Chalmers, Collins & Alwell, Inc. v. Burnett & Co.

175 So. 3d 1100, 15 La.App. 3 Cir. 249, 2015 La. App. LEXIS 1973, 2015 WL 5833962
CourtLouisiana Court of Appeal
DecidedOctober 7, 2015
DocketNo. 15-249
StatusPublished
Cited by4 cases

This text of 175 So. 3d 1100 (Chalmers, Collins & Alwell, Inc. v. Burnett & Co.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chalmers, Collins & Alwell, Inc. v. Burnett & Co., 175 So. 3d 1100, 15 La.App. 3 Cir. 249, 2015 La. App. LEXIS 1973, 2015 WL 5833962 (La. Ct. App. 2015).

Opinion

GREMILLION, Judge.

It Chalmers, Collins & Alwell, Inc. (Chal-mers), appeals the summary judgment granted in favor of Certain Underwriters at Lloyd’s (Underwriters). This judgment involves coverage under a commercial liability policy issued by Underwriters to Chalmers and Underwriters’ duty to defend. For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

Chalmers contracted with Haland Operating Services, LLC (Haland), to undertake engineering consultancy services in the drilling of a well. A number of problems with the drilling resulted in Haland retaining another engineering firm to complete the well.

.Chalmers pursued arbitration against Haland. Haland responded to the arbitration dispute with allegations of its own and asserted a reconventional demand in the arbitration proceedings. Chalmers made demand on Underwriters to defend it in arbitration against Halan.d’s reconventional demand.

When Underwriters declined to undertake Chalmers’ defense, Chalmers filed a petition entitled, “Complaint for Breach of Contract, Declaratory Relief, and Breach of Implied Covenant of Good Faith and' Fair Dealing,” against Underwriters and Burnett and Company, Inc., its insurance agent. Underwriters denied the allegations in the petition. Both parties filed motions for summary judgment; Chal-mers asserting Underwriters should be ordered to defend it in the arbitration and Underwriters asserting that there was no coverage under its policy. The trial court denied Chalmers’ motion and granted Underwriters’ motion. This devolutive appeal followed.

| .ASSIGNMENTS OF ERROR

Chalmers asserts that the trial court erred in denying its motion for summary judgment and in granting Underwriters’ motion.

ANALYSIS

The obligation of the insurer to defend its insured is broader than its obligation to indemnify its insured against liability. Am. Home Assurance Co. v. Czarniecki, 255 La. 251, 230 So.2d 253 (1969). Whether" the insurer owes its insured a defense is usually determined within the allegations of the claimant’s petition. Id. [1102]*1102“[Ujnless the petition unambiguously excludes coverage” under those allegations, the insured is owed a defense. Id. at 259, 230 So.2d 253. Further, even when the petition discloses many acts or omissions ■ for which there would be no coverage, “the duty to defend may nonetheless exist if there is at least a single allegation” that would not unambiguously be excluded. Duhon v. Nitrogen Pumping & Coiled Tubing Specialists, Inc., 611 So.2d 158, 161 (La.App. 3 Cir.1992). Courts look to the factual allegations of the petition, rather than conclusory allegations, in determining whether the insurer must defend the insured. Id.

Logic dictates that if the policy unambiguously excludes coverage for purposes of the insurer’s duty to defend, the insurer owes no duty to pay sums its insured is legally obligated to pay.

The policy issued by Underwriters contains an insuring agreement whereby Underwriters provides:

We will pay those sums that that insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this Insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this Insurance does not apply....

laThe policy also contains a number of exclusions, including, pertinently, “[bjodily injury” or “property damage” for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. There are a number of exceptions to the exclusion for contractual liability.

Underwriters maintain that the re-conventional demand of Haland against Chalmers asserts facts that constitute liability under the contract. Acts of negligence against Chalmers, Underwriters argues, constitute acts for which the policy excludes coverage. The trial court agreed. We agree.

Haland’s reconventional demand begins at paragraph 12 of its answer to the arbitration demand. Paragraphs 12 through 26 do discuss the terms of the Master Service Agreement (MSA) between Ha-land and Chalmers, including the parties’ respective obligations regarding performance of work, warrantying that work, payment and billing, termination of the agreement, reporting, dispute resolution, indemnity and insurance, and choice of laws. Paragraphs 27 through 32 discuss the circumstances under which Chalmers was retained to work on the well at issue. They also discuss the technical demands this particular well posed. These paragraphs allege that the sands through which the well was bored were “tight.” These sands, therefore, required specific equipment suited for those drilling conditions.

The facts of the incident in dispute begin at paragraph 33 of the reconventional demand, and it is with these that we must focus our analysis. Difficulties arose when the drill bit lost several cones in the hole. Those had to be cleaned out. According to paragraphs 41 through 43:

Jé1-
Chalmers reported they thought the hole was clean after the first mill. However, the second mill locked up essentially right away. For an unexplained reason, the rig Chalmers had specifically recommended Haland to choose for these conditions did not have a torque meter on it. Consequently, Chalmers [1103]*1103failed to realize the mill had locked up and high torque was developing.
42.
As a result, about 2,400 feet of drill pipe twisted apart inside the casing.
43.
Chalmers tried to fish the drill pipe out using several fishing tools, such as overshots and spears. Apparently the spears could successfully grip the pipe, but the rig — again strangely — was not capable of producing enough strength to pull it out.

After several attempts to retrieve the pipe, a chemical charge was used to sever the pipe below the casing, and the pipe was retrieved. This severing of the pipe allegedly resulted in Haland losing valuable lease rights for deeper minerals. Ha-land alleged that the rig recommended by Chalmers was “singularly unsuited to perform cleaning or fishing operations,” and the geological conditions the well presented “made fishing and cleaning operations a reasonably likely outcome.” These acts resulted in Haland losing certain rights in the well conferred by its lease.

The policy contains and amendatory endorsement that provides:

In consideration of the premium charged and notwithstanding anything to the contrary contained in this policy, it is understood and agreed that form CO 00 01 12 04, COMMERCIAL GENERAL LIABILITY COVERAGE FORM SECTION I — COVERAGES, COVERAGE A., BODILY INJURY AND PROPERTY DAMAGE LIABILITY, 2., Exclusions, is amended to include:
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Liability for:
(1) loss of or damage to any well or hole,
(a) which is being drilled or worked over by or on behalf of the Insured, or

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Cite This Page — Counsel Stack

Bluebook (online)
175 So. 3d 1100, 15 La.App. 3 Cir. 249, 2015 La. App. LEXIS 1973, 2015 WL 5833962, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chalmers-collins-alwell-inc-v-burnett-co-lactapp-2015.