The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EXPERT OIL & GAS, LLC CIVIL ACTION
VERSUS NO: 22-3121
HDI GLOBAL SPECIALTY SE ET AL. SECTION “H”
ORDER AND REASONS
Before the Court are Plaintiff’s Motion for Summary Judgment (Doc. 31)
and Defendants’ Motion for Partial Summary Judgment (Doc. 33). For the
following reasons, the Motions are GRANTED IN PART.
BACKGROUND
Plaintiff ExPert Oil & Gas, LLC owns a hydrocarbon production
processing facility in Lake Salvador, Louisiana. The property was damaged as
a result of Hurricane Ida, a Category 4 storm. Plaintiff is the named insured
on a Marine Cargo and Equipment Insurance Policy issued by Defendants Hdi
Global Specialty Se, American International Group UK Limited, and
Renaissance Re Syndicate 1458, which provided coverage to Plaintiff’s
property at the time of the storm (“the Policy”). Plaintiff alleges that despite
producing a satisfactory proof of claim, proving $4,415,341.01 in damages to
its facility, Defendants have only made two payments totaling $392,038.27.
1
Plaintiff filed this action seeking the remaining proceeds for its property
damage, consequential damages, and bad faith penalties.
Plaintiff and Defendants have each moved for summary judgment on the
issue of coverage. Plaintiff seeks a judgment finding that the Policy provides
blanket insurance coverage up to the Policy limits and entitles it to a damages
award of $3,318,733. Defendants seek a judgment stating that (1) the Policy is
a scheduled policy; (2) damages for the barge moored to the Lake Salvador
platform at the time of the subject loss are specifically excluded; and (3) the
only potential coverage afforded by the Policy for any unscheduled items is
limited to the Policy’s coverage extensions. The Court will consider each issue
in turn.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.”1 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”2
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor.3 “If the moving party meets the initial
1 Sherman v. Hallbauer, 455 F.2d 1236, 1241 (5th Cir. 1972).
2 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
3 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 532 (5th Cir. 1997).
2
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.”4 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.”5 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the non-
movant would bear the burden of proof at trial.”6 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
necessary facts.”7 Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.”8
LAW AND ANALYSIS
A. Coverage
The parties primarily dispute whether the Policy is a blanket policy or a
scheduled policy.
A scheduled policy is one in which “each separately treated item of
property is in effect covered by a separate contract of insurance
and the amount recoverable with respect to a loss affecting such
property is determined independently of the other items of
4 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
6 John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
7 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
8 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
3
property.” 12 Couch on Ins. § 175.90. A blanket policy, on the other
hand, is one in which coverage “attaches to, and covers to its full
amount, every item of property described in it.” Id. § 177.72.9
Plaintiff contends that the Policy is a blanket policy that provides $2,500,000
in coverage for damage caused by a Category 4 or 5 named windstorm. It
contends that although the Policy includes a list and estimated value of
property located at the facility, coverage is not restricted to those specific items
or their value and the list was simply used to calculate the policy premium. On
the other hand, Defendants contend that the Policy provides for a $2,500,000
coverage limit for the scheduled equipment listed in the Policy damaged as a
result of a Category 4 or 5 named windstorms.
“Under Louisiana law, an insurance policy is a contract between the
parties and should be interpreted according to the general rules of
interpretation of contracts prescribed in the Louisiana Civil Code.”10 Further,
“[w]hen the words of a contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of the parties’
9 Rainbow USA, Inc. v. Crum & Forster Specialty Ins. Co., 711 F. Supp. 2d 655, 665
(E.D. La. 2010).
10 Smith v. Am. Family Life Assur. Co. of Columbus, 584 F.3d 212, 215–16 (5th Cir.
2009).
4
intent.”11 “Generally, courts look at the language of an insurance policy as a
whole to determine whether it provides for scheduled or blanket coverage.”12
1. The Policy
In order to consider the plain meaning of the Policy, the Court will
outline the relevant portions here. The relevant Risk Details as outlined on the
MRC Slip provide:
INTEREST: Equipment of any nature whilst in use, whilst in store
or at rest and whilst in transit, being the property of the Insured
(owned, leased/rented in or out) or for which is under the care,
custody and control of the Insured or for which the Insured may be
legally liable.
SUM INSURED: Total Insured Values USD 3,643,084 as per
schedule attached however limited to USD 2,500,000 combined
single limit in regards to Named Windstorm (Categories 4 and 5
only).
