United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS April 14, 2004
For the Fifth Circuit
Charles R. Fulbruge III
Clerk
No. 03-30026
STEVEN HENRY ADAMS, for Himself and as Representative of Certain
Underwriters at Lloyd’s; INDEMNITY MARINE ASSURANCE COMPANY LTD;
THE YORKSHIRE INSURANCE COMPANY LTD; COMMERCIAL UNION ASSURANCE
COMPANY PLC; PHOENIX ASSURANCE PLC; CORNHILL INSURANCE PLC; NORWICH
UNION FIRE INSURANCE SOCIETY LTD; MARITIME INSURANCE COMPANY LTD.;
THE NORTHERN ASSURANCE COMPANY, LTD; SKANDIA UK INSURANCE PLC;
OCEAN MARINE INSURANCE COMPANY; FOLKSAM INTERNATIONAL INSURANCE
COMPANY (UK) LTD; SCOTTISH LION INSURANCE COMPANY LTD;
WURTTEMBERGISCHE FEUERVERSICHERUNG AG; SPHERE DRAKE INSURANCE GROUP
PLC; DAI-TOKYO INSURANCE CO UK LTD
Plaintiffs–Appellees–Cross Appellants
VERSUS
UNIONE MEDITERRANEA DI SICURTA; ET AL
Defendants
AK STEEL CORP, formerly known as, Armco Steel Company LP
Defendant–Appellant
and
UMS GENERALI MARINE SPA, formerly known as Unione Mediterranea Di
Sicurta
Defendant–Appellant–Appellee–Cross Appellee
Appeals from the United States District Court
For the Eastern District of Louisiana
Before DAVIS, WIENER and STEWART Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
This suit arises from the sinking of two barges in the
Mississippi River and the loss of 158 slabs of steel aboard those
barges. The primary issues in this appeal relate to arguments
between two co-insurers of the lost steel cargo over the amount of
the loss each should bear. Defendant insurer Unione Mediterranea
di Sicurta (“UMS”) also challenges personal jurisdiction and venue.
Issues are also presented challenging the propriety of the district
court’s order permitting the insurers to recover in their
subrogation action against A.K. Steel Corp. (“AK Steel”) for
converting the salvaged steel. We AFFIRM in part, VACATE in part,
and REMAND this case to the district court.
I.
The facts of this case have been set out in detail in the
opinion from the earlier appeal to this court, Adams v. Unione
Mediterranea Di Sicurta, 220 F.3d 659, 664-67 (5th Cir. 2000)
(“Adams I”). The background facts will be summarized here to the
extent necessary to understand the issues in the present appeal.
On October 16, 1993, while en route from New Orleans to
Cincinnati, two Canal Barge Company barges carrying 158 slabs of
steel cargo broke away from their flotilla and sank in the
Mississippi river. The loss occurred during the final leg of a
carriage of 1,290 steel slabs that began in Italy. The owner of
2
the steel slabs was Duferco SA (“Duferco”), a Swiss company, which
had agreed to ship the steel to AK Steel, an Ohio Company.
Plaintiff underwriters Steven Henry Adams et al. (“Adams”) and UMS,
an Italian insurer, concurrently insured the steel cargo under
separate marine cargo policies. Adams insured the steel through a
cargo policy originally issued to Canal Barge Co. Ltd., with
Duferco named as an additional insured. Duferco was separately
insured under an open cargo policy issued by UMS. The Adams policy
carried a policy limit of $5 million; the UMS policy carried a
limit of $20 million per shipment. The value of the cargo was
$7,580,000. Duferco and Adams ultimately agreed that the value of
the lost steel was $986,352.41.
Once the two barges sank, Duferco filed a claim with UMS for
the loss. After attempts by UMS and Duferco to salvage the sunken
cargo failed, UMS denied Duferco’s claim. Duferco then pursued its
claim against Adams and abandoned the sunken cargo to the London
underwriter. Meanwhile a professional salvage company, American
Eagle Marine, Inc. (“American Eagle”) attempted to salvage the lost
cargo believing it to have been abandoned in its entirety.
