Dennis M. Jeter v. Ameron International Corporation

• Court: Louisiana Court of Appeal
• Decided: June 23, 2021
• Docket: 2021-CA-0048
• Status: Published

Opinion

DENNIS M. JETER * NO. 2021-CA-0048

VERSUS * COURT OF APPEAL AMERON INTERNATIONAL * CORPORATION, ET AL. FOURTH CIRCUIT * STATE OF LOUISIANA *******

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2019-02167, DIVISION “L” Honorable Kern A. Reese, Judge ****** Judge Terri F. Love ****** (Court composed of Chief Judge James F. McKay, III, Judge Terri F. Love, Judge Edwin A. Lombard)

Thomas E. Balhoff ROEDEL PARSONS BLACHE FONTANA PIONTEK & PISANO, ALC 8440 Jefferson Highway, Suite 301 Baton Rouge, LA 70809-3720

Judith R. Atkinson ROEDEL PARSONS BLACHE FONTANA PIONTEK & PISANO, ALC 8440 Jefferson Highway, Suite 301 Baton Rouge, LA 70809-3720

Daniel T. Price ROEDEL PARSONS BLACHE FONTANA PIONTEK & PISANO, ALC 8440 Jefferson Highway, Suite 301 Baton Rouge, LA 70809-3720

COUNSEL FOR THIRD PARTY PLAINTIFF/APPELLANT

Julia A. Dietz DEGAN, BLANCHARD & NASH 400 Poydras St., Suite 2600 New Orleans, LA 70130

James A. Rowell DEGAN, BLANCHARD & NASH 400 Poydras St., Suite 2600 New Orleans, LA 70130

Genevieve K. Jacques DEGAN, BLANCHARD & NASH 400 Poydras St., Suite 2600 New Orleans, LA 70130

Matthew F. Morgan DEGAN, BLANCHARD & NASH 400 Poydras St., Suite 2600 New Orleans, LA 70130

Travis L. Bourgeois DEGAN, BLANCHARD & NASH 400 Poydras St., Suite 2600 New Orleans, LA 70130

Tina L. Kappen LUGENBUHL, WHEATON, PECK, RANKIN & HUBBARD 601 Poydras Street, Suite 2775 New Orleans, LA 70130

Stephen F. Butterfield LUGENBUHL, WHEATON, PECK, RANKIN & HUBBARD 601 Poydras Street, Suite 2775 New Orleans, LA 70130

Leigh Ann Schell ADAMS AND REESE LLP 701 Poydras Street, Suite 4500 New Orleans, LA 70139

COUNSEL FOR DEFENDANT/APPELLEE

AFFIRMED JUNE 23, 2021 TFL

JFM

EAL This case concerns the duty to defend in a workplace tort suit by Dennis M.

Jeter against Turner Industries Group, L.L.C. (“Turner”). Turner filed a third-party

demand against its comprehensive general liability insurers, Fireman’s Fund

Insurance Company (“FFIC”) and United States Fidelity and Guaranty Company

(“USF&G”), seeking that they provide Turner with a complete defense to Mr.

Jeter’s suit. Each insurer had paid defense costs for what they deemed to be their

share, based on their policy periods and a time-on-the-risk formula. Turner filed a

motion for partial summary judgment regarding the insurers’ duty to defend and

the insurers filed cross motions for summary judgment regarding the same and

seeking complete dismissal of all claims. Turner argued that “Other Insurance”

clauses in the policies issued by the insurers extended liability outside of the policy

periods and that the trial court should adopt an exception holding insurers liable for

periods of time in which insurance was unavailable to Turner. After a hearing, the

trial court denied Turner’s motion for partial summary judgment, granted FFIC’s

motion for partial summary judgment and USF&G’s motion for summary

1 judgment on third-party demand, and dismissed all claims against FFIC and

USF&G within Turner’s demand. Turner now appeals this judgment.

