Case: 10-30020 Document: 00511405850 Page: 1 Date Filed: 03/10/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 10, 2011
No. 10-30020
Lyle W. Cayce
Clerk
SEACOR HOLDINGS INC.,
Plaintiff – Appellee/Cross-Appellant
v.
COMMONWEALTH INSURANCE COMPANY,
Defendant – Appellant/Cross-Appellee
Appeals from the United States District Court
for the Eastern District of Louisiana
Before JOLLY, HIGGINBOTHAM, and SMITH, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
In this diversity case, Commonwealth Insurance Company appeals a grant
of partial summary judgment in favor of SEACOR Holdings Inc. on an insurance
contract interpretation question. The district court also granted summary
judgment in favor of Commonwealth with regard to SEACOR’s bad faith claims,
which SEACOR now cross-appeals. We AFFIRM both judgments.
I.
SEACOR is a publicly traded Delaware corporation that owns and
operates marine and aviation assets servicing the transportation and oil-and-gas
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industries worldwide. Commonwealth, a Canadian corporation, furnished
SEACOR with an all-risk property insurance policy for the 2005 calendar year.
The matter before us involves two interweaving factual backgrounds—the first
for the insurance contract interpretation and the second for bad faith claims.
A.
SEACOR’s all-risk policy includes a provision denoting various deductibles
contingent on the source of the damage.
Each occurrence resulting in a claim for loss shall be adjusted
separately and [Commonwealth]’s liability shall be limited to
that amount by which the loss exceeds the deductible
amounts shown hereunder, up to the applicable Limit of
Liability.
...
(c) In respect of loss caused directly by the peril of
Windstorm, as defined: $25,000, except
(d) In respect of loss caused directly by the peril of a
“Named Windstorm”, as defined, 3% of the total
insurable values . . . subject to a minimum of $50,000
per occurrence
(e) In respect of loss caused directly by the peril of Flood,
as defined: $25,000; except Flood Zones A and V, excess
maximum National Flood Insurance Program (NFIP)
limits available . . . .
SEACOR and Commonwealth disagree as to whether damages from Hurricanes
Katrina and Rita should be covered using only the Named Windstorm deductible
or using both the Named Windstorm and Flood deductible. The parties further
dispute the application of the policy’s limit of liability provision, which reads:
The Company’s liability for the cumulative total of adjusted
net claims resulting from any one loss, casualty, disaster or
occurrence (including all costs, fees, charges and expenses)
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shall not exceed $10,000,000.
Without increasing the policy limit, it is agreed that:
(a) Loss caused by the peril of Flood, as defined, is subject
to an Annual Aggregate Limit of Five Million Dollars
($5,000,000); . . . .
Hurricanes Katrina and Rita1 significantly damaged SEACOR’s property,
leading SEACOR to seek recovery of its losses under the Commonwealth
insurance plan. From the start of the adjustment process, the parties agree they
worked diligently and cooperatively to determine the scope of damage and costs
to repair, with Commonwealth making an advance payment to SEACOR of $1.5
million. The parties promptly resolved the loss values and settled all contractual
issues except for the legal questions of which deductible and liability limit
applied. Commonwealth has now paid SEACOR over $4 million for undisputed
claims. SEACOR contends that Commonwealth would owe an additional $3.2
million if SEACOR’s interpretation of the contract is correct.
Despite their collegiality in determining loss values, early on the parties
disputed which deductibles should apply to the claims. Recognizing this tension,
SEACOR filed a declaratory judgment action in August 2006 “with regard to
whether the loss or damage suffered by SEACOR was caused by Windstorm,
Named Windstorm or Flood, as defined and understood under the
Commonwealth” policy. SEACOR asserted that all of its losses resulted from a
Named Windstorm.2 In contrast, Commonwealth argued Hurricane Katrina was
1
We will refer only to Hurricane Katrina, with the understanding that a ruling would
apply to damages from each storm.
2
SEACOR notes that none of its damage was caused by the breaking of the levees and
(continued...)
3
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a “multi-peril occurrence” that required the use of deductibles and liability limits
for both Flood and Named Windstorm.
