Opinion

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

UNITED SPECIALTY INSURANCE CIVIL ACTION

COMPANY, ET AL.

VERSUS NO. 25-1501

TAHOE INVESTMENTS, LLC DBA SECTION “R” (3)

MR. BINKYS #3, ET AL.

ORDER AND REASONS

Plaintiffs United Specialty Insurance Company (“United”) and Century

Surety Company (“Century”) move for summary judgment in this

declaratory judgment action.1 Defendants Tahoe Investments, LLC DBA Mr.

Binkys #3 (“Tahoe”)2 and Jenna Combel3 oppose the motion. For the

following reasons, the Court grants the motion for summary judgment.

I. BACKGROUND

A. The Underlying Personal Injury Litigation

On September 18, 2024, Jenna Combel filed suit in state court for

bodily injuries against Tahoe and twenty other defendants she alleges are

1 R. Doc. 18. All R. Doc. citations are in the record for 25-1501 unless

otherwise noted.

2 R. Doc. 28.

3 R. Doc. 27.

distributors or manufacturers of nitrous oxide.4 The state court case was

removed to this Court on June 18, 2025. Combel alleges that nitrous oxide

is often “sold and inhaled as a drug by users to obtain a high.”5 When used

in that manner, Combel alleges that nitrous oxide is “commonly referred to

as whippets, poppers, or laughing gas.”6

Combel alleges that she began inhaling nitrous oxide—including

nitrous oxide she purchased from Tahoe—in 2019 and continued to do so

until 2023.7 Combel alleges that because of her inhalation of nitrous oxide,

she has suffered injuries, including paralysis and nerve damage.8 She sued

alleged distributors and manufacturers of nitrous oxide for her injuries.

B. The Declaratory Judgment Litigation

After receiving notice of the personal-injury litigation, United and

Century filed a reservation of rights letter to Tahoe, agreeing to provide a

defense subject to the reservation of rights to deny coverage under the

psychotropic substances exclusion in their policies.9 United and Century

4 R. Doc. 1, Combel v. Great International Supply Chain Management

Company, 25-1252 (E.D. La. Filed June 18, 2025).

5 R. Doc. 1-1 at 1, Combel v. Great International Supply Chain

Management Company, 25-1252 (E.D. La. Filed June 18, 2025).

6 Id.

7 Id. at 12.

8 Id.

9 R. Docs. 21-1 at 5; 28 at 2.

then filed this declaratory judgment action seeking a determination of their

coverage obligations, including a declaration that they owe no duty to defend

or indemnify Tahoe in the underlying action.10

The undisputed facts are as follows. United provided insurance

coverage to Tahoe from March 31, 2018 to March 31, 2020.11 Century

provided insurance coverage to Tahoe from March 31, 2020 to March 31,

2024.12 The policies, though not identical, all state that coverage includes

“those sums the insured becomes legally obligated to pay as damages because

of ‘bodily injury’ or ‘property damage’ to which the insurance applies.”13 The

policies all state that there is “no duty to defend” against a suit seeking

damages “to which the insurance does not apply.”14

The policies contain multiple exclusions, one of which is at issue here.

The insurance “does not apply to . . . ‘bodily injury’” resulting from

“inhalation of . . . psychotropic substances.”15 The policies define a

“psychotropic substance” as a “legal or illegal drug or substance that: (1)

[a]ffects the mind, mood or other mental process; or (2) [i]mpacts the brain

10 R. Doc. 21-1, at 2-3; R. Doc. 1.

11 R. Doc. 21-1, at 3-4.

12 Id. at 4.

13 Id.

14 Id.

15 R. Doc. 21-1, at 8.

or central nervous system; or (3) [i]s hallucinogenic.”16 The policies provide

that “[p]sychotropic substances include . . . whippets, laughing gas [and]

poppers . . . .”17

United and Century now move for summary judgment, arguing that

the insurance policies unambiguously preclude coverage for the injuries

Combel has alleged, and thus United and Century have no duty to defend or

indemnify.18 The Court considers the motion below.

II. LEGAL STANDARD

Summary judgment is warranted when “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.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23 (1986). The Court considers the evidence in

the record without making credibility determinations or weighing the

evidence. Delta & Pine Land Co. v. Nationwide Agribusiness Ins., 530 F.3d

395, 398-99 (5th Cir. 2008). All reasonable inferences are drawn in favor of

the nonmoving party. Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216

(5th Cir. 1985). If the record could not lead a rational trier of fact to find for

16 Id.

17 Id. at 5.

18 R. Doc. 23-1, at 6.

the nonmoving party, there is no genuine dispute of material fact. EEOC v.

