Choice Foundation v. Law Industries, LLC

CHOICE FOUNDATION * NO. 2021-CA-0431

VERSUS *
COURT OF APPEAL
LAW INDUSTRIES, LLC, ET *
AL. FOURTH CIRCUIT
*
STATE OF LOUISIANA
*******

APPEAL FROM
CIVIL DISTRICT COURT, ORLEANS PARISH
NO. 2019-04985, DIVISION “J”
Honorable D. Nicole Sheppard
******
Judge Joy Cossich Lobrano
******
(Court composed of Judge Terri F. Love, Judge Joy Cossich Lobrano, Judge
Tiffany Gautier Chase)

Jonathan S. Forester
Donald C. Douglas, Jr.
Robyn A. Brown
RIESS LeMIEUX LLC
1100 Poydras Street, Suite 1100
New Orleans, LA 70163

COUNSEL FOR DEFENDANT/APPELLANT

Christian B. Bogart
Joseph E. Bearden, III
DUPLASS ZWAIN BOURGEOIS PFISTER WEINSTOCK & BOGART, APLC
Three Lakeway Center, Suite 2900
3838 North Causeway Boulevard
Metairie, LA 70002

COUNSEL FOR THIRD PARTY DEFENDANT/APPELLEE

AFFIRMED

MARCH 2, 2022

JCL This is an insurance coverage dispute. Defendant/appellant, Tuna

TFL Construction, LLC (“Tuna”), appeals the May 3, 2021 judgment of the district

TGC court, granting the motion for summary judgment in favor of third party

defendant/appellee, StarStone National Insurance Company (“StarStone”) and

dismissing Tuna’s third party demand against StarStone.

FACTS AND PROCEDURAL HISTORY

This litigation arises from construction work, which allegedly resulted in

asbestos contamination at Lafayette Academy Charter School (the “School”),

which is operated by Choice Foundation (“Choice”). During Phase I of

construction, Tuna was the general contractor. Tuna entered into a subcontract with

V. Keeler & Associates, Inc. (“Keeler”), which called for Keeler to perform

asbestos abatement work. Pursuant to the Tuna-Keeler subcontract, Keeler agreed

to have Tuna listed as an additional insured under Keeler’s insurance policies,

including the StarStone policy, which was a commercial umbrella liability

insurance policy. On May 10, 2019, Choice and the Orleans Parish School Board

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(“OPSB”) filed suit against numerous construction defendants, including Tuna and

Keeler, seeking damages for contamination of equipment, remediation expenses,

damages for disruption of operations, and relocation expenses from the removal of

asbestos-containing materials from the School’s campus. On July 26, 2019, Tuna

filed a cross-claim against Keeler and third party demand against StarStone and

Keeler’s other insurers. Tuna alleged that Keeler and its insurers, including

StarStone, owed Tuna defense, indemnity, and additional insured status for the

claims made against Tuna by Choice and OPSB.

On January 14, 2021, StarStone filed a motion for summary judgment

seeking dismissal of Tuna’s third party demand.1 StarStone argued that its policy

provided no insurance coverage or duty to provide defense or indemnity for the

underlying lawsuit against Tuna, because the StarStone policy contained an

asbestos exclusion. On March 25, 2021, a hearing went forward on the summary

judgment motion. On May 3, 2021, the district court rendered summary judgment

in StarStone’s favor and dismissed all of Tuna’s claims against StarStone in Tuna’s

third party demand. This appeal followed.

Tuna raises the following assignments of error on appeal:

1. The District Court erred in granting StarStone’s
Motion for Summary Judgment as the claims against
Tuna Construction, LLC, are not unambiguously
excluded under the policy language.

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StarStone (the appellee herein) and another insurer, StarStone Specialty Insurance Company,
jointly filed the motion for summary judgment at issue in this appeal. Summary judgment was
denied in part as to StarStone Specialty Insurance Company, which no party raises as error on
appeal.

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2. The District Court erred in granting StarStone’s
Motion for Summary Judgment as the petition
included broad claims including claims of negligence
against Tuna Construction, LLC, which are covered
claims under the policy language.

3. The District Court erred in granting StarStone’s
Motion for Summary Judgment as the “eight corners
rule” was incorrectly applied in this matter.

DISCUSSION

Motion for Summary Judgment

An appellate court reviews a district court’s ruling on a motion for summary

judgment using the de novo standard of review. Smith v. H & E Tugs LLC, 18-

0424, p. 3 (La. App. 4 Cir. 10/24/18), 258 So.3d 159, 161. The summary judgment

procedure is favored, and “[a]fter an opportunity for adequate discovery, a motion

for summary judgment shall be granted if the motion, memorandum, and

supporting documents show that there is no genuine issue as to material fact and

that the mover is entitled to judgment as a matter of law.” La. C.C.P. art.