Upon review, we find that the trial court correctly applied the time-on-the-

risk formula to the present case, in keeping with precedent, and that there is no

basis in this matter for extending liability for defense costs outside of the insurers’

policy periods. Furthermore, we find that the “Other Insurance” clauses in the

instant matter do not apply to defense costs. Accordingly, this judgment is

affirmed.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The original petition by Mr. Jeter, filed February 25, 2019, alleged that he

developed mesothelioma caused by injurious exposure to asbestos from

approximately 1963 to 1979 at various work sites in Louisiana. The petition

named thirty-six employers, premise owners, manufacturers, sellers, suppliers,

contractors, and distributors as defendants. Turner, a Louisiana corporation, and

its predecessors were named as employers/premise owners and sued for

employer/strict/contractor/supplier liability. Beyond this, the petition does not

describe how, when, or where Turner exposed Mr. Jeter to asbestos.

Of the sixteen years that Mr. Jeter alleged he was exposed to asbestos,

Turner purchased insurance from FFIC and USF&G for at least twelve years. For

the first year of alleged exposure, in 1963, Turner states that it purchased

comprehensive general liability insurance from Home Insurance Company, which

has since become insolvent. For March 1, 1964, to March 1, 1965, and from

2 March 1, 1967, to March 1, 1976, FFIC or its affiliates issued comprehensive

general liability insurance policies to Turner. Turner also claims to have purchased

insurance from FFIC for March 1, 1965, to March 1, 1967, but FFIC disputes that

fact. Neither Turner nor FFIC have been able to locate the FFIC policies allegedly

issued for this period of time. USF&G or its affiliates issued comprehensive

general liability insurance policies to Turner for March 1, 1976, to March 1, 1979.

The FFIC and USF&G policies contained similar language, stating that the

insurer will pay on behalf of the insured all sums which the insured shall become

legally obligated to pay as damages because of bodily injury to which this

insurance applies. The policies also state that the insurer “shall have the right and

duty to defend any suit against the insured seeking damages on account of such

bodily injury or property damage, even if any of the allegations of the suit are

groundless.” “Bodily injury” is defined as “bodily injury, sickness or disease

sustained by any person which occurs during the policy period, including death at

any time resulting therefrom.” An “occurrence” is defined as “an accident,

including continuous or repeated exposure to conditions, which results in bodily

injury or property damage neither expected nor intended from the standpoint of the

insured.” The two policies also contain “Other Insurance” clauses, stating that:

The insurance afforded by this policy is primary insurance, except when stated to apply in excess of or contingent upon the absence of other insurance. When this insurance is primary and the Insured has other insurance which is stated to be applicable to the loss on an excess or contingent basis, the amount of the Company's liability under this policy shall not be reduced by the existence of such other insurance.

3 The “Other Insurance” clauses further state that when “both this insurance

and other insurance apply to the loss on the same basis, whether primary, excess or

contingent, the Company shall not be liable under this policy for a greater

proportion of the loss than that stated in the applicable contribution provision

below.” These provisions then lay out a formula for contribution by equal shares,

if “all of such other valid and collectible insurance provides for contribution by

equal shares.” Alternatively, contribution by limits would be applied when “any of

such other insurance does not provide for contribution by equal shares.” The

contribution by limits formula states that the insurer “shall not be liable for a

greater proportion of such loss than the applicable limit of liability under this

policy for such loss bears to the total applicable limit of liability of all valid and

collectible insurance against such loss.”

The suit brought by Mr. Jeter was settled by the end of 2019, with an

agreement that Mr. Jeter did not sustain any exposures after December 31, 1976.

On December 30, 2019, Turner filed a third-party demand against FFIC and

USF&G, seeking a full and complete defense against Mr. Jeter’s lawsuit and

reimbursement of 18.63% of the defense costs. FFIC and USF&G had paid

defense costs for what they each deemed to be their share, a computation based on

the period of time in which Mr. Jeter alleged injury and in which they had

contracted to provide insurance to Turner.

