Blair v. Sealift, Inc

``
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 95-30600
DWAYNE BLAIR; GLORIA BLAIR,
Plaintiffs,
versus
SEALIFT, INC.,
Defendant——Third Party Plaintiff——Appellant,
versus
LOUISIANA INSURANCE GUARANTY ASSOCIATION,
Defendant——Third Party Defendant——Appellee.
Appeal from the United States District Court
For the Eastern District of Louisiana
August 5, 1996
Before HIGGINBOTHAM, WIENER and PARKER, Circuit Judges.
WIENER, Circuit Judge:
More than a decade ago, Defendant-Third Party Plaintiff-
Appellant Sealift, Inc. (Sealift) impleaded Defendant-Third Party
Defendant-Appellee Louisiana Insurance Guaranty Association (LIGA)
into the instant action. Since that time, the case has been
appealed to this court; consolidated with a number of similar
cases; forwarded by us together with a certified case to the
Louisiana Supreme Court; decided by us on the basis of the answer
to the question certified; remanded to the district court; and,
now, appealed once again to this court. At the heart of this
ongoing controversy is the question whether LIGA is obligated to
reinsure standard workers' compensation policies when claims are
brought under those policies for maritime-related injuries. The
particular issue raised by the instant appeal is whether the
district court on remand properly held that LIGA is not obligated
to cover such claims, and that it therefore need not reimburse
Sealift for its costs, including attorneys' fees. Notwithstanding
the fact that this last holding by the district court is
inconsistent with this court's holding in the initial appeal of the
instant case, we affirm because of supervening changes in the law.
I.
FACTS AND PROCEEDINGS
A. LIGA
In response to an increasing number of insolvencies among
insurance companies statewide, the 1970 Louisiana Legislature
enacted the Insurance Guaranty Association Law (IGAL).1 The IGAL
“created LIGA as a non-profit, unincorporated entity to pay valid
claims, up to statutory limits, in the event an insurer who was a
1
See LA. REV. STAT. ANN. §§ 22:1375 et seq. (West 1995).
2
member of [LIGA] became insolvent.”2 Specifically, when insurance
companies that are members of LIGA become insolvent, LIGA is
required to “assume . . . the benefits and obligations of the
direct insurance policies underwritten by the defunct carrier.”3
The IGAL expressly provides, however, that several particular
kinds of direct insurance will not be reinsured by LIGA.4
Significant to the instant appeal is the fact that “ocean marine
insurance” is one of those kinds of insurance excluded from LIGA's
reinsurance obligations.5 Since 1985, the precise meaning of
“ocean marine insurance” has been the subject of much litigation.
That litigation, and the 1989 amendments to the IGAL adopted in
response to it, are discussed below.
B. PROCEDURAL BACKGROUND
1. In District Court: Phase I
In November 1984, Plaintiffs Dwayne Blair (Dwayne) and his
wife, Gloria Blair, (collectively, the Blairs) filed suit under the
Jones Act and general maritime law against Sealift, Dwayne's
employer. The Blairs alleged that Dwayne had been injured in the
course of his employment as a crew member on one of Sealift's
vessels. At the time of Dwayne's alleged injury, Sealift was
2
Deshotels v. SHRM Catering Serv., Inc., 845 F.2d 582, 583
(5th Cir. 1988).
3
See Sifers v. Gen. Marine Catering Co., 892 F.2d 386, 388
(5th Cir.), modified on other grounds, 897 F.2d 1288 (5th Cir.
1990).
4
See LA. REV. STAT. ANN. § 22:1377 (West 1995).
5
See id.
3
insured under a “Standard Workmen's Compensation and Employers'
Liability” insurance policy (the WC/EL policy) issued by Transit
Casualty Company (Transit), a member of LIGA. Under the WC/EL
policy, Transit owed Sealift the duties of defense and indemnity.
In December 1985, Transit was declared insolvent by the
Louisiana's Commissioner of Insurance, and Transit's policies were
canceled. As a result, in January 1986, Sealift demanded that LIGA
assume Transit's obligations under the WC/EL policy. LIGA refused,
asserting that the policy constituted “ocean marine insurance”
within the meaning of the statutory exception to its reinsurance
obligations.