Simbaki, Ltd., 767 F.3d 475, 481 (5th Cir. 2014).

If the dispositive issue is one on which the moving party will bear the

burden of proof at trial, the moving party “must come forward with evidence

which would entitle it to a directed verdict if the evidence went

uncontroverted at trial.” Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257,

1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by

either countering with evidence sufficient to demonstrate the existence of a

genuine dispute of material fact, or “showing that the moving party's

evidence is so sheer that it may not persuade the reasonable fact-finder to

return a verdict in favor of the moving party.” Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear

the burden of proof at trial, the moving party may satisfy its burden by

pointing out that the material in the record capable of being made admissible

is insufficient with respect to an essential element of the nonmoving party’s

claim. Fed. R. Civ. P. 56(c); see Celotex, 477 U.S. at 325. The burden then

shifts to the nonmoving party, who must, by submitting or referring to

material capable of being made admissible, set out specific facts showing that

a genuine dispute exists. See Celotex, 477 U.S. at 324. The nonmovant may

not rest upon the pleadings but must identify specific facts that establish a

genuine issue for resolution. See, e.g., id.

III. DISCUSSION

The parties agree that Louisiana law applies.19 Under Louisiana law,

an insurer’s duty to defend an insured is “a separate and distinct inquiry from

that of the insurer's duty to indemnify a covered claim after judgment against

the insured in the underlying liability case.” Martco Ltd. P'ship v. Wellons,

Inc., 588 F.3d 864, 872 (5th Cir. 2009) (citing Elliott v. Cont'l Cas. Co., 949

So. 2d 1247, 1250 (La. 2007)). The Court will address each duty separately.

A. Duty to Defend

An insurer’s duty to defend suits against its insured is broader than its

obligation to indemnify for damage claims. Hardy v. Hartford Ins. Co., 236

F.3d 287, 290 (5th Cir. 2001); Suire v. Lafayette City–Parish Consol. Gov't,

907 So. 2d 37, 52 (La. 2005). Under Louisiana law, courts apply the “Eight

Corners” rule to determine whether an insurer has a duty to defend. Lamar

Advert. v. Cont'l Cas. Co., 396 F.3d 654, 660 (5th Cir. 2005). The rule

requires that, if, after comparing the terms of the policy to the allegations of

the complaint, the court determines “‘there are any facts in the complaint

19 R. Docs. 21-1 at 6, 27 at 2, 28 at 6.

which, if taken as true, support a claim for which coverage is not

unambiguously excluded,’ the insurer must defend the insured.” Id.

While the court must accept as true the facts alleged in the complaint

for purposes of applying the Eight Corners rule, the court need not credit

“statements or conclusions . . . that are unsupported by factual allegations.”

Coleman v. Sch. Bd. of Richland Parish, 418 F.3d 511, 523 (5th Cir. 2005)

(quoting Jensen v. Snellings, 841 F.2d 600, 612 (5th Cir. 1988)). “[O]nce a

complaint states one claim within the policy’s coverage, the insurer has a

duty to accept defense of the entire lawsuit, even though other claims in the

complaint fall outside of the policy's coverage.” Coleman, 418 F.3d at 523

(quoting Montgomery Elevator Co. v. Bldg. Eng'g Servs. Co., 730 F.2d 377,

382 (5th Cir. 1984)).

Here, the relevant pleading for determining Century’s and United’s

duty to defend is Combel’s complaint. Ordinarily, the Court would undertake

this analysis in two steps: first, the Court would determine whether the

“complaint allege[d] a set of facts that would fall within coverage;” second,

the Court would determine whether Century and United carried their burden

of proving any policy exclusion applies. See Martco, 588 F.3d at 874. Here,

however, the Court finds that Century and United easily meet their burden

of proving that coverage under the policies is foreclosed by a policy exclusion.

This single issue is dispositive of all other aspects of Century and United’s

duty to provide a defense. See Wagner v. Tammany Holding Co. LLC, 135

So. 3d 77, 86 (La. App. 4 Cir. 2012) (“When an exclusion to a policy is

applicable, the insurer owes no duty to defend or indemnify the insured.”).

Thus, the Court assumes for the purposes of this order that the claims against

Tahoe alleged facts that would fall within coverage and proceeds directly to

the issue of whether an exclusion applies. See, e.g., Chet Morrison

Contracts, LLC v. One Beacon American Ins. Co., 132 F. Supp. 3d 825, 830-

31 (E.D. La. 2015).