DEDUCTIBLE: USD 50,000 any one occurrence but USD 100,000
any one occurrence in respect of Named Windstorm (Categories 4
and 5 only - Categories 1, 2 & 3 not covered hereunder).13
The “Information” section of the MSC Slip provides that “Scheduled equipment
is located on Lake Salvador, 25 miles South East of New Orleans. Water depth
is approximately 10’ and underlying structure is a concrete ‘Waskey’ platform
11 Id.
12 Rainbow USA, Inc., 711 F. Supp. 2d at 665.
13 Doc. 31-2 at 1.
5
of substantial height above the water with 22’ concrete pilings.”14 The
“Conditions” section describes the “Basis of Valuation” as “Agreed Value.”15
The second document comprising the Policy is entitled “ExPert Oil & Gas
LLC 2021-2022 Property Values.”16 It provides a list of ExPert Lake Salvador
Facility Topside Equipment that includes the type, number, and value of
certain equipment located at the facility. The total value of the listed
equipment is $3,643,084.17
The third document in the Policy is the RAP All Risks Equipment Form,
which provides the general terms, conditions, limitations, and exclusions of the
Policy. The pertinent provisions thereof include:
1. COVERAGE
This policy insures against all risks of physical loss of or
physical damage to the property insured from any cause and
similar coverages related thereto, except as may be
hereinafter provided.
2. DEFINITION OF PROPERTY INSURED
Exploration, production and/or development mobile property
of any description including but not limited to workover rigs,
well servicing rigs, support/logistical/service equipment, oil
and gas lease property, tools, pumps, oil or gas gathering
systems production/ disposal/processing facilities, real and
personal property, electronic data processing equipment,
compressor stations, tankage, materials, machinery, in use,
in transit, in storage or otherwise that are owned or operated
by the Insured or in which the Insured has an interest or for
which the Insured has assumed liability, in whole or in part,
also Including equipment of contractors or others (if at the
14 Id. at 4.
15 Id. at 1.
16 Id. at 7.
17 Id.
6
risk of the Insured) including but not limited to
miscellaneous and/or unscheduled property leased or rented
in or out by Insured but at a value not exceeding that
specified by the lease agreement. . . .
16. NEW ACQUISITIONS/ AUTOMATIC COVERAGE
This policy/section, subject to its terms and conditions, is
extended to cover additional property and/or increases in
value which the Insured may acquire subsequent to the
effective date and during the period of this policy. In
consideration of this extension, the Insured specifically
agrees to report such acquisition to the Insurers hereon
within 90 days and pay pro rata additional premium from
date acquired to expiration. This policy shall cease to cover
any equipment so acquired if not reported with the required
period. In no event shall the insurers heron be liable for more
than 25% of the scheduled values of the terms of this
extension. . . .
23. BASIS OF VALUATION
Agreed Value: The cost agreed at inception of the policy
between the Insured and Insurers as the amount to be paid
in the event of a total loss of the item(s) insured (without
regard to the Actual Cash Value or Replacement Cash
Value).18
The RAP All Risks Equipment Form also includes a detailed list of property
and perils not covered by the Policy.
2. Plaintiff’s Argument
Plaintiff argues that the “Interest” section of the MRC slip and Section 2
of the RAP All Risks Equipment Form provide for blanket coverage and that
the Policy does not contain a single provision that states that it is a “scheduled
18 Id. at 8–15.
7
policy” or that coverage is limited to the property that is listed on the list that
was attached to the Policy. It argues therefore that the Policy unambiguously
provides for blanket coverage.
In support, Plaintiff cites to Reliance Insurance Co. v. Orleans Parish
School Board, in which the Fifth Circuit considered whether a fire insurance
policy provided blanket or scheduled coverage.19 There, the Fifth Circuit found
that the policy provided blanket coverage despite containing an attached list
of property and statement of values.20 It noted that the policy contained a
special form entitled “School Form-Blanket,” and all of the experts agreed that
“the first six pages of the policy indicate that the policy here is a blanket
policy.”21 The defendant argued, however, that the list of properties and its
values, in addition to the endorsements, which either deleted or added property
and specified the value of the property, were inconsistent with a blanket
policy.22 The court found otherwise, holding that the frequent addition and
deletion of properties to the policy without a change in premium was consistent
with a blanket policy and the policy’s co-insurance clause, which required the
plaintiff to maintain insurance on each item of property insured of not less
than 90% of the actual cash value.23 It also noted that the value assigned to
each listed property was the full value of each building, not the amounts of
insurance coverage afforded by the fifty percent policy at issue.24 Plaintiff
19 Reliance Insurance Co. v. Orleans Parish School Board, 322 F.2d 803, 804 (5th
Cir. 1963).