In response, Sealift filed a third party complaint against
LIGA in the Blair lawsuit, and the Blairs named LIGA as an
additional defendant. In April 1986, Sealift filed a motion for
summary judgment against LIGA, asserting that LIGA was obligated to
pay the full amount of the Blairs' claim. Sealift also sought
payment from LIGA of any attorneys fees and other costs incurred by
Sealift in its defense against the Blairs' suit, as well as in its
prosecution of the coverage claim against LIGA. In opposing the
motion, LIGA insisted that (1) the WC/EL policy constituted “ocean
marine insurance”; and (2) LIGA was therefore liable for neither
the Blairs' claim nor Sealift's attorneys' fees and costs.
In October 1986, Sealift and the Blairs reached a settlement
in the amount of $150,000. The Blairs agreed not to execute on the
settlement against Sealift, however, until LIGA's obligations were
judicially determined. Based on that settlement, the district
4
court entered a final, summary judgment dismissing the Blairs'
claims against Sealift. In that judgment, the court also ordered
LIGA to pay the amount owed to the Blairs under the settlement and
to reimburse Sealift for its attorneys’ fees and other costs.
2. First Appeal
a. Certification
LIGA timely appealed to this court from the district court's
grant of summary judgment. We consolidated that appeal with a
number of similar but unrelated cases that also raised the issue of
LIGA's obligation to pay a claim brought for maritime-related
injuries under a general workers' compensation policy. We then
certified one of the cases, styled Deshotels v. SHRM Services, to
the Louisiana Supreme Court.6 We also suggested that, in answering
the question certified in Deshotels, the Louisiana Supreme Court
“m[ight] . . . find helpful portions of the record in two other
cases pending before this court”——namely, the instant case, Blair
v. Sealift, Inc., as well as another of the consolidated cases,
Sifers v. General Marine Catering.7
6
See Deshotels v. SHRM Catering Serv., Inc., 845 F.2d 582, 585
(5th Cir. 1988) (“The style of the case in which certification is
made is Joseph Mike Deshotels, Plaintiff, versus SHRM Catering
Services, Inc. . . . on appeal from the United States District
Court for the Western District of Louisiana.”) (certifying the
following question: “Does this claim for maritime-related
injuries, brought on the Standard Workmen's Compensation and
Employers' Liability policy with a marine endorsement, involve
'ocean marine insurance' so as to be excluded . . . from the
coverage of the Insurance Guaranty Association Fund?”).
7
See id. As a result of our decision to forward the Blair
record to the Louisiana Supreme Court, there is some ambiguity as
to whether we actually certified Blair as well as Deshotels. We
need not resolve this debate, though, as its resolution does not
5
In January 1989, the Louisiana Supreme Court answered the
question certified in Deshotels. That court held that the disputed
“claim for maritime-related injuries, brought on a Standard
Workmen's Compensation and Employers' Liability policy . . . does
not involve 'ocean marine insurance' and is not excluded from the
coverage of the Insurance Guaranty Association Fund.”8
b. The Legislature's Response
Within months following the issuance of the Louisiana Supreme
Court's answer to the question certified in Deshotels, the
Louisiana Legislature responded by amending the IGAL. Prior to the
enactment of the amendments, the IGAL provided that LIGA would
reinsure "all kinds of direct insurance, except life, health,
mortgage guaranty, and ocean marine insurance."9 The amendments
added the following language to the statute: "The kind and
coverage of insurance afforded by any policy shall be determined by
the coverage specified and established in the provisions of that
policy regardless of any name, label, or marketing designation for
that policy."10 The amendments also inserted the following
definition of "ocean marine insurance":
“Ocean marine insurance” includes marine insurance as
defined in R.S. 22:6(13), except for inland marine, as
well as any other form of insurance, regardless of the
affect our analysis of the merits of the instant appeal. See
discussion infra part II.B.
8
Deshotels v. SHRM Catering Serv., Inc., 538 So. 2d 988, 993
(La. 1989) [hereinafter Deshotels].
9
See LA. REV. STAT. ANN. § 22:1377 (West 1989).
10
See LA. REV. STAT. ANN. § 22:1377 (West 1990).
6
name, label or marketing designation of the insurance
policy, which insures against maritime perils or risks
and other related perils or risks . . . . Such perils
and risks include . . . liability of the insured for
personal injury, illness or death . . . .11
c. Post-Certification
Soon after the amendments were enacted, and “[w]ith the
benefit of th[e Louisiana Supreme Court's] [pre-amendment]
resolution of our certified question,”12 we again considered the
consolidated appeals. LIGA argued that we should reject the pre-
amendment result reached by the Louisiana Supreme Court on
certification and instead retroactively apply the supervening
amendments to the IGAL, thereby releasing LIGA from any
responsibility to assume the WC/EL policies involved in the
consolidated cases.
