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United States Court of Appeals Fifth Circuit F I L E D In the May 18, 2007 United States Court of Appeals Charles R. Fulbruge III for the Fifth Circuit Clerk _______________ m 06-30489 _______________ NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA, Plaintiff-Appellant, VERSUS LIBERTY MUTUAL INSURANCE COMPANY, Defendant-Appellee. _________________________ Appeal from the United States District Court for the Middle District of Louisiana m 3:05-CV-352 ______________________________ Before GARWOOD, SMITH, and DEMOSS, (“National Union”) sued Liberty Mutual In- Circuit Judges. surance Company (“Liberty Mutual”), seeking coverage under a policy. The district court JERRY E. SMITH, Circuit Judge:* granted summary judgment for Liberty Mu- tual, and we affirm. National Union Fire Insurance Company I. This case arises out of a dispute between * Pursuant to 5TH CIR. R. 47.5, the court has de- Rubicon, Inc. (“Rubicon”), and S&B Engi- termined that this opinion should not be published neers and Constructors, Ltd. (“S&B”), which and is not precedent except under the limited cir- Rubicon hired to provide engineering contract cumstances set forth in 5TH CIR. R. 47.5.4. services for an expansion project. As part of this project, S&B obtained weld shop fabri- Moreover, National Union contends that the cated pipes from American Pipe Fabricating, “your work” exclusion is inapplicable here Inc. (“American Pipe”). In the middle of the because of the subcontractor exception: Amer- project, Rubicon terminated S&B’s involve- ican Pipe acted as a subcontractor to S&B, so ment, litigation ensued, and Rubicon sued the “your work” exclusion does not apply.3 S&B for breach of contract, negligence in per- forming its duties, and negligent misrepresen- Second, National Union urges that Liberty tation, among other causes of action. Mutual was obligated to fulfill American Pipe’s promise to indemnify S&B for losses S&B and Rubicon settled the suit, and S&B resulting from American Pipe’s services. As sought payment from its insurer, National part of the purchase order between S&B and Union, for the costs of the suit. National American Pipe, American Pipe promised to Union and S&B settled that claim, and S&B carry insurance4 and indemnify S&B.5 As assigned its rights against any third parties to National Union. 3 Only the “your work” exclusion has a subcon- In the instant case, National Union sues tractor exception; the “your product” exclusion Liberty Mutual, American Pipe’s insurer, to does not. After laying out the “your work” exclu- recover the amount of the settlement to Rubi- sion, the policy states that “[t]his exclusion does con that resulted from American Pipe’s defec- not apply if the damaged work or the work out of tive work, based on two theories. First, Na- which the damage arises was performed on your tional Union argues that S&B was an addi- behalf by a subcontractor.” tional insured under Liberty Mutual’s insur- 4 The purchase order states: ance policy for American Pipe. Liberty Mu- tual admits that S&B was an additional insured Seller must maintain at all times with a reliable but asserts that S&B cannot recover in this insurance carrier or carriers, at Seller’s sole ex- case because of the “your work” and “your pense, insurance policies providing sufficient product” exclusions in the policy.1 National coverage and limits to cover the liabilities Union argues that S&B was not excluded assumed under this agreement. Insurance under these provisions, because S&B was not policies provided by Seller shall include but are “you” as defined by the contract,2 so the exclu- not limited to General Liability, including sions applying to “you” did not apply to S&B. coverage for Products and Complete Operations and Contractual Liability, Automobile 1 5 The policy excludes (1) “‘Property damage’ to The purchase order states: ‘your work’ arising out of it or any part of it and included in the ‘products-completed operations To the maximum extent permitted by applicable hazard.’”; and (2) “‘Property damage’ to ‘your law, Seller shall defend, indemnify and hold product’ arising out of it or any part of it.” harmless FBD [S&B’s affiliate], and its affili- ated companies, subsidiaries and clients from 2 The policy defines “you”: “Throughout this and against any and all loss, damage, claims, policy the words ‘you’ and ‘your’ refer to the suit, liability, strict liability, product liability, Named Insured shown in the Declarations, and any judgement and expense (including attorney’s other person or organization qualifying as a Named fees and other costs of litigation) and any fines, Insured under this policy.” (continued...) 2 American Pipe’s insurer, Liberty Mutual sons that American Pipe and S&B’s contract would be obligated to fulfill this promise. Lib- is not an insured contract because S&B was an ertyMutual, however, contends that American engineer, and Liberty Mutual’s insurance poli- Pipe’s obligation to indemnify S&B was ex- cy with American Pipe excludes engineering cluded from Liberty Mutual’s policy with services from the definition of insured con- American Pipe by the contractual liability ex- tracts.8 clusion.6 National Union retorts that the pur- chase order qualifies as an insured contract, II. obviating that exclusion.7 Liberty Mutual rea “This Court reviews grants of summary judgment de novo, applying the same standard as the district court, viewing the evidence in a 5 light most favorable to the non-movant.” (...continued) penalties and assessments arising out of injury Fruge ex rel. Fruge v. Parker Drilling Co., to, disease or death of, or damage to or loss of
337 F.3d 558, 560 (5th Cir. 2003). “If the property of, persons (except for Seller’s prop- court finds no ambiguity [in an insurance poli- erty, employees, agents or subcontractors) cy], the court’s duty is to enforce the policy resulting from or in connection with the execu- according to its plain meaning.” Valmont En- tion of this order by Seller, its agents or sub- ergy Steel, Inc. v. Commercial Union Ins. Co., contracts to the extent and proportion caused by