American Eagle successfully salvaged 127 of the sunken steel slabs
and sold them to AK Steel for a net profit of $190,975.68.
Plaintiff Adams initially brought this action in June 1994
seeking a declaratory judgment: (1) identifying whom it should pay
for the loss of the cargo under their cargo policy with Canal
Barge; (2) that UMS was obligated under its open cargo policy with
3
Duferco to contribute to payment for the loss; and (3) that
Plaintiffs were obligated to pay only their proportionate share of
the loss. Plaintiffs named as defendants, among others, Canal
Barge, UMS, and Duferco.1
The district court held that Plaintiffs could not recover in
a contribution action against UMS for any potential share of the
losses without first fully compensating Duferco for the loss.
Plaintiffs then paid Duferco $986,352.41 for the loss and obtained
an assignment of whatever rights Duferco had against UMS and other
potential tortfeasors.
Plaintiffs later discovered a successful salvage of 127 of the
sunken steel slabs by American Eagle and AK Steel. Adams demanded
that American Eagle and AK Steel return the cargo or pay its value.
When the two companies refused to do either Plaintiffs amended
their petition to assert a claim against AK Steel and American
Eagle for the value of the converted steel. UMS then cross-claimed
against AK Steel and American Eagle for its share of the value of
the steel.2
1
“Plaintiffs named as defendants Ilva, the manufacturer of the
steel; Duferco; Canal Barge; UMS; and Duferco Steel, Inc., an
American sister company to Duferco. The court voluntarily dismissed
Ilva, Duferco, Duferco Steel, Inc., Canal Barge and A.K. Steel from
this initial action at various times. The Plaintiffs later made
A.K. Steel a co-defendant in the action for conversion of the
steel.” Adams I, 220 F.3d at 665. Only the Plaintiffs (Adams, et
al.), UMS, and AK Steel remain as parties in this suit.
2
American Eagle filed a bankruptcy petition during the pendency
of this case and has not participated in this appeal.
4
UMS filed pretrial motions to dismiss for lack of personal
jurisdiction and improper forum. The district court rejected UMS’s
motions. The district court granted Adams motion for partial
summary judgment regarding the apportionment of Duferco’s loss
between the two insurers, Adams and UMS. The court then proceeded
with a bench trial. At the conclusion of the trial the district
court denied UMS’s coverage defenses and found that UMS was
required to contribute pro rata with Adams for the loss according
to their respective policy limits. The court then awarded Adams
80% of the approximately $900,000 it had paid out to Duferco. The
district court further found that American Eagle and AK Steel had
converted the steel and therefore awarded Adams 20% and UMS 80% of
the $190,975.68 in value that AK Steel and American Eagle realized
from the salvaged steel after paying the cost of savlage.
UMS appealed the district court judgment objecting to the
rulings on personal jurisdiction and venue as well as the
apportionment of liability between insurers. Adams cross appealed
arguing that UMS was not entitled to an award from AK Steel without
having paid its portion of the Duferco loss and that UMS owed Adams
a portion of the attorney’s fees it paid to bring the case against
AK Steel and American Eagle. AK Steel appealed the district
court’s judgment against it. This Court addressed primarily the
jurisdictional issues and remanded for further proceedings only on
those issues. On remand the district court found sufficient
5
contacts with Louisiana to justify the exercise of jurisdiction and
again entered a judgment. UMS appealed.
In the current appeal UMS challenges the district court’s
rulings on jurisdiction, venue, and apportionment of the liability
for Duferco’s loss. Adams again challenges the district court’s
order granting UMS a pro rata portion of the award against AK
Steel, and the refusal to award attorney’s fees. AK Steel
challenges the district court’s award of damages to UMS, arguing
that UMS is unable to sue its additional insured, AK Steel. We
address these separate challenges in turn.
II.
UMS challenges first the district court’s finding that it has
sufficient contacts with Louisiana to support specific and general
personal jurisdiction. UMS argues that neither the coverage of
this specific shipment of steel nor the coverage of prior shipments
through Louisiana provide the necessary minimum contacts to support
personal jurisdiction.
