Aggreko, L.L.C. v. Chartis Specialty Ins. Co. ( 2019 )


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  •      Case: 18-40325      Document: 00515194097   Page: 1   Date Filed: 11/11/2019
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 18-40325                  United States Court of Appeals
    Fifth Circuit
    FILED
    AGGREKO, L.L.C.,                                                November 11, 2019
    Lyle W. Cayce
    Plaintiff                                                 Clerk
    v.
    CHARTIS SPECIALTY INSURANCE COMPANY, formerly known as
    AIG Specialty Insurance Company,
    Defendant
    ************************************************************************
    INDIAN HARBOR INSURANCE COMPANY,
    Plaintiff - Appellant Cross-Appellee
    v.
    THE GRAY INSURANCE COMPANY,
    Defendant - Appellee Cross-Appellant
    Appeals from the United States District Court
    for the Eastern District of Texas
    Before JOLLY, COSTA, and ENGELHARDT, Circuit Judges.
    KURT D. ENGELHARDT, Circuit Judge.
    Case: 18-40325    Document: 00515194097     Page: 2   Date Filed: 11/11/2019
    No. 18-40325
    Indian Harbor Insurance Company (“Indian Harbor”), the plaintiff in one
    of two consolidated lawsuits pending below, appeals the district court’s grant
    of summary judgment in favor of defendant The Gray Insurance Company
    (“Gray”). Gray, in turn, “conditionally” appeals the district court’s decision to
    apply Texas law, instead of Louisiana law, to the issues before it, asking us to
    only consider its appeal if we conclude that we are unable to affirm the
    summary judgment under Texas law. For the reasons set forth below, we
    AFFIRM.
    I.
    The consolidated lawsuits in this matter arise out of fatal injuries
    suffered by James Andrew Brenek, II (“Brenek”) when he was electrocuted by
    an electrically-energized generator housing cabinet on a rig in Jefferson
    County, Texas. At the time of his accident, Brenek was employed by and
    performing work for Guichard Operating Company, L.L.C. (“Guichard”), a
    drilling subcontractor located in Crowley, Louisiana. Guichard had leased the
    generator involved in the incident from Aggreko, L.L.C. (“Aggreko”), a
    Delaware company doing business in both Louisiana and Texas. The rental
    agreement between Guichard and Aggreko required Guichard to maintain a
    commercial liability insurance policy during the lease period that would cover
    damages arising out of use of the leased equipment and recognize Aggreko as
    an additional insured.
    On the date of Brenek’s accident—July 27, 2014—Guichard had in place
    a primary commercial liability policy issued by Gray (“the Gray Policy”) and
    an excess commercial liability policy issued by Chartis Specialty Insurance
    Company, also known as “ASIC” (“ASIC”). Aggreko had in place a primary
    insurance policy issued by Indian Harbor. Relevant to the issues before us,
    Gray is a Louisiana corporation that has its principal place of business in
    Metairie, Louisiana and regularly conducts business in Texas. Indian Harbor
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    is a Delaware corporation with its principal place of business in Stamford,
    Connecticut.
    Following their son’s death, Brenek’s parents (“the Breneks”) filed a tort
    suit in Texas state court against Aggreko and Rutherford Oil Corporation
    (“Rutherford”), the owner of the rig on which Brenek’s accident occurred. 1
    Thereafter, Gray agreed, in response to demands by Aggreko and Rutherford,
    to indemnify and defend them as additional insureds under the Gray policy. 2
    ASIC, on the other hand, advised Aggreko, upon learning of the Breneks’
    lawsuit, that Aggreko did not qualify as an additional insured under the policy
    it issued to Guichard. In response, Aggreko filed suit against ASIC in Texas
    state court, seeking declaratory relief with respect to ASIC’s alleged
    obligations to Aggreko under its policy. ASIC then removed the suit to the
    United States District Court for the Eastern District of Texas.
    Despite Aggreko’s lawsuit against ASIC, Gray maintained its defense of
    Aggreko with respect to the lawsuit filed by the Breneks. The Gray policy had
    a liability limit of $1,000,000, subject to a $50,000 self-insured retention. On
    February 8, 2017, Gray and the Breneks reached two separate agreements
    regarding the Breneks’ claims against Rutherford and Aggreko. With respect
    to Rutherford, Gray agreed to pay the Breneks $50,000 in exchange for a full
    and complete release of any and all claims that the Breneks had against
    Rutherford arising out of their son’s accident and death. With respect to
    Aggreko, Gray agreed to pay the Breneks $950,000 on behalf of Aggreko in
    exchange for the Breneks’ agreement to execute any subsequent judgment
    obtained by the Breneks as to Aggreko only against available insurance. On
    the same date, Gray issued to the Breneks and their attorneys two checks—
    1  See James Andrew Brenek, et al. v. Aggreko, L.L.C. and Rutherford Oil Co., No. E-
    196603, 172nd District Court of Jefferson County, Texas.
    2 Rutherford had also contracted with Guichard and was considered an additional
    insured under the liability policy issued to Guichard by Gray.
    3
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    one in the amount of $50,000, and one in the amount of $950,000. On March
    3, 2017, the Breneks executed a “Release and Settlement Agreement” and a
    “Covenant Not To Execute Agreement” (“Covenant Not To Execute”) setting
    forth the formal terms of the respective agreements they entered into with
    Gray.