The policies’ coverage includes “those sums the insured becomes

legally obligated to pay as damages because of ‘bodily injury’ or ‘property

damage’ to which the insurance applies.”20 The policies state that there is

“no duty to defend” against a suit seeking damages “to which the insurance

does not apply.”21

Certain claims are excluded from coverage under the policies. The

psychotropic substances exclusion provides that the insurance “does not

apply to . . . ‘Bodily injury,’ ‘property damage’ or ‘personal and advertising

injury’ arising out of, or alleged to arise out of the inhalation of,

20 R. Doc. 21-1, at 3-4.

21 Id.

ingestion of, contact with, exposure to, existence of, or presence of

psychotropic substances.”22 The policies define a “psychotropic

substance” as “any legal or illegal drug or substance that: (1) [a]ffects the

mind, mood or other mental process; or (2) [i]mpacts the brain or central

nervous system; or (3) [i]s hallucinogenic.”23 The policies provide that

“[p]sychotropic substances include . . . whippets, laughing gas [and]

poppers . . . .”24

Here, the insurers rely on the psychotropic substances exclusion to

argue that there is no duty to defend. The insurer “bears the burden of

proving the applicability of an exclusionary clause within a policy.” Doerr v.

Mobil Oil Corp., 774 So. 2d 119, 124 (La. 2000); see also Farrell Lines, Inc.

v. Insurance Co. of North America, 789 F.2d 300, 306 (5th Cir. 1986). “A

duty to defend will exist unless the allegations are such that every claim

pleaded in the complaint (and otherwise falling within the insuring claim)

unambiguously falls within an exclusion.” Martco, 588 F.3d at 875 (citing

Alert Centre, Inc. v. Alarm Protection Servs., Inc., 967 F.2d 161, 163 (5th Cir.

1992)).

22 R. Doc. 21-5 at 46 (emphasis added).

23 Id.

24 Id. at 5.

In interpreting the statutory “owned vehicle” exclusion, which excludes

insurance coverage for an insured suffering bodily injury while occupying a

motor vehicle owned by the insured that is not a vehicle insured under the

policy, the Louisiana Supreme Court applied the following method of

analysis:

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. The judiciary's

role in interpreting insurance contracts is to ascertain the

common intent of the parties to the contract.

Words and phrases used in an insurance policy are to be

construed using their plain, ordinary and generally prevailing

meaning, unless the words have acquired a technical meaning.

An insurance contract, however, 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. The rules of construction do not authorize a

perversion of the words or the 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.

Ambiguous policy provisions are generally construed

against the insurer and in favor of coverage. Under this rule of

strict construction, equivocal provisions seeking to narrow an

insurer's obligation are strictly construed against the insurer.

The strict construction principle applies only if the ambiguous

policy provision is susceptible to two or more reasonable

interpretations; for the rule of strict construction to apply, the

insurance policy must be not only susceptible to two or more

interpretations, but each of the alternative interpretations must

be reasonable.

If the policy wording at issue is clear and unambiguously

expresses the parties' intent, the insurance contract must be

enforced as written. Courts lack the authority to alter the terms

of insurance contracts under the guise of contractual

interpretation when the policy's provisions are couched in

unambiguous terms. The determination of whether a contract is

clear or ambiguous is a question of law.

Mayo v. State Farm Mut. Auto. Ins. Co., 869 So. 2d 96, 99-100 (La.

2004) (internal citations omitted) (citing, inter alia, Cadwallader v. Allstate

Ins. Co., 848 So. 2d 577, 580 (La. 2003); Carbon v. Allstate Ins. Co., 719 So.

2d 437, 439 (La. 1998); La. Ins. Guar. Ass’n v. Interstate Fire & Cas. Co., 630

So. 2d 759, 763 (1994); Carrier v. Reliance Ins. Co., 759 So. 37, 43-44 (La.

2000)); see also William Shelby McKenzie and H. Alston Johnson, III, 15

Louisiana Civil Law Treatise: Insurance Law and Practice, § 1:4 (4th ed.).

