United States District Court, M.D. Louisiana
RULING AND ORDER
A. JACKSON DISTRICT JUDGE UNITED STATES DISTRICT COURT.
the Court is the Motion for Summary Judgment, (Doc.
17), filed by Plaintiff, Atain Specialty Insurance
Company ("Plaintiff or "Atain"). Defendant,
Siegen 7 Developments, L.L.C. ("Defendant" or
"Siegen 7"), filed a Memorandum in Opposition.
(Doc. 27). Defendant, Andrea Warren ("Defendant" or
"Warren"), also filed a Memorandum in Opposition.
(Doc. 35). Plaintiff filed a Memorandum in Reply. (Doc. 30).
Defendant and Counter-Claimant, Andrea Warren, also filed a
Motion for Summary Judgment. (Doc. 22).
Plaintiff filed a Memorandum in Opposition. (Doc. 36). For
the reasons stated herein, Plaintiffs Motion for
Summary Judgment, (Doc. 17), is GRANTED IN
PART and DENIED IN PART, and
Defendant and Counter-Claimant Warren's Motion
for Summary Judgment, (Doc. 22), is GRANTED
IN PART and DENIED IN PART.
claims arise out of an arbitration award issued in favor of
Warren, homeowner, adverse to Siegen 7, home builder. Atain
issued policies of insurance to Siegen 7, the terms and
conditions of which may or may not provide coverage to Siegen
7 for the amounts owed to Warren. Plaintiff seeks a judicial
declaration that: (1) it has no obligation to indemnify
Siegen 7 for the amounts awarded to Warren; and (2) it is not
liable to Warren for damages awarded to her arising out of
her claims against Siegen 7. (Doc. 6).
facts relevant to the motions before the Court are
undisputed. Siegen 7 constructed a home in East Baton Rouge
Parish pursuant to a contract with Warren. (Doc. 6 at ¶
7). Warren contends that all work on the home was performed
through subcontractors retained by Siegen 7 and that the
plans and specifications were provided to each of the
subcontractors. (Doc. 35 at pp. 1-2 (citing Doc. 23,
Affidavit of Thomas A. Guerin, at ¶ 13)). The residence
was "substantially completed" by July or
early-August, 2016, at which time Warren took occupancy of
the residence. (Doc. 6 at ¶ 9).
August 2016, the residence sustained damages due to flooding.
(Doc. 6 at ¶ 10). Due to these damages, Warren filed a
Demand for Arbitration against Siegen 7, alleging that
"[Siegen 7] failed to follow architect plans,
specifications, and drawings regarding initial site work for
drainage, and confirm elevation of fill at location of slab
prior to pouring of slab". (Doc. 6 at ¶ 15; Doc.
17-7 at p. 2). Siegen 7 notified its insurer, Atain, of the
allegations, and Atain provided a defense to Siegen 7 subject
to a reservation of rights to deny policy coverage with
respect to the arbitration award. (Doc. 17-8). Warren claimed
that Siegen 7 improperly constructed the residence, (Doc. 6
at ¶ 11), that it failed to place the proper amount of
grade fill material on the property, that it failed to
achieve the minimum finish slab elevation required by the
contract, (id), that the flood waters in August 2016
would not have damaged the residence or Warren's personal
property if the house been properly constructed, (Doc. 6 at
¶ 12), that Siegen 7's preparation of the lot for
drainage and slope was improperly performed and defective,
(Doc. 6 at ¶ 13), that Siegen failed to provide position
storm water drainage and prepare a drainage plan for the
house and lot, that it failed to otherwise comply with the
International Building Code ("IBC") regarding
drainage and slope as required by the contract,
(id.), and that as a result of this deficient work
the backyard on the property was swampy and wet, thereby
inhibiting its use and enjoyment, (Doc. 6 at ¶ 14).
claims against Siegen 7 were litigated in arbitration on June
26-27, 2018, (Doc. 6 at ¶ 16). The arbitration award was
issued July 25, 2018, (id.), and was confirmed by
the 19th Judicial District Court for the Parish of
East Baton Rouge on December 10, 2018. (Doc. 17-10). The
arbitration award was based on the finding that Siegen 7
failed to achieve the minimum finish slab elevation. Warren
was awarded a total of $128, 061.54 in damages to the
residence and personal property therein. The award also
reflects the finding that Siegen 7 failed to provide position
storm water drainage and failed to prepare a drainage plan
for the house and lot. Warren was also awarded a total of
$17, 975.00 for backyard improvements, $42, 983.53 for
attorneys' fees, and $2, 675.00 for the costs of
arbitration. (Doc. 6 at ¶¶ 17-19; Doc. 17-9),
Siegen 7 argues that the award does not specify who or what
entity performed the work, with the exception of the issue of
drainage, which the arbitration award found was a
responsibility shared by Warren and Siegen 7, and it did not
specify if Siegen7's fault was due to its subcontractors
or not. (Doc. 27 at p. 2).
argues on summary judgment that the policies it issued to
Siegen 7 are commercial general liability policies that are
not intended to guarantee the quality of Siegen 7's work.