    Consistent with the February 8 agreement between Gray and the
    Breneks regarding Aggreko, the Covenant Not To Execute states that, by
    executing the agreement, the Breneks “jointly and severally, promise[], agree[]
    and covenant[] that they shall not seek to and will not execute on any
    Judgment obtained in their favor and against Aggreko in the Lawsuit save and
    except to the extent they can recover the Judgment from any insurance
    company which provides coverage to Aggreko.” The Covenant Not to Execute
    further provides that the Breneks would “enforce any and all such Judgment
    against the available insurance only, and not against the assets of Aggreko or
    its respective present or former directors, officers, employees, [or] parent
    companies.”     Additionally, the agreement indicates that the Breneks
    “acknowledge[] and agree[] that Aggreko retains whatever rights it may have
    under the law to reduce the amount of any damage award against it by way of
    settlement credit, proportionate responsibility, Tex. Civ. Prac. & Rem. Code
    Chapter 33, the One-Satisfaction Rule, or otherwise.”
    Taking the position that it had exhausted its policy limit and its
    obligation to Aggreko, Gray notified Aggreko by letter dated February 9, 2017
    that it intended to withdraw its defense in the Breneks’ pending state lawsuit
    30 days from the date of the letter. In support of its position, Gray pointed to
    the following language from its policy:
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    SECTION I—COVERAGES
    COVERAGE A.    BODILY INJURY AND PROPERTY
    DAMAGE LIABILITY
    1. Insuring Agreement.
    a. We will pay those sums that the insured becomes legally
    obligated to pay as damages because of “bodily injury” or “property
    damage” to which this insurance applies . . . . But . . .
    2. Our right and duty to defend end when we have used up the
    applicable limit of insurance in payment of judgments or
    settlements under Coverage[] A . . . .
    The Gray policy does not define the terms “judgments” and “settlements.”
    Noting that it had paid the $1,000,000 policy limit “in settlement regarding the
    Brenek occurrence,” Gray advised that it had no further obligations under the
    policy.
    Gray subsequently denied requests of Aggreko and Indian Harbor to
    maintain its defense of Aggreko. As a result, Indian Harbor instituted a
    declaratory action, also in the United States District Court for the Eastern
    District of Texas, seeking, among other things, recognition that Gray
    maintained a duty to defend Aggreko. Shortly thereafter, the district court
    issued an order consolidating Aggreko’s lawsuit against ASIC with Indian
    Harbor’s lawsuit against Gray.
    After consolidation, Gray filed a motion for summary judgment in which
    it sought a declaration that it had exhausted its policy limits and no longer had
    a duty to defend or indemnify Aggreko.         ASIC and Indian Harbor filed
    memoranda in opposition to Gray’s motion, while Aggreko filed a response
    stating that its substantive arguments would be included in Indian Harbor’s
    memorandum. Indian Harbor also, in turn, filed a cross-motion for summary
    judgment in which it asked the district court to determine that Texas law
    applies to the issues raised in the consolidated lawsuits; that the Covenant Not
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    to Execute did not constitute a “settlement” of any of the Breneks’ claims
    against Aggreko under Texas law and, therefore, that Gray had not exhausted
    its policy limit with respect to such claims; that Gray had an ongoing duty to
    defend Aggreko in the Breneks’ lawsuit; and that Gray was required to
    reimburse Indian Harbor for any costs spent in Aggreko’s defense. Gray filed
    a memorandum in opposition to Indian Harbor’s motion.
    The district court granted Gray’s motion and denied Indian Harbor’s
    motion, except that it determined, in accordance with Indian Harbor’s request,
    that Texas law—as opposed to Louisiana law—was applicable to the issues
    before it. Specifically, the court held that:
    [A]s a matter of law, . . . (1) Texas law is controlling for both the
    Gray Policy and the Covenant Not to Execute; and (2) Gray’s
    payment of the policy limits and the Breneks’ execution of the
    Covenant Not to Execute against Aggreko and the release of
    Rutherford terminates Gray’s duty to defend and indemnify its
    insureds.
    Indian Harbor now appeals the district court’s order. As noted above, Gray
    asks this court to affirm the district court’s ruling but submits a “conditional”
    cross-appeal, urging us to reverse the district court’s conclusion that Texas law
    applies to the issues at hand and affirm the district court’s grant of summary
    judgment in favor of Gray by applying Louisiana law in the event that we
    conclude the judgment cannot be maintained under Texas law.
    II.
    This court reviews choice-of-law determinations de novo but reviews the
    district court’s underlying factual determinations for clear error. Mumblow v.
    Monroe Broadcasting, Inc., 
    401 F.3d 616
    , 620 (5th Cir. 2005); see also Nat’l
    Union Fire Ins. Co. of Pittsburgh, Pa. v. Am. Eurocopter Corp., 
    692 F.3d 405
    ,
    408 (5th Cir. 2012) (“A district court’s choice-of-law determination is a legal
    conclusion.”). We also review a district court’s interpretation of state law de
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    novo. Ironshore Eur. DAC v. Schiff Hardin, L.L.P., 
    912 F.3d 759
    , 764 (5th Cir.
    2019).
    Likewise, we review grants of summary judgment de novo, “applying the
    same standard that the district court applied.” Smith v. Reg’l Transit Auth.,
    
    827 F.3d 412
    , 417 (5th Cir. 2016). Summary judgment is appropriate where
    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). Material facts are those
    that “might affect the outcome of the suit under the governing law.” Leasehold
    Expense Recovery, Inc. v. Mothers Work, Inc., 
    331 F.3d 452
    , 456 (5th Cir. 2003)
    (internal quotation marks and citation omitted). The court must “view the
    evidence introduced and all factual inferences [therefrom] in the light most
    favorable to the party opposing summary judgment.” 
    Smith, 827 F.3d at 417
    (internal quotation marks and citation omitted). “We may affirm the district
    court’s grant of summary judgment on any ground supported by the record and
    presented to the district court.” Amerisure Mut. Ins. Co. v. Arch Specialty Ins.
    Co., 
    784 F.3d 270
    , 273 (5th Cir. 2015).
    As further discussed below, neither party identifies any material fact
    that is in dispute. Thus, our resolution of this appeal revolves on proper
    interpretation and application of the applicable law.
    III.
    1.