The Court reviews de novo the district court’s determination
that its exercise of personal jurisdiction over a non-resident
defendant is proper. Nuovo Pignone, SpA v. STORMAN ASIA M/V, 310
F.3d 374, 378 (5th Cir. 2002). When, as in the instant case, “the
district court decides the motion to dismiss without holding an
evidentiary hearing, [the plaintiff] must make only a prima facie
6
showing of the facts on which jurisdiction is predicated.” Id. In
determining whether that prima facie case exists, we “must accept
as true [the plaintiff’s] ‘uncontroverted allegations and resolve
in [his] favor all conflicts between the [jurisdictional] facts
contained in the parties’ affidavits and other documentation.’” Id.
(quoting Kelly v. Syria Shell Petroleum Dev. B.V., 213 F.3d 841,
854 (5th Cir. 2000)); see also 5A Charles Alan Wright & Arthur R.
Miller, Federal Practice and Procedure, § 1351 (2d ed. 1990).
The district court found both specific and general personal
jurisdiction in this case. See Adams v. Unione Mediterranea di
Sicurta, 234 F. Supp. 2d, 614, 621-25 (E.D. La. 2002). The
district court also suggested that jurisdiction might be available
under Fed. R. Civ. P. 4(k)(2). Id. at 625-26.
Rule 4(k)(2) provides for service of process and personal
jurisdiction in any district court for cases arising under federal
law where the defendant has contacts with the United States as a
whole sufficient to satisfy due process concerns and the defendant
is not subject to jurisdiction in any particular state:
If the exercise of jurisdiction is consistent with the
Constitution and laws of the United States, serving a
summons or filing a waiver of service is also effective,
with respect to claims arising under federal law, to
establish personal jurisdiction over the person of any
defendant who is not subject to the jurisdiction of the
courts of general jurisdiction of any state.
Fed. R. Civ. P. 4(k)(2). The Rule was enacted to fill an important
gap in the jurisdiction of federal courts in cases arising under
7
federal law:
Thus, there was gap in the courts’ jurisdiction: while a
defendant may have sufficient contacts with the United
States as a whole to satisfy due process concerns, if she
had insufficient contacts with any single state, she
would not be amenable to service by a federal court
sitting in that state. . . . Rule 4(k)(2) was adopted in
response to this problem of a gap in the courts’
jurisdiction . . . .
World Tanker Carriers Corp. v. MV Ya Mawlaya, 99 F.3d 717, 721-22
(5th Cir. 1996).3
Before examining UMS contacts with the United States as a
whole, we first consider the requirement of the last sentence of
Rule 4(k)(2) that it only applies if the defendant is not subject
to jurisdiction in any state. We agree with the Seventh Circuit,
that a piecemeal analysis of the existence vel non of jurisdiction
in all fifty states is not necessary. Rather, so long as a
defendant does not concede to jurisdiction in another state, a
court may use 4(k)(2) to confer jurisdiction. See, e.g., ISI
Int’l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 552 (7th
Cir. 2001) (“If . . . the defendant contends that he cannot be sued
in the forum state and refuses to identify any other where suit is
possible, then the federal court is entitled to use Rule
4(k)(2).”). In this case UMS contested the transfer of this case
to New York where plaintiff believed jurisdiction existed, arguing
3
Rule 4(k)(2) can be applied in admiralty actions such as this
case because admiralty cases arise under federal law. World
Tanker, 99 F.3d at 723.
8
that there was no personal jurisdiction in New York. See UMS Mem.
in Opp. to Mot. to Transfer, May 29, 2001, at 8-10. Furthermore
UMS has generally challenged the existence of minimum contacts with
the United States as a whole. See UMS Mem. Supp. Mot. to Dismiss
for Lack of Pers. Jur., June 26, 2001, at 4-6. Because UMS has not
offered other venues in this country where personal jurisdiction
would attach and argues that it cannot be sued in the United
States, the last sentence of 4(k)(2) does not preclude application
of this rule.
In applying Rule 4(K)(2) the Court must determine whether the
defendant has sufficient ties to the United States as a whole to
satisfy constitutional due process concerns. See World Tanker, 99
F.3d at 723. The record demonstrates that UMS has extensive
contacts with the United States.
