Case Law

Date Decided: November 10^th, 2009

Originally Filed in: Louisiana (Federal)

Decided by: U.S. Court of Appeals, Fifth Circuit (Federal)

Court: United States Court of Appeals, Fifth Circuit

Judge: Judge King

Citation: 2009 WL 3753538 (5th Cir. 2009)

Background:
In this action, the Court considered the meaning and scope of an endorsement to an insurance policy excluding coverage for claims or suits against an insured brought pursuant to the Longshore and Harboer Worker's Compensation Act ("LHWCA").

In 2002, Bayou Steel Corp engaged Memco Barge Lines under a contract of affreightment to transport steel bundles by barge from Bayou's facility. Bayou loaded the barge and hired Kindra Marine Terminals, a stevedoring company, to unload the barge upon arrival.

While unloading the barge, Ryan Campbell, a Kinder employee, suffered substantial injuries.  As a result, Campbell filed suit against Bayou in Illinois state court.

Bayou's primary insurer accepted coverage and defense for Campbell's claims against Bayou. Bayou's primary insurer, excess wharfinger insurur, and excess insurers initially denied coverage.

Bayou brought suit against all of their insurers who had denied coverage of Campbell's claim.

The parties filed opposing Motions for Summary Judgment and presented coverage issues to the district court.

The district court granted Evanston's (excess wharfinger insurer) Motion for Summary judgment holding that Campbell's claims against Bayou were pursuant to the LHWCA and thus, the policy provided no coverage.

Issues:
Did this Court affirm the district court's granting of summary judgment in favor of Evanston holding that the LHWCA prevented Bayou from asserting coverage?

Held:
Bayou argued that Evanston's policy exclusion for suits brought "pursuant" to the LHWCA, does not exclude coverage for negligence claims brought by longshoremen against third parties.

This Court relied on another case in which an exclusion clause provided that claims would not be covered that resulted from,  "any losses arising out of injuries covered under the LHWCA". However, this Court noted Evanston's exclusion clause provided exclusion for "claims made or suits brought pursuant to the LHWCA".

Accordingly, this Court examined the nature of Campbell's claim against Bayou rather than looking at whether his injuries were covered under the LHWCA.

This Court found that Campbell's claims are unaffected by LHWCA's exclusivity provision. And therefore, Campbell's claim cannot be characterized as a claim "pursuant to" the LHWCA exclusion. Accordingly this Court found that Evanston had to provide coverage consistent with their respective policies.

Comments:
Wharfinger's insurance is insurance designed to cover work performed on  a wharf, often covering the activities of stevedore companies and longshoreman.

Some insurance companies will not cover claims that may be brought under the LHWCA because of the possible amount plaintiffs might be able to recover under the Act.

Here, because the claim was not one brought pursuant to, as drafted by the insurer, the insurance exclusion did not include the plaintiff's claim.