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Gilchrist Construction Company, LLC v. The Travelers Indemnity Co.

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

September 23, 2019

GILCHRIST CONSTRUCTION COMPANY, LLC
v.
THE TRAVELERS INDEMNITY COMPANY, ARCH INSURANCE COMPANY, JUANITA FONTENOT, AND T. JUNE WILDER

          KAY, MAGISTRATE JUDGE

          MEMORANDUM RULING

          S. MAURICE HICKS, JR., CHIEF JUDGE

         Before the Court is a Motion to Dismiss filed by the remaining defendant, The Travelers Indemnity Company (“Travelers” or “the Defendant”). See Record Document 50. Travelers contends that coverage did not exist under policies issued by it to Gilchrist Construction Company, LLC (“Gilchrist”) and that it had no duty to defend Gilchrist. See id. For the reasons that follow, the Motion to Dismiss is GRANTED.[1]

         BACKGROUND

         I. Procedural History.

         This matter arises from a petition filed by Gilchrist in the Thirty-Third Judicial District Court, Allen Parish, Louisiana, against Travelers and Arch Insurance Company (“Arch”), and individual defendants Juanita Fontenot (“Fontenot”) and T. June Wilder (“Wilder”). See Record Document 1, Ex. 3 (state court record). In the instant action, Gilchrist asserts breach of contract claims against Travelers and Arch 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 Travelers 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 Fontenot, Wilder and Gilchrist 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.[2] See id.

         Arch was the first to file a motion to dismiss for failure to state a claim, arguing that it had no duty to defend or to indemnify Gilchrist, which was granted by this Court. See Record Documents 25 and 48-49. Thereafter, Travelers filed the instant motion to dismiss. See Record Document 50. Gilchrist filed an opposition to the motion and Travelers filed a reply. See Record Documents 53-54.

         II. Relevant Allegations and Policy Provisions.

         Travelers insured Gilchrist through a commercial general liability policy, which was renewed twice. See Record Document 50 at Exs. 4-6.[3] After the underlying Fontenot/Wilder lawsuit was filed in 2012, Gilchrist requested that Travelers provide a defense and indemnity under the policies. Travelers 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 in good faith and failure to perform its duties and obligations under the contract. See Record Document 50, 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 Travelers policy provides coverage to Gilchrist for “bodily injury” and “property damage.” See Record Document 50 at Ex. 4. The relevant coverage provisions and exclusions of the policies state:

         SECTION I – COVERAGES

         COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY

         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; and
(3) Prior to the policy period, no insured listed under 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 occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the “bodily injury” or “property damage” occurred, then any continuation, change or resumption of such “bodily injury” or “property damage” during or after the policy period will be deemed to have been known prior to the policy period.
. . .
d. “Bodily injury” or “property damage” will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II – Who Is An Insured or any “employee” authorized by you to give or receive notice of an “occurrence” or claim:
(1) Reports all, or any part, of the “bodily injury” or “property damage” to us or any other insurer;
(2) Receives a written or verbal demand or claim for damages because of the “bodily injury” or “property damage”; or
(3) Becomes aware by any other means that “bodily injury” or “property damage” has occurred ...

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