966(A)(2)-(3). The applicable burden of proof is as follows:

The burden of proof rests with the mover.
Nevertheless, if the mover will not bear the burden of
proof at trial on the issue that is before the court on the
motion for summary judgment, the mover’s burden on
the motion does not require him to negate all essential
elements of the adverse party’s claim, action, or defense,
but rather to point out to the court the absence of factual
support for one or more elements essential to the adverse
party’s claim, action, or defense. The burden is on the
adverse party to produce factual support sufficient to
establish the existence of a genuine issue of material fact
or that the mover is not entitled to judgment as a matter
of law.

La. C.C.P. art. 966(D)(1).

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Duty to Defend

Tuna’s assignments of error require this Court to examine whether StarStone

owes a duty to provide Tuna with a defense. Tuna argues that the petition contains

claims that StarStone’s policy does not unambiguously exclude; thus, under Tuna’s

argument, StarStone must provide Tuna with a defense to the underlying lawsuit.

“Interpretation of an insurance policy usually involves a legal question that

can be resolved properly within the framework of a motion for summary

judgment.” Thebault v. Am. Home Assur. Co., 15-0800, p. 5 (La. App. 4 Cir.

4/20/16), 195 So.3d 113, 116 (citing Bonin v. Westport Ins. Corp., 05-0886, p. 4

(La. 5/17/06), 930 So.2d 906, 910) (other citation omitted). “An insurance policy is

a contract between the parties and should be construed employing the general rules

of interpretation of contracts set forth in the Louisiana Civil Code.” Thebault, 15-

0800, p. 5, 195 So.3d at 116-17 (citing Cadwallader v. Allstate Ins. Co., 02-1637,

p. 3 (La. 6/27/03), 848 So.2d 577, 580). “The extent of coverage is determined by

‘[t]he parties’ intent as reflected by the words in the policy,’ and ‘[s]uch intent is to

be determined in accordance with the general, ordinary, plain and popular meaning

of the words used in the policy, unless the words have acquired a technical

meaning.’” Perniciaro v. McInnis, 18-0113, p. 10 (La. App. 4 Cir. 9/7/18), 255

So.3d 1223, 1231 (internal quotations and citations omitted). “Insurers can limit

their liability absent a conflict with statutory provisions or public policy.” Id.

(citations omitted). “The insurer has the burden of proving that a claimed loss falls

within the policy exclusion.” Id. (citations omitted).

“The duty to defend arises solely under contract.” Arceneaux v. Amstar

Corp., 15-0588, p. 12 (La. 9/7/16), 200 So.3d 277, 286 (quotation omitted). “Under

Louisiana law, the duty to defend is broader than the duty to indemnify.” Spencer

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v. Chevron Corp., 16-0174, p. 7 (La. App. 4 Cir. 9/28/16), 202 So.3d 1055, 1059

(quotation and citation omitted). “The issue of whether a liability insurer has the

duty to defend a civil action against its insured is determined by application of the

‘eight-corners rule,’ under which an insurer must look to the ‘four corners’ of the

plaintiff’s petition and the ‘four corners’ of its policy to determine whether it owes

that duty.” Plaia v. Stewart Enterprises, Inc., 14-0159, p. 35 (La. App. 4 Cir.

10/26/16), 229 So.3d 480, 504 (quoting Mossy Motors, Inc. v. Cameras Am., 04-

0726, p. 6 (La. App. 4 Cir. 3/2/05), 898 So.2d 602, 606) (internal citation omitted).

“[T]he factual allegations of the plaintiff’s petition must be liberally interpreted to

determine whether they set forth grounds which raise even the possibility of

liability under the policy.” Id.

“If, assuming all of the allegations of the petition to be true, there would be

both coverage under the policy and liability of the insured to the plaintiff, the

insurer must defend the insured regardless of the outcome of the suit.” Spencer, 16-

0174, p. 8, 202 So.3d at 1059 (citations omitted). “[E]ven though a plaintiff’s

petition may allege numerous claims for which coverage is excluded under an

insurer’s policy, a duty to defend may nonetheless exist if there is at least a single

allegation in the petition under which coverage is not unambiguously excluded.”

Mossy Motors, Inc., 04-0726, p. 6, 898 So.2d at 606 (citation omitted). “However,

‘[i]f a petition does not allege facts within the scope of coverage, an insurer is not

legally required to defend a suit against its insured.’” Spencer, 16-0174, p. 8, 202

So.3d at 1059 (quotation and citation omitted).