On May 26, 2020, Turner filed a motion for partial summary judgment

regarding the insurers’ duty to defend. USF&G and FFIC filed cross motions for

4 summary judgment regarding the same and seeking complete dismissal of all

claims. USF&G and FFIC also jointly moved for leave to file a supplemental

memorandum to supplement the record with a copy of a policy that was at issue in

a separate case that their arguments relied upon. The trial court held a hearing on

these matters and denied Turner’s motion for partial summary judgment, granted

FFIC’s motion for partial summary judgment and USF&G’s motion for summary

judgment on third-party demand, and dismissed all claims against FFIC and

USF&G within Turner’s demand. The trial court denied the joint motion to

supplement the record but granted a proffer of the joint motion and exhibit for the

record. Turner, Appellant, timely appealed this judgment against Appellees, FFIC

and USF&G.

DISCUSSION

Standard of Review

In reviewing a trial court ruling on summary judgment motions, this Court

applies a de novo standard of review, applying the “same criteria that govern the

district court's consideration of whether summary judgment is appropriate.” Green

ex rel. Peterson v. Johnson, 14-0292, p. 3 (La. 10/15/14), 149 So. 3d 766, 770.

This standard of review requires analysis of pleadings, depositions, answers to

interrogatories, admissions on file, and affidavits, if any, to determine if they show

that no genuine issue as to a material fact exists, and that the mover is entitled to

judgment as a matter of law. Ricker v. Wieleman, 464 So. 2d 891, 893 (La. App. 4

Cir. 1985). In cases involving cross motions for summary judgment, the Court

5 must “determine whether either party has established there are no genuine issues of

material fact and it is entitled to judgment as a matter of law.” Duncan v. U.S.A.A.

Ins. Co., 06-363, p. 4 (La. 11/29/06), 950 So. 2d 544, 547. Whether a fact is

material depends on whether its existence or nonexistence is essential to the cause

of action, “insures or precludes recovery, affects a litigant’s ultimate success, or

determines the outcome of the legal dispute.” Mandina, Inc. v. O’Brien, 13-0085,

p. 9 (La. App. 4 Cir. 7/31/13), 156 So. 3d 99, 104 (collecting cases). “A genuine

issue is one as to which reasonable persons could disagree; if reasonable persons

could reach only one conclusion, no need for trial on that issue exists and summary

judgment is appropriate.” Id.

Issues for Review

Appellant identifies three assignments of error: (1) that the trial court erred

when it concluded that the “Other Insurance” clauses in the FFIC and USF&G

policies, which policy language is materially different from the policy language

relied upon by the Supreme Court in Arceneaux v. Amstar Corp., 15-0588, p. 3

(La. 9/7/16), 200 So. 3d 277, 280, do not require the Insurers to provide a complete

defense to Turner; (2) that the trial court erred when it applied the rationale

underlying the Supreme Court’s Arceneaux proration of defense costs holding to

the much different, broad, vague, and indiscriminate allegations of the Petition

here of Mr. Jeter; and (3) that the trial court erred by failing to adopt an

“unavailability of insurance” exception under the circumstances of this case, in

6 which Turner did not voluntarily self-insure or deliberately go “bare” for any

period at issue.

Assignment of Error #1

In its first assignment of error, Appellant states that the trial court erred

when it concluded that the “Other Insurance” clauses in the FFIC and USF&G

policies do not require the Insurers to provide a complete defense to Turner.

Appellant contends that the “Other Insurance” clauses at issue in this case contain

policy language that is materially different from the policy language relied upon by

the Supreme Court in Arceneaux. Id.

