The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION
TONY MANCUSO CASE NO. 2:21-CV-03947
VERSUS JUDGE JAMES D. CAIN, JR.
STARR SURPLUS LINES INSURANCE CO MAGISTRATE JUDGE LEBLANC
MEMORANDUM RULING
Before the court is a Motion for Partial Summary Judgment [doc. 99] filed by
defendant Starr Surplus Lines Insurance Company (“Starr”). Plaintiff Tony Mancuso, in
his official capacity as Calcasieu Sheriff and Tax Collector (“CPSO”) opposes the motion.
Doc. 112.
I.
BACKGROUND
This suit arises from damage to property owned by CPSO, a political subdivision of
the state of Louisiana, in Hurricanes Laura and Delta and Winter Storm Uri. At all relevant
times the property was insured under a surplus lines policy issued by Starr. CPSO filed suit
in this court on November 12, 2021, alleging that Starr had failed to timely or adequately
compensate it for covered losses. Doc. 1. Accordingly, it raised claims of breach of
insurance contract and bad faith under Louisiana law. The matter is set for jury trial before
the undersigned on April 22, 2024. Doc. 58.
Starr now moves for summary judgment on various coverage issues, namely: (1)
that the policy is a scheduled policy, not a blanket limit of liability policy; (2) that the
policy’s two year limitation to recover replacement cost value is enforceable; (3) that any
recovery based on Actual Cash Value must be based on values as of the time and place of
loss; (4) that any recovery for the Men’s Prison’s roof (Location 004) is limited to Actual
Cash Value; (5) that there is no coverage for code upgrades that were not completed within
two years of the date of loss and that any covered code upgrades are subject to a $1 million
sublimit across all locations; (6) that the policy’s sublimits are part of, and not in addition
to, the policy’s limit of liability; and (7) that any costs associated with testing for or
remediating for mold are subject to the policy’s mold exclusion, regardless of the cause of
the mold. CPSO opposes the motion. Doc. 112. In its opposition it also objects to the SOV
used by Starr, with both parties disputing which SOV was in place at the time of loss. Id.
II.
SUMMARY JUDGMENT STANDARD
Under Rule 56(a), “[t]he court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” The moving party is initially responsible for identifying
portions of pleadings and discovery that show the lack of a genuine issue of material fact.
Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). He may meet his burden by
pointing out “the absence of evidence supporting the nonmoving party’s case.” Malacara
v. Garber, 353 F.3d 393, 404 (5th Cir. 2003). The non-moving party is then required to go
beyond the pleadings and show that there is a genuine issue of material fact for trial.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To this end he must submit
“significant probative evidence” in support of his claim. State Farm Life Ins. Co. v.
Gutterman, 896 F.2d 116, 118 (5th Cir. 1990). “If the evidence is merely colorable, or is
not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at
249 (citations omitted).
A court may not make credibility determinations or weigh the evidence in ruling on
a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 150 (2000). The court is also required to view all evidence in the light most favorable
to the non-moving party and draw all reasonable inferences in that party’s favor. Clift v.
Clift, 210 F.3d 268, 270 (5th Cir. 2000). Under this standard, a genuine issue of material
fact exists if a reasonable trier of fact could render a verdict for the nonmoving party.
Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).
III.
LAW & APPLICATION
A. Governing Law
Starr moves for summary judgment on various issues relating to interpretation of its
policy. Under Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), a federal court sitting in
diversity jurisdiction applies the substantive law of the forum state. Cates v. Sears, Roebuck
& Co., 928 F.2d 679, 687 (5th Cir. 1991). Louisiana law provides that an insurance policy
is a contract and that its provisions are construed using the general rules of contract
interpretation in the Louisiana Civil Code. Hanover Ins. Co. v. Superior Labor Svcs., Inc.,
179 F.Supp.3d 656, 675 (E.D. La. 2016). The words of the policy are given their generally
prevailing meaning and “interpreted in light of the other provisions so that each is given
the meaning suggested by the contract as a whole.” Coleman v. Sch. Bd. of Richland Par.,
418 F.3d 511, 516–17 (5th Cir. 2005) (citing La. Civ. Code arts. 2047, 2050). Ambiguities
in the policy must be construed against the insurer and in favor of coverage. Id. The court
resolves an ambiguity by asking “how a reasonable insurance policy purchaser would
construe the clause at the time the insurance contract was entered.” Id.
