Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 1 of 23 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA ST. PAUL FIRE AND MARINE INSURANCE CIVIL ACTION COMPANY, ET AL. VERSUS No. 07-3053 BOARD OF COMMISSIONERS OF THE PORT SECTION: I/5 OF NEW ORLEANS ORDER AND REASONS Before the Court is a motion for summary judgment filed by plaintiffs, St. Paul Fire and Marine Insurance Company, Insurance Company of North America and American Home Assurance Company (collectively “the Underwriters”). For the following reasons, the motion is GRANTED IN PART AND DENIED IN PART.1 BACKGROUND This action for declaratory judgment arises in connection with a state court judgment awarding John Morella (“Morella”) and his wife damages for injuries sustained in a July, 2001 accident on property owned by defendant, the Board of Commissioners of the Port of New Orleans (“the Board”). In 2002, Morella filed a lawsuit against the Board in state court alleging that he was driving a top loader when his vehicle fell into a pothole, causing 1In a telephone conference with the Court, the parties confirmed that they had no objections to the admissibility of any evidence submitted in connection with this motion. Rec. Doc. No. 64. 1 Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 2 of 23 him injuries.2 The state court tried the case without a jury on January 16, 2007, and on February 28, 2007, the state court entered a $2.6 million judgment in favor of Morella and a $50,000 judgment in favor of his wife on her loss of consortium claim.3 Following a motion for new trial, the state court entered an amended judgment on March 23, 2007, awarding interest at a rate of six percent from the date of judicial demand.4 The Louisiana Fourth Circuit Court of Appeals affirmed the judgment on May 14, 2008.5 Morella v. Bd of Comm’rs of Port of New Orleans, 988 So. 2d 266 (La. Ct. App. 4th Cir. 2008). At the time of Morella’s injuries, the Underwriters had issued the Board an excess insurance policy, known as a “Bumbershoot” policy, which provided coverage above the $1 million limits of the Board’s underlying policies. The policy was in effect from June 14, 2001 to June 14, 2002.6 On May 30, 2007, the Underwriters filed this lawsuit, seeking a declaratory judgment that the policy does not cover the Board’s 2Rec. Doc. No. 34-5. Morella was employed by New Orleans Marine Contractors, which subsequently merged into P&O Ports of Louisiana (“P&O”). However, his petition alleges that the Board owned and maintained the Frances Road Terminal Yard where he was driving the top loader. The Board leased the premises to P&O. 3Rec. Doc. No. 34-2, p. 2; Rec. Doc. No. 48, p. 3; Rec. Doc. No. 49, p. 6. 4Rec. Doc. No. 34-12. Morella’s employer was awarded $413,033.90, such amount to be deducted from the $2.6 million awarded to Morello. 5The Fourth Circuit amended the judgment to, among other things, allocate 25 percent of the fault to P&O. 6Rec. Doc. No. 34-3, para. 27; Rec. Doc. No. 34-14. 2 Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 3 of 23 liability for Morella’s injuries because the Board failed to timely notify the Underwriters of Morella’s claim as required by the policy. The Board filed a third-party complaint against its insurance brokers, Aon Corporation, Aon Risk Services, Inc. of Texas and Aon Risk Services, Inc. of Louisiana (collectively “Aon”). The Board alleges that Aon assumed the duty of notifying the Board’s insurers of claims against the Board which may involve the Board’s insurance policies.7 On May 29, 2009, the Underwriters filed this motion for summary judgment, arguing that it is entitled to a declaratory judgment that the Board is not entitled to coverage based on a policy provision requiring that the insured send notice “as soon as practicable” whenever it “may reasonably conclude that an occurrence covered [under the policy] involves an event likely to involve [the] Policy.”8 The Underwriters claim that they did not receive notice of Morella’s claim until after the judgment had been entered and then amended.9 The Board does not claim that the Underwriters were put on notice before the amended judgment was issued, asserting only that it notified Aon and that the Board “is unaware of when Aon 7Rec. Doc. No. 7, para. VII. 8Rec. Doc. No. 34-2, p. 6; Rec. Doc. No. 34-14, p. 10. 