    Since the issue of whether the district court applied the correct state’s
    law to resolve the matters before it is of primary importance in determining
    whether the district court ultimately reached the correct result in granting
    Gray’s request for summary judgment, we reject Gray’s categorization of its
    appeal as “conditional.” Either the district court applied the correct law, or it
    did not. Whether the district court applied the correct law cannot and does not
    revolve on whether it reached a result that benefits Gray. Thus, we will
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    address the propriety of the district court’s decision to apply Texas law
    regardless of whether we agree with the court’s conclusion under Texas law.
    Federal courts exercising diversity jurisdiction generally must apply the
    choice-of-law rules of the forum state to determine the applicable substantive
    law. Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 
    767 F.3d 503
    , 512 (5th Cir.
    2014). A choice-of-law analysis is unnecessary, however, if the laws of the
    states with an interest in the dispute do not conflict. 
    Mumblow, 401 F.3d at 620
    . Under such circumstances, the substantive law of the forum applies. 
    Id. Before the
    district court, Gray argued that there is no conflict between
    the laws of Texas and Louisiana—the two states that have an interest in this
    matter—with respect to whether it exhausted its obligations under its policy.
    Gray asserted, however, that if the court found a conflict to exist, Louisiana
    law should be applied to the dispute. Indian Harbor, on the other hand,
    contended that Texas law governs. After finding that a potential conflict exists
    between Texas and Louisiana law with respect to the issues before it due to
    Louisiana’s allowance of direct actions by third parties against liability
    insurers and Texas’s rejection of such actions, the district court engaged in a
    conflict-of-laws analysis and concluded that the Gray policy should be
    interpreted under Texas law.
    Initially, we note that the parties do not point to, and we are unaware
    of, any pertinent difference between Texas law and Louisiana law with respect
    to interpreting insurance policies. Under the laws of both states, an insurance
    policy is a binding agreement that defines the relationship between the insurer
    and insured and dictates the obligations each has to the other, subject to
    applicable state regulations. See USAA Tex. Lloyds Co. v. Menchaca, 
    545 S.W.3d 479
    , 488 (Tex. 2018) (“[A]n insurance policy is a contract that
    establishes the respective rights and obligations to which an insurer and its
    insured have mutually agreed.” (internal quotation marks and citations
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    omitted)); Supreme Servs. and Spec. Co. v. Sonny Greer, Inc., 
    958 So. 2d 634
    ,
    638 (La. 2007) (“An insurance policy is a conventional obligation that
    constitutes the law between the insured and the insurer, and the agreement
    governs the nature of their relationship.”) Accordingly, under both Texas and
    Louisiana law, insurance policies are to be interpreted in accordance with
    general rules governing interpretation of contracts, and words and phrases
    contained therein should be given their plain and ordinary meaning. See Don’s
    Bldg. Supply, Inc. v. OneBeacon Ins. Co., 
    267 S.W.3d 20
    , 23 (Tex. 2008)
    (discussing legal precepts for interpreting insurance policies); Bonin v.
    Westport Ins. Corp., 
    930 So. 2d 906
    , 910–11 (La. 2006) (same). Further, both
    states require true ambiguities in policy language to be construed in favor of
    coverage. See 
    id. Nevertheless, we
    look further to whether Texas law and Louisiana law
    potentially dictate different outcomes with respect to the particular dispute at
    hand. As noted above, the policy issued by Gray to Guichard required Gray to
    defend Aggreko with respect to the lawsuit filed by the Breneks until such time
    as Gray “used up the applicable limit of insurance in payment of judgments or
    settlements under Coverage[] A.” There is no dispute that Gray paid its limit
    of insurance to the Breneks relative to their claims against Gray’s additional
    insureds, Rutherford and Aggreko. There is also no dispute that there has
    been no judgment against Aggreko in the lawsuit filed by the Breneks. Thus,
    the narrow question that is presented is whether Gray’s payment of $950,000
    to the Breneks on behalf of Aggreko in exchange for their covenant not to
    execute any judgment against Aggreko, except as to available insurance,
    constituted a “settlement” under the Gray Policy sufficient to relieve Gray of
    its duty to defend Aggreko. In other words, is a release of tort liability required
    in exchange for the payment of policy proceeds for a “settlement,” as
    anticipated by the Gray Policy, to occur? To determine whether a conflict exists
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    between Texas law and Louisiana law as to this issue, we must engage with
    the merits of the issue under the laws of both states.
    “When evaluating issues of state law, we look to the decisions of the
    state’s highest court.” Meador v. Apple, Inc., 
    911 F.3d 260
    , 264 (5th Cir. 2018).
    The parties have not identified any cases from the Texas Supreme Court or the
    Louisiana Supreme Court that are precisely on point as to the issue before us.
    Further, our review of Texas and Louisiana jurisprudence does not reveal any
    such cases. Under these circumstances, “we must make an Erie guess and
    determine as best we can” how the highest courts of each state would resolve
    such issue.   Martinez v. Walgreen Co., 
    935 F.3d 396
    , 398 (5th Cir. 2019)
    (quoting Hays v. HCA Holdings, Inc., 
    838 F.3d 605
    , 611 (5th Cir. 2016)). To do
    so, we must consult “the sources of law that the state[s’] highest court[s] would
    look to, including intermediate state appellate court decisions, the general rule
    on the issue, decisions from other jurisdictions, and general policy concerns.”
    
    Id. (quoting Hays,
    838 F.3d at 611).          Because of Louisiana’s “civilian
    methodology,” in determining how the Louisiana Supreme Court would resolve
    the present issue, we must give primary importance to Louisiana’s
    constitution, codes and statutes. Jorge-Chavelas v. La. Farm Bureau Cas. Ins.