UMS has paid claims to numerous U.S. companies, 155 in all
from 1991 to 1994. The defendant insurer has covered numerous
other U.S. companies which made no claims. UMS has insured
hundreds of shipments to the United States. Specifically records
produced by UMS and Duferco show that UMS insured approximately 260
shipments to the United States between 1989 and 1995 for Duferco
alone; 138 of these Duferco shipments to the United States made
between 1991 and 1994 were valued at over $130 million.
Moreover, UMS used and paid a number of individuals in the
United States as claims adjusters, surveyors, investigators and
9
other representatives to enable it to conduct business in this
country.4
Given the volume of activity, we have no difficulty concluding
that UMS has continuous and systematic contacts with the United
States as a whole. See Helicopteros Nacionales de Columbia, S.A.
v. Hall, 466 U.S. 408, 414-16 (1984); World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297 (1980). It was foreseeable that suit
in U.S. courts would result from these business contacts.
Defendant was well aware of the shipments to the United States and
in fact enabled the prosecution of claims in the United States by
providing claims agents and surveyors here. See Puerto Rico v. SS
Zoe Colocotroni, 628 F.2d 652, 670 (1st Cir. 1980). Thus,
subjecting UMS to suit here does not offend notions of fair play
and substantial justice.
Because we conclude that our exercise of jurisdiction is
clearer and more straightforward under Rule 4(k)(2) than under
Louisiana law, we affirm the district court’s jurisdictional ruling
on this alternate basis. See Chiu v. Plano Ind. Sch. Dist., 339
F.3d 273, 283 (5th Cir. 2003) (“This Court may affirm on grounds
other than those relied upon by the district court.”).
III.
4
These facts, among others, were provided by AK Steel in its
Supplemental Memorandum Regarding Personal Jurisdiction, Aug. 23,
2002, at 22-25. These facts have not been contested by UMS.
10
A.
UMS argues next that the district court erred in denying their
motion to dismiss for improper venue. UMS complains that the
district court should have enforced the forum selection clause
contained in the insurance contract between UMS and Duferco which
provides as follows:
Competent Court
Article 16. The competent Court, at the choice of the
Plaintiff party, is exclusively that of the Legal
Authority of the place at which the Insurer or the Agency
to which the Policy has been allocated or at which the
contract has been concluded, has its management.
In denying the motion to dismiss for lack of venue the
district court held that Adams’s claim against UMS was a
contribution action and not a subrogation action. As such Adams
did not stand in Duferco’s shoes and would not be bound by the
forum selection clause in the agreement to which Adams was not a
party:
If Plaintiffs’ suit was based on its subrogation rights,
Plaintiffs would be bound by the forum selection clause.
Plaintiffs seek contribution from UMS as a co-insurer.
The subrogation agreement obtained from Duferco does not
transform the nature of their claims against UMS into
subrogation claims; rather the subrogation agreement
folds into the contribution claim.
Dist. Ct. Op., May 14, 1997, at 4.
“Under the general principles of contract law, it is axiomatic
that courts cannot bind a non-party to a contract, because that
party never agreed to the terms set forth therein.” EEOC v.
Frank’s Nursery & Crafts, Inc., 177 F.3d 448, 460 (6th Cir. 1999);
11
see also EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002) (“It
goes without saying that a contract cannot bind a nonparty.”).
Thus, under this well recognized general rule, because Adams is not
a party to the UMS-Duferco contract he is not bound by the forum
selection clause in the UMS policy.
UMS argues that under American, English, or Italian law an
insurer who sues a co-insurer for contribution is bound by
provisions in the co-insurer’s insurance policy. UMS cites cases
where courts have dismissed contribution actions where the
defendant co-insurer had no coverage, or where plaintiffs did not
comply with notice requirements in the policy. See Continental
Ins. Co. v. Highlands Ins. Co., 793 F.2d 225 (9th Cir. 1986)
(finding that exclusion in underlying policy was a defense to the
contribution action); New York v. Blank, 27 F.3d 783 (2d Cir. 1994)
(finding that notice provision of the underlying policy defeated
coverage and provided a defense). UMS further quotes an English
marine insurance treatise to support its arguments:
The underwriter who has paid a claim and is seeking
contribution on the basis of double insurance can have no
better rights against the other underwriter than those
possessed by the assured.