The policy defined Named Windstorm as “any Windstorm . . . or any
atmospheric disturbance which have [sic] been declared to be a tropical storm
and/or hurricane by the National Weather Service or the National Hurricane
Center.” Notably, this definition included “atmospheric disturbances” declared
to be hurricanes, regardless of whether those disturbances met the policy’s
definitional requirements of a Windstorm. For Windstorm, the policy’s
definition section stated: “Windstorm shall constitute a single claim hereunder
provided, if more than one windstorm shall occur within any period of seventy-
two (72) hours during the term of this Policy, such windstorm shall be deemed
to be a single windstorm within the meaning thereof.” Lastly, Flood was defined
to mean “waves, tide or tidal water, inundation, rainfall and/or resultant runoff,
and the rising (including overflowing or breakage of boundaries) of lakes, ponds,
reservoirs, rivers, harbors, streams, or similar bodies of water whether wind-
driven or not.” No separate provision in the policy denoted whether multiple
deductibles could apply.
On opposing motions for partial summary judgment, the district court
concluded that only the Named Windstorm deductible applied. Further, the
court found the Flood liability limit did not apply because the Named
Windstorm’s percentage-based deductible structure already included the
possibility of greater damages—and a correspondingly higher deductible—when
2
(...continued)
instead all water-related damages were attributable to hurricane rains and the storm surge.
We need not decide whether the Named Windstorm deductible would include flooding damage
caused by breaking levees.
4
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compared to the Flood’s flat-rate deductible. Commonwealth timely appealed.
B.
In August 2007, SEACOR amended its complaint to include penalties, fees,
and costs pursuant to Louisiana Revised Statutes sections 22:1892 and 22:1973,3
alleging Commonwealth acted in bad faith in its interpretation of the policy.
Section 22:1892 provides that an insurer shall pay claims amounts within thirty
days after receipt of satisfactory proofs of loss. When the insurer fails to make
this payment and is found to have acted arbitrarily, capriciously, or without
probable cause, the insurer is subject to a penalty of fifty percent of damages or
$1000, whichever is greater.4 Section 1973 is a similar statute, requiring that
an insurer “owes to his insured a duty of good faith and fair dealing. The insurer
has an affirmative duty to adjust claims fairly and promptly . . . . Any insurer
who breaches these duties shall be liable for any damages sustained as a result
of the breach.” Failing to pay a claim within sixty days for arbitrary or
capricious reasons or without probable cause constitutes a breach of good faith.
The claimant may be awarded penalties not to exceed two times the damages
3
These statutes were formerly LA . REV . STAT . ANN . § 22:658 and § 22:1220.
4
The legislature amended this statute in August 2006 during the aftermath of
Hurricane Katrina to increase the penalty from twenty-five percent to fifty percent, also
adding reasonable attorney fees and costs. Under Louisiana law, “[t]he amendment is
unquestionably substantive, and as such cannot be applied retroactively.” Sher v. Lafayette
Ins. Co., 07-2441 (La. 4/8/08), 988 So. 2d 186, 198 (holding that the version of the law that
applied when the claim first arose is applicable). Thus, Commonwealth would only be subject
to a twenty-five percent penalty. But see id. at 208–09 (Knoll, J., concurring in part and
dissenting in part) (finding that the insurer has a continuing obligation to act in good faith and
thus the revised statute with higher penalties should apply to Katrina cases where the
insurer’s vexatious behavior continued to occur after the revision).
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sustained or $5000, whichever is greater.5
Commonwealth paid SEACOR applying both the Flood and Named
Windstorm deductibles, which resulted in lower payments. SEACOR contended
that Commonwealth acted in bad faith by failing to timely pay claims for no
reason other than a misinterpretation of its own policy. SEACOR noted that
Commonwealth’s position here was counter to its position in Six Flags, Inc. v.
Westchester Surplus Lines Ins. Co.6 and argued these conflicting readings are
clear evidence that Commonwealth here intentionally misinterpreted its policy.
Commonwealth replied that its varying positions rested on differences between
the SEACOR and Six Flags policies.
Commonwealth moved for summary judgment on the bad faith claim,
which the district court initially denied. Commonwealth then filed a motion for
reconsideration, which was granted, and the court found “no reasonable juror
could return a verdict in favor of the policyholder on bad faith claims. As a
matter of law, Seacor is not entitled to recover penalties or attorneys’ fees . . . .”
SEACOR appeals this judgment.
5
The Louisiana Supreme Court has recognized that these two statutes are nearly
identical, with the only difference being the amount of time the insurer has to pay the claim.