Arceneaux, much like the instant case, concerned an insurer’s duty to defend

an employer in a long latency tort action. Id., 15-0588, p. 1, 200 So. 3d at 279. In

that case, a group of plaintiffs alleged hearing loss after many years of exposure to

loud noises in their workplace. Id., 15-0588, pp. 1-2, 200 So. 3d at 279-80. There,

as in the instant matter, the insured employer filed a third-party demand against

their insurer for defense costs and subsequently filed a motion for partial summary

judgment seeking a declaration that the insurer owed the employer a complete

defense against the claims. Id., 15-0588, p. 3, 200 So. 3d at 280-81. The policy at

issue in Arceneaux contained similar language to the policies in this case, with

nearly identical language defining “bodily injury”, “occurrence”, and concerning

the insurer’s duty to defend. Id., 15-0588, p. 3, 200 So. 3d at 280. The Court

noted that in Louisiana, the fact “[t]hat indemnification is allocated pro rata is

based in large part on Louisiana’s adoption of the exposure theory in long latency

7 disease cases.” Id., 15-0588, p. 6, 200 So. 3d at 282. Under the exposure theory,

the trigger for insurance coverage is the plaintiff’s exposure to injurious conditions

within the insurance policy period. Id. The theory “relies on the principle that an

insurer will only be responsible within the terms of its policy for those damages

arising out of the period the policy is in effect.” Id., citing Norfolk Southern Corp.

v. California Union Ins. Co., 02-0369, 02-0371, 02-0372, p. 42 (La. App. 1 Cir.

9/12/03), 859 So. 2d 167, 198.

In noting the state’s approach to indemnification, the Court noted that there

is no precedent in case law regarding the allocation of defense costs. Arceneaux v.

Amstar Corp., 15-0588, pp. 6-7 (La. 9/7/16), 200 So. 3d 277, 282. The Court

proceeded to discuss long latency cases and the approaches taken by different

jurisdictions in handling defense costs in such cases. Id., 15-0588, pp. 7-11, 200

So. 3d at 282-85. Ultimately, the Court was persuaded by the reasoning of Forty–

Eight Insulations, which held that:

[t]he duty to defend arises solely under contract. An insurer contracts to pay the entire cost of defending a claim which has arisen within the policy period. The insurer has not contracted to pay defense costs for occurrences which took place outside the policy period. Where the distinction can be readily made, the insured must pay its fair share for the defense of the non- covered risk.

Insurance Co. of North America v. Forty–Eight Insulations, Inc., 633 F. 2d 1212,

1224-25 (6th Cir. 1980).

The Court examined the contract between the parties and found that “the

words of the insurance contract at issue are clear and unambiguous” and that “the

policy language limits coverage for bodily injury to that which occurs during the

8 policy period.” Arceneaux, 15-0588, p. 12, 200 So. 3d at 286. However, the Court

stated that “the policy language in this case that supports a pro rata allocation of

defense costs may not appear in another policy, requiring a different result with

regard to responsibility for defense costs.” Id., 15-0588, p. 13, 200 So. 3d at 286.

Additionally, defense costs “may need to be determined on a case by case basis,

according to the precise language of the insurance contract at issue.” Id. The

policy language at issue in this case is similar to the policy language examined in

Arceneaux and hence would require a similar result. However, Appellant contends

that the existence of “Other Insurance” clauses in its contracts with Appellees

differentiates the two cases. Appellees counter that the Arceneaux policy also

contained an “Other Insurance” clause identical to the “Other Insurance” clauses

here, and offered evidence of such in their proffer. As it appears that parties in

Arceneaux, and subsequently the Court, did not directly address the “Other

Insurance” clause in that case, we must examine the substance of these clauses in

the present matter.

Appellant concedes that “bodily injury” during the policy period is the

required trigger for coverage from Appellees. However, Appellant argues that the

“Other Insurance” clauses contemplate a different allocation of coverage in

situations where “both this insurance and other insurance apply to the loss on the

same basis.” Appellant argues that “loss” refers to any monetary amount paid in

connection with a single claim, including defense costs, and that “loss” is not

synonymous with bodily injury. Appellant also argues that “loss” necessarily

9 follows manifestation, which can occur a long time after the initial exposure and in

an entirely different policy period than “bodily injury.” Appellant contends that

this language, taken together, indicates that Appellees can be liable for coverage

for injuries that span multiple policy periods, including for portions of injuries that

happened during years in which they did not issue a policy. Appellant further

contends that because the “Other Insurance” clause distributes liability only to

insurers and not the insured, no defense costs can be assigned to it.