20 Id.
21 Id.
22 Id.
23 Id.
24 Id.
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contends that Reliance stands for the proposition that the attachment of a list
of property and its value to a policy does not change the classification of the
policy from a blanket policy to a scheduled policy without a provision that
specifically restricts coverage to the property listed on the list.
3. Defendants’ Argument
On the other hand, Defendants argue that the Policy should be
considered as a whole and that there are numerous references to the attached
schedule in the Policy. Indeed, the word “schedule” appears at least 12 times
in the Policy. Specifically, the sum insured is expressly limited to $3,643,084
“as per schedule attached,” and $3,643,0884 is the sum total of each
individually scheduled piece of equipment in the list attached to the Policy.
Further, the Policy twice states that the basis of valuation is the “agreed
value.”
For their part, Defendants rely on Fair Grounds Corp. v. Travelers
Indem. Co. of Illinois in which the Louisiana Fifth Circuit Court of Appeal held
that “references to ‘statements of values on file with us’” in a policy meant that
it was a scheduled, rather than blanket, policy.25 Similarly, the Louisiana
Fourth Circuit Court of Appeal found in Orleans Parish School Board v.
Lexington Insurance Co. that the policy was scheduled where it contained
language limiting coverage to “the total stated amount for the property
involved, as shown on the latest Statement of Values on file with the
Company.”26 In Beazley Underwriting Ltd. v. DeQuincy Real Estate Holdings
LLC, the Western District Court of Louisiana found that a policy that stated
25 742 So. 2d 1069, 1072 (La. App. 5 Cir. 1999).
26 Orleans Par. Sch. Bd. v. Lexington Ins. Co., 99 So. 3d 723, 728 (La. App. 4 Cir. 2012).
9
“[a]s per Schedule on file with the Underwriter” unambiguously provided for
scheduled coverage.27 Another section of that court similarly found in Forest
Oaks Shreveport Apartments, LLC v. Western World Insurance Co. that
references to a statement of value on file with the company “coupled with a
limit of liability endorsement signal that the insurance contract is a scheduled
policy.”28
4. Analysis
This Court does not find any case cited by either party to be particularly
helpful in considering the language of the Policy at issue. The Policy here is
easily distinguishable from the one considered in Reliance, where it does not
use the word “blanket” and does not contain a co-insurance provision. While
this Court agrees with the proposition that the attachment of a list of property
and its value to a policy does not change the classification of the policy from a
blanket policy to a scheduled policy without a provision that specifically
restricts coverage to the property on the list, it is unclear whether such a
provision exists here. The language at issue here is far more ambiguous than
that considered by the courts in the cases cited by Defendants. Despite
multiple uses of the word “scheduled,” the Policy here does not reference a
“statement of value on file with the company” or contain a provision expressly
limiting liability thereto.
Accordingly, this Court finds the policy at issue to be ambiguous as to
whether it provides for blanket or scheduled coverage. Under Louisiana law,
27 Beazley Underwriting Ltd. v. DeQuincy Real Est. Holdings LLC, No. 2:21-CV-
01884, 2021 WL 4134431, at *2 (W.D. La. Sept. 10, 2021).
28 Forest Oaks Shreveport Apartments, LLC v. W. World Ins. Co., No. CV 20-286, 2021
WL 2534112, at *4 (W.D. La. June 21, 2021).
10
“an insurance contract is ambiguous if it is susceptible to two or more
reasonable interpretations or if the intent of the parties cannot be ascertained
from the language employed.”29 Here, “the interpretation of the policy
language urged by plaintiff can only be adopted by reading out” all of the many
uses of the term “scheduled” and the provision stating that the basis of
valuation is the “agreed value.”30 On the other hand, Defendant’s
interpretation requires the Court to ignore the inclusive description of the
property insured by the Policy and would render meaningless the Policy’s
detailed list of items that are not covered. “One provision of the contract should
not be construed separately at the expense of disregarding other provisions.”31
“Where a contract provision is ambiguous, it should be interpreted in
light of the custom and usages of the industry, as well as the conduct of the
parties and any prior agreements between them.”32 “[O]nce the Court has
determined that the contract is ambiguous, interpreting the agreement from
the words of the contract and extrinsic evidence is a task for the trier of fact.”33
“[I]f, after applying the general rules of contractual interpretation to an
insurance contract, an ambiguity remains, the ambiguous contractual
provision is generally construed against the insurer and in favor of coverage.”34
In opposition to summary judgment on the issue of coverage, Defendants
offer extrinsic evidence involving coverage under Plaintiff’s other insurance
29 Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948, 955 (5th Cir.
2009).
