Naquin v. Elevating Boats, L.L.C., — F.3d —-2016 WL 1138516 (5th Cir. March 22, 2016)
This insurance coverage dispute arose from personal injuries sustained by Larry Naquin while operating an EBI land based crane. Naquin sued EBI under the Jones Act. At trial, the jury concluded that EBI was Naquin’s Jones Act employer and that EBI’s negligence caused his injuries. The Fifth Circuit affirmed these findings, but vacated the jury’s damage award. The case was remanded to the district court to conduct a trial on that issue.
The district court subsequently granted EBI leave to file a third-party complaint against its insurance companies, State National Insurance Company (“SNIC”) and Certain London Insurers (“London Insurers”). EBI complained that its insurers breached their insurance contracts by denying EBI’s insurance claims arising from Naquin’s accident and by failing to provide EBI with defense and indemnity. EBI also sought statutory bad-faith damages. The district court granted a motion to sever, ordering that EBI’s claims against SNIC and London Insurers be severed from the remaining issue of damages and resolved by a separate trial.
SNIC moved for summary judgment on the grounds that EBI was not entitled to coverage under its Protection & Indemnity Policy (the “Policy”) because coverage did not extend to Naquin’s land-based incident and that EBI failed to comply with the notice requirements imposed by the Policy.
The “Indemnity” provision of the Policy provided:
Subject to all exclusions and other terms of this Policy, the Underwriters agree to indemnify the Assured for any sums which the Assured, as owner of the Vessel, shall have become liable to pay, and shall have paid in respect of any casualty or occurrence during the currency of the Policy, but only in consequence of any other matters set forth hereunder . . . (emphasis added).
The district court interpreted this language as excluding coverage to EBI due to the circumstances surrounding its liability in Naquin and granted SNIC’s motion. SNIC argued that the terms of the Policy—specifically, the “as owner of the Vessel” clause—does not provide coverage for the land-based incident due to EBI’s negligence. EBI urged a blanket reading of the Policy that would provide coverage for “any casualty or occurrence” for which EBI might become liable.
The Fifth Circuit affirmed the ruling of the district court. The Court found that Naquin’s incident in no way arose out of EBI’s conduct as “owner of the Vessel.” The land-based crane did not break on or even in close proximity to a vessel. Where there is no causal operational relation between the vessel and the resulting injury, there is no extension of coverage for liability. The Court concluded that: “it was [EBI’s] actions as platform operator or as a crane operator that caused the harm, and that does not make it a liability of a shipowner.”