We rejected LIGA's recommended approach, however, as we “s[aw]
no reason” to depart from the general rule that a state court's
answer to a certified question is “final and binding upon the
parties between whom the issue arose . . . [and thus] generally .
. . the 'law of the case' in any further federal court proceeding
involving those parties.”13 In particular, we “question[ed] whether
the Louisiana Supreme Court would conclude that the recent
legislation overruled its decision in Deshotels.”14
11
See LA. REV. STAT. ANN. § 22:1379 (West 1990).
12
Sifers v. Gen. Marine Catering Co., 892 F.2d 386, 389 (5th
Cir. 1990) [hereinafter Sifers].
13
Id. at 391.
14
Id. at 392.
7
Having determined that the Deshotels decision governed all of
the consolidated appeals, we held that LIGA was required to
reinsure the claims arising from the standard workers' compensation
policies involved in the cases. We also addressed the issue of
LIGA's obligation to pay the attorneys' fees and other costs of
litigation incurred by the insured employers. First, we held that
an insured could not recover attorneys' fees and costs incurred in
the successful prosecution of a claim against LIGA unless on remand
the district court found that LIGA had acted “arbitrarily,
capriciously, or without probable cause.”15 In addition, we
concluded that LIGA could not be held liable for fees and costs
incurred by an insured such as Sealift in the defense of claims
brought by plaintiffs such as the Blairs if by statute those claims
are excluded from LIGA's reinsurance obligations.16 We then
remanded each individual case to the district courts in which it
had arisen for further proceedings consistent with our opinion.
3. Back In District Court: Phase II
While the instant case was pending on remand, LIGA agreed to
cover the amount owed by Sealift to the Blairs under the
settlement. LIGA refused, however, to cover Sealift's costs and
attorneys' fees. Filing a motion for a summary judgment of
dismissal of Sealift's claim for costs and attorneys fees, LIGA
argued once again that the IGAL amendments should be applied
15
Id. at 399.
16
Id. at 399-400 (noting that “LIGA's statutory obligation is
coextensive with that of the insolvent insurer”).
8
retroactively to exclude the WC/EL policy from LIGA’s reinsurance
obligations. As noted by LIGA at the time, if the amendments were
applied retroactively then any claim by Sealift for costs and
attorneys' fees must fail for the following reasons: First, this
court had held that LIGA cannot be liable for legal services
rendered in the defense of nonrecoverable claims17; and second, as
a matter of law, LIGA cannot be considered to have acted
“arbitrarily, capriciously, or without probable cause” in
contesting unsuccessful prosecutions of coverage claims.18
After considering LIGA's motion, the district court agreed
that the IGAL amendments should be applied retroactively.
Accordingly, it granted summary judgment dismissing Sealift's
remaining claim for attorneys' fees and other costs of litigation.
The district court acknowledged that, in the earlier appeal of the
instant case, this court had expressly rejected the argument that
the IGAL amendments should be interpreted as overriding the
Louisiana Supreme Court's decision in Deshotels. Nevertheless, the
district court followed a contrary but supervening Louisiana
appellate court decision, Tidelands Ltd I v. Louisiana Ins.
Guaranty Ass'n,19 which had been issued after Deshotels, after the
amendments, and after the remand of the instant case.
The Tidelands decision squarely holds that (1) under the IGAL
17
Id.
18
Id. at 399.
19
645 So. 2d 1240 (La. Ct. App. 1994), writ denied, 650 So. 2d
252 (La 1995).
9
amendments, WC/EL policies constitute “ocean marine insurance,” and
(2) the IGAL amendments should be applied retroactively.20
Explaining its decision to follow Tidelands, the district court
stated:
This Court finds that Tidelands is the only post-
amendments decision which directly addresses the matter
before this Court, that is, whether WC/EL insurance
should be considered "ocean marine insurance" when its
coverage involves maritime claims. As such, it expresses
the current interpretation of state law on the matter
before this Court and should be followed absent a strong
showing that the state supreme court would rule
differently.
Understandably displeased with the district court's decision to
depart from this court's earlier decision to abide by Deshotels,
Sealift timely appealed. The issue is thus before us for the third
time.
II.
ANALYSIS
A. STANDARD OF REVIEW
When reviewing a grant of summary judgment, we view the facts
and inferences in the light most favorable to the non-moving
party21; and we apply the same standards as those governing the
trial court in its determination.22 Summary judgment must be
granted if a court determines "that there is no genuine issue as to
any material fact and that the moving party is entitled to a
20
See id.
