United States District Court, W.D. Louisiana, Lake Charles Division
D. CAIN, JR.UNITED STATES DISTRICT COURT
the Court is "Admiral Insurance Company's Motion for
Summary Judgment" (Doc. #31) wherein Admiral Insurance
Company ("Admiral") maintains that the policies it
issued to Zadeck Energy Group, Inc. ("Zadeck") do
not provide coverage for the claims brought against Zadeck in
the underlying suit, The Parish of Cameron v. Apache
Corp. (of Delaware), et al., Civ. Action No. 18-cv-688.
Admiral requests that this Court render judgment as prayed
for in its Complaint for Declaratory Judgment pursuant to 28
U.S.C. § 2201 and declare that Admiral has no defense or
indemnity obligations to Zadeck. For the reasons that follow,
the motion will be granted.
about May 7, 1996, Zadeck began operating well serial number
218362 (hereinafter referred to as "Well 1")
located in Cameron Parish. Zadeck ceased operating Well 1 on
or about June 1, 1998, and Iberia Operating Company
("Iberia") began operating Well 1. Admiral issued
and re-issued commercial General Liability policies to Zadeck
each year covering the collective period from March 13, 2004,
until March 13, 2012. Admiral did not issue any insurance
policies to Zadeck in 1996, 1997, or 1998.
is a named defendant in The Parish of Cameron v. Apache
Corp. (of Delaware, et al lawsuit. The suit was removed
to the United States District Court, Western District of
Louisiana. Zadeck tendered a demand for defense and indemnity
to Admiral; Admiral agreed to participate in the defense,
subject to a full reservation of rights. This action seeks a
declaration of the rights and responsibilities of Admiral
under the Admiral Policies with respect to Zadeck's
request for defense and indemnity in the underlying
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/VRisan, 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.
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 may be granted." Anderson, 477 U.S. at
249 (citations omitted).
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. Brumfleld v. Hollins, 551 F.3d 322,
326 (5th Cir. 2008).
issued insurance policies to Zadeck more than five (5) years
after Zadeck ceased operating Well 1. Admiral filed the
instant motion to have the Court declare that these policies
do not provide coverage for property damage allegedly
attributable to the operation of Well 1. Admiral, along with
three (3) other insurers, is presently providing a
defense under a reservation of rights to Zadeck in
the underlying lawsuit originally filed in Cameron Parish and
removed to this Court which is pending on this court's
docket as Civ. Action 2:18-688. Cameron Parish alleges that Covey
Energy, Inc., ("Covey"), Zadeck and Iberia drilled
and/or operated Well 1, and that those operations and
activities environmentally damaged land and waterbodies
located in the "Coastal Zone," as defined by the
State and Local Coastal Resources Management Act of 1978,
within Cameron Parish. The Petition implicates a time period
between 1978 and 2016 in which all defendants are alleged to
have engaged in activities in the Cameron Parish Coastal Zone
resulting in property damages up until the suit was filed in
operated the well from September 18, 1995, until May 7, 1996.
Zadeck operated Well 1 from May 7, 1996, until May 31, 1998,
and Iberia began operating Well 1 on June 1, 1998, and
remained the operator until the operations ceased and/or Well
1 was abandoned. Specifically, the lawsuit alleges that
defendants (1) used unlined earthen waste pits, (2) failed to
design the earth pits to prevent the movement of leachate
away from the waste facilities, (3) failed to clear,
re-vegetate, detoxify and restore the areas to their original
condition, causing increasing damage to the Cameron Parish
Coastal Zone.The lawsuit further alleges that defendants
discharged and/or disposed of oilfield waste in Cameron
Parish and/or its Coastal Zone and caused contamination and
pollution to the Coastal Zone and waters in the Operational
Area. Cameron also alleges that Defendants
allowed radioactive materials to accumulate in the soils and
ground waters, and Defendants' dredging activities
resulted in erosion of marshes, the degradation of
terrestrial and aquatic life, and has enabled and/or
accelerated saltwater intrusion.
Parish demands damages, costs, attorney fees, and
administrative penalties which include all or a portion of
the abatement or mitigation of damages, payment of
restoration costs, and actual restoration. Cameron Parish
also demands the costs necessary to clear, re-vegetate,
detoxify, and restore the Coastal zone as near as practicable
to its original condition.
noted above, beginning March 13, 2004, Admiral issued
consecutive policies to Zadeck (eight commercial general
liability policies and eight umbrella/excess policies).
Admiral argues that under the clear and unambiguous policy
language, and Louisiana jurisprudence, the Admiral policies
issued to Zadeck do not provide coverage for the claims
Cameron Parish brings against Zadeck. Zadeck argues that the
Petition does not unambiguously exclude the possibility that
Zadeck's activities and operations caused property
damages during the Admiral 2004-2012 policy periods, which
triggered Admiral's obligation to defend Zadeck.
are four (4) primary theories that courts apply to determine
when an insurance policy is triggered—the exposure
theory, the manifestation theory, the continuous trigger
theory, and the injury-in-fact theory. Norfolk S. Corp.
v. California Union Ins. Co., 859 So.2d 167 (La.App. 1
Cir. 12/19/03), writ denied, 861 So.2d 579 (La.
is proper to consider extrinsic evidence to determine
Zadeck complains that it is improper for this Court to
consider a list of oil and gas wells drilled and/or operated
by each Defendant, specifically referring to exhibit F.