30 Sims v. Mulhearn Funeral Home, Inc., 2007-0054, 956 So. 2d 583, 589 (La. 2007).
31 Id.
32 Rainbow USA, Inc, 711 F. Supp. 2d at 667.
33 Id.
34 Sims, 956 So. 2d at 589–90.
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policies. Defendants contend that Plaintiff has a gap in coverage that it is
attempting to fill by construing the Policy at issue to provide blanket coverage.
They also argue that Plaintiff has failed to comply with its discovery
obligations regarding disclosures of claims made or amounts paid under other
policies. For its part, Plaintiff submits evidence that its representatives
believed that it was purchasing a policy that provided blanket coverage. It
alleges that it did not receive a copy of the Policy and was not aware that the
“Property Values spreadsheet that was requested by the insurance broker was
referenced by or attached to the Policy” until after the loss at issue here.35
Defendants dispute this fact. Accordingly, this Court finds that there are
material issues of fact regarding the extrinsic evidence necessary for the trier
of fact to interpret the parties’ intent and determine whether the Policy
provides scheduled or blanket coverage.
B. Coverage Extensions
Plaintiff also argues that the Policy provides additional coverage beyond
the $2,500,000 through coverage extensions. Plaintiff contends that the Policy
provides for an additional $300,000 in coverage for (1) Miscellaneous and/or
Unscheduled Property; (2) Extra and Expediting Expenses; and (3) Pollutant
Clean Up and Removal. It also contends that it is entitled to additional
coverage in the amount of $910,771 for the removal of wreckage and debris.
While Defendants do not dispute that the Policy provides for certain
additional coverage, they argue that Plaintiff has not presented any evidence
of its entitlement to those amounts. This Court agrees that Plaintiff’s Motion
35 Doc. 34.
12
does not provide proof of entitlement to these amounts, and therefore summary
judgment on these coverage categories is inappropriate.
As to the Policy’s coverage for removal of wreckage and debris, the Policy
provides that coverage is extended to “all costs and expenses of or incidental to
the raising, removal or destruction of the wreckage and/or debris of the
property insured hereunder.”36 Accordingly, a decision on what property is
insured by the Policy is required to determine the Policy’s coverage for removal
of wreckage and debris. Accordingly, summary judgment likewise cannot be
entered on this issue.
C. Deductible
Next, Plaintiff seeks a judgment that no deductible is required for its
claim. The Policy unequivocally states that the deductible for a Category 4 or
5 wind storm is $100,000. However, Plaintiff points to another provision of the
Policy that states that “[t]he deductible/retention shall not apply in the event
of actual or constructive total loss of any item forming part of the Schedule of
Insured’s Assets.”37 Plaintiff argues that because items listed in the property
list attached to the Policy, such as the drain sump tank, were total losses, then
no deductible applies. Defendants rebut that such an interpretation leads to
absurd results wherein the total loss of a low-value item would obviate the
entire deductible. Even so, Defendants do not offer a contrary interpretation of
the provision. By its plain terms, the Policy provides that no deductible applies
if any item in the schedule of assets is a total loss. Accordingly, the Court
agrees with Plaintiff that according to the clear terms of the Policy, no
36 Doc. 31-2 at 13.
37 Id. at 12.
13
deductible is due on its claim if an item from the schedule of assets is a total
loss.
D. Watercraft Exclusion
Finally, Defendants asks the Court to find that the Policy does not
provide coverage for a barge moored to the Lake Salvador platform. It is
undisputed that the barge is not on the list of property attached to the Policy.
That said, Defendants argue that the barge is not covered for an additional
reason: the Policy expressly excludes coverage for watercraft. Indeed, the
Policy states that it excludes coverage for “watercraft, unless forming part of
scheduled equipment as advised to and agreed by Slip Leader at attachment
of risk.”38 Plaintiff rebuts that the barge at issue is no longer considered a
“watercraft” because at the time of the loss it “was permanently affixed
adjacent to the Platform, had been permanently removed from navigation, and
was no longer capable of operating as a vessel.”39 In support, Plaintiff discusses