Templeman on Marine Insurance: Its Principles and Practice, 405 (5th
ed. 1981).
UMS reliance on the above authorities is misplaced. We agree
that the terms of the defendant co-insurer’s policy limit the
rights of the plaintiff co-insurer in asserting a contribution
12
claim. The defendant can rely on its policy terms to show it
provided no coverage and to show the “other insurance” provisions
governing the apportionment among co-insurers in the event of
multiple coverage.
As the right to contribution arises because both the
entity seeking contribution and the entity from whom it
is sought are liable for the underlying obligation, it
stands to reason that any fact or circumstance which
would allow the latter entity to avoid liability for the
obligation would preclude contribution. This opens the
door to a wide range of claims attacking the validity of
the policy as a whole, or its enforceability based on
compliance with any number of conditions or contractual
obligations.
15 Lee R. Russ, Couch on Insurance § 218:17 (3d ed. 1999). Thus,
in defending a contribution action against a coinsurer, a defendant
can rely upon provisions in its policy to show it had no coverage
for the loss sued upon or how the loss should be allocated between
multiple insurers. The forum selection clause in the UMS policy is
not relevant to either of these questions. We therefore decline to
extend the precedents cited by UMS to bind Adams to the forum
selection clause in UMS’s policy.
The district court correctly refused to enforce UMS’s forum
selection clause.
B
UMS further argues that venue is improper in this case because
it does not comport with the venue provisions of the Brussels
13
Convention of 1968.5 Because UMS did not sufficiently raise this
issue in the prior appeal the argument is abandoned and we will not
address the merits of the issue here.
In UMS’s first appeal to this court it challenged the district
court’s decision on venue only as it related to the forum selection
clause. Although it referred to the district court’s rejection of
UMS’s Brussels Convention argument, it articulated no argument
supporting reversal of that ruling.
Issues not raised or inadequately briefed on appeal are
waived. See Patterson v. Mobil Oil Corp., 335 F.3d 476, 483 n.5
(5th Cir. 2003) (issue not raised on appeal); L & A Contracting Co.
v. S. Concrete Servs., Inc., 17 F.3d 106, 113 (5th Cir. 1994)
(finding that issue was not adequately briefed where no authorities
were cited in a one page argument). Because UMS did not make an
argument challenging the district court’s venue finding regarding
the Brussels Convention this argument was waived.
IV.
UMS next challenges the district court’s summary judgment
apportioning payment of the loss between Adams and UMS according to
their respective policy limits. The district court’s order
apportioned the loss in a 4:1 ratio based on the UMS policy limit
5
These venue rules have since been codified in the European
Council Regulations. Council Regulation 44/2001, 2001 O.J. (L 12).
14
of $20 million and the Adams $5 million limit. UMS argues that the
loss should have been apportioned based upon the value of the
insured lost cargo. Had the loss been apportioned in this manner
Adams and UMS would have shared the loss equally, since the value
of the insured lost cargo was the same and because it fell within
each insurer’s policy limit.
This Court reviews a district court's grant of summary
judgment de novo, applying the same legal standards as the district
court in determining whether summary judgment was appropriate.
United States v. Lawrence, 276 F.3d 193, 195 (5th Cir. 2001)
Questions of fact are viewed in the light most favorable to the
nonmovant; questions of law, like the apportionment of liability
between UMS and Adams in this case, are reviewed de novo. Id.
The Duferco-UMS insurance policy provided an “other insurance”
clause to dictate the mode of apportionment. The policy stated:
INSURANCE WITH VARIOUS INSURERS
Article 9. When for one and the same risk, several
insurances with several insurers have been taken out
separately–even by various contracting parties–Article
1910 of the Civil Code [of Italy] will apply.
Article 1910 of the Italian Civil Code provides:
Insurance with more than one insurer.