Exhibit F was attached to Cameron Parish's petition as an
expansion of ¶ 19 in the underlying lawsuit. Cameron
Parish alleges that "[d]efendants drilled and/or
operated numerous oil and gas wells within the Operational
Area;" that defendant's operations and activities
were conducted (or being conducted) to enable or support the
drilling and operation of the "oil and gas wells listed
on Exhibit F"; and that "[a] list of the oil and
gas wells drilled and/or operated by each Defendant" was
attached as Exhibit F." Zadeck argues
that when evaluating a defense obligation, the court can only
consider the four corners of the Petition and the four
corners of the insurance policies—otherwise known as
the "eight corners rule." Hanover Ins. Co. v.
Superior Labor Servs., Inc., 179 F.Supp.3d 656, 676
(E.D. La. 2016) (factual inquiries beyond the petition for
damages and the relevant insurance policy are prohibited with
respect to the duty to defend); XL Spec. Ins. Co. v.
Bollinger Shipyards, Inc., 800 F.3d 178, 182 (5th Cir.
does not contest the eight corner's rule as to an
insurer's duty to defend, but remarks that the instant
motion for summary judgment seeks to have the Court declare
its obligation as to coverage, which could potentially
extinguish its duty to defend. Federal Rule of Civil
Procedure 10(c) provides that: "[a] copy of a written
instrument that is an exhibit to a pleading is a part of the
pleading for all purposes." Admiral argues that because
Cameron Parish attached the list to its Petition, it is
proper for this Court to consider the exhibit because it is a
part of and incorporated into the petition. Admiral agrees
that under a duty to defend analysis, it cannot rely upon
extrinsic documents, but because the list (exhibit
F) is incorporated into the Petition, it is properly
considered part of the "four corners" of the
Petition. The Court agrees and finds that it is proper to
consider exhibit F in a duty to defend analysis. However, as
noted by Admiral, the instant motion is before the Court to
decide if the Admiral's policies provide coverage. Either
way, it is proper for this Court to consider exhibit F.
further challenges this Court's consideration of evidence
obtained from the Louisiana Office of Conservation in
determining Admiral's duty to defend. The Court agrees
that if this motion was based on a duty to defend, this
extrinsic evidence would not be considered. However, as noted
by Admiral, the instant motion is for the Court to determine
coverage. Therefore, the evidence is proper summary judgment
evidence and will be considered.
exposure theory should be applied
argues that pursuant to Louisiana jurisprudence, its policies
should be interpreted under the "exposure" theory
relying on the exclusions in the excess policies which denies
coverage for any loss not covered by the underlying
insurance. Admiral maintains that its excess
insurance policies do not cover the losses because the
"property damage" did not occur during any of the
Admiral policy periods, noting that Zadeck ceased operating
the well prior to March 13, 2004. Conversely, Zadeck argues
that Admiral has not only a duty to defend it in the
underlying lawsuit, but it also has a duty to indemnify it
for any damages it is held liable for, not only under the
exposure theory, but also under the manifestation theory.
Admiral policies provide excess liability insurance under
Coverage A and umbrella liability insurance under Coverage B.
Admiral notes that Coverage A is a following-form policy
which follows or adopts the conditions and agreements of the
underlying primary liability insurance policy. Orleans
Parish Sch. Bd. v. Lexington Ins. Co., 99 So.3d 723, 727
(La.App. 4 Cir. 8/22/12); see also Bayou Steel Corp. v.
Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 642
F.3d 506, 509 (5th Cir. 2011). The obligations of
following-form excess insurers are defined by the language of
the underlying policies, except to the extent there is a
conflict between the two policies, in which case, absent
excess policy language to the contrary, the wording of the
excess policy will control. Barry R. Ostrager & Thomas R.
Newman, Handbook on Insurance Coverage Disputes § 13.01
[a] (18th ed. 2017) (citing, inter alia,
Estate of Bradley v. Royal Surplus Lines Ins. Co. Inc.,
647 F.3d 524, 530 n.4).
asserts that Coverage A also contains a specific exclusion
for any loss not covered by the underlying insurance. Thus,
Admiral argues that no losses are covered under the
Commercial General Liability ("CGL") policies
because under the exposure theory, no "property
damage" occurred during the CGL policy periods and
therefore, the umbrella and excess policies were not
issued eight consecutive CGL policies from 3/13/2004 through
insuring agreement in each of the Admiral CGL policies
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; and
(3) Prior to the policy period, no insured listed in
Paragraph 1. of section II - Who Is An
Insured and no "employee" authorized by you to give
or receive notice of an "occurrence" or claim, knew
that the "bodily injury" or "property
damage" had ...