    Co., 
    917 F.3d 847
    , 851 (5th Cir. 2019) (internal quotation marks and citations
    omitted). We must refrain, however, from “adopt[ing] innovative theories of
    recovery under state law without strong reason to believe that those theories
    would be adopted if [the state’s highest court] had the opportunity.” 
    Martinez, 935 F.3d at 398
    –99 (internal quotation marks and citation omitted).
    We note that if a prior panel of this court made an Erie ruling under
    Texas or Louisiana law as to the issue before us, and that ruling has not been
    superseded by either state statute or caselaw, then we are bound by that
    panel’s prior decision. See Welborn v. State Farm Mut. Auto. Ins. Co., 
    480 F.3d 685
    , 687 (5th Cir. 2007).
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    2.
    a.
    We first analyze the issue before us under Texas law. Indian Harbor
    argues that, under Texas law, the payment of Gray’s policy proceeds on behalf
    of Aggreko in exchange for the Covenant Not to Execute is not a “settlement”
    sufficient to have relieved Gray from its duty to defend Aggreko under the Gray
    Policy, since it did not release Aggreko from any tort liability or end any part
    of the Breneks’ lawsuit against Aggreko. Indian Harbor further contends that
    Gray’s actions are part of a “strategy” to shift its duty to defend to Indian
    Harbor, an excess insurer. Indian Harbor primarily points to this court’s
    decision in Continental Casualty Co. v. North American Capacity Insurance
    Co., 
    683 F.3d 79
    (5th Cir. 2012), in support of its position.
    Gray, on the other hand, argues that Indian Harbor “elevates form over
    substance” and that we should focus on whether the Covenant Not to Execute
    “provided similar protection as any document entitled ‘release’ or ‘settlement’.”
    Gray further suggests that in light of available excess insurance under Indian
    Harbor’s policy, which would be inaccessible after full release of the Breneks’
    liability claims against Aggreko, the Covenant Not to Execute was as complete
    of a release as it could obtain. Additionally, Gray asserts that the policy
    provision at issue is clear and unambiguous and does not explicitly require a
    release.   In support of its position, Gray relies on another of this court’s
    decisions—Judwin Properties, Inc. v. United States Fire Insurance Co., 
    973 F.2d 432
    (5th Cir. 1992).
    Our decisions in Continental Casualty Co. and Judwin Properties, Inc.
    were both decided under Texas law. For the reasons discussed below, we
    conclude that neither case compels a specific resolution of this matter under
    Texas law. We address each in turn, starting with the older decision—Judwin
    Properties, Inc. The appellants in Judwin Properties, Inc., to which we will
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    collectively refer as “Judwin,” were sued in multiple personal injury lawsuits
    by dozens of plaintiffs after treating certain rental properties with the chemical
    
    chlordane. 973 F.2d at 433
    . Prior to trial, Judwin’s primary insurer, United
    States Fire Insurance Company (“USF”), entered into an agreement with two
    groups of plaintiffs to pay them $6,000,000 in exchange for covenants not to
    execute judgments directly against Judwin, USF’s other insureds, or USF. 
    Id. at 433–35.
        USF also agreed to pay “a peppercorn” to the two groups of
    plaintiffs in exchange for a release of bad faith claims against USF. 3 
    Id. at 433,
    435. Following payment of the $6,000,000, USF declined further coverage
    under its policy. 
    Id. In turn,
    Judwin sued USF, alleging that the insurer had
    breached its insurance policy by failing to properly defend Judwin or settle the
    claims of the two groups of plaintiffs, and asserting claims for bad faith
    regarding the manner in which USF had defended Judwin. 
    Id. On Judwin’s
    appeal from the district court’s grant of summary judgment
    in favor of USF, we noted that the USF policy provided that USF would “not
    be obligated to pay any claim or judgment or to defend any suit after the
    applicable limit of the company’s liability ha[d] been exhausted by payment of
    judgments or settlements.” 
    Id. at 436
    (internal quotation marks and citation
    omitted). We found this language to be “plain, clear and unambiguous” and,
    regarding Judwin’s claim that USF had breached its duty to defend, concluded
    that “USF exhausted its obligation to provide a defense to Judwin when USF
    paid $6,000,000 to [two groups of] plaintiffs on behalf of the insureds under the
    policy.” 
    Id. In response
    to Judwin’s argument that USF’s failure to obtain a
    release of liability from the two groups of plaintiffs prevented termination of
    USF’s obligations under the policy, we pointed out that Judwin had not raised
    3 Judwin had separately reached its own agreement with the two groups of plaintiffs
    whereby such plaintiffs agreed to not execute any judgment against Judwin in exchange for
    an assignment of any bad faith claims Judwin had against its insurers. Judwin Props., 
    Inc., 973 F.2d at 433
    .
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    such argument before the trial court. 
    Id. at 436
    n.4. We further referenced
    our policy of not considering arguments raised for the first time on appeal
    absent a showing of manifest injustice that would result from our failure to
    consider a purely legal question and noted that Judwin had not demonstrated
    how our failure to consider its argument would result in manifest injustice. 
    Id. Thus, as
    Indian Harbor correctly points out, we expressly declined in Judwin
    Properties, Inc. to consider the specific issue that is currently directly before
    us. Accordingly, we do not glean any holding from Judwin Properties, Inc. that
    is binding on us in the instant case.
    We turn, then, to Continental Casualty Co. to consider what bearing it
    may have on our decision here. In Continental Casualty Co., we determined
    that a primary insurer that paid its policy limit to a company that had invoked
    contractual arbitration against its insured did not exhaust its policy
    obligations, including its duty to defend, since it failed to obtain a release of
    any claim against its 
    insured. 683 F.3d at 89
    –90. Like the insurance policies
    at issue in Judwin Properties, Inc. and here, the policy at issue in Continental
    Casualty Co. provided that the insurer’s “right and duty to defend end[ed]
    when [it] . . . used up the applicable limit of insurance in the payment of
    judgments or settlements.” 