* * *
An insurer who has made payment has a right to
recourse against the other insurers for a proportional
contribution based on the indemnities owed in accordance
with their respective contracts. If one of the insurers
15
is insolvent, his share shall be divided among the
others.
Adams policy contained no “other insurance” clause.
In support of its argument that the loss should be allocated
according to the value of the cargo insured in each policy, UMS
relies on the following phrase from art. 1910: “contribution based
on the indemnities owed in accordance with their respective
contracts.” UMS argues that this means that apportionment is based
upon the value of the insured cargo rather than the policy limits.6
The district court disagreed.
In beginning its analysis the district court recognized the
existence of the UMS “other insurance” clause and the absence of a
similar clause in the Adams contract. Based upon the single “other
insurance” clause the district court determined that it must give
effect to that contractual provision. Dist. Ct. Op., June 3, 1998,
at 10-11 (citing Barry R. Ostrager & Thomas R. Newman, Handbook on
Insurance Coverage Disputes, § 11.03[b]). The district court then
6
UMS did not make this argument in its response to Adams’s motion
for summary judgment regarding apportionment of loss. Instead, at
the summary judgment stage, UMS argued that apportionment of loss
should be based upon policy limits and that Adams policy limit was
$80 million while the UMS policy limit was only $20 million. In
its trial memorandum and motion for a new trial, after the district
court had determined that Adams’s policy limit was only $5 million,
UMS changed its argument to the one it presents in this appeal,
namely that apportionment should be based upon insured value and
not policy limits. While we have concerns about whether this
argument was properly raised below, we nevertheless address UMS’s
latter argument on its merits.
16
proceeded to interpret the “other insurance” clause, the relevant
Italian Code article, and the policy as a whole and determined that
the UMS-Duferco policy “appear[ed] to follow the majority rule of
pro rata division based on the ratio which the individual insurer’s
limits bear to the sum of all available coverage.” Id. at 11.
Contrary to UMS’s arguments, the district court’s decision to
divide loss based upon policy limits was not based upon substantive
American law. Instead the decision was based upon its
interpretation of the UMS contract and Italian Code art. 1910
referred to in that contract. The phrase giving a coinsurer a
“right to recourse against the other insurers for a proportional
contribution based on the indemnities owed in accordance with their
respective contracts” refers to the exposure each insurer has to
the insured under their respective policies. The contract was the
law between the parties regarding the apportionment of loss in
instances of concurrent insurance. We agree with the district
court’s interpretation of the UMS-Duferco contract.
V.
Adams and AK Steel bring cross appeals against UMS related to
the judgment against AK Steel and the apportionment of that award.
“Of course, we review bench trial findings of fact for clear error;
conclusions of law, de novo.” Baldwin v. Stalder, 137 F.3d 836,
839 (5th Cir. 1998).
17
A.
Adams challenges the district court’s order to split the tort
award of $190,975.68 against AK Steel pro rata between Adams (20%)
and UMS (80%). Adams asserts that UMS is not entitled to any
portion of the award from AK Steel until UMS pays Adams for its
share of the loss incurred by Duferco.
The district court reasoned that each insurer should recover
against the tortfeasor, AK Steel, in the same percentage each was
required to pay for the loss.
As a general rule “under the doctrine of equitable subrogation
. . . where an insured is entitled to receive recovery for the loss
from . . . the insurer and the tortfeasor, it is only after the
insured has been fully compensated for all of the loss that the
insurer acquires the right to subrogation[.]” 16 Lee R. Russ, Couch
on Insurance, § 223:134, at 147-48 (3d. ed. 2000) (emphasis added);
see also 6A John Alan Appleman & Jean Appleman, Insurance Law and
Practice, § 4121, at 395 (1972) (“An insurer was not deemed to be
subrogated to the rights of the insured unless it had paid the loss
in full.” (emphasis added)). UMS has made no payments to Duferco
to compensate it for the lost steel. UMS therefore is not
subrogated to Duferco’s right to assert a claim against AK Steel
and the district court erred in awarding any part of the judgment
to UMS.
18
If UMS pays its share of the insured loss, it may well be
entitled to an equitable credit for its share of the tort recovery.
