St Paul Ins Co v. Am Fidelity Ins Co

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
_______________

No. 96-30553
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ST. PAUL INSURANCE COMPANY,

Plaintiff-Appellee,

VERSUS

AMERICAN FIDELITY INSURANCE COMPANY, et al.,

Defendants,

AMERICAN FIDELITY INSURANCE COMPANY, et al.,

Defendants-Appellants,

VERSUS

FIDELITY AND CASUALTY COMPANY OF NEW YORK
and
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON,

Defendants-Appellees.

and

FIDELITY AND CASUALTY COMPANY OF NEW YORK,

Defendant-Appellee.
_________________________

Appeal from the United States District Court
for the Eastern District of Louisiana
(94-CV-3074-F)
_________________________

December 17, 1996
Before HIGGINBOTHAM, SMITH, and BARKSDALE, Circuit Judges.

1
JERRY E. SMITH, Circuit Judge:*

American Fidelity Insurance Company (“American Fidelity”)

appeals a summary judgment in favor of Fidelity and Casualty

Company of New York (“F & C”) and St. Paul Insurance Company

(“St. Paul”) on various insurance coverage claims arising out of an

automobile accident. Finding no error, we affirm.

I.

Ronald Lorraine was killed and Ernest LoBouef, Luiz Howard,

and Joseph Aucoin injured in a single-car accident. The four men,

all crew members of a tug owned by Nolty J. Theriot, Inc. (“Ther-

iot”), were traveling in a vehicle also owned by Theriot, en route

to the tug. Theriot was the insured under a primary protection and

indemnity policy (the “P&I Policy”) underwritten primarily by

American Fidelity, a business automobile liability insurance policy

underwritten by F & C, and an umbrella policy underwritten by

St. Paul.

Lorraine's survivor and the other three victims filed claims

against Theriot. The settlements of the claims exhausted the

$2 million coverage limitation of the P&I Policy, forcing St. Paul

to contribute an additional $800,000 from its umbrella policy. As

*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion
should not be published and is not precedent except under the limited circumstances
set forth in 5TH CIR. R. 47.5.4.

2
a result, St. Paul filed a declaratory action against both American

Fidelity and F & C to determine the nature and extent of coverage

under Theriot’s various policies. American Fidelity filed a

counterclaim against St. Paul and a cross-claim against F & C,

seeking contribution for its settlement payments to the claimants.

The district court granted summary judgment in favor of F & C,

finding that it was exempted from liability by the “course and

scope of employment” coverage exclusion. In addition, the court

granted St. Paul’s summary judgment motion, concluding that,

because the men were in the course of employment at the time of the

accident, the P&I Policy provided coverage.1

II.

We review a grant of summary judgment de novo. See Hanks v.

Transcontinental Gas Pipe Line Corp., 953 F.2d 996, 997 (5th Cir.

1992). Summary judgment is appropriate “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.” FED. R. CIV. P. 56(c).

A.

1
A third summary judgment awarded to the maritime employer’s liability
insurers has not been appealed.

3
 American Fidelity first argues that the district court erred

in concluding that, under Louisiana law, the four men were in the

course and scope of employment at the time of the accident.2 As a

preliminary matter, we reject American Fidelity’s contention that

federal maritime law, rather than Louisiana insurance law, applies.

In the absence of a specific and controlling federal rule, we

interpret maritime insurance contracts under the appropriate state

law. See Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 (5th

Cir.), cert. denied, 502 U.S. 901 (1991). Whether a specific

federal rule controls depends upon whether (1) the federal maritime

rule constitutes “entrenched federal precedent”; (2) the state has

a substantial and legitimate interest in the application of its

laws; and (3) the state's rule is materially different from the

federal maritime rule. See id. (citations omitted). These factors

are merely instructive and not dispositive. See id.

Where, as here, the policy was issued to a Louisiana insured,

the accident occurred in Louisiana, and all of the injured seaman

were employed in Louisiana, Louisiana’s interest in the instant

case is substantial. Furthermore, American Fidelity has not

identified any “entrenched federal precedent” regarding construc-

tion of the scope of employment for purposes of interpreting

automobile insurance contracts under maritime law, nor are we

2
The parties agree that, because the automobile insurance policy expressly
excludes bodily injury to a fellow employee arising out of and in the course of
his employment, whether the men were in the course and scope of employment is
dispositive of this issue.

4
convinced that any such maritime jurisprudence is materially

different from Louisiana law.3 As such, we agree with the district

court that Louisiana law is apposite to the insurance contract.

Under Louisiana law, accidents that occur while an employee is

traveling to and from work generally are not considered to have

occurred during the course of employment. See Michaleski v.

Western Preferred Casualty Co., 472 So. 2d 18, 20 (La. 1985).