B. Application
1. Scheduled policy vs. blanket policy
Starr first asks for a judgment to the effect that the policy is a scheduled, rather than
blanket, policy and that CPSO’s recovery for losses at any Location (for buildings,
contents, and/or business interruption) is limited to the value declared for any specific
coverage on the submitted statement of values. The policy’s Occurrence Limit of Liability
Endorsement provides:
A. It is agreed that the following special terms and conditions apply to, and
are made a part of, the POLICY to which this Endorsement is attached:
1. The Limit of Liability or Amount of Insurance shown in the
Declarations of this POLICY, or endorsed onto this POLICY, is the total
limit of the COMPANY’s liability applicable to each OCCURRENCE as
hereafter defined. Notwithstanding any other terms and conditions of this
POLICY to the contrary, in no event shall the liability of the COMPANY
exceed this limit or amount irrespective of the number of LOCATIONS
involved.
2. The premium for this POLICY is based upon the Schedule of Values
on file with the COMPANY, or attached to this POLICY. In the event of
loss hereunder, liability of the COMPANY shall be limited to the least
of the following:
a. The actual amount of loss, less applicable deductible(s);
b. The total stated value for the property involved, for Property
Damage and TIME ELEMENT separately, as specified in the latest
Statement of Values on file with the COMPANY, or attached to
this POLICY, less applicable deductible(s);
c. The limit of liability or Amount of Insurance specified in the
Declarations of this POLICY, or endorsed onto this POLICY.
Doc. 97, att. 2, p. 70 (emphasis added). CPSO argues that “total stated value” is ambiguous
and should thus be read in favor of coverage to mean the entire limit of liability for the
policy. The clause specifies that these stated values are found within the SOV, which
provides values on a per building basis and then a total value ($56,700,621.00) for all
properties, which corresponds to the limit of liability on the policy’s declarations as set
forth under 2(c). Doc. 111, att. 3; see doc. 97, att. 2, p. 3. CPSO’s reading would render
subsections (b) and (c) virtually identical, defeating the purpose of the different terms
applied in each. Instead, “total” is more coherently read horizontally across the chart for
each property to include the different kinds of coverage (Building Value, Content Value,
and Business Interruption Value), especially as the SOV sums these into a column titled
“Total Insured Value.” Doc. 111, att. 3; accord Berkshire Refrigerated Warehousing LLC
v. Com. Underwriters Ins. Co., 2006 WL 862877 (N.D. Ill. Mar. 27, 2006). Accordingly,
Starr’s motion is granted to the extent that the “Total Insured Value” on the SOV provides
its limit of liability for each property under subsection 2(c) of the Occurrence Limit of
Liability Endorsement.
2. Enforceability of two-year limitation period
Starr next moves for summary judgment on the enforceability of the two-year
limitation period for recovery of replacement cost under its policy. The policy’s
Replacement Cost Endorsement states, in relevant part:
The COMPANY shall not be liable under this Endorsement for any loss:
a. occasioned directly or indirectly by enforcement of any ordinance or law
regulating the use, construction, repair or demolition of any structure(s)
unless such liability has been specifically assumed under this POLICY;
b. unless and until the damaged or destroyed property is actually repaired or
replaced by the Insured with due diligence and dispatch, and in no event,
unless repair or replacement is completed within two (2) years after the
destruction or damage, or within such further time as the Company may
during the two (2) years, in writing, allow.