(Doc. 19-1 at p. 4). Under the terms, definitions, and
exclusions of the Atain policies, Atain argues that the
policies do not provide coverage for the majority of the
damages awarded to Warren because the damages were not caused
by an "occurrence" and/or are excluded from
coverage as "property damage" to "your
product". Atain also argues that the backyard
improvements are excluded from coverage pursuant to the
"Damage to Impaired Property" exclusion. Finally,
Atain argues that the attorney fees award is excluded from
coverage because they are punitive or exemplary damages.
(Doc. 19-1 at p. 6).
to Federal Rule of Civil Procedure 56, "The [C]ourt
shall grant summary judgment if 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(a). In determining whether the movant is
entitled to summary judgment, the Court views the facts in
the light most favorable to the non-movant and draws all
reasonable inferences in the non-movant's favor.
Coleman v. Houston Independent School Dist., 113
F.3d 528, 533 (5th Cir. 1997).
proper motion for summary judgment is made, the non-movant
must set forth specific facts showing there is a genuine
issue for trial. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 250 (1986). At this stage, the Court
does not evaluate the credibility of witnesses, weigh the
evidence, or resolve factual disputes. Int'l
Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257,
1263 (5th Cir. 1991), cert, denied, 502 U.S. 1059
(1992). However, if the evidence in the record is such that a
reasonable jury, drawing all inferences in favor of the
non-moving party, could arrive at a verdict in that
party's favor, the motion for summary judgment must be
denied. Int'l Shortstop, Inc., 939 F.2d at 1263.
other hand, the non-movant's burden is not satisfied by
some metaphysical doubt as to the material facts, or by
conclusory allegations, unsubstantiated assertions, or a mere
scintilla of evidence. Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994). Summary judgment is
appropriate if the non-movant "fails to make a showing
sufficient to establish the existence of an element essential
to that party's case." Celotex Corp. v.
Catrett, 477 U.S. 317, 324 (1986). In other words,
summary judgment will be appropriate only "if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits if any, show
that there is no genuine issue as to any material fact, and
that the moving party is entitled to judgment as a matter of
law." Sherman v. Hallbauer, 455 F.2d 1236, 1241
(5th Cir. 1972).
law provides that "an insurance policy is a contract
between the parties and should be construed by using the
general rules of interpretation of contracts set forth in the
Civil Code." Williams v. Employers Mut. Cos.
Co., No. CIV. A. 13-499, 2014 WL 2197067, at *2 (M.D.
La. May 27, 2014). The Court's role in interpreting
contracts is to determine the common intent of the parties.
Starr Surplus Lines Insurance Company v. Banner Property
Management Co., No. CIV.A. 18-5635, 2018 WL 6448840, at
*5 (E.D. La. Dec. 10, 2018)(citing La. Civ. Code art. 2045).
"In doing so, Civil Code article 2047 requires that
words and phrases used in an insurance policy are to be
construed using their plain, ordinary and generally
prevailing meaning, unless the words have acquired a
technical meaning." Id. (citing Henry v.
South Louisiana Sugars Cooperative, No. 2006-2764 (La.
5/22/07), 957 So.2d 1275, 1277 (citing Cadwallader v.
Allstate Ins. Co., No. 2002-1637 (La. 6/27/03), 848
So.2d 577, 580)). An insurance policy "constitutes the
law between the insured and the insurer, and the agreement
governs the nature of their relationship." Peterson
v. Schimek, 98-1712 (La. 3/2/99), 729 So.2d 1024, 1028.
"Absent a conflict with statutory provisions or public
policy, insurers, like other individuals, are entitled to
limit their liability and to impose and to enforce reasonable
conditions upon the policy obligations they contractually
assume." Louisiana Ins. Guar. Ass'n v.
Interstate Fire and Cas. Co., 93-0911 (La. 1/14/94), 630
So.2d 759, 763. Furthermore, "when the words of a
contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search
of the parties' intent." La. Civ. Code art. 2046
(1987). Ambiguous policy provisions are generally construed
against the insurer and in favor of coverage.
Cadwallader, 848 So.2d at 580.
argues that it issued Policy Nos. CIP260439 and CIP298173
(the "policies") to Siegen 7, (Doc. 19-1 at p. 3),
and that the policies "do not provide coverage for the
majority of the damages awarded to Warren." (Doc. 19-1
at p. 6).
The Policy Language
commercial general liability ("CGL") policies at
issue provide coverage for "sums that the insured
becomes legally obligated to pay as damages" due to
property damage to which the insurance applies. The insurance
applies to property damage if it is caused by an
"occurrence". (Doc. 17-6 at p. 78 and 183). The
insurance excludes from coverage certain damages, as follows:
insurance does not apply to:
k. Damage to Your Product
'Property damage' to 'your product' arising out
of it or any part of it.
l. Damage to Your Work
'Property damage' to 'your work' arising out
of it or any part of it and included in the 'pro
ducts-completed operations hazard.'
This exclusion does not apply if the damaged work or the work
out of which the damage arises was performed on your behalf
by a sub-contractor.
m. Damage to Impaired Property or Property not Physically
'Property damage' to 'impaired property' or
property that has not been physically ...