21
See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256,
266 (5th Cir. 1995).
22
See Neff v. Am. Dairy Queen Corp., 58 F.3d 1063, 1065 (5th
Cir. 1995), cert. denied, 116 S. Ct. 704 (1996).
10
judgment as a matter of law."23
B. THE MERITS
1. Defining The Issue
The central issue presented by this appeal is whether the
district court erred in following Tidelands rather than our earlier
Sifers decision which applied the Louisiana Supreme Court’s
certification response as set out in Deshotels. If the district
court properly relied on Tidelands, then any claim by Sealift for
attorneys' fees and related costs must fail. First, Sealift’s
demand for fees incurred in the prosecution of its coverage claim
against LIGA would lack foundation, as in the end that claim would
have proved unsuccessful. Accordingly, LIGA's actions in resisting
the claim could not, as a matter of law, be considered arbitrary or
capricious.24 Second, Sealift's demand for fees incurred in
defending against the Blairs' claim would be unfounded: If
Tidelands were followed, then the Blairs' suit would comprise a
claim under “ocean marine insurance,” which would be excluded by
the IGAL as amended. Consequently, under circumstances in which
Tidelands prevails, LIGA would be liable for neither the Blairs'
claim nor for any attorneys’ fees and costs incurred by Sealift in
defending against the claim.25
At oral argument to this panel, Sealift and LIGA debated the
peripheral question whether Blair itself was certified to the
23
FED. R. CIV. P. 56(c).
24
Sifers, 892 F.2d at 399.
25
Id. at 400.
11
Louisiana Supreme Court together with Deshotels. That, however, is
a debate we need not resolve, as we conclude that regardless of
whether, technically, Blair was or was not certified, the district
court's decision to depart from our earlier ruling in the instant
case should be affirmed.
2. The Law of the Case
Generally, under the “law of the case” doctrine, our prior
rulings on given issues in a particular case must be followed
“without reexamination, both on remand to the district court and on
subsequent appeals to this court.”26 If such a ruling has
effectively implemented a state supreme court's response to a
question certified earlier from the case before us, then deference
to the ruling is particularly appropriate: A certification answer
“provide[s] this [c]ourt with indisputable authority for deciding
difficult and previously unresolved issues of [s]tate law.”27
26
N. Mississippi Communications, Inc. v. Jones, 951 F.2d 652,
656 (5th Cir.) (footnotes omitted), cert. denied, 506 U.S. 863
(1992).
We take this opportunity to note an additional “wrinkle” in
this procedurally complex case. Assuming arguendo that Blair was
not certified, the application of Deshotels opinion to the Blair
case could either be considered the law of the case or the
application of a “prior” panel decision, i.e., the binding
precedent of this circuit. See Sifers, 892 F.2d at 391-92
(treating the certification response as binding on parties to the
appeal who were not parties to the certified case, for the reason
that the answer is “now the law of this circuit”). This
distinction is of no moment here, however, as subsequent, clearly
contradictory state law trumps both the law of the case and the
otherwise binding nature of prior decisions of a panel of this
court. See, e.g., Lee v. Frozen Food Express, Inc., 592 F.2d 271,
272 (5th Cir. 1979).
27
Nat'l Educ. Ass'n, Inc. v. Lee County Bd. of Pub.
Instruction, 467 F.2d 447, 449 (5th Cir. 1972).
12
Nevertheless, our prior rulings may be reexamined both on
remand and on subsequent appeals if “controlling authority has
since made a contrary decision of law applicable to such issues.”28
This reexamination principle applies even when our earlier
resolution of the issue has followed a certification response by a
state's highest court, for the certification process does not
ultimately relieve us of “our constitutionally imposed duty to
decide cases properly before us for review.”29
We have in the past reexamined our own rulings that had been
based on a response by a state supreme court to a certified
question. The most instructive example for today's purposes is
Laubie v. Sonesta Int'l Hotel Corp.30——a case with a procedural
history remarkably similar to that of the instant case——in which we
certified an issue regarding innkeeper liability to the Louisiana
Supreme Court. With the benefit of that court's response to the
certified question, we ruled on the liability issue and remanded to
the district court. While the case was on remand, the Louisiana
Legislature amended the Civil Code to counteract the Louisiana
Supreme Court's interpretation of innkeeper liability.
