its pipeline on land adjacent to the spill site, as well as injunctive relief to compel Central Crude's remediation of the site. Id. Central Crude states that it reported the release and the Columbia Gas suit to Liberty Mutual, seeking coverage under its CGL policy. Doc. 1, att. 2, pp. 7-8, ¶¶ 17-21. Liberty Mutual allegedly agreed to cover Central Crude's "reasonable and necessary costs" relating to the Paradis Incident, but subsequently refused to defend or indemnify Central Crude in the Columbia Gas suit or to reimburse it for any costs incurred from the Paradis Incident. Id. at pp. 7-8, 10, ¶¶ 18, 22, 42.

         Central Crude then filed the above-mentioned suit in state court, raising claims against Liberty Mutual based on the denial of coverage and naming a placeholder defendant for its excess insurer. Id. at pp. 5-17. Liberty Mutual removed the case to this court on the basis of diversity jurisdiction, 28 U.S.C. § 1332. Doc. 1. Central Crude then amended its complaint to name Great American as the excess insurer and to seek recovery under the terms of its policy with Great American. Doc. 32; see doc. 1, att. 2, p. 14 ¶ 72. Great American now moves for summary judgment, asserting that coverage for the Paradis Incident is barred under the excess policy's terms. Doc. 49; doc. 49, att. 1. Central Crude opposes the motion. Doc. 53. Alternatively, it requests additional time under Rule 56(d) to conduct discovery in support of its opposition. Id.

         II. Legal Standards

         A court should grant a motion for summary judgment when the movant shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56. The party moving for summary judgment is initially responsible for identifying portions of pleadings and discovery that show the lack of a genuine issue of material fact. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). The court must deny the motion for summary judgment if the movant fails to meet this burden. Id.

         If the movant makes this showing, however, the burden then shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (quotations omitted). This requires more than mere allegations or denials of the adverse party's pleadings. Instead, the nonmovant must submit "significant probative evidence" in support of his claim. State Farm Life Ins, Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990). "If the evidence is merely colorable, or is not significantly probative, summary judgment maybe granted." Anderson, 477 U.S. at 249 (citations omitted).

         A court may not make credibility determinations or weigh the evidence in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). The court is also required to view all evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000). Under this standard, a genuine issue of material fact exists if a reasonable trier of fact could render a verdict for the nonmoving party. Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).

         III. Application

         Great American's motion turns on its assertion that coverage for the Paradis Incident is excluded under the terms of its policy with Central Crude. The Great American policy is an umbrella policy, providing coverage exceeding that offered under the CGL policy. Doc. 49, att. 8, pp. 5, 48. The policy contains several exclusions, including one for injury arising out of a discharge of pollutants ("Pollution Exclusion"). Id. at 48. The Pollution Exclusion purports to bar coverage arising out of:

(1) The actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of ...

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