See Reed v. State Farm Mut. Automobile Ins. Co., 03-0107 (La. 10/21/03), 857 So. 2d 1012,
1020; Calogero v. Safeway Ins. Co. of La., 99-1625 (La. 1/19/00), 753 So. 2d 170, 174. Further,
the court has held that when Louisiana Revised Statutes § 22:1973 provides for a greater
penalty, it supersedes § 22:1892 such that the plaintiff cannot recover penalties under both
statutes. But the plaintiff may still recover attorney fees under either statute. Calogero, 753
So. 2d at 174.
6
535 F. Supp. 2d 744 (E.D. La. 2008), aff’d in part and rev’d in part, 565 F.3d 948 (5th
Cir. 2009).
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II.
We review a district court’s grant of summary judgment de novo.7 A court
“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.”8 An issue as to a material fact is genuine “if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” 9 In our
review, we consider all evidence “in the light most favorable to the party
resisting the motion.”10
Sitting in this diversity case, we apply Louisiana law. “Under Louisiana
law, 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 Louisiana Civil Code.”11 In interpreting insurance contracts, courts seek to
determine the parties’ common intent, as reflected by the words in the policy.12
The Civil Code provides that “words of a contract must be given their generally
7
See Gonzales v. Denning, 394 F.3d 388, 391 (5th Cir. 2004).
8
FED . R. CIV . P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
Effective December 1, 2010, Rule 56 has been amended, and the summary judgment standard
is now reflected in Rule 56(a). The amended rule contains no substantive change to the
standard.
9
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
10
Trevino v. Celanese Corp., 701 F.2d 397, 407 (5th Cir. 1983).
11
In re Katrina Canal Breaches Lit., 495 F.3d 191, 206 (5th Cir. 2007) (internal
quotation marks and alterations omitted).
12
See La. Ins. Guar. Ass’n. v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La. 1994).
7
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prevailing meaning.”13 When those words are clear, explicit, and lead to no
absurd consequences, the contract must be interpreted within its four corners
and no parol evidence is permitted.14
III.
Our first question is whether, in the absence of a specific provision
allowing multiple deductibles, the policy requires SEACOR to pay both the Flood
and Named Windstorm deductibles or whether the single Named Windstorm
deductible encompasses Katrina’s wind and water damage. As an initial matter,
we turn to the policy’s definition of Named Windstorm, which reads, “any
Windstorm, as defined [by the policy], or any atmospheric disturbance which
have [sic] been declared to be a tropical storm and/or hurricane by the National
Weather Service or the National Hurricane Center.” While the Named
Windstorm definition incorporates the Windstorm definition, the Windstorm
definition itself is inadequate. The policy never describes what events or
conditions qualify as a Windstorm and merely states that multiple windstorms
within a 72-hour period will be deemed as one windstorm. Given this deficiency,
we could turn to the Louisiana Supreme Court, which provides “in the absence
of definition or limitation on the subject, a windstorm must be taken to be a wind
of sufficient violence to be capable of damaging the insured property either (a) by
13
LA . CIV . CODE ANN . art. 2047.
14
See Peterson v. Schimek, 98-1712 (La. 3/2/99), 729 So. 2d 1024, 1031.
8
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impact of its own force or (b) by projecting some object against the property.” 15
Yet the policy’s Named Windstorm definition does not rely on the Windstorm
definition alone. Instead, a Named Windstorm also includes “any atmospheric
disturbance” that the National Weather Service declares to be a hurricane or
tropical storm. The National Weather Service declared Katrina and Rita to be
hurricanes. Therefore, these events and the damage they caused fall within the
Named Windstorm definition and require use of the Named Windstorm
deductible.
Commonwealth asserts that water damages cannot be covered under the
Named Windstorm deductible because the definition of Named Windstorm does
not include flooding. We do not find this persuasive. Louisiana law requires
that words in a contract be given their “generally prevailing meaning.” 16 The
American Heritage Dictionary defines “hurricane” as a “severe tropical cyclone
. . . usually involving heavy rains.”17 Thus, applying ordinary definitions, losses
caused by a Named Windstorm, which under the policy’s definition includes
hurricanes, could include losses caused by heavy rains.