    Id. at 89
    (internal quotation marks omitted). We
    agreed with the district court’s conclusion that the primary insurer’s
    agreement with the claimant “did not satisfy the plain meaning of this
    provision because there was no judgment ending even part of the arbitration
    against [the insured].” 
    Id. We added
    that “there was no settlement as intended
    by the policy because no lawsuit or dispute was ended.” 
    Id. Further, we
    characterized the payment by the primary insurer as an “initial installment
    payment from one insurer” that was intended to “be applied . . . to some future
    judgment or global settlement, which did not finally occur until 15 months
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    [later].” 
    Id. Thus, we
    held that the insurer’s “payment was . . . not pursuant
    to a settlement or judgment as required by its policy.” 
    Id. at 90.
            Indian Harbor reads Continental Casualty Co. as requiring that an
    agreement must end a legal claim or lawsuit and, therefore, contain a release
    of liability, to be considered a settlement. We do not believe that our holding
    in Continental Casualty Co. is as broad as Indian Harbor suggests.
    Importantly, in that case, we did not take note of any benefit obtained by the
    primary insurer for its insured in exchange for paying its policy limit. 4 
    Id. at 89
    –90. Absent any perceivable benefit obtained on behalf of the insured, it was
    clear that the insurer’s payment of its limits was not “in the payment of [a]
    settlement[].” 
    Id. at 89
    . In so holding, we did not exclude the possibility that
    a payment by a liability insurer in exchange for an agreement by a claimant
    not to execute any judgment against its insured or some other benefit to the
    insured could, in some circumstances, constitute a “settlement” under Texas
    law. This is supported by the language in the opinion stating that “there was
    no settlement as intended by the policy because no lawsuit or dispute ended.”
    
    Id. b. Because
    neither of our decisions relied upon by the parties binds us here,
    we proceed to conduct an Erie analysis of whether, under Texas law, the
    4A review of the district court’s opinion and filings in the district court reveals that,
    as here, the primary insurer in Continental Casualty Co. did obtain, as part of its agreement
    with the tort plaintiff, a confirmation by the tort plaintiff that it would not execute any
    judgment against the assets of the insured. Unlike here, however, the insured in Continental
    Casualty Co. had previously obtained its own covenant not to execute from the tort plaintiff.
    
    See 683 F.3d at 83
    . Perhaps because of that, the panel of this court that decided Continental
    Casualty Co. made no reference to any covenant not to execute obtained by the primary
    insurer in exchange for the payment of its policy limits. In light of its omission of any
    reference to the affirmation by the tort plaintiff that it would honor its prior commitment not
    to execute any judgment directly against the insured in its agreement with the primary
    insurer, we will not assume that such affirmation played any role in the panel’s analysis or
    decision.
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    Covenant Not to Execute and payment of the remainder of the Gray policy
    proceeds constitutes a “settlement” sufficient to have relieved Gray of its duty
    to defend Aggreko under the Gray Policy. See 
    Martinez, 935 F.3d at 398
    . Our
    review of pertinent Texas jurisprudence leaves us convinced that, if presented
    with the issue before us, the Texas Supreme Court would conclude that a
    settlement occurred, as required by the Gray Policy.
    First, to determine whether a settlement took place here, we look to the
    definition of a settlement. Relying on Texas jurisprudence, we have previously
    defined a “settlement” as follows: “the conclusion of a disputed or unliquidated
    claim, and attendant differences between the parties, through a contract in
    which they agree to mutual concessions in order to avoid resolving their
    controversy through a course of litigation.” McCleary v. Armstrong World
    Indus., Inc., 
    913 F.2d 257
    , 259 (5th Cir. 1990) (quoting Priem v. Shires, 
    697 S.W.2d 860
    , 863 n.3 (Tex. App.—Austin 1985, no writ)). There is no dispute
    that the Covenant Not to Execute is a binding contract. Further, it is apparent
    that in that contract, mutual concessions were made: Gray paid $950,000 on
    behalf of Aggreko in exchange for the Breneks’ agreement not to execute any
    tort judgment directly against Aggreko. Though the contract did not end
    Aggreko’s tort liability, it did conclude, as the district court recognized, any
    claim that the Breneks had to Aggreko’s personal assets and eliminated any
    personal exposure that Aggreko faced with respect to a potential tort judgment
    against it. In addition, the Covenant Not to Execute effectively reduced the
    amount of damages that the Breneks could recover as a result of any finding
    of tort liability on the part of Aggreko by $950,000, since, in it, the Breneks
    “acknowledge[d] and agree[d] that Aggreko retain[ed] whatever rights it may
    have under the law to reduce the amount of any damage award against it by
    way of settlement credit, proportionate responsibility, Tex. Civ. Prac. & Rem.
    Code Chapter 33, the One-Satisfaction Rule, or otherwise.”
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    Considering the foregoing, the fact that the Breneks’ damages plainly
    exceed the Gray Policy limit, and the inability of Gray to obtain a full release
    of Aggreko without hampering the Breneks’ excess coverage claims, we believe
    that the Texas Supreme Court would conclude that a settlement occurred as to
    the Breneks’ claims against Aggreko.
    Our conclusion is bolstered by various Texas cases addressing
    exhaustion of liability policy limits and/or an insurer’s duty to defend,
    including a case relied upon by Gray in its briefing—Kings Park Apartments,
    Ltd. v. Nat’l Union Fire Ins. Co., 
    101 S.W.3d 525
    (Tex. App.—Houston [1st
    Dist.] 2003, pet. denied). 5 Kings Park Apartments, Ltd. arises from the same
    factual circumstances as Judwin Properties, Inc. Kings Park Apartments, Ltd.
    (“Kings Park”) owned some of the rental properties that were treated with
    chlordane by Judwin. 
    Id. at 528.