To resolve the particular issue before us, we must consider the language of

the StarStone policy along with the petition. Section I of the policy outlines the

coverage provided, stating in relevant part:

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SECTION I – COVERAGE

A. We will pay on behalf of the insured the ultimate net
loss in excess of the retained limit which the Insured
becomes legally obligated to pay as damages because of
bodily injury, property damage or personal and
advertising injury to which this insurance applies.

(Emphasis in original).

The StarStone policy contains a broad asbestos exclusion, which reads:

SECTION IV – EXCLUSIONS

This insurance does not apply to any liability, damage,
loss, cost or expense:
…
B. ASBESTOS

Arising out of:

1. The manufacture of, mining of, use of, sale of,
installation of, removal of, distribution of or exposure to
asbestos, asbestos products, asbestos fibers, asbestos dust
or products or materials containing asbestos;

2. Any obligation of any insured to indemnify any party
because of damages arising out of the manufacture of,
mining of, use of, sale of, installation of, removal of,
distribution of or exposure to asbestos, asbestos products,
asbestos fibers, asbestos dust or products or materials
containing asbestos; or

3. Any obligation to defend any suit or claim against any
insured that seeks damages if such suit or claim arises
as the result of the manufacture of, mining of, use of, sale
of, installation of, removal of, distribution of or exposure
to asbestos, asbestos products, asbestos fibers, asbestos
dust or products or materials containing asbestos.

(Emphasis in original).

According to Tuna’s argument, the district court improperly applied the

exclusion and disregarded StarStone’s duty to defend Tuna. Tuna contends that the

petition contains allegations that are outside the scope of the exclusion and for

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which StarStone owes a duty to defend Tuna, regardless of the outcome of this

lawsuit. Tuna relies on the principle that, if the petition contains one allegation for

which the policy provides coverage to Tuna, StarStone owes Tuna a duty to defend

for the entire lawsuit. See Mossy Motors, Inc., 04-0726, p. 6, 898 So.2d at 606.

Tuna points out that the petition never alleges Tuna self-performed any asbestos

work. Tuna argues that the petition’s allegations as to Tuna included claims of

Tuna’s negligence in completing the project separate and apart from any asbestos

work. Tuna sets forth seven allegations within the petition, which Tuna claims the

asbestos exclusion does not unambiguously bar coverage:

5.

Defendant, Tuna, is a Louisiana limited liability
company doing business in New Orleans, Louisiana.
Tuna is a general contractor that RSD [Recovery School
District] contracted with to perform the Phase 1 Work,
which was for various improvements, including, but not
limited to, replacing windows, at the [School] during the
2016-2017 school year.
…

22.

Choice and OPSB assert that the faults, acts,
opinions, and/or negligence of the Defendants with
respect to the construction at the [School] caused and/or
contributed to the damages suffered by Choice and
OPSB.
…

27.

During construction, Tuna and its subcontractors
failed to submit necessary reports.
…

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29.

During that construction, Choice received
complaints from faculty regarding smells and sounds that
disrupted teaching and caused concern for their health.
…

34.

The failure of [other named defendants], Tuna, and
Keeler to properly oversee, manage, coordinate, and/or
complete the project in a safe and compliant manner led
to Choice’s and OPSB’s damages.
…

56.

Tuna was negligent, causing damage to Choice and
OPSB by, including, but not limited to, failing to follow
generally accepted construction practices and by
negligently performing renovations/work, by failing to
properly oversee and undertake the construction of its
work, by causing and/or contributing to delays, and by
failing to adhere to standards for a reasonably prudent
contractor in the Orleans Parish area.
…

81.

Due to the failure of Defendants to complete a
scheduled renovation project in a safe and timely manner
at the [School], OPSB has also incurred and is continuing
to incur damages.
…

Tuna argues that these are claims of general construction negligence,

administrative and communication issues, wherein none of these allegations use

the word “asbestos;” thus, Tuna argues, coverage is not unambiguously excluded,

and StarStone owes a duty to defend Tuna. We disagree, as all allegations of

Tuna’s negligence within the petition are asbestos-related. While the petition states

that Tuna was contracted for “various improvements” including “replacing

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windows,” no negligence is alleged or damages identified with respect to windows

or any other specific improvements aside from asbestos abatement. With respect to

the individual paragraphs that Tuna pinpoints within the petition, all allegations of

negligent construction, renovation, project management or completion; “smells and

sounds;” failure to submit reports; and project delays all refer to asbestos-related

work when read together with and in context with the surrounding paragraphs.

Specifically, Choice and OPSB alleged:

1.