Most insurance policies specifically exclude coverage for water-related
events that often accompany windstorms.18 SEACOR’s policy does not contain
such an exclusion but rather contains separate deductibles for the perils of
15
Roach-Strayhan-Holland Post No. 20, Amer. Legion Club, Inc. v. Continental Ins. Co.,
112 So. 2d 680, 682 (La. 1959).
16
LA . CIV . CODE ANN . art 2047.
17
AM . HERITAGE DICTIONARY 628 (2d College ed. 1982); see also Cadwallader v. Allstate
Ins. Co., 02-1637 (La. 6/27/03), 848 So. 2d 577, 581–83 (noting that dictionaries are a source
useful to determine the common and approved usage of words).
18
COUCH ON INS . § 153:56 (3d ed. 2010).
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Named Windstorm and Flood, without indicating when, if ever, multiple
deductibles apply. The provision simply states that the Named Windstorm
deductible applies to “loss caused directly by the peril of a Named Windstorm.”
Therefore, if the damage caused by rain and flood was “caused directly” by
Katrina, then it may be covered under the Named Windstorm deductible.
Because the policy does not define “loss caused directly by,” we rely on
Louisiana law, which equates “direct loss” to “proximate or efficient cause.” 19
With windstorms, the Louisiana Supreme Court has held that “it is sufficient,
in order to recover upon a windstorm insurance policy not otherwise limited or
defined, that the wind was the proximate or efficient cause of the loss or damage,
notwithstanding other factors contributing thereto.”20 Accordingly, state
appellate courts have found that windstorm policies may cover damage from
affiliated heavy rains, if the wind was the proximate cause of the damages.21 It
follows here that Katrina’s winds were the proximate cause of SEACOR’s water-
related damages.
Commonwealth further argues that Katrina included multiple “perils” so
19
See Arias-Benn v. State Farm Fire & Cas. Ins. Co., 495 F.3d 228, 231 (5th Cir. 2007)
(“Louisiana law equates ‘direct loss’ with proximate cause; an insurance policy, however, may
limit or otherwise define ‘direct loss.’”).
20
Roach-Strayhan-Holland, 112 So. 2d at 683; see also Lorio v. Aetna Ins. Co., 232 So.
2d 490, 493 (La. 1970) (holding that “if a windstorm is the dominant and efficient cause of the
loss, the insured may recover notwithstanding that another cause or causes contributed to the
damage suffered”).
21
See Leonards v. Travelers Ins. Co., 506 So. 2d 509, 511 (La. Ct. App. 1986) (holding
that wind was not the sole cause of the damage but the damage was still covered by the
windstorm policy).
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multiple deductibles should apply,22 an argument contradicted by the policy.
Under the policy, “[e]ach occurrence resulting in a claim for loss shall be
adjusted separately.” An occurrence is defined as “any one loss, disaster or
casualty or series of losses, disasters or casualties arising out of one event.”
Thus, each series of losses, even those stemming from different perils, arising
from one event is adjusted separately. SEACOR may have experienced different
casualties from Katrina’s two perils, wind and rain, but under the policy, those
losses arose out of one event—Katrina—and warrant only one deductible.
Our court previously reached a similar conclusion in a different insurance
setting.23 There, a brokerage firm sought recovery under an insurance provision
that covered employee dishonesty. The employee broker went on a four-day
speculative spree in soybean futures, issued two bad checks, became insolvent,
and owed the brokerage firm over $150,000. The insurance company argued
that the $35,000 deductible should apply to each step in the trading spree that
could be characterized as “dishonest.” We upheld the district court and applied
a single deductible. There, the insurance policy in question covered “any one act
or omission of any person” or “acts or omissions.” We held that multiple “acts”
by the same person could be deemed a single “casualty” or “event.” 24 All
22
A “peril” may be defined as “[t]he cause of a risk of loss to person or property; esp., the
cause of a risk such as fire, accident, theft, forgery, earthquake, flood, or illness.” BLACK ’S LAW
DICTIONARY 1253 (9th ed. 2009).
23
Howard, Weil, Labouisse, Friedrichs, Inc. v. Ins. Co. of N. Am., 557 F.2d 1055 (5th Cir.
2003) (applying Louisiana law); cf. Saint Paul-Mercury Indem. Co. v. Rutland, 225 F.2d 689
(5th Cir. 1955) (applying a single liability limit for one accident when a trucker derailed a
freight train causing damage to sixteen cars, contents of cars and shippers, and to the
roadbed).
24
Howard, Weil, 557 F.2d at 1059–60.