    Shortly before trial, Kings Park and some
    related parties reached an agreement with one group of plaintiffs, pursuant to
    which Kings Park assigned its bad faith claims against its insurers to the
    plaintiffs in exchange for a covenant not to execute any judgment directly
    against Kings Park. 
    Id. Kings Park
    retained a monetary interest in the
    outcome of any bad faith lawsuits by the plaintiffs. 
    Id. at 529.
    Following a
    judgment against Kings Park, certain plaintiffs filed suit against Kings Park’s
    insurers, including National Union, asserting bad faith claims under the
    assignment by Kings Park. 
    Id. National Union
    later reached an agreement
    with these plaintiffs in which it agreed to pay its $5 million policy limit and a
    peppercorn in exchange for a covenant not to execute any judgment against
    Kings Park and a release of the bad faith claims against National Union. 
    Id. 5We note
    that while Indian Harbor spends much time in its briefing pointing to cases
    from other jurisdictions to support its position, it does not point to any case from a Texas
    court that is directly on point.
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    Kings Park filed a separate suit against National Union, alleging that
    National Union had wrongfully paid its policy limit to resolve only the bad faith
    claims against it, as opposed to the plaintiffs’ claims against Kings Park, and
    that National Union had wrongfully refused to defend or indemnify it. 
    Id. at 530.
    On appeal from a jury verdict in favor of Kings Park, National Union
    contended that payment of its policy limit was on behalf of its insureds and,
    therefore, that it had exhausted its obligations under its policy. 
    Id. at 530–31.
    The court of appeals agreed, finding the evidence sufficient to establish that
    National Union exhausted its policy limit by paying $5 million on behalf of
    Kings Park to settle bodily injury claims against it and a peppercorn for the
    release of bad faith claims against National Union. 
    Id. at 533–34.
    The court
    looked to, inter alia, the language of National Union’s agreement with the
    plaintiffs and the reasoning and holding of this court in Judwin in support of
    its conclusion. 
    Id. at 532.
    Notably, the court rejected King Park’s argument
    that, because National Union did not obtain a release of tort liability for Kings
    Park in exchange for its $5 million payment, the payment could not have
    exhausted National Union’s policy. 
    Id. at 532–33.
    The court noted that the
    lack of a release of liability was “not dispositive,” since the plaintiffs’ bodily
    injury claims against Kings Park were retained for the purpose of preserving
    their claims against an excess insurer. 
    Id. at 532–33.
          In response to Kings Park’s argument that it received no benefit from
    National Union’s settlement payment, particularly given that it had already
    entered into its own covenant not to execute with the plaintiffs, the court noted
    that “Kings Park received the benefit of the right to proceed [against] the next
    layer of insurance, which would not have been available absent exhaustion of
    National Union’s policy.” 
    Id. at 534.
    According to the court, Kings Park also
    “received the benefit of an essential step toward a full release after all the
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    insurers paid,” since “National Union’s $5 million payment was an integral
    piece of the ultimate settlement plan to a full release of judgment.” 
    Id. Here, like
    the tort defendant in Kings Park, Aggreko received the benefit
    of resolution of a portion of the monetary claim against it and a step toward a
    full release, since in the Covenant Not to Execute, the Breneks
    “acknowledge[d] and agree[d] that Aggreko retain[ed] whatever rights it may
    have under the law to reduce the amount of any damage award against it”
    because of Gray’s payment. Further, here, where Aggreko had not obtained
    any concessions from the Breneks on its own, Aggreko clearly received as a
    result of the Covenant Not to Execute the benefit of the Breneks’ agreement
    not to execute any judgment directly against Aggreko. Accordingly, like in
    Kings Park, we conclude that the lack of a release of Aggreko’s liability is not
    dispositive of whether Gray’s obligations to Aggreko under the Gray Policy
    were exhausted.
    In further support of our conclusion that Gray exhausted its duty to
    defend Aggreko under Texas law, we look to Texas Farmers Ins. Co. v. Soriano,
    
    881 S.W.2d 312
    (Tex. 1994), and its progeny. In Soriano, the Texas Supreme
    Court held that “when faced with a settlement demand arising out of multiple
    claims and inadequate proceeds, an insurer may enter into a reasonable
    settlement with one of the several claimants even though such settlement
    exhausts or diminishes the proceeds available to satisfy other 
    claims.” 881 S.W.2d at 315
    .      This approach, the court noted, among other benefits,
    “promotes settlement of lawsuits.” 
    Id. Relying on
    Soriano, an intermediate
    Texas court held that an auto liability insurer exhausted its duty to defend its
    insured by paying its policy limit to enter into reasonable settlements of a
    portion of the claims against him resulting from a three-car accident, where
    the insurance policy at issue provided that the insurer’s “duty to settle or
    defend end[ed] when [its] limit of liability . . . [had] been exhausted.” See Mid-
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    Century Ins. Co. of Texas v. Childs, 
    15 S.W.3d 187
    , 188 (Tex. App.—Texarkana
    2000, no pet.).
    We recognize that in the instant case, unlike in Soriano and Mid-Century
    Insurance Co. of Texas, there are not multiple, independent claimants
    asserting claims against Aggreko as a result of Brenek’s accident.
    Nevertheless, these cases signify the willingness of Texas courts to allow a
    liability insurer to reasonably exhaust its duties to its insured under the terms
    of its policy, including its duty to defend, even though it has not resolved all
    pending liability claims against the insured. Notably, despite Indian Harbor’s
    suggestion that Gray’s agreement with the Breneks was a maneuver to dump
    Aggreko’s defense on it, there is no assertion or indication that payment of
    $950,000 to the Breneks by Gray on behalf of Aggreko to satisfy a portion of
    the damages sought for the death of the Breneks’ son was unreasonable. Thus,
    in light of these cases, we do not see pending liability claims against Aggreko
    after payment of Gray’s policy limit and execution of the Covenant Not to
    Execute alone as a reason to conclude that Gray did not exhaust its contractual
    obligations to Aggreko.