In its decision on remand, the district court acknowledged our
earlier decision in which we had implemented the Louisiana Supreme
Court's analysis of the issue, but nevertheless applied the
28
N. Mississippi, 951 F.2d at 656.
29
Nat'l Educ. Ass'n, 467 F.2d at 449; see also Laubie v.
Sonesta Int'l Hotel Corp., 752 F.2d 165 (5th Cir. 1985).
30
752 F.2d 165.
13
amendments to the Civil Code as superseding the Louisiana Supreme
Court’s answer to our certified question —— and did so
retroactively. With that case once again before us on appeal, we
affirmed, noting that “[i]n Louisiana, a civil law jurisdiction,
the legislative will, as expressed in the articles of the Code, is
supreme.”31 Thus, even when one of our determinations follows a
certification response, it may be reexamined on remand or on
subsequent appeal when supervening authority has issued.
It is worth noting that the instant case differs from Laubie
in that, here, the legislative amendments were issued prior to our
earlier ruling in Sifers on the disputed issue. Nevertheless,
subsequent to our Sifers ruling, the Tidelands court issued an
opinion that directly contradicts our Sifers decision.32 Moreover,
in H & B Construction Co. of Louisiana v. LIGA,33 another state
appellate court independently determined that the IGAL amendments
should be applied retroactively. The H & B Construction decision
is not directly on point, as it deals with LIGA's obligation to
reinsure protection and indemnity (P & I) policies rather than
WC/EL policies. Nevertheless, H & B Construction strengthens the
district court's hindsight conclusion that we “got it wrong,” and
the Tidelands court “got it right.”
State appellate court decisions may constitute subsequent,
31
Id. at 167.
32
See Tidelands, 645 So. 2d 1240.
33
580 So. 2d 931 (La. Ct. App.), writ denied, 587 So. 2d 695
(La. 1991).
14
controlling authority that overrides an earlier determination by
this court. Specifically,
state intermediate appellate court decisions constitute
indicia of state law even when decided after a federal
court has rendered a contrary opinion if the federal
court judgment has not yet become final. Such decisions,
if applicable, should, therefore, be followed absent a
strong showing that the state supreme court would rule
differently.34
In the instant case, there has been no “strong showing” that the
Louisiana Supreme Court would depart from the conclusions of the
Tidelands and H & B Construction courts. Indeed, the only showing,
strong or otherwise, is to the contrary: The Louisiana Supreme
Court has denied writs in both Tidelands and H & B Construction.
Although the refusal to grant a writ has no precedential effect,
such a refusal does provide “persuasive” evidence that the
Louisiana Supreme Court approves of the legal conclusions reached
by the appellate court.35 Accordingly, in this instance the
district court properly determined that Tidelands constitutes
controlling authority which compels a departure from our earlier
certification-based decision on the issue of LIGA's obligation to
34
See Lavespere v. Niagara Mach. & Tool Works, Inc., 920 F.2d
259, 260 (5th Cir. 1990) (footnotes omitted), cert. denied, 114 S.
Ct. 171 (1993).
35
See Colonial Pipeline Co. v. Agerton, 289 So. 2d 93, 96 (La.
1974) (noting that a refusal to grant a writ is “persuasive,” but
is without the precedential weight of a case in which a writ has
been granted), aff'd, 421 U.S. 100 (1975).
15
reinsure the WC/EL policy.36.549 So.2d 283 (La. 1989).37
III.
CONCLUSION
For the foregoing reasons, the district court's grant of
summary judgment dismissing Sealift's claim against LIGA for
attorneys' fees and other costs is
AFFIRMED.
36
Sealift urges that the Louisiana Supreme Court's decision in
Backhus v. Transit Casualty Co.
clearly indicates that the Louisiana Supreme Court would reject
the holdings of the Tidelands court. In Backhus, an opinion issued
shortly after the Legislature amended the IGAL, the Louisiana
Supreme Court recited its Deshotels opinion with approval.
Nevertheless, the Backhus opinion never discusses the impact of the
IGAL amendments on the state of the law; in fact, the amendments
are not even mentioned in the opinion. Moreover, the central issue
of the Backhus opinion is whether P & I policies, rather than WC/EL
policies, constitute “ocean marine insurance.” Thus, standing
alone, Backhus provides no persuasive evidence on the issue of how
the Louisiana Supreme Court would rule on the matter at hand. Any
tentative indication to the contrary that we may have made in our
earlier decision in the instant case, see Sifers, 892 F.2d at 392,
is best characterized as dicta, the accuracy of which has not stood
the test of time.
16