Where, however, the transportation is furnished as “an incident of

employment, either through a vehicle, a conveyance and driver, or

payment of expenses,” the transportation may be considered within

the course of employment. See id. Other exceptions to the general

rule include, among other things, where the employee was deemed to

have been on a specific mission for his employer, such as making a

trip in the interest of the employer's business or pursuant to the

employer's order, or where the employee was traveling from one work

site to the next. See Tarver v. Energy Drilling Co., 645 So. 2d

796, 798-99 (La. App. 2d Cir. 1994).

It is uncontested that Theriot provided transportation free of

charge for its employees from its administrative offices to the

port of departure and back, which benefit was noted on written

employment contracts and on the written employee rules and

3
In fact, to the extent that maritime law differs from Louisiana state
law, the former has a more permissive definition of the scope of employment. See
Daughdrill v. Diamond M. Drilling Co., 447 F.2d 781, 785 (5th Cir. 1971), cert.
denied, 405 U.S. 997 (1972).

5
regulations. Although employees were not required to accept this

benefit and did not get paid for the transportation time (nor did

employees who elected to drive their own cars get reimbursed

accordingly), the benefit was so well utilized that employees who

elected not to partake were required so to notify the personnel

manager in advance. Furthermore, Theriot received benefit from the

trips, often loading the vehicles with supplies and directing the

employees to pick up groceries that were required for the impending

voyage. In so doing, the company avoided having to send a shore-

based port captain to purchase the accouterments.

The men were traveling, as was customary, in a Theriot-owned

car from the administrative office to the vessel loading dock. The

vehicle was carrying supplies needed for the ship's voyage, and the

employees had been instructed to stop by the butcher and grocery

store to purchase food for the trip. Under the circumstances, we

agree with the district court that the men were in the course of

employment at the time of the accident. As such, the automobile

insurance policy provision exempting from coverage bodily injury to

an employee arising out of and in the course of employment is

applicable.

B.

American Fidelity next argues that the district court erred

in finding that the automobile accident constitutes a risk covered

6
under the P&I Policy. The parties agree that the policy covers all

losses for which the insured shall become liable to pay “as owner”

of the vessel, but the parties dispute the scope of the definition

of “as owner.”

Because the parties agree that the “causal operational

relation” test enunciated in Lanasse v. Travelers Ins. Co., 450

F.2d 580, 584 (5th Cir.), cert. denied, 406 U.S. 921 (1971),

governs the disposition of this case, we need not resolve the

difficult question of whether Lanasse applies to vessel owners

being sued directly in their capacity as owners, as opposed to as

additional insureds on a P&I policy. Rather, we assume arguendo

that Lanasse is apposite. See, e.g., Rashidi v. American President

Lines, 96 F.3d 124, 126 (5th Cir. 1996). Under Lanasse, whether

the liability of the owner arises “as owner” depends upon the

causal connection between the action that gave rise to the

liability and the ownership, operations, maintenance, or use of the

vessel. 450 F.2d at 584.

Lanasse is distinguishable factually from the instant case.

In Lanasse we noted that the P&I policy did not cover claims

arising from the negligence of Chevron, an additional insured on

the vessel owner's policy, because it was Chevron's acting as

platform operator or crane operator, rather than as owner, that

caused the harm. See id. “[W]here the injury is done through

nonvessel operations, the vessel must be more than the inert locale

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of the injury.” Id. In the instant case, although the harm arose

out of nonvessel operationsSSa car accident at least sixty miles

away from the vesselSSthe employees were utilizing transportation

provided by Theriot to effect a crew change and to deliver supplies

as ordered by Theriot in preparation for the vessel's departure.

Hence, Theriot's actions as owner of the vesselSSeffecting a crew

change and delivering supplies necessary for an impending voyageSS

are functions wholly within the province of a ship owner and had

the requisite causal connection to the harms suffered.4

Accordingly, the judgment is AFFIRMED.

4
Each of the other cases upon which American Fidelity reliesSSWindsor Mt.
Joy Mutual Ins. Co. v. Pozzi, 832 F. Supp. 138 (E.D.Pa. 1993); American Motorists
Ins. Co. v. American Employers' Ins. Co., 447 F. Supp. 1314 (W.D. La. 1978),
aff’d on other grounds, 608 F.2d 624 (5th Cir. 1979); and Reliance Ins. Co. v.
Alan, 222 Cal. App. 3d 702 (Cal. Ct. App. 1990)SSis factually distinct. In
American Motorists, 447 F. Supp. at 1319, and Reliance, 222 Cal. App. 3d at 708,
the respective courts noted that harms resulting from a shooting, where the only
relationship between the shooting and the vessel was the mere fortuity that the
shooting occurred on or near the vessel, were not causally related to the
operation, maintenance, ownership, or use of the vessel. Similarly, the Windsor
court held that harms resulting from an argument between two ship owners over the
use of a spigot hose lacked the requisite connection required under Lanasse.
832 F. Supp. at 141-42. The connection in the instant case between the harms
suffered and the operation, maintenance, ownership, and use of the vessel is
simply more direct.

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