    Finally, we note that our conclusion that a “settlement” occurred under
    the terms of the Gray Policy, is, we believe, in line with the Texas Supreme
    Court’s goal of promoting public policies that encourage settlements.         See
    Stewart Title Guar. Co. v. Sterling, 
    822 S.W.2d 1
    , 9 (Tex. 1991).
    3.
    Having concluded the Texas Supreme Court would likely decide the
    present issue in favor of Gray, we turn to the likely outcome under Louisiana
    law. In its initial brief, Gray asserts that if we “reach [its] conditional cross-
    appeal, [then we] should reverse the district court’s choice-of-law ruling,
    conclude that Louisiana law applies, and conclude that Gray exhausted its
    policy limits under Louisiana law and owes no further obligation to Aggreko.”
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    Gray does not argue, however, with any detail or clarity why it’s duty to defend
    Aggreko should be considered exhausted under Louisiana law.             Its only
    discussion of the merits of the issue under Louisiana law contains a brief
    discussion of the case Gasquet v. Commercial Union Ins. Co., 
    391 So. 2d
    . 466
    (La. App. 4 Cir. 1980) and its progeny and the suggestion that the law of
    Louisiana and several other states “aligns with Judwin.” Indian Harbor, for
    its part, does not address in its briefing how the issue before us would be
    decided under Louisiana law and conceded at oral argument that under
    Louisiana law Gray likely exhausted its duty to defend Aggreko.
    The district court, with little explanation, concluded that “[u]nder
    Louisiana law, a direct action state, the Covenant Not to Execute acted as a
    release, as described in Gasquet v. Commercial Union Insurance Company, and
    ended Gray’s obligations under the Gray Policy despite not being a full release
    of liability for Aggreko.”
    While, as discussed below, we agree that Gasquet and its progeny
    support the conclusion that Gray exhausted its duty to defend Aggreko under
    Louisiana law, Gasquet did not address the specific issue before us. Further,
    other sources of Louisiana law are entitled to consideration here. As discussed
    above, in making an Erie determination under Louisiana law, due to
    Louisiana’s “civilian methodology,” we must give primary importance to any
    pertinent Louisiana constitutional or statutory provisions. 
    Jorge-Chavelas, 917 F.3d at 851
    .     Louisiana Civil Code article 3071 provides Louisiana’s
    definition of a “settlement,” or, using Louisiana’s terminology, a “compromise.”
    Because our task is to determine whether a settlement occurred sufficient to
    relieve Gray of its duty to defend Aggreko under the Gray policy, that article
    is pertinent and warrants our primary consideration. Notably, the district
    court and the parties failed to give this provision any consideration, much less
    the primary consideration it deserves.
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    Louisiana Civil Code article 3071 defines a “compromise” as “a contract
    whereby the parties, through concessions made by one or more of them, settle
    a dispute or an uncertainty concerning an obligation or other legal
    relationship.” LA. CIV. CODE ANN. Art. 3071 (2007). For the same reasons that
    the agreement between Gray and the Breneks appears to meet the Texas
    definition of a “settlement,” it also appears to meet the Louisiana definition of
    a “compromise.”      Again, the Covenant Not to Execute is undoubtedly a
    contract; both Gray, on behalf of Aggreko, and the Breneks made concessions
    in such contract; and, through the Covenant Not to Execute, the uncertainty
    as to Aggreko’s personal financial obligation to the Brenek’s and its liability
    for at least $950,000 in damages was resolved.         Thus, it appears that a
    settlement or compromise occurred between Gray, on behalf of Aggreko, and
    the Breneks under the terms of Louisiana Civil Code article 3071.
    Having addressed the code provision relevant to this dispute, we turn,
    now, to Gasquet and its progeny. In Gasquet, the plaintiff suffered severe
    injuries in an airboat accident that occurred while he was on a hunting trip.
    
    391 So. 2d
    at 468. Prior to trial, the plaintiff entered into an agreement with
    the tort defendants’ primary insurer whereby the primary insurer paid
    $200,000 of its $300,000 liability policy limit in exchange for a complete release
    of the primary insurer and a release of the alleged tortfeasors “from all claims
    which might be recovered from [them] directly, but specifically reserving his
    claims only to the extent that collectible coverage is afforded to [the alleged
    tortfeasors] by [a] policy of excess insurance.” 
    Id. at 468,
    470. As part of his
    agreement with the primary insurer, the plaintiff also agreed to “allow a credit
    to [the excess insurer] for the full $300,000 of the primary insurance policy.”
    
    Id. at 470.
          The excess insurer sought summary judgment, claiming that there was
    no coverage under its policy since the plaintiff settled with the primary insurer
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    for less than its policy limits. 
    Id. The excess
    insurer relied on the following
    language from its policy in support of its argument: “Liability under this policy
    with respect to any occurrence shall not attach unless and until the insured,
    or the insured’s underlying insurer, shall have paid the amount of the
    underlying limits on account of such occurrence.” 
    Id. The excess
    insurer
    argued that since the limit of the underlying policy had not been paid and no
    longer could be paid, due to the language of the plaintiff’s agreement with the
    primary insurer, it could not have any liability under its excess policy. 
    Id. After studying
    relevant Louisiana jurisprudence and cases from other
    jurisdictions, the Louisiana Fourth Circuit Court of Appeal held that the
    plaintiff’s “release of the primary insurer . . . and partial release of [the
    tortfeasors] for less than the full primary limits, but granting a credit for the
    full primary limits and reserving the right to proceed against the excess
    carrier, did not release [the excess carrier] from its liability as the excess
    insurer.” 
    Id. at 472.
