Larry Naquin, Sr. v. Elevating Boats, L.L.C.
817 F.3d 235, 2016 U.S. App. LEXIS 5329, 2016 WL 1138516 (2016)
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Rule of Law:
A maritime Protection & Indemnity (P&I) insurance policy covering liability incurred 'as owner of the vessel' does not extend to injuries caused by non-vessel operations unless there is a causal operational relation between the vessel and the injury; the vessel cannot merely be the inert locale of the incident.
Facts:
- Larry Naquin, an employee of Elevating Boats, LLC (EBI), was operating a land-based crane owned by EBI.
- The pedestal of the crane snapped due to a defective weld, for which EBI was responsible.
- The crane toppled over, causing Naquin to jump from the crane house to escape.
- Naquin sustained severe injuries, including a broken left foot, a severely broken right foot, and an abdominal hernia, while another employee was killed.
- The land-based crane was not on, nor in close proximity to, any vessel at the time of the accident.
Procedural Posture:
- Larry Naquin sued his employer, Elevating Boats, LLC (EBI), in federal district court under the Jones Act.
- A jury found EBI negligent and awarded Naquin damages for his injuries.
- EBI appealed to the U.S. Court of Appeals for the Fifth Circuit, which affirmed EBI's liability but remanded the case for a new trial solely on the issue of damages.
- On remand, the district court granted EBI leave to file a third-party complaint against its insurer, State National Insurance Company (SNIC), for breach of contract and bad faith in denying coverage.
- The district court severed EBI's insurance claims from the damages trial.
- SNIC filed a motion for summary judgment, arguing the policy did not cover the land-based incident.
- The district court granted summary judgment in favor of SNIC.
- EBI, as the appellant, appealed the district court's grant of summary judgment to the U.S. Court of Appeals for the Fifth Circuit, with SNIC as the appellee.
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Issue:
Does a maritime insurance policy that indemnifies the insured for liability incurred 'as owner of the Vessel' cover an injury caused by a defective land-based crane that has no causal operational connection to a vessel?
Opinions:
Majority - Graves, J.
No. A maritime insurance policy covering liability 'as owner of the Vessel' does not cover an injury caused by a defective land-based crane with no causal connection to a vessel. The court, interpreting the policy under Louisiana law, must read the contract as a whole. The phrase 'as owner of the Vessel' is a critical limitation on the broader 'any casualty or occurrence' language, meaning the policy only covers liability arising from EBI's conduct as a shipowner. Citing its precedent in Lanasse v. Travelers Ins. Co., the court reasoned there must be a 'causal operational relation between the vessel and the resulting injury.' Here, the liability arose from EBI's negligence as a crane operator due to a defective weld on a land-based crane. Since the crane was not on or near a vessel and the vessel's operation had no causal link to the accident, the incident is not covered. Because the underlying insurance claim is invalid, EBI's statutory bad-faith claim against the insurer necessarily fails.
Analysis:
This decision reaffirms and applies the 'causal operational relation' test from Lanasse v. Travelers Ins. Co. for determining the scope of maritime P&I policies. It clarifies that specific limiting language, such as 'as owner of the vessel,' constrains the policy's coverage, even in the presence of broader terms like 'any casualty.' The ruling serves as a clear precedent that for amphibious or mixed land-sea operations, the specific source of liability (e.g., as a shipowner versus a crane operator) is the determinative factor for coverage. This holding reinforces a strict interpretation of policy limits, potentially narrowing coverage for companies with diverse operational risks under a single maritime policy.
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