Doc. 99, att. 7, p. 75. This court has previously held that the “prevention of performance”
may void this limitation, however, if the insured can show that it was unable to complete
repairs within the two-year period because of underpayment by the insurer. E.g., TGS
Properties LLC v. Covington Spec. Ins. Co., 2023 WL 6430676, at *2 (W.D. La. Sep. 28,
2023). Starr points to Orleans Parish School Board v. Lexington Insurance Company, 118
So.3d 1203 (La. Ct. App. 4th Cir. 2013), in which a Louisiana appellate court held that the
doctrine did not apply. It also argues that CPSO cannot show an inability to make repairs,
because the payments issued by Starr were sufficient to cover the actual incurred costs
identified by CPSO. In opposition CPSO points to this court’s prior decisions and further
notes that the Louisiana Third Circuit Court of Appeal has rejected the Fourth Circuit’s
position. Mason v. Shelter Mut. Ins. Co., 209 So.3d 860 (La. Ct. App. 3d Cir. 2016). This
court has repeatedly made its position clear, a position which is the subject of a circuit split
among the Louisiana appellate courts, and will not change course until presented with
binding authority to the contrary.
3. Actual Cash Value recovery
Next, Starr asserts that any recovery based on Actual Cash Value must be calculated
from the time and place of the loss. The policy’s Valuation Clause states:
In case of loss, the basis of adjustment, unless otherwise endorsed hereon,
shall be as follows at the time and place of loss:
. . . .
c. Buildings and other structures, at ACTUAL CASH VALUE unless
otherwise endorsed hereon[.]
Doc. 99, att. 7, pp. 24–25. CPSO maintains that Starr has waived its right to limit recovery
based on this clause because its prior payments, tendered up to two years after loss, were
based on more recent pricing data.
Under Louisiana law, waiver requires “an existing right, a knowledge of its
existence and 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.” Moreno
v. Entergy Corp., 233 So.3d 176, 184 (La. Ct. App. 5th Cir. 2017) (citing Arceneaux v.
Amstar Corp., 66 So.3d 438, 451 (La. 2011)). Waiver may apply to any provision of an
insurance contract, even if it has the effect of extending coverage. Steptore v. Masco Const.
Co., 643 So.2d 1213, 1216 (La. 1994); Additionally, an insurer is charged with knowledge
of the contents of its own policy. Koehl v. RLI Ins. Co., 367 So.3d 122, 129 (La. Ct. App.
5th Cir. 2023) (citing Steptore, 643 So.2d at 1216)).
CPSO contends that none of the ten payments issued by Starr were based on August
2020 pricing. To this end it cites an estimate prepared by Leverenz in April 2022, which
appears to be based on April 2021 pricing. See doc. 112, att. 5, p. 3. It also notes Leverenz’s
statement that “additional information and further actual cash values developed during the
ongoing adjustment process” as he made recommendations to Starr for further payments.
Doc. 99, att. 9, ¶ 6. Accordingly, CPSO maintains that its experts, consultants, contractors,
and adjusters have also used updated prices, in reasonable reliance on Starr’s practices.
CPSO’s evidence shows that Starr used updated pricing on at least one adjustment.
It maintains, without proof, that this was its practice across all of the payments it issued.
The court does not have sufficient evidence as to Starr’s conduct or that of CPSO’s
consultants to enter judgment in CPSO’s favor on the issue. But CPSO has succeeded in
creating an issue of material fact, and so the jury will decide whether Starr has waived this
term of its policy by its inconsistent conduct.
4. Limitation of Men’s Prison Roof
Starr also moves for summary judgment limiting recovery for the men’s prison roof
to actual cash value. The men’s prison is Location 004 under the policy and the Schedule
of Values reflects that it was built in 1998. Doc. 99, att. 8, p. 2. The policy’s Roof
Limitation Endorsement states, in relevant part:
The coverage provided by this POLICY . . . is limited as respects direct
physical loss or damage to ROOF SURFACING caused by WIND or
NAMED WINDSTORM as defined in the policy.
A. In case of loss, the basis of adjustment for damage to ROOF
SURFACING that has been in place on an insured building or structure
for fifteen (15) years or more will be ACTUAL CASH VALUE, at time
and place of loss.