Here, the Court finds that Combel’s alleged use of and injuries from

nitrous oxide inhalation are unambiguously within the policies’ definitions

of “psychotropic substances.” The policies define a “psychotropic substance”

as “any legal or illegal drug or substance that: (1) affects the mind, mood or

other mental process; or (2) impacts the brain or central nervous

system . . . .”25 Combel describes nitrous oxide inhalation as causing

“euphoric, dissociated, and out-of-body experiences,”26 which clearly “affect

the mind”27 within the terms of the exclusion. Combel alleges that inhalation

25 R. Doc. 21-5 at 46 (cleaned up).

26 R. Doc. 1-1 at 6.

27 R. Doc. 21-5 at 46 (cleaned up).

of high concentrations of nitrous oxide, which she allegedly inhaled “almost

continu[ally],”28 can cause “neurological damage” and “serious and

permanent . . . neurological injuries.”29 These alleged injuries clearly

“impact the brain or central nervous system” within the language of the

policy.30 Combel further alleges that when nitrous oxide is inhaled to

product a high, it is commonly referred to as “whippets, poppers, or laughing

gas.”31 “Whippets, laughing gas, and poppers”32 are specifically excluded by

the policy language. Exclusions are construed against the insurer only when

they are ambiguous. Mayo, 869 So. 2d at 99-100. Here, the policy could not

be clearer that injury from the inhalation of nitrous oxide products is

excluded.

The Court lacks “the authority to alter the terms of insurance contracts

under the guise of contractual interpretation when the policy’s provisions are

couched in unambiguous terms.” Cadwallader, 848 So. 2d at 580. To

interpret the policies as not excluding bodily injury arising from the

inhalation of nitrous oxide would impermissibly alter the terms of the

policies at issue here. Based on the allegations, there is no genuine dispute

28 R. Doc. 1-1 at 15.

29 R. Doc. 1-1 at 6, 7.

30 R. Doc. 21-5 at 46 (cleaned up).

31 R. Doc. 1-1 at 4.

32 R. Doc. 21-5 at 46 (cleaned up).

that the use of nitrous oxide at issue in the personal injury suit is a

“psychotropic substance” as defined in the policies. The Court finds that

Combel’s claims against Tahoe are excluded from coverage as a matter of law.

Combel nevertheless argues that the provisions are in fact ambiguous.

Combel argues that the psychotropic substances exclusion is subject to two

interpretations: (1) substances that have only one use or purpose, which is to

induce an altered mental state, or (2) substances in that category and

substances that can be misused to induce an altered mental state but also

have other safe or legitimate uses.33

The Court finds that Combel’s proffered interpretation is an

“unreasonable” and “strained” reading of the policies. Carrier, 759 So. 2d at

43. First, the language of the exclusion expressly includes “any legal or illegal

drug or substance” that, when inhaled or ingested, alters one’s mental

state.34 The use of the word “any” here sweeps broader than Combel asserts;

the language is not susceptible to a reading that would cover only substances

that can only be a hallucinogen. The policy says nothing of the sort.

Further, Combel’s proffered interpretation is unreasonable because

the policy itself specifically lists “whippets, laughing gas [and] poppers . . .”35

33 R. Doc. 27 at 2.

34 R. Doc. 21-5 at 46.

35 Id. (cleaned up).

as examples of psychotropic substances. The policy specifically excludes

coverage of nitrous oxide products when in the form of “whippets, laughing

gas [and] poppers . . . .”36 This is true even though nitrous oxide does have

legitimate, nonharmful uses as a whipped cream dispenser accelerant. It

thus cannot be that the exclusion applies only to substances that exclusively

have a mind-altering purpose.

Because Combel does not offer a reasonable interpretation, the policy

language is not ambiguous, and the exclusion applies. Mayo, 869 So. 2d at

99-100 (“The strict construction principle applies only if the ambiguous

policy provision is susceptible to two or more reasonable

interpretations . . . .”) (first emphasis added). The Court finds that there is

no genuine dispute of material fact as to whether the claims against Tahoe

fall within this exclusion and that Century and United are entitled to

judgment as a matter of law.

Combel and Tahoe make two arguments against this conclusion.

Neither persuades. First, Combel and Tahoe assert that summary judgment

is premature because discovery has not been completed. Rule 56(d) provides

that if “the nonmovant shows by affidavit or declaration that, for specified

reasons, it cannot present facts essential to justify its opposition,” the court

36 Id.

may defer considering the motion or allow time for discovery. Fed. R. Civ. P.

56(d).

Combel and Tahoe assert in their motions that discovery is required to

evaluate the psychotropic substances exclusions. Tahoe asserts that it is

entitled to discovery concerning (1) the specific nitrous oxide products

Combel allegedly purchased or used and (2) whether those products qualify

as “psychotropic substances” under the policy definitions. Combel argues

that she needs discovery (1) to determine whether the insurers knew about

the products Tahoe sold when the policies were issued and (2) whether

Tahoe’s premium included a “significant discount for the gap in coverage

created by the psychotropic substances exclusions.”37

The proposed discovery would not produce anything relevant to the

contract interpretation issue here. This is a contract interpretation question

that is ripe for decision on summary judgment. Bonin v. Westport Ins. Co.,

930 So. 2d 906, 910 (La. 2006). Combel is suing for injuries she allegedly

received inhaling nitrous oxide products. As established above, such injuries

are clearly, unambiguously excluded by the psychotropic substances

exclusion. The Court finds that additional discovery is not needed to address

this straightforward contract interpretation question, and there are no

37 R. Doc. 27 at 5.

outstanding facts “essential to justify” the opposition of Combel or Tahoe.