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damages were caused by the same speculative spree by the same employee so
only one deductible applied. Likewise, here, under the terms of SEACOR’s
policy, Katrina was a single event, requiring only the Named Windstorm
deductible, even if the storm included multiple “acts” of rain and wind.
IV.
Notwithstanding the single deductible for Named Windstorm,
Commonwealth maintains that the Flood Limit of Liability should apply. Under
the policy, Flood means “waves, tide or tidal water, inundation, rainfall . . . the
rising (including overflowing or breakage of boundaries) of lakes . . . or similar
bodies of water whether wind-driven or not.” In Six Flags, we held that when
a policy’s flood definition did not exclude damage caused by other perils, then the
flood limit of liability could apply, regardless of whether a hurricane caused the
flood.25 There, the flood limit applied on a “per occurrence” basis. We
highlighted that the limit did not apply “per Flood Occurrence” or “as respects
the peril of Flood.”26 In contrast, here, the Limit of Liability expressly applies
only to “[l]oss caused by the peril of Flood.” Since we have concluded under the
deductible provision that all of SEACOR’s damages were proximately caused by
the Named Windstorm, then those damages cannot trigger the Flood liability
limit because such losses were not caused by the peril of Flood.
Commonwealth urges that the liability limits provision operates
independently of the deductible provision. As the argument goes, the
applicability of the Named Windstorm deductible does not affect the applicability
25
Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 955 (5th Cir. 2009).
26
Id. at 956–57.
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of the Flood liability limit. This argument strains to escape Louisiana law that
requires “construing the policy as a whole; one policy provision is not to be
construed separately at the expense of disregarding other policy provisions.” 27
It fails. The definitions of the perils apply to both the Deductible and the Limit
of Liability provisions. Since the Named Windstorm definition encompasses all
of SEACOR’s damages, then only a liability limit for a Named Windstorm would
apply. Further, the Deductible provision explicitly operates in conjunction with
the liability limits. The introductory paragraph of the Deductible provision
states that each loss is covered “up to the applicable Limit of Liability.” Three
perils have defined liability limits: Flood, Earthquake, and Earthquakes in
California. But the Limit of Liability provision also provides for a cumulative
general limit of $10 million. The proper assumption for the perils that have
deductibles but no defined liability limit, including Windstorm and Named
Windstorm, is that only the cumulative liability limit applies to those perils.
Commonwealth contends that the inclusion of “whether wind-driven or
not” in Flood’s definition would be meaningless if the Flood Limit of Liability did
not apply when windstorms caused flooding. Yet in Six Flags, we held that a
reasonable interpretation of similar language “is that water driven by wind is
Flood—giving meaning to that provision; however, if that wind-driven Flood is
caused by another covered peril, such as a Named Storm, then the Flood
sublimit does not apply.”28 We find the same conclusion apt here.
Commonwealth further argues that since SEACOR collected proceeds
27
La. Ins. Guar. Ass’n, 630 So. 2d at 763 (citing LA . CIV . CO D E AN N . art. 2050 (1987)
(“Each provision in a contract must be interpreted in light of the other provisions so that each
is given the meaning suggested by the contract as a whole.”)).
28
Six Flags, 565 F.3d at 960–61.
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under its National Flood Insurance Program policies, then SEACOR itself
admits that it sustained damages from flooding and the corresponding limit of
liability should apply. This argument fails because whether SEACOR collected
under other policies has no implication for how this policy should be interpreted.
The Commonwealth policy could have provided a liability limit for Named
Windstorm damage. It did not. There is nothing to indicate that the limit for
the peril of Flood should apply when, under the policy, all damages were under
the umbrella of a Named Windstorm. The policy language contradicts such a
conclusion, stating the limit applies only to losses caused by Flood.
V.
Finally, we turn to SEACOR’s challenge to the summary judgment in favor
of Commonwealth on the bad faith claims. Louisiana statutes provide that when
an insurer fails to pay a claim within thirty or sixty days and when such failure
is found to be “arbitrary, capricious, or without probable cause,” the insurer is
subject to penalties.29 SEACOR relies predominantly on language from a 2008
Louisiana Supreme Court decision, Louisiana Bag Co., Inc. v. Audubon
Indemnity Co., which stated “when there is a dispute over the extent of coverage
afforded by an insurance policy, the insurer bears the risk of misinterpreting its
own policy and will be liable for penalties for its errors.”30 The only reason
Commonwealth did not make full payments was because of the dispute over the
deductible and liability limit. Thus, SEACOR contends, this involved a dispute
29
LA . REV . STAT . ANN . § 22:1892; 22:1973.