359 F.3d 770, 773 (5th Cir. 2004). the sole, concurrent, or contributory negligence or other fault of Seller, its agents or subcontrac- A. tors. Liability and Workers’ Compensation National Union seeks coverage as an addi- including employers Liability coverage. All tional insured, arguing the “your work” and Policies, excepting Workers’ Compensation “your product” exceptions do not apply to shall include FBD and its affiliated companies, S&B because “you” was defined in the con- subsidiaries and clients as additional insureds.” tract as American Pipe, not additional insureds 6 Liberty Mutual’s contract with American Pipe excludes coverage for 7 (...continued) ‘Bodily injury’ or ‘property damage’ for which tract as “[t]hat part of any other contract or agree- the insured is obligated to pay damages by rea- ment pertaining to your business . . . under which son of the assumption of liability in a contract you assume the tort liability of another party to pay or agreement. This exclusion does not apply to for ‘bodily injury’ or ‘property damage’ to a third liability for damages: person or organization.” 8 (1) Assumed in a contract or agreement that is The definition of an insured contract “does an ‘insured contract’, provided the ‘bodily in- not include any contract or agreement: . . . (2) That jury’ or ‘property damage’ occurs subsequent indemnifies an architect, engineer or surveyor for to the execution of the contract or agreement; or injury or damages arising out of: (a) Preparing, approving or failing to prepare or approve maps, (2) That the insured would have in the absence drawings, opinions, reports, surveys, change of the contract or agreement. orders, designs or specifications; or (b) Giving directions or instructions, or failing to give them, if 7 The insurance policy defined an insured con- that is the primary cause of the injury or damage . (continued...) . . .” 3 such as S&B. We take as a given that “you” discharge, dispersal, release or escape of in this policy only means American Pipe, ac- pollutants from premises owned by Factory cording to the policy’s definition of that word. (the only insured included in the policy’s de- Read with that definition, the policy excludes finition of ‘you’).”
Id. claims basedon American Pipe’s work or product, because American Pipe is substituted The instant case has different facts, but our for you in those exclusions. With that substi- reading of the insurance policy comports en- tution, the policy excludes (1) “‘Property dam- tirely with Chevron Chemical’s reading of the age’ to ‘[American Pipe’s] work’ arising out policy in that case. In both cases, the named of it or any part of it and included in the ‘prod- insured is substituted for “you” in the policy. ucts-completed operations hazard.’”; and Though the substitution in that case meant that (2) “‘Property damage’ to ‘[American Pipe’s] the exclusion did not apply because the pre- product’ arising out of it or any part of it.” mises were not owned by “you,” in this case the exclusion does apply, because the work or S&B’s claim as an additional insured is product serving as the basis of the claim was based on American Pipe’s work or product. “yours”SSAmerican Pipe’s. S&B is correct that if S&B’s work or product had been the basis of the suit, these exclusions Substituting “American Pipe” for “you” in would not apply, but they do apply in this case the subcontractor exception similarly reveals because American Pipe’s work or product is that S&B is not entitled to relief under that the cause of the claim. exception. The policy says that the “your work” exclusion does not apply “if the dam- National Union points us to Chevron aged work or the work out of which the dam- Chemical Co. v. Factory Compressor Parts, ages arises was performed on your behalf by a Inc.,
1993 WL 329999(E.D. La. Aug. 23, subcontractor.” Because the contract defines 1993), to support its position. Instead of bol- “you” as American Pipe, the exception applies stering National Union’s argument, however, when someone else does work as American Chevron Chemical confirms the effect we have Pipe’s subcontractor, not when American Pipe given to the terms of the policy here. In that is a subcontractor. “[O]n your behalf” be- case, an insurance policy excluded “bodily comes “on American Pipe’s behalf,” so S&B injury or property damage arising out of the cannot obtain the benefit of this exception, be- alleged or threatened discharge, dispersal, re- cause no one worked on American Pipe’s lease or escape of pollutants . . . at or from behalf. S&B was excluded from coverage be- premises you own, rent or occupy.”
Id. at *2cause American Pipe’s work or product was (internal quotations omitted). The “you” was the basis of the claim, and American Pipe did defined in the policy as the named insured in not hire a subcontractor to work on its behalf, the declaration, and the named insured was so the district court correctly determined that Factory Compressor Parts.
Id. at *3.Because S&B’s claim was excluded. the damage from pollutants occurred on Chev- ron’s and not Factory Compressor Parts’s B. premises, the exclusion did not apply on those National Union seeks coverage pursuant to facts: “[T]he pollution exclusion only applies the purchase order between S&B and Amer- to claims for bodily injury which arise from the ican Pipe in which American Pipe agreed to 4 defend and indemnify S&B. National Union asserts that Liberty Mutual, as American Pipe’s insurer, is liable to S&B for this obliga- tion. Because the basis of S&B’s claim is Amer- ican Pipe’s work or product, the indemnity provision in the purchase order does not pro- vide a way for S&B to be covered by Liberty Mutual’s policy. The indemnity provision was never triggered. American Pipe promised to indemnify S&B for claims “arising out of injury to, disease or death of, or damage to or loss of property of, persons (except for Seller’s property, employ- ees, agents or subcontractors) . . . .” This provision excludes damage to property of American Pipe, as the “Seller.” Without dam- ages beyond damages to American Pipe’s own work or product, the indemnity provision was never triggered, and Liberty Mutual is not ob- ligated to pay National Union on this basis. AFFIRMED. 5
Document Info
Docket Number: 06-30489
Filed Date: 5/18/2007
Precedential Status: Non-Precedential
Modified Date: 4/17/2021