Richard v. Anadarko Petroleum Corp.

147 F. Supp. 3d 632, 2015 U.S. Dist. LEXIS 162215, 2015 WL 7871154
CourtDistrict Court, W.D. Louisiana
DecidedDecember 2, 2015
DocketCIVIL ACTION NO. 6:11-cv-0083
StatusPublished

This text of 147 F. Supp. 3d 632 (Richard v. Anadarko Petroleum Corp.) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Richard v. Anadarko Petroleum Corp., 147 F. Supp. 3d 632, 2015 U.S. Dist. LEXIS 162215, 2015 WL 7871154 (W.D. La. 2015).

Opinion

RULING

DEE D. DRELL, CHIEF JUDGE, UNITED STATES DISTRICT COURT

Before the court are three motions for summary judgment filed by Valiant Insurance Co. (Valiant) (Docs. 264-66). For the following.reasons, (1) Valiant’s Motion for Summary Judgment regarding additional insured coverage will be GRANTED; (2) Valiant’s Motion for Summary Judgment regarding Offshore Energy Services’ (OES) claims for contractual liability will be GRANTED in part and DENIED in part; and (3) Valiant’s Motion for Summary Judgment regarding the drilling rig exclusion will be GRANTED.

I. Background and Procedural History

The underlying case arises out of a personal injury action filed by plaintiff, Raylin Richard. Plaintiffs claims against every defendant have been settled or disposed of by the court, and plaintiff is no longer a party to this suit. The issues remaining before the court concern insurance coverage between OES, Anadarko Petroleum Corporation (Anadarko), Liberty Mutual and Valiant.1 In a recent ruling issued March 24, 2015, we ruled that OES and Anadarko were entitled to reform the indemnity provision in their November 2000 [635]*635Master Service Agreement (MSA). (Doc. 242). Pursuant to that ruling, OES filed a motion to amend its third-party demand against Valiant, which we granted in October 2015. (Doc. 302). The amended, third-party demand set forth the reformed indemnity provision, which reflects the mutual intent of OES and Anadarko to- include “contractors and their employees” within the category of “subcontractors and their employees.” (Doc. 302). Valiant, with permission from thé court, then filed the instant motions for summary judgment raising various coverage defenses. (Docs. 264,265,266).

II. OES’ Waiver and Estoppel Argument

In a recent pretrial conference we were informed that OES intended to put forth a “waiver” defense to Valiant’s previously asserted coverage defenses. For the sake of judicial economy, so that all of the coverage issues could be determined at once, we allowed assertion of the argument and appropriate briefing. In its “Supplemental Memorandum Addressing Waiver/Estop-pel Affirmative Defense in Opposition to Valiant’s Three Motions for’"Summary Judgment ...” (Doc. 371), OES claims that, regardless of any applicable coverage exclusion found in its policy, Valiant waived all potential coverage defenses and should be estopped from asserting them in this litigation,

In order to demonstrate that Valiant waived its coverage defenses, OES must show:

(1) an existing right;
(2) a knowledge of its existence,! and
(3) an actual intention to relinquish it or conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished. Steptore v. Masco Const. Co., Inc., 643 So.2d 1213, 1216 (La.1994) (internal citations omitted).

Louisiana law charges insurers with knowledge of the contents of their own policies,2 To begin, the. court does not perceive any genuine dispute as to Valiant’s receipt of the requisite notice of occurrence in May of 2011. (Doc. 371-1). As discussed below, Valiant does possess certain rights under its policy and asserted such rights in its original and amended answers to OES’ third-party demand. Taken together, these facts lead us to conclude that there can be no serious dispute as to the first and 'second elements of OES’ waiver defense. Instead, the dispute lies within the third element: did Valiant’s conduct induce a reasonable belief that it had relinquished its coverage defenses under the policy at issue?

OES makes two general arguments regarding Valiant’s conduct. First, OES claims that the policy language, particularly that of the contested drilling rig exclusion, represents an express waiver of coverage defenses by Valiant. We reject this claim for several reasons. First, the language of the policy’s drilling rig exclusion is not “conduct” such as this court understands as is required to be shown here. Next, testimony by Valiant’s underwriter John -Moy and claims adjuster Craig Brown as to the “intent” behind the disputed policy language is not relevant conduct. (Doc. 371 at pp. 18-21). Rather, such testimony is parol evidence of the policy’s meaning—an impermissible foray at this time. Finally, OES cites no jurisprudence in support of its posited theory that Valiant’s adoption of the policy form used by another insurer3 constitutes an expression of intent to administer claims under that [636]*636policy in exactly the same manner as did the prior insurer.

OES’ second argument that Valiant’s claims adjusters failed to follow prevailing industry standards, resulting in a reasonable belief by OES that 'Valiant waived its coverage defenses in this case, is similarly unconvincing. OES offers testimony by Barry Neville, a Valiant claims adjuster, and Jose Guerrero, its expert on insurance practices, in support of its contention that Valiant’s failure to issue a reservation* of rights letter advising OES of its intention to pursue coverage defenses was not only a breach of customary claims practices, but induced its reasonable belief that Valiant waived its coverage defenses under the policy.

OES relies heavily on the Louisiana Supreme Court’s opinion in Steptore v. Mas-co Construction Company, Inc, to bolster its overarching argument that Valiant is not permitted, under Louisiana law, to wait three (3) years between learning of the occurrence and asserting its .coverage defenses. We do not agree that the reasoning of Steptore leads to that conclusion in this particular ease. In Steptore, the court found a valid waiver by the primary insurer based on the primary insurer’s assumption of a defense of its insured without reserving its rights. While it is undisputed that Valiant never issued a reservation of rights letter to OES in this matter, there is no evidence before the court to suggest that Valiant ever assumed the defense of OES. Thus, we find that Valiant’s failure to issue a reservation of rights letter, without more, does not constitute conduct inducing a reasonable belief in waiver under Steptore. •

OES complains of the prejudice it sustained as a result of Valiant’s decision to assert its numerous coverage defenses in its original and supplemental answers, filed only after Valiant was formally named as a third-party defendant in this suit and shortly before a scheduled mediation. (Doc. 371 at pp. 24-25). The court struggles to understand OES’ tactical decision not' to serve Valiant with a‘ formal demand for defense and indemnity at some time prior to the filing of the 2014 third-party complaint or, alternatively, to simply file its third-party complaint at some earlier date;4 It seems clear that either of these actions by OES would have revealed Valiant’s position and placed OES in the best position to assert its claims in this case. Yet, OES was content with Valiant’s “silence” between 2011 and 2014. Moreover, OES was not forced to proceed with the mediation if, in light of Valiant’s then-recent answer to- the suit, OES needed additional time to evaluate Valiant’s coverage defenses or seek discovery, disclosure, or declaratory relief with the court. OES’ decision ’to proceed with the mediation was its own.

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Bluebook (online)
147 F. Supp. 3d 632, 2015 U.S. Dist. LEXIS 162215, 2015 WL 7871154, Counsel Stack Legal Research, https://law.counselstack.com/opinion/richard-v-anadarko-petroleum-corp-lawd-2015.