case law regarding when a barge that is used as a work platform is no longer
considered a “vessel” under maritime law. Defendants point out that these
cases are not dispositive in considering whether the barge here is a
“watercraft” under the terms of the Policy. The Policy, however, does not define
the term “watercraft.” Under Louisiana law, the words of a contract should be
given “their common and usual significance.”40
The Supreme Court’s discussion in Lozman v. City of Riviera Beach,
Florida is helpful in considering the meaning of the term “watercraft.”41 There,
38 Id. at 7.
39 Doc. 34.
40 Gambel v. Tullis, 307 F. Supp. 3d 570, 575 (E.D. La. 2018).
41 Lozman v. City of Riviera Beach, Florida, 568 U.S. 115, 123 (2013).
14
the Court considered whether a floating home was a “vessel” under 1 U.S.C. §
3, which states that “[t]he word ‘vessel’ includes every description of watercraft
or other artificial contrivance used, or capable of being used, as a means of
transportation on water.” In so discussing, the Supreme Court explained that
the term “craft” means a vessel for the purpose of “water carriage and
transport.”42 And “[t]he addition of the word ‘water’ to ‘craft,’ yielding the term
‘watercraft,’ emphasizes the point.”43 Similarly, the Oxford English Dictionary
defines “watercraft” as “[a] boat or other vessel designed for use on water.”44
Accordingly, “it cannot be reasonably questioned that a watercraft is a craft for
use in or on water.”45
Here, Plaintiff has presented the following undisputed facts regarding
the barge at issue.
[Plaintiff] ExPert purchased a 10,000-barrel oil storage
barge and permanently affixed the barge adjacent to the Platform.
This oil storage barge was installed adjacent to the Platform to
serve as a permanent storage tank. Once the oil storage barge was
brought on-site, it was permanently moored on location by driving
pilings on all four sides of the barge, effectively pinning it on
location as it had permanent pilings on every side prohibiting its
movement. The oil storage barge was effectively placed inside an
immovable cage where it was able to float up and down with the
tide but was prohibited from significant lateral movement,
navigation, or transportation. A permanent walkway was then
installed that ran from the Platform to the oil storage barge.
Permanent load lines were also installed that ran from the
Platform to the oil storage barge. These load lines transferred
42 Id.
43 Id.
44 Watercraft, OXFORD ENGLISH DICTIONARY (July 2023).
45 First Specialty Ins. Corp. v. Am. Home Assur. Co., 558 F.3d 97, 100 (1st Cir.
2009).
15
processed hydrocarbons from the Platform to the oil storage barge
for storage.
The ExPert Platform processes the hydrocarbons as it did
prior to the loss of the pipeline and then transfers the product into
the oil storage barge. Once the oil storage barge becomes full, a tug
and oil transportation barge operated by either Plains All
American or Settoon Towing is sent to the oil storage barge and
the stored product is pumped out of the oil storage barge and into
the oil transportation barge and taken to shore. . . .
The oil storage barge remained permanently affixed
adjacent to the Platform from April 2019 until Hurricane Ida.
During Hurricane Ida, the wind and storm surge caused the
pilings to be torn from the seabed, the barge broke free from the
permanent enclosure, the permanently affixed load lines were
broken, and the barge was carried miles away by the storm.46
In First Specialty Ins. Corp. v. American Home Assurance Co., the First
Circuit Court of Appeals considered whether a barge that was being used as a
floating work platform for marine construction projects was a “watercraft”
pursuant to an insurance policy’s watercraft exclusion.47 The barge at issue
traveled through water to arrive where it was needed, but had no means of
propulsion or steering.48 The court held that under the “plain and commonly
accepted” definition of “watercraft” the work barge at issue, “which is a vessel
for use in the water, and which moved across water to reach its destination,
was a watercraft.”49
Here too, the barge at issue meets the “plain and commonly accepted”
definition of “watercraft.” Although it was affixed to the side of the platform
46 Id.
47 Id. at 99.
48 Id.
49 Id. at 100.
16
and not being used for transportation, it was clearly still capable of such as
evidenced by its floating several miles away during Hurricane Ida. Indeed,
even while affixed to the platform, the barge was floating in the water. While
“a work-barge is not used in the same way as most other watercraft, .. . it is
nonetheless clearly within the meaning of ‘watercraft’ contemplated by the
insurance policy.”®° Accordingly, coverage for the barge is excluded by the
Policy’s watercraft exclusion. Defendants are entitled to a judgment stating
that damages for the barge moored to the Lake Salvador platform at the time
of the loss are specifically excluded.
CONCLUSION
For the foregoing reasons, the Motions are GRANTED IN PART.
Plaintiff is entitled to a finding that no deductible is required under the Policy;
and Defendants are entitled to a finding that damages for the barge moored to
the Lake Salvador platform at the time of the loss are specifically excluded.
Summary judgment on all other issues is denied.
New Orleans, Louisiana this 17th day of October, 2024.
g TRICHE Lh 3
UNITED STATES DISTRICT JUDGE
50 Pennsylvania Nat. Mut. Cas. Ins. Co. v. S. State, Inc., No. CIV. 07-2989 (RMB), 2008
WL 5116207, at *7 (D.N.J. Dec. 3, 2008).