On remand the district court should give UMS an opportunity to
satisfy Adam’s judgment against it, and if it does so, the district
court can give UMS an equitable credit for a portion of the tort
recovery.
We therefore vacate the district court’s award of
approximately $151,000 to UMS and award the entire $190,975.68 to
Adams. On remand the district court may conduct whatever
proceedings it considers necessary to consider UMS’s claim to an
equitable credit once UMS pays or agrees to pay its share of the
insured loss.
B.
Defendant AK Steel argues that UMS would never be entitled to
recover its share of the profits from the salvaged steel because AK
Steel was an additional insured of UMS. According to AK Steel it
is entitled to a credit for UMS’s share of the approximately
$191,000 and should, at most, be required to pay Adams its 20%
share. We disagree.
AK Steel is correct that an insurer generally cannot subrogate
against its insureds:
This Circuit has overwhelmingly upheld the fundamental
principle of insurance law which states that an insurer
may not sue its own insured to recover under the
insurance policy. An insurer cannot by way of
subrogation recover against its insured or an additional
19
assured any part of its payment for a risk covered by the
policy.
Peavey Co. v. M/V ANPA, 971 F.2d 1168, 1177 (5th Cir. 1992)
(citations omitted).
But not all suits by an insurer against its insureds are
barred. An insurer may recover damages from an insured for losses
outside the policy. In particular an insurer may bring a
reimbursement action against its insured for recovered property or
an insurers overpayment for losses, even where a subrogation action
is forbidden. 16 Lee R. Russ, Couch on Insurance, § 226:4, at 15-
16 (3d ed. 2000) (“The importance of the various theories
supporting reimbursement lies in their ability to circumvent
significant obstacles encountered by an insurer seeking recovery
under subrogation. . . . For example, recovering funds from an
insured by means of reimbursement may be allowable even when the
recovery of the same funds under the theory of subrogation would be
barred by the rule that an insurer may not be subrogated to claims
against its own insured.”); see also id. § 226:135, at 134 (“An
insurer may recover payments it has made for lost property if the
property is subsequently found, or the property is subsequently
delivered, and may similarly recover stolen property that has been
reacquired by the insured.”)
This Court has clearly recognized an insurer’s right to
recover against an insured for reimbursement:
While public policy does not allow an insurer to sue its
20
own assured on the insurance policy, the law recognizes
that there may be causes of action by an insurer outside
the policy. . . . . Zurich’s [the insurer] suit against
Degesch [the assured] is not one of subrogation but one
of reimbursement.
Peavey, 971 F.2d at 1177. The district court decided and the
parties have not challenged on appeal that Duferco was the owner of
the lost steel and Adams paid Duferco for that steel. AK Steel
suffered no loss and was unjustly enriched at the expense of Adams
by the conversion of the lost steel. UMS, once it pays its share
of the loss, is therefore entitled to recover in reimbursement
against AK Steel even if AK Steel is an additional insured under
the UMS policy. Any recovery is outside the policy and unaffected
by the general prohibition against insurers enforcing subrogation
against their insureds.
VI.
Finally Adams challenges the district court’s denial of
attorney fees.
We review awards of attorneys fees under an abuse of
discretion standard. Underlying questions of fact are reviewed for
clear error; questions of law, de novo. Jason D.W. v. Houston Ind.
Sch. Dist., 158 F.3d 205, 208 (5th Cir. 1998) (per curiam).
According to the general “American Rule” applied in admiralty
cases, attorney fees are not awarded absent a statutory or
contractual authority. Alyeska Pipeline Serv. Co. v. Wilderness
21
Soc’y, 421 U.S. 240, 268-69 (1975). We find no reason to deviate
from the American Rule in this case.
VII.
For the reasons stated above, we affirm all features of the
district court’s judgment except in one respect. We vacate the
district court’s award of a portion of the recovery against AK
Steel to UMS and remand for the district court to award the entire
recovery to Adams. The district court can also consider UMS claim
to an equitable credit if it pays its share of the insured loss.
AFFIRMED in PART; VACATED in PART; REMANDED.
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