          As recognized in RSUI Indemity Co. v. American States Insurance Co.,
    “Gasquet” has become a term of art among Louisiana jurists and lawyers to
    describe a type of release. 
    127 F. Supp. 3d 649
    , 657 (E.D. La. 2015). The court
    in RSUI Indemnity Co. described a Gasquet release and its function as follows:
    [B]y executing a Gasquet release in a settlement agreement, a
    plaintiff (1) releases the primary insurer entirely, and (2) releases
    the insured from all claims which might be recovered from the
    insured directly, reserving claims against the insured only to the
    extent that collectible coverage is afforded by an excess insurance
    policy. Procedurally, after a Gasquet release is executed the
    insured remains in the lawsuit as a “nominal” defendant while the
    plaintiff pursues recovery from the excess insurer.
    
    Id. at 658
    (alterations omitted) (internal quotation marks and citation
    omitted). See also Thistlethwaite v. Gonzalez, 
    106 So. 3d 238
    , 244 n.1 (La. App.
    5 Cir. 2012) (discussing Gasquet and its implications); Jones v. Capital Enters.,
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    Inc., 
    89 So. 3d 474
    , 480–81 (La. App. 4 Cir. 2012) (same); Thompson v. Shay,
    
    817 So. 2d 1230
    , 1233 (La. App. 1 Cir. 2002) (same).
    As noted above, we believe that Gasquet and its progeny do support the
    conclusion that the Louisiana Supreme Court would conclude that a settlement
    occurred sufficient to relieve Gray of its duty to defend Aggreko, since these
    cases make clear that Louisiana courts are willing to recognize that a liability
    insurer can exhaust its duties to its insured without obtaining a release of tort
    liability on behalf of the insured. Gasquet does not, however, resolve the
    central issue here: whether a “settlement” can occur under Louisiana law
    without a release of any claim or tort liability. To the extent the district court’s
    decision suggests that Gasquet does resolve that question, it is in error.
    The Louisiana Supreme Court case of Pareti v. Sentry Indemnity
    Company, 
    536 So. 2d 417
    (La. 1988), also instructs our resolution of the issue
    before us under Louisiana law. The issue before the court in that case was
    “whether [a] liability insurer had a continuing duty, after the exhaustion of its
    policy limits through settlement, to defend its insured in another claim arising
    from the same [automobile] accident.” 
    Pareti, 536 So. 2d at 418
    . The policy
    provided that “the insurer’s duty to settle or defend end[ed] when [its] limit of
    liability . . . ha[d] been exhausted.” 
    Id. The court
    concluded that because this
    language is not ambiguous and because “there [was] no indication from the
    record that the insurer did not act in good faith when it settled the personal
    injury claim for the limits of its liability policy,” the insurer was not obligated
    to defend its insured as to the unresolved claim after payment of its policy
    limit. 
    Id. at 418–19.
          In deciding the case, the court cautioned that its ruling was “premised
    upon both the language of the policy before [it] and the facts of [the] particular
    case.” 
    Id. at 419.
    Further, it recognized that “[w]hen an insurer merely
    tenders its limits without obtaining a settlement of any claim for its insured, a
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    strong argument can be made that it has neither exhausted its policy limits
    nor fulfilled its fiduciary duty to discharge its policy obligations to the insured
    in good faith.” 
    Id. at 422–423
    (internal quotation marks and citation omitted).
    Recognizing and addressing the “[r]isk that insurance companies [would] enter
    inappropriate settlements in some cases” to avoid their contractual duties to
    their insureds, including the duty to defend, the court stated that “in every
    case, the insurance company is held to a high fiduciary duty to discharge its
    policy obligations to its insured in good faith.” 
    Id. at 423.
    ``The court added
    that “[a]n insurer which hastily enters into a questionable settlement simply
    to avoid further defense obligations under the policy clearly is not acting in
    good faith and may be held liable for damages caused to its insured.” 
    Id. The Louisiana
    Supreme Court’s willingness to recognize that a liability
    insurer can exhaust its duty to defend under its policy by, in good faith,
    resolving some, but not all, claims against its insured for its policy limits
    suggests that it would also recognize the exhaustion of a liability insurer’s duty
    to defend by, in good faith, fully resolving the question of its insured’s personal
    liability for damages.
    Considering the foregoing authorities, and for the reasons discussed
    above, we believe that the Louisiana Supreme Court would determine that
    Gray, on behalf of Aggreko, and the Breneks entered into a settlement
    sufficient to exhaust Gray’s duty to defend Aggreko under the Gray Policy.
    4.
    Because we conclude that the outcome of the present dispute would be
    the same under both Texas and Louisiana law, we need not engage in a conflict-
    of-laws analysis and apply Texas law. See 
    Mumblow, 401 F.3d at 620
    . Under
    Texas law, as set forth above, we conclude that Gray exhausted its policy limit
    and its duty to defend Aggreko when it paid $950,000—the remainder of its
    liability coverage limit—to the Breneks in exchange for the Breneks agreement
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    not to execute any judgment against Aggreko and to recognize Aggreko’s
    entitlement to claim a $950,000 damages credit.
    We emphasize that our resolution of the matter before us does not reach
    and should not be interpreted as in any way construing Indian Harbor’s
    obligations under its own policy, which concerns matters that are not before
    us. Further, we recognize that, in some instances, insurers may be compelled
    to improperly and hastily hand over their policy limits to rid themselves of the
    duty to defend their insured. We reiterate that such a situation is not before
    us, as there is no suggestion or indication in the record that the Breneks’
    damages do not exceed the Gray policy limit or that Gray did not properly
    investigate the Breneks’ claim on behalf of Aggreko. Thus, our decision should
    not be construed as in any way limiting remedies to insureds under Texas or
    Louisiana law against insurers who have improperly or in bad faith handled
    their claims.
    IV.
    For the reasons set forth herein, the judgment of the district court is
    AFFIRMED.
    25