Fed. R. Civ. P. 56(d).

Second, Combel argues that the Court must deny summary judgment

because enforcing the exclusions as written renders coverage illusory.

Combel argues that because Tahoe runs a “gas station, head shop, or tobacco

store,” enforcing the psychotropic substances exclusion would result in

Tahoe having no coverage for injuries from “most of its products.”38

This purely conclusory argument is facially without merit. The

argument is unsupported by any allegations in the complaint that would

suggest that gas stations, head shops, and tobacco stores mostly purvey

psychotropic substances. Such an understanding would require concluding

that “most of” a gas station’s products are not gas, and “most of” a tobacco

store’s products are not tobacco.

The Court rejects this wholly conclusory argument as unsupported by

any allegations in the complaint that the products sold at “gas stations, head

shops, and tobacco stores” are mainly psychotropic substances.39 The

complaint does not support a plausible argument that the psychotropic

38 R. Doc. 27 at 4.

39 Although the Court’s decision is based on the complaint and the policy

in accordance with the Eight Corners rule, the Court notes that Tahoe

submitted an affidavit that says is it not even a head shop, gas station

store, or a tobacco store, but an adult novelty retail store.

substances exclusion would “totally exclude” all coverage under Tahoe’s

comprehensive liability insurance policy. Compare Orleans Parish Sch. Bd.

v. Scheyd, Inc., 673 So. 2d 274, 279 (La. App. 4 Cir. April 24, 1996) (“It would

be illogical, and perhaps against public policy, to provide a specific coverage,

collect a premium, then by way of endorsement, totally exclude that

coverage.”).

This is a clear legal question of contract interpretation. There is no

genuine dispute of material fact. Century and United are thus entitled to

summary judgment on the duty to defend claim as a matter of law.

B. Duty to Indemnify

As discussed above, an insurer's duty to defend suits is broader than its

obligation to indemnify for damage claims. Suire, 907 So. 2d at 52. Thus,

while the duty to defend applies “whenever the pleadings against the insured

disclose even a possibility of liability,” Sibley v. Deer Valley Homebuilders,

Inc., 32 So. 3d 1034, 1039 (La. App. 2 Cir. 2010), the duty to indemnify arises

only when the insured is found liable for a loss that is covered by the policy.

Chi. Prop. Interests, LLC v. Broussard, 8 So. 3d 42, 48 (La. App. 5 Cir. 2009).

An insurer owing no duty to defend owes no duty to indemnify. See

Am. Nat'l Gen. Ins. Co. v. Ryan, 274 F.3d 319, 324 (5th Cir. 2001); see also

Wagner v. Tammany Holding Co. LLC, 135 So. 3d 77, 86 (La. App. 4 Cir.

2012) (“When an exclusion to a policy is applicable, the insurer owes no duty

to defend or indemnify the insured.”). The “duty to indemnify may be

resolved at summary judgment . . . when ‘the insurer has no duty to defend

and the same reasons that negate the duty to defend likewise negate any

possibility the insurer will ever have a duty to indemnify.’” VRV Dev. L.P. v.

Mid–Continent Cas. Co., 630 F.3d 451, 459 (5th Cir. 2011) (citations

omitted). Here, the Court finds that Century and United had no duty to

defend Tahoe because there was no possibility of liability under the policies.

This finding is conclusive on the indemnification issue as well. Because the

policies excluded claims for injury arising out of the inhalation of

psychotropic substances, Century and United have no duty to make payment

for possible future liabilities Tahoe incurs in the underlying personal injury

litigation.

Thus, the Court grants Century and United’s motion for summary

judgment on indemnification. The Court finds that the policies’ psychotropic

substances exclusions exclude coverage for the claims against Tahoe in the

underlying suit and that Century and United therefore have no duty to

defend or indemnify Tahoe in the underlying suit.

IV. CONCLUSION

The Court GRANTS the motion for summary judgment. The Court

finds that Century and United have no duty to defend or indemnify Tahoe in

the underlying suit.

New Orleans, Louisiana, this 19th day of March, 2026.

Lerak Varner

SARAH 8S. VANCE

UNITED STATES DISTRICT JUDGE

19