… Tuna contracted with [Keeler] to remove asbestos-
containing floor tiles from four classrooms on the third
floor of the [School] in March 2016 (the “Phase 1
Work”). The negligence of [other construction
defendants], Tuna, and Keeler led to deficiencies as
outlined by the Louisiana Department of Environmental
Quality in a July 31, 2017 report. Notably, that report
was not given to Choice until nearly a year after that
date. Choice and OPSB were the subject of negative
media attention. Many parents and students were upset
that they were not notified of the report earlier, which
Choice understands led to some students switching to
other schools.
…

25.

The [School], like many schools and buildings in
New Orleans, contains asbestos, which is naturally
occurring in the environment. Asbestos has a risk of
being harmful, however, if the proper precautions are not
taken and there is exposure for prolonged periods of
time. Here, the Defendants knew or should have known
of proper precautions but failed to adhere to them.
…

30.

Choice later learned that on March 22, 2017,
Louisiana Department of Environmental Quality

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(“LDEQ”) visited the [School] and observed multiple
violations, which were outlined in an LDEQ Asbestos
Demolition/Renovation Compliance Inspection Report.
These violations were attributable to [] Keeler’s
negligence….2

32.

Abatement work had to stop while Tuna, [] Keeler,
and [other construction defendants] addressed the
violations….
…

2
The petition sets forth an excerpt of the LDEQ report as follows:

AREAS OF CONCERN

LAC 33:111.5151.F.3.h. No demolition or renovation activity that
disturbs RACM or ACDA shall be conducted at a facility regulated
by this Subsection unless at least one asbestos abatement
contractor/supervisor trained in accordance with Subsection P of
this Section is physically present. An accredited supervisor was not
initially present at the time of inspection. The “acting” supervisor
was found to be unaccredited with falsified paperwork.

LAC 33:111.5151.J.1.a.ii. Discharge no visible emissions to the
outside air from collection, mixing, wetting, and handling
operations, or use the methods specified by Subsection O of this
Section to clean emissions containing particulate asbestos material
before they escape to, or are vented to, the outside air. Boot prints
were visible on the floor between the two containment areas.
Children were walking the halls between the two containment
areas.

LAC 33:111.5151.F.3.a.iii. (a). The RACM and any ACD shall be
adequately wet, and contained in leak-tight, clear transparent
wrapping. The wrapped flooring sections were not wet.

LAC 33:111.5151.J.1.a.iii. After wetting, seal all asbestos-
containing waste material in leak-tight, clear, transparent
containers (i.e., bags) while wet; or, for materials that will not fit
into containers without additional breaking, put materials into leak-
tight, clear, transparent wrapping, ensuring that the ACWM is
securely wrapped and sealed. Only some asbestos containing waste
materials were wet. The large sections were not wet or leak-tight.

LAC 33:111.5151.J.1.a.iv. For asbestos-containing waste material
to be transported off the facility site, label containers or wrapped
materials with the name of the waste generator and the location at
which the waste was generated. Generator labels observed on bags
of material on 3/22/2017 were not legible. Large sections of ACM
that had been removed had no generator label at all. A follow-up
inspection on 3/27/2017 revealed that generator labels still were
not being used on every bag and removed section as required.

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52.

Due to the negligence of the Defendants, the work
had to cease, and the [School’s] first and second floors
contain unsafe asbestos levels and will require
remediation.
…
71.

Choice stored furniture and equipment of
significant value including, but not limited to, Choice’s
computer servers on the floors, which were contaminated
and must be replaced. Moreover, the play yard and
additional items, including those in the large metal
storage units in which Choice stored items from the first
floor, were contaminated. Thus far, Choice authorized an
expenditure of at least $1.3 million to replace
contaminated furniture and equipment.
…
79.

Accordingly, Choice seeks all damages resulting
from the Defendants’ actions, including, but not limited
to, (1) the amounts paid to replace furniture, equipment,
classroom materials, and other items that were
contaminated and to be replaced; (2) extra expenses it
incurred to relocate[] the [School] to the Kerlerec
Campus; and (3) lost profits to be calculated.
…

Assuming “all allegations of the petition to be true,” if there would be (1)

coverage under the policy and (2) liability to the plaintiff, the insurer must defend

the lawsuit. Arceneaux, 15-0588, p. 5, 200 So.3d at 282 (emphasis added). We find

that, under this standard, to assume all allegations are true, we cannot look at

Tuna’s cited allegations in a vacuum. Even construing said allegations liberally, it

cannot be said that the petition’s claims of construction negligence and

administrative and communication issues are separate and distinct from asbestos-

related negligence claims. Lacking any distinction, these claims are unambiguously

excluded from coverage, and StarStone owes Tuna no duty to defend against the

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claims made in the lawsuit. Summary judgment dismissing Tuna’s third party

demand against StarStone was properly granted.

CONCLUSION

Accordingly, for the reasons set forth herein, we affirm the judgment of the

district court.

AFFIRMED

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