30
Louisiana Bag Co., Inc. v. Audubon Indemnity Co., 08-0453 (La. 12/2/08), 999 So. 2d
1104, 1117.
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in the extent of coverage; Commonwealth proceeded at its own risk and is
subject to penalties.
First, we note that the dispute here was not whether the policy covered
SEACOR’s damages but rather which deductibles and liability limits applied.
As such, Louisiana Bag’s instruction to apply penalties in coverage disputes does
not apply. Moreover, of course, Louisiana does not follow stare decisis. “Judicial
decisions . . . are not intended to be an authoritative source of law in
Louisiana.”31 A long line of cases with “uniform and homogeneous rulings” may
be persuasive authority under the jurisprudence constante doctrine, but a single
case does not produce a sufficient foundation for other cases to follow.32
The Louisiana Supreme Court’s guidance on insurer penalties has been
less than uniform. Louisiana Bag itself also held that “when there are
substantial, reasonable and legitimate questions as to the extent of an insurer’s
liability or an insured’s loss, failure to pay within the statutory time period is not
arbitrary, capricious or without probable cause.”33 Another 2008 decision found
that the bad faith statutes “are penal in nature and must be strictly
construed. . . . The sanctions of penalties and attorney fees are not assessed
unless a plaintiff’s proof is clear that the insurer was in fact arbitrary,
capricious, or without probable cause in refusing to pay.” 34 That same court held
31
Doerr v. Mobil Oil Corp., 00-0947 (La. 12/19/00), 774 So. 2d 119, 128.
32
Id. at 128-29.
33
Louisiana Bag, 999 So. 2d at 1114.
34
Sher, 988 So. 2d at 206 (quoting Reed v. State Farm Mut. Auto Ins. Co., 03-0107 (La.
10/21/03), 857 So. 2d 1012, 1020–21). The Sher court affirmed penalties because the insurer
had misrepresented factual findings to the plaintiff and had failed to pay undisputed damages.
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that “statutory penalties are inappropriate when the insurer has a reasonable
basis to defend the claim and acts in good-faith reliance on that defense.”35 We
find here, as we have concluded before, “it is not apparent from the statute that
the Louisiana legislature intended insurers to pay penalties whenever they err
in their interpretation of coverage.” 36
SEACOR does not come with any evidence that Commonwealth acted
arbitrarily or capriciously beyond Commonwealth’s inconsistent reading of
similar provisions in the SEACOR and Six Flags policies, and this is insufficient.
The Six Flags policy more clearly delineated the use of one deductible in the
event of a multi-peril occurrence, such as Hurricane Katrina. We are not
persuaded that Commonwealth acted arbitrarily or without a good-faith defense.
It promptly paid SEACOR over $4 million to cover undisputed damages and
looked to judicial assistance to resolve disputes that bore on its treatment of the
policy deductible and liability limits.37 Following the language of the statute, we
do not find penalties appropriate here.
VI.
We affirm the district court’s grant of summary judgment in favor of
35
Id.; see also Calogero, 753 So. 2d at 173 (“[W]here the insurer has legitimate doubts
about coverage, the insurer has the right to litigate these questionable claims without being
subjected to damages and penalties.”).
36
Woods v. Dravo Basic Materials Co., 887 F.2d 618, 623 (5th Cir. 1989).
37
Commonwealth’s payment contrasts with other cases where the Louisiana Supreme
Court has enforced penalties. In Louisiana Bag, for example, the insurer delayed multiple
payments and claimed it was uncertain of the extent of coverage, even though it had received
an opinion from its legal counsel that the damages were covered. 999 So. 2d at 1117.
Likewise, in Sher, the insurer failed to pay even the undisputed claims. 988 So. 2d at 207.
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SEACOR, agreeing with its policy interpretation—the Named Windstorm
deductible encompassed both wind and water damage caused by Hurricanes
Katrina and Rita—and with its holding that the Flood liability limit did not
apply. Further, we affirm the district court’s grant of summary judgment
rejecting SEACOR’s claims of bad faith in favor of Commonwealth.
17