Coastal Chemical Company, LLC v. The Travelers Indemnity Company and Lexington Insurance Company

STATE OF LOUISIANA

COURT OF APPEAL

FIRST CIRCUIT

2021 CA 1471

BRILLIANT NATIONAL SERVICES, INC.

VERSUS

THE TRAVELERS INDEMNITY COMPANY AND LEXINGTON
INSURANCE COMPANY

JUDGMENT RENDERED:
SEP 0 7 2022

Appealed from
The Nineteenth Judicial District Court
Parish of East Baton Rouge • State of Louisiana
Docket Number 656, 308 • Section 24

The Honorable Donald Johnson, Presiding Judge

James K. Ordeneaux COUNSEL FOR APPELLANT
Scott H. Mason PLAINTIFF/ DEFENDANT- IN-
G. Bruce Parkerson RECONVENTION— Brilliant
New Orleans, Louisiana National Services, Inc.

Amy S. Malish COUNSEL FOR APPELLANTS
Maura Z. Pelleteri DEFENDANTS- IN-
EFENDANTS- IN-

New Orleans, Louisiana RECONVENTION—
RECONVENTION— BrilliantBrilliant
National Services, Inc. and
Coastal Chemical Company,
LLC

Jonathan B. Womack COUNSEL FOR APPELLEE
Paul M. Wellons DEFENDANT/ PLAINTIFF- IN-
New Orleans, Louisiana RECONVENTION— Lexington
Insurance Company

BEFORE: MCCLENDON, WELCH, AND THERIOT, JJ.

Tit,. ae'
9 - (-*
V.4-*
AA

WELCH, J.

In this insurance coverage dispute, the plaintiff, Brilliant National Services,

Inc. (" Brilliant"), appeals a summary judgment rendered in favor of the defendant,

Lexington Insurance Company (" Lexington"), which dismissed all of Brilliant' s

claims against Lexington with prejudice and declared that Lexington has no duty to

defend or indemnify Coastal Chemical Company, LLC (" CCC, LLC"). We affirm.

In a related appeal - 2021 CA 1472— Brilliant and CCC, LLC challenge the

summary judgment rendered in favor of The Travelers Indemnity Company, The

Charter Oak Fire Insurance Company, The Phoenix Insurance Company, and

United States Fidelity and Guaranty Company— which dismissed all of Brilliant' s

claims against the Travelers companies with prejudice and declared they had no

duty to provide insurance coverage to Brilliant or CCC, LLC under the policies at

issue.

FACTS AND PROCEDURAL HISTORY

Brilliant filed suit against Lexington ( among other defendants), seeking

contribution for the costs of defending CCC, LLC in a number of asbestos -

exposure personal injury lawsuits filed in various state courts in Louisiana,

beginning in 2011. Brilliant alleged that Lexington issued a general liability

insurance policy to its insureds for the period of August 20, 1986, through August

201 1987 (" Lexington policy"). Brilliant alleged that certain plaintiffs in the

asbestos lawsuits claimed that CCC, LLC was the successor to an insured entity

under the Lexington policy that was alleged to have manufactured, distributed,

marketed, or sold asbestos -containing products. Brilliant claimed that if CCC,

LLC was found to be the successor to an insured entity under that Lexington

policy, then the insured entity' s rights under the policy transferred to CCC, LLC by

operation of law. Brilliant further alleged that regardless of whether CCC, LLC

was the successor of an entity insured under the policy, Lexington owed CCC,

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LLC a duty to defend based on the allegations raised in the asbestos lawsuits and

the terms and conditions of the Lexington policy. Accordingly, Brilliant sought

declaratory judgment that Lexington owed a duty to defend CCC, LLC in the

asbestos lawsuits. Brilliant also sought judgment in its favor and against

Lexington for 1/ 7 of all attorney' s fees and costs paid by Brilliant in defense of

CCC, LLC in the asbestos lawsuits, together with legal interest, costs, and all other

relief to which Brilliant may be entitled.

In response, Lexington filed a peremptory exception of no right of action,

arguing that Brilliant had no right to raise a claim under the Lexington policy.

Following a hearing, the trial court overruled the exception. Thereafter, Lexington

answered, raising numerous affirmative defenses, and filed a reconventional

demand against Brilliant and CCC, LLC. In its reconventional demand, Lexington

sought a declaration that it owed no duty to defend, indemnify, or provide any

benefit to Brilliant or CCC, LLC under the Lexington policy.'

Lexington moved for summary judgment, seeking a judgment in its favor

declaring that CCC, LLC has no rights under the Lexington policy; dismissing the

claims asserted by Brilliant; and awarding judgment in favor of Lexington on its

reconventional demand against Brilliant and CCC, LLC. Brilliant and CCC, LLC

opposed the motion.'

Following a hearing, the trial court took the matter under advisement and

ordered the parties to submit post -hearing proposed findings of fact, burdens of

proof, conclusions of law, and a proposed judgment.

In a judgment signed on October 7, 2020, the trial court granted Lexington' s

motion for summary judgment; dismissed all of Brilliant' s claims against

1 Brilliant and CCC, LLC answered Lexington' s reconventional demand, raising a dilatory
exception of prematurity and affirmative defenses.

The trial court granted Brilliant and CCC, LLC' s ex parte motion to file their memorandum
and exhibits in opposition under seal.

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Lexington with prejudice; and declared that Lexington has no duty to defend or

indemnify CCC, LLC. The trial court adopted Lexington' s proposed findings of

fact and conclusions of law as its reasons for judgment. Brilliant and CCC, LLC

now appeal.'

SUMMARY JUDGMENT ON INSURANCE COVERAGE

Whether an insurance policy, as a matter of law, provides or precludes

coverage is a dispute that can be properly resolved within the framework of a

motion for summary judgment. George S. May Int' 1 Co. v. Arrowpoint Capital

Corp., 2011- 1865 ( La. App. 1St Cir. 8/ 10/ 12), 97 So. 3d 1167, 1171. Summary

judgment declaring a lack of coverage under an insurance policy may not be

rendered unless there is no reasonable interpretation under which coverage could

be afforded when applied to the undisputed material facts shown by the evidence

supporting the motion. Smith v. Moreau, 2017- 0003 ( La. App. 11t Cir. 6/ 2/ 17),

222 So. 3d 761, 765. Absent a conflict with statutory provisions or public policy,

insurers are entitled to limit their liability and impose and enforce reasonable

conditions upon the policy obligations they contractually assume. Hickey v.

Centenary Oyster House, 97- 1074 ( La. 10/ 20/ 98), 719 So. 2d 421, 425. An

insurer seeking to avoid coverage through summary judgment bears the burden of

proving some exclusion applies to preclude coverage. Smith, 222 So. 3d at 765.

Appellate courts review summary judgments de novo under the same criteria

that govern the district court' s consideration of whether summary judgment is

appropriate. Guste v. Lirette, 2017- 1248 ( La. App. 1st Cir. 6/ 4/ 18), 251 So. 3d

1126, 1129. Where the facts are undisputed and the matter presents a purely legal

question, summary judgment is appropriate. See Landry v. Progressive Sec. Ins.

Co., 2021- 00621 ( La. 1/ 28/ 22), So. 3d , 2022 WL 263003, at * 3.

3 Brilliant and CCC, LLC filed a motion for devolutive appeal