“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.” Mayo v. State Farm Mut. Auto. Ins. Co., 03-1801, p. 3 (La.

2/25/04), 869 So. 2d 96, 99. The language used in a policy should be construed

using “their plain, ordinary and generally prevailing meaning.” Id.; La. C.C. art.

2047. An insurance contract “should not be interpreted in an unreasonable or

strained manner under the guise of contractual interpretation to enlarge or to

restrict its provisions beyond what is reasonably contemplated by unambiguous

terms to achieve an absurd conclusion.” Mayo, 03-1801, p. 3, 869 So. 2d at 99.

Nor should construction of an insurance contract be an “exercise of inventive

powers to create an ambiguity where none exists or the making of a new contract

when the terms express with sufficient clarity the parties’ intent.” Mayo, 03-1801,

pp. 3-4, 869 So. 2d at 99-100; La. C.C. art. 2046. However, “if any doubt or

ambiguity exists as to the meaning of a provision in an insurance policy, it must be

construed in favor of the insured and against the insurer.” Gibbs Construction,

10 L.L.C. v. National Rice Mill, L.L.C., 17-0113, p. 11 (La. App. 4 Cir. 2/21/18), 238

So. 3d 1033, 1041.

The “Other Insurance” clauses in this case state alternate formulas for

apportioning liability among “valid and collectible insurance” “[w]hen both this

insurance and other insurance apply to the loss on the same basis, whether primary,

excess or contingent.” Appellees’ insuring agreements each define when insurance

is valid and collectible – when triggered by “bodily injury” during the policy

period. For example, these “Other Insurance” clauses would be applicable here if

two insurers both provided primary coverage to Turner for 1967, one of the years

in which Mr. Jeter was allegedly exposed to asbestos. Read according to their

plain meaning, the “Other Insurance” clauses provide guidance for instances in

which more than one policy applies to a loss at the same time. However, the

Appellees’ policies were non-concurrent, covering different policy periods, and

thus cannot be said to be “valid and collectible” insurance that “appl[ies] to the

loss on the same basis.” To argue otherwise, that insurers providing coverage to an

insured at entirely different points in time are now exclusively liable for exposure

to injurious conditions outside of the policy periods they contracted for would

essentially render policy periods meaningless and strain the clear terms of the

contracts. Therefore, we find that under the language of these policies and the

factual scenario in the instant matter, the “Other Insurance” clauses do not apply to

defense costs.

11 Appellant makes a further attempt to distinguish the policy language in

Arceneaux from the language at issue, contending that the pro rata approach taken

in Arceneaux was premised on that case’s strict limitation of bodily injury to injury

“during the policy period.” Arceneaux, 15-0588, p. 3, 200 So. 3d at 280.

Appellant states that unlike in Arceneaux, the present case extends liability to

include death outside of the policy period. In fact, the definition of “bodily injury”

in Arceneaux is similar to the definitions in this case. Id. The definition of bodily

injury in Arceneaux is “bodily injury, sickness or disease sustained by any person

which occurs during the policy period, including death at any time resulting

therefrom.” Id. The definition of bodily injury in Appellees’ policies is “bodily

injury, sickness or disease sustained by any person which occurs during the policy

period, including death at any time resulting therefrom.” That these policies

contain virtually the same language undermines Appellant’s attempt to distinguish

the cases and strengthens the precedential weight of the Arceneaux holding.

In addition, “the duty to defend arises solely under contract.” Id., 15-0588,

p. 12, 200 So. 3d at 286. In Arceneaux, as in the instant matter, the words of the

insurance policy defining the duty to defend are “clear and unambiguous” in

creating a duty to defend any suit seeking damages on account of “bodily injury.”

Id. As bodily injury in both cases is limited to that which occurs during the policy

period, the duty to defend is likewise limited to each Appellee’s periods of policy

coverage. Therefore, the trial court did not err in dismissing Appellant’s motion

for partial summary judgment, granting Appellees’ motions for summary

12 judgment, and concluding that the “Other Insurance” clauses did not create an

obligation to pay defense costs outside of the scope of Appellees’ policies.