B. The term “ROOF SURFACING” means: 1. the roofing material exposed
to the weather; 2. the underlayment applied for moisture protection; 3. all
materials used in securing the roof surfacing all flashings required in the
replacement of the roof surfacing.
Doc. 99, att. 7, p. 77. CPSO does not dispute that this endorsement applies but maintains
that there is a genuine issue of material fact as to (1) which layers of the multi-layered
prison roof system the endorsement applies to and (2) the valuation of the ACV, through
the waiver issue described above. Doc. 112, p. 22.
On the first issue, CPSO maintains that the jury must decide which portions of the
men’s prison roof meet the policy’s definition, noting that the men’s prison roofs were
originally “built-up gravel ballasted roof systems with multilayers that sit on top of a metal
decking.” Doc. 112, p. 22. While Starr maintains that the policy language is broad enough
to cover the entire roof, it produces no testimony, diagrams, or other evidence in support
of its case. Furthermore, the definition appears to exclude at least some roof-related
materials such as decking. The court lacks sufficient evidence to make that determination
and thus only grants the motion as far as the limitation’s general applicability, leaving it to
the jury to determine its extent. As for waiver, CPSO may present at trial its argument as
to whether ACV is based on time of loss or adjustment based on Starr’s inconsistent
conduct.
5. Code upgrades
The policy’s Increased Cost of Construction & Demolition Endorsement provides
an extension of coverage for:
1. The increased cost of repair, rebuilding or construction of the building(s)
or structure(s) covered under this POLICY, on the same premises, of like
size and occupancy, caused by loss from any peril insured against under
this POLICY and resulting from the enforcement of, and limited to the
minimum requirements of, any law or ordinance regulating the
construction or repair of damaged building(s) or structure(s); and
2. The insured value of the undamaged portion, and the cost of demolishing
any such undamaged portion of the building(s) or structure(s) covered
under this POLICY, including the cost of clearing the site thereof, caused
by loss from any peril insured against under this POLICY and resulting
from enforcement of any law or ordinance regulating the construction or
repair of building(s) or structure(s) and in force at the time of loss which
necessitate such demolition[.]
Doc. 99, att. 7, p. 61. A $1,000,000.00 sublimit applies to this coverage. Id. at 15. As with
the Replacement Cost Endorsement, this extension of coverage is limited to repair or
replacement “completed within Two (2) years after the destruction or damage, or within
such further time as the COMPANY may allow, in writing, during the Two (2) years.” Id.
For the same reason set forth above, summary judgment is denied on this issue and CPSO
may present at trial evidence that the condition is excused by Starr’s failure to provide it
with sufficient funds to make repairs within the two-year period.1
6. Policy sublimits
Starr also moves for a ruling that the policy’s sublimits are part of, and not additional
to, the policy’s limits of liability and that certain of these sublimits have been satisfied. It
points to the policy’s Application of Sublimits Endorsement, which states in relevant part:
Application To Insured Interests. Each sublimit stated in this POLICY
applies as part of, and not in addition to, the overall POLICY Limit of
Liability for an OCCURRENCE insured hereunder. Each sublimit is the
maximum amount potentially recoverable from all insurance layers
combined for all insured loss, damage, expense, TIME ELEMENT or other
insured interest arising from or relating to that aspect of the OCCURRENCE,
including but not limited to type of property, construction, geographic area,
zone, location, or peril.
Doc. 99, att. 7, p. 94. Starr further asserts that the Extra Expense sublimit ($50,000) and
Trees and Shrubs sublimit ($100,000) have both been paid. Doc. 99, att. 1, p. 25.