9Rec. Doc. No. 58, p. 2. The Underwriters claim that they received notice on March 28, 2007, “concurrent with the filing of the appeal.” 3 Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 4 of 23 provided notice to Excess Insurers.”10 Aon contends that it notified the Underwriters of the amended judgment on or about March 23, 2007.11 Aon further argues that it submitted loss summaries to the Insurance Company of North America when it submitted policy renewal applications in 2003, 2004 and 2005 and that these summaries identified Morella’s claim. LAW AND ANALYSIS I. STANDARD OF LAW Summary judgment is proper when, after reviewing “the pleadings, the discovery and disclosure materials on file, and any affidavits,” the court determines there is no genuine issue of material fact. Fed. R. Civ. P. 56(c). The party seeking summary judgment always bears the initial responsibility of informing the court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 266, 274 (1986). The party seeking summary judgment need not produce evidence negating the existence of material fact, but need only point out the absence of evidence supporting the other party’s case. Celotex, 477 U.S. at 323, 106 S. Ct. at 2553, 91 L. Ed. 2d at 274; Fontenot v. Upjohn Co., 780 F.2d 1190, 1195 (5th Cir. 1986). 10Rec. Doc. No. 49-7, pp. 2, 4, 5. 11Rec. Doc. No. 48, p.3 4 Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 5 of 23 Once the party seeking summary judgment carries its burden pursuant to Rule 56(c), the other party must come forward with specific facts showing that there is a genuine issue of material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538, 552 (1986). The showing of a genuine issue is not satisfied by creating “‘some metaphysical doubt as to the material facts,’ by ‘conclusory allegations,’ ‘unsubstantiated assertions,’ or by only a ‘scintilla’ of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted). Instead, a genuine issue of material fact exists when the “evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202, 211-12 (1986). The party responding to the motion for summary judgment may not rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The nonmoving party’s evidence, however, “is to be believed, and all justifiable inferences are to be drawn in [the nonmoving party’s] favor.” Id. at 255, 106 S. Ct. at 2513, 91 L. Ed. 2d at 216; see Hunt v. Cromartie, 526 U.S. 541, 552, 119 S. Ct. 1545, 1551-52, 143 L. Ed. 2d 731, 741 (1999). II. CHOICE OF LAW The Board’s bumbershoot policy provides that it “shall be governed by the internal laws of the State of New York in all 5 Case 2:07-cv-03053-JTM-ALC Document 69 Filed 08/11/09 Page 6 of 23 respects, including matters of interpretation and performance...”12 Given the choice-of-law clause, the Underwriters contend that New York law governs this dispute. On the other hand, the Board and Aon contend that Louisiana law applies because Louisiana has a more significant interest than New York and because application of New York law is contrary to Louisiana policies. In order to apply the appropriate choice-of-law rules, the Court must first determine whether it has admiralty jurisdiction or whether its jurisdiction is based solely upon the parties’ diversity of citizenship. Within the Fifth Circuit, “it is well-settled that a marine insurance policy is a maritime contract within federal admiralty jurisdiction.” Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 n.2 (5th Cir. 1991). The parties, however, dispute whether the insurance policy at issue is a marine insurance policy and, therefore, a maritime contract giving rise to admiralty jurisdiction.13 Notwithstanding Aon’s and the Board’s arguments, the Court must look beyond the facts that Morella’s accident occurred on land and that the bumbershoot policy covered some non-marine risks. Indeed, the United States Supreme Court has held that whether a contract is maritime “‘depends upon...the nature and character of the contract’ and the true criterion is whether it has ‘reference to maritime 12Rec. Doc. No. 34-14, p. 16. 13The parties do not dispute that this Court has diversity jurisdiction.