Assignment of Error #2

In its second assignment of error, Appellant states that the trial court erred

when it applied the rationale underlying the Supreme Court’s Arceneaux proration

of defense costs holding to the much different, broad, vague, and indiscriminate

allegations of the Petition of Mr. Jeter.

Appellant argues that the rationale supporting Arceneaux’s holding should

be restricted to its unique facts. Appellant states that Arceneaux involved over

one-hundred employees injured by exposure to loud noise over sixty-five years at a

single location, with only one insurer liable for coverage, and only for twenty-six

months out of the entire sixty-five year period. Id., 15-0588, pp. 1-2, 200 So. 3d at

279-80. Appellant believes that the Arceneaux Court predicated its opinion on the

ease with which proration could be effected between the one insurer and the

insured. Appellant also argues that the Arceneaux Court was motivated by the

belief that it would be unfair to hold an insurer liable for 100% of defense costs

when it only provided coverage for 3% of the exposure period.

Appellant reasons that the breadth of the allegations in this case, in contrast

to the concrete facts in Arceneaux, make it impossible to demarcate exactly when

the exposure occurred. Without that certainty, Appellant states that it is possible

Mr. Jeter’s exposure to asbestos occurred solely in the years where coverage exists

from Appellees and it is consequently impossible to allocate costs with any

13 reasonable means. Appellant also argues that because the settlement with Mr. Jeter

contained an agreement that the exposure period fell between October 1, 1967, and

December 31, 1976, periods in which Appellees had policies in place providing

liability coverage to Appellant, Appellees are entirely liable for defense costs.

Appellant asserts that under these circumstances, the test is not whether the

allegations unambiguously assert coverage, but “whether they do not

unambiguously exclude coverage.” Mossy Motors, Inc. v. Cameras America, 04-

0726, p. 6 (La. App. 4 Cir. 3/2/05), 898 So. 2d 602, 606.

The Arceneaux Court stated that “the pro rata allocation scheme is an

equitable system, that can be readily used in long latency disease claims in

Louisiana.” Arceneaux, 15-0588, p. 13, 200 So. 3d at 286-87. Indeed, Arceneaux

analyzed long latency injury cases in depth and examined approaches in other

jurisdictions before concluding that the espousal of the exposure theory in

Louisiana “provides a clear way to apportion defense costs.” Id., 15-0588, p. 13,

200 So. 3d at 287. Arceneaux concluded that while the “duty to defend is broader

than the duty to indemnify, neither obligation is broader than the policy's coverage

period in the context of long latency disease cases that trigger occurrence-based

policies.” Id., 15-0588, p. 13, 200 So. 3d at 286.

Appellant emphasizes language in Mossy Motors, Inc., stating that “the test

is not whether the allegations unambiguously assert coverage, but rather whether

they do not unambiguously exclude coverage.” Mossy Motors, Inc., 04-0726, p. 6,

14 898 So. 2d at 606. However, that language is a condensation of the full rule. The

entire rule states that:

[t]he issue of whether a liability insurer has the duty to defend a civil action against its insured is determined by application of the 'eight-corners rule,' under which an insurer must look to the 'four corners' of the plaintiff's petition and the 'four corners' of its policy to determine whether it owes that duty. Vaughn v. Franklin, 00-0291, p. 5 (La. App. 1 Cir. 3/28/01), 785 So. 2d 79, 84. Under this analysis, the factual allegations of the plaintiff's petition must be liberally interpreted to determine whether they set forth grounds which raise even the possibility of liability under the policy. Id. In other words, the test is not whether the allegations unambiguously assert coverage, but rather whether they do not unambiguously exclude coverage.

Mossy Motors, Inc., 04-0726, p. 6, 898 So. 2d at 606.