In response CPSO does not dispute that “there are specific sublimits in the Policy,
as a part of the overall limit of liability.” Doc. 112, p. 25. It maintains, however, that a
1 CPSO argues that this “Endorsement and limit of $1,000,000.00 for code upgrades is inapplicable” because its code
upgrade repair costs were only required to repair its hurricane damages. To the extent it is not seeking the extension
of coverage provided under this section, the issue is moot.
genuine issue of material fact exists as to whether Starr has satisfied the $100,000.00
sublimit for trees and shrubs. To this end it points to Leverenz’s Master Loss Schedule
from December 2023, which notes a tree sublimit of $100,000 in the adjustment comments
for the row assigned to Location 004, Building 001 – Calcasieu Sheriff’s Prison Main
Building & Generators. Doc. 112, att. 5, p. 1. The same row assigns an RCV of $5,481,304
to the building, based on J.S. Held’s estimate showing an RCV of $4,866,784 for repair
costs2, plus allocated engineering and architect fees of $425,970 and a management fee of
$188,550. CPSO maintains that tree replacement is not covered under the J.S. Held
estimate for that location and that the costs were therefore not allocated under payments
for Location 004. Starr has not yet met its burden of showing that this sublimit was met.
Starr has also produced no evidence of its satisfaction of the extra expense sublimit.
Accordingly, summary judgment is granted to the extent that sublimits are contained
within, and not additional to, the policy’s overall limit of liability but denied as to Starr’s
satisfaction of any individual sublimit.
7. Mold exclusion
Finally, Starr moves for summary judgment on the applicability of the policy’s mold
exclusion. The policy provides:
6. PERILS EXCLUDED
This POLICY does not insure against loss or damage caused by or resulting
from any of the following regardless of any cause or event contributing
concurrently or in any other sequence to the loss:
. . . .
2 The J.S. Held estimate is attached to the spreadsheet. See doc. 112, att. 5, pp. 3–112.
q. Mold, moss, mildew, fungi, spores, bacterial infestation or any similar
organism, wet or dry rot and extremes of temperature or humidity, whether
directly or indirectly the result of a covered peril. This exclusion applies,
and is not limited to, the cost for investigation, testing, remediation services,
Such loss, damage, costs, or expenses are excluded regardless of any other
cause or event that contributes concurrently or in any sequence to the loss, or
whether such loss is directly or indirectly, proximately or remotely, or in
whole or in part caused by, the result of, contributed to or aggravated by any
other peril.
Doc. 99, att. 7, p. 22.
Starr broadly seeks a ruling “on any aspect of Mancuso’s claim related to
investigating, testing, and remediating mold or damage caused, in part or in whole, by
mold.” Doc. 99, att. 1, p. 27. CPSO does not dispute the clause’s meaning but responds
that no part of its claimed damages includes mold testing or damages caused by mold.
Specifically, it maintains that it is not seeking reimbursement for the mold testing that was
performed in December 2020 and that its “incurred hurricane and freezer repair costs,
including mitigation, were not caused by or resulted from mold.” Doc. 112, p. 26. In the
absence of anything more specific, the court will grant the motion on this issue to the extent
that the plain language of the exclusion applies but defer to trial any dispute over whether
mold played a role in a specific claim.
8. Applicable SOV
Finally, the parties have disputed here and elsewhere which SOV applies in this
matter. Starr has introduced a declaration from assistant vice president Timothy Drag, who
was the lead underwriter for the policy issued to CPSO in effect from May 1, 2020, to May
1, 2021. Doc. 111, att. 1. Drag states:
[CPSO] submitted to Starr a revised and final Statement of Values
(“SOV”) that Starr relied on in the underwriting of the Policy. The SOV
accepted by Starr at the inception and time of the losses was bound with the
Policy. Starr accepted the information included in the final SOV from
Mancuso and on file with Starr as true and correct... . The bound SOV in
place at the time of loss for Hurricanes Laura and Delta and Winter Storm
Uri, 1s attached to this declaration as Exhibit 2.
Id. at 4 6.
Attached as Exhibit 2 to Drag’s declaration is an SOV [doc. 111, att. 3] relied on by
Starr in this and other motions. CPSO maintains that Starr’s SOV differs because it “does
not include the Forensic Lab on Line 82.” In CPSO’s SOV, the Forensic Lab is only
referenced in a note at the bottom of the sheet:
1 [OFFICES ist, 2nd, 6thfioors STOTT LAKESHOREOR [LAKE CHARLES [LA _| 70601]
Po OFFICE OOORYANSTSUITET LAKE CHARLES [LA | 7060
7
[AUTOCATCOVERAGE Sate
[BLANKET COMPUTERS ——SSSCS~SCSVARTUS LOCATIONS SCT
[TOWERSEQUIPMENT OGENTERPRISEBLVD LAKECHARLES [LA [|
[BLANKET EARNINGS ANDEXTRAEXPENSE □□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□□
(NOTES FROM JEFF COLE 3/2218
Calcasieu Law Enforcement Centers :
OP ‘North Lake Charles owned
find/Hail South Lake Charles owned/leased property from Airport Dist #1
amed Sulphur Owned 721 B. East Prien Lk Rd., Forensic] Lab on Pollution, not sure if owned yet?
Carlyss Owned leased property from Jeff Davis bank
Vinton Owned
Deqguincy Leased from Calcsieu Parish Health Unit
‘Starks Leased from Willard White === MISSING
Moss Bluff Owned
Doc. 103, p. 1. Meanwhile, it also appears at the bottom of the SOV attached by Drag but
as a line item with no stated value:
Page 13 of 15
[BLANKETCOMPUTERS 0 WARIOUSLOCATIONS FTO]
| ES ee ee eee
Wr Sah te ns oes SRE = 56,700,621
Garyss Onnat ese propety tom ef Dav bank
sane Leased from Calcsieu Parish Health Unit a
Bal Cay Leased from CPP Keep surance on all leased substations
Doc. 111, att. 3.
As CPSO notes, Starr previously introduced the SOV on which CPSO now relies
with a declaration from Drag stating that it was part of the bound policy “provided to and
accepted by CPSO.” Doc. 67, att. 2, 4 6—7; see doc. 67, att. 6. Furthermore, CPSO has
used that SOV as an exhibit to its 30(b)(6) deposition of a Starr witness without objection.
Doc. 112, att. 3. Accordingly, CPSO seeks to have Starr’s reliance converted to a judicial
confession. It argues that, under CPSO’s SOV, the limited reference to the Forensic Lab
creates an opportunity for coverage under the policy’s “Unnamed Location Coverage
Endorsement.” That provision states:
Subject to all terms, conditions, exclusions, limitations and
stipulations of the POLICY to which this Endorsement is attached, not in
conflict herewith, this POLICY is extended to cover Real and Personal
Property at Unnamed Locations owned, leased or rented by the Insured but
not specified in the Schedule of Locations.
Doc. 99, att. 7, p. 88. Coverage under this section is subject to a sublimit of $250,000.00.
Td. at 15.
Page 14 of 15
Under Louisiana Civil Code article 1853, a judicial confession “constitutes full
proof against the party who made it.” “To constitute a judicial confession, a statement must
be an express acknowledgment of an adverse fact.” Perry v. Phelps Dunbar LP, 2007 WL
9700865, at *4 (M.D. La. 2007) (citing Ramelow v. Bd. of Trustees, Univ. of La. Sys., 870
So.2d 415, 418 (La. Ct. App. 3d Cir. 2004)). A judicial confession may only be revoked
because of an error of fact and has the effect of waiving evidence as to the subject of
admission. La. Civ. Code art. 1853; Crawford v. Deshotels, 359 So.2d 118 (La. 1978).
Starr contends that, to the extent a judicial confession was made, it was a mere
factual error and should be withdrawn. It notes that the deposition of CPSO’s broker,
Nancy Sylvester, was taken last week and indicates that Ms. Sylvester confirmed that the
SOV attached to Drag’s later declaration is the correct one.? Accordingly, the court will
defer its ruling on the correct SOV and coverage for the Forensic Building.
IV.
CONCLUSION
For the reasons stated above, the Motion for Partial Summary Judgment [doc. 99]
will be GRANTED IN PART, DENIED IN PART, and DEFERRED IN PART.
THUS DONE AND SIGNED in Chambers on the 3rd day of April, 2024.
t/
UNITED STATES DISTRICT JUDGE
3 Starr states that the transcript of this deposition is not yet available but that it will supplement its reply upon receipt.
Page 15 of 15