In Mossy Motors, Inc., the insurer rejected any duty to defend and the Court

carefully scrutinized the facts alleged in the petition and the language of the policy

to determine whether a duty to defend existed. Id., 04-0726, pp. 7-10, 898 So. 2d

at 607-08. In this case, Appellees readily acknowledge that the duty to defend

exists, acknowledge the applicability of Mossy Motors, Inc., and rely on that case

to establish that their duty to defend is limited to the “four corners” of Mr. Jeter’s

petition and the “four corners” of their policies. Id., 04-0726, p. 6, 898 So. 2d at

606. The “four corners” of the petition allege seventeen years, or two-hundred-

and-four months of exposure to asbestos. Id., 04-0726, p. 6-7, 898 So. 2d at 606.

The policies at issue in this case expressly limit coverage to bodily injury occurring

during the policy periods and under Arceneaux, Appellees’ time on the risk is

based on these policy periods. Arceneaux, 15-0588, pp. 17-18, 200 So. 3d at 289.

Therefore, a straightforward and reasonable basis for allocating defense costs does

exist. Appellee FFIC provided coverage for ten of the seventeen years and its

15 time on the risk is thus 121 months, amounting to a pro rata share of 58.82% of

defense costs. Appellee USF&G provided coverage for forty-six months of the

total exposure period, amounting to a pro rata share of 22.55% of defense costs.

Appellant’s argument that evidence adduced during discovery and the

settlement agreement indicate that there was potential exposure only during

periods covered by Appellees is not relevant, as it is the allegations of the petition

and the language of the insurance policies that control the duty to defend. Mossy

Motors, Inc., 04-0726, pp. 6-7, 898 So. 2d at 606-07.

Although Appellant argues that applying Arceneaux leads to an unjust

windfall for insurers, this case presents the precise scenario contemplated within

Arceneaux – a long latency disease claim due to workplace exposure to asbestos.

Application of the pro rata method in this matter comports with the parties’

“reasonable expectations,” as the terms of the contracts, discussed in the preceding

section, ensure that “neither party could reasonably expect that the insurer was

liable for losses that occurred outside the policy coverage periods.” Arceneaux,

15-0588, p. 13, 200 So. 3d at 286. To hold otherwise and absolve Appellant of any

liability for defense costs for the time it was not insured would create “a

disincentive to insureds to purchase uninterrupted insurance coverage and

provid[e] a windfall to companies that fail to obtain continuous coverage.” Id., 15-

0588, p. 14, 200 So. 3d at 287. Consequently, the trial court did not err in

dismissing Appellant’s motion for partial summary judgment, granting Appellees’

16 motions for summary judgment, and applying the Arceneaux formula prorating

Assignment of Error #3

In its third assignment of error, Appellant states that the trial court erred by

failing to adopt an “unavailability of insurance” exception under the circumstances

of this case, in which Turner did not voluntarily self-insure or deliberately go

“bare” for any period at issue.

Heretofore, the “unavailability of insurance” exception has not been applied

in this jurisdiction. In Arceneaux, the Court noted that in jurisdictions ascribing to

the pro rata allocation method for defense costs, “if the insured has periods of non-

coverage, the insured is responsible for its pro rata share.” Id., 15-0588, p. 7, 200

So. 3d at 282. To that end, Arceneaux held the insured in that case liable for the

period of time in which it went bare. Id., 15-0588, p. 18, 200 So. 3d at 289.

Appellant argues that this holding in Arceneaux pivoted on the fact that the insured

there chose to be self-insured for all but 26 of the 780 months in question.

Appellant also argues that it is differently situated, as it never chose to go bare.

Instead, Appellant claims that insurance coverage is unavailable because it

purchased insurance from a company that has since become insolvent and because

it purchased policies from FFIC that have not been located.

However, even in the case cited by Appellant as applying the unavailability

exception, insurance was entirely unavailable because insurers had ceased selling

the insurance sought by the insured. R.T. Vanderbilt Company, Inc. v. Hartford

17 Accident and Indemnity Company, 156 A. 3d 539, 589-93 (Conn. App. 2017). In

this case, Appellant does not argue that insurance was unavailable on the market.

In actuality, Appellant claims to have purchased insurance for the entirety of the

exposure time. Additionally, the unavailability exception was explicitly evaluated

and rejected by the Arceneaux Court, which noted that nationally, in cases where

“it has been determined that the insured is self-insured for part of the coverage

period, the weight of authority is that the insured must bear a pro rata share of the

defense costs.” Arceneaux, 15-0588, pp. 11-12, 200 So. 3d at 285 (citing BARRY

R. OSTRAGER & THOMAS R. NEWMAN, HANDBOOK ON INSURANCE COVERAGE

DISPUTES, § 6.02(a) (2) (17th ed. 2014)). In holding the insured liable for defense

costs for non-covered periods in Arceneaux, the Court pointed to its holding in

Southern Silica for support. Southern Silica of Louisiana, Inc. v. Louisiana Ins.

Guar. Ass’n., 07-1680, pp. 13-14 (La. 4/8/08), 979 So. 2d 460, 469. Southern

Silica held “[a]ccording to the exposure theory and its component pro rata share

allocation, coverage for exposure outside the policy period could not be demanded

of the solvent insurers” and solvent liability insurers were not required to fill the

gap left by another insurer’s insolvency. Id., 07-1680, p. 12, 979 So. 2d at 468.

Likewise, “the vast majority of decisions applying a pro rata allocation

methodology require that the policyholder contribute for ‘bare’ periods regardless

of whether applicable insurance was ‘available’ or ‘unavailable.” SCOTT M.

SEAMAN & JASON R. SCHULZE, ALLOCATION OF LOSSES IN COMPLEX INSURANCE

COVERAGE CLAIMS § 4:3 ALLOCATION (December 2020 Update).

18 In regards to the missing policies Appellant alleges to have purchased from

FFIC, Appellant has offered an affidavit of its Chief Administrative Officer, Rick

Scardina. In his affidavit, Mr. Scardina stated that he has been employed by

Appellant since 1991 and that, upon information and belief, Appellant purchased

general liability insurance from Appellee FFIC from March 1, 1965, to March 1,

1967. Under La. C.C.P. art. 967, affidavits must be based on personal knowledge.

“The purpose of the ‘personal knowledge’ requirement in this article is to confine

the scope of an affidavit to ‘facts which the affiant saw, heard, or perceived with

his own senses.” Indulge Island Grill, L.L.C. v. Island Grill, L.L.C., 16-1133, p.

12 (La. App. 4 Cir. 5/10/17), 220 So. 3d 154, 162 (citing Hibernia Nat’l Bank v.

Rivera, 07-962, pp. 8-9 (La. App. 5 Cir. 9/30/08), 996 So. 2d 534, 539).

Furthermore, “[p]ortions of affidavits not based on personal knowledge of the

affiant should not be considered by the trial court in deciding a motion for

summary judgment.” Indulge Island Grill, 16-1133, p. 12, 220 So. 3d at 162

(quoting Hibernia Nat’l Bank v. Rivera, 07-962, p. 9, 996 So. 2d at 540). Mr.

Scardina only began working for Appellant twenty-four years after Appellant

allegedly purchased the missing FFIC policies and offered no other basis for his

knowledge of these policies. Ergo, that portion of Mr. Scardina’s affidavit fails to

fulfill the personal knowledge requirement of the article and cannot be considered.

Id. In assessing the liability for defense costs for the period of March 1, 1965, to

March 1, 1967, Appellant is considered self-insured and liable for defense costs for

that period. Southern Silica, 07-1680, p. 12, 979 So. 2d at 468.

19 The trial court did not err in dismissing Appellant’s motion for partial

summary judgment, granting Appellees’ motions for summary judgment, and

refraining from adopting an “unavailability of insurance” exception.

CONCLUSION

For the reasons set forth herein, we find that the trial court did not err in

denying Appellant’s motion for partial summary judgment, granting Appellees’

motions for summary judgment and dismissing all claims against Appellees. As

such, the judgment of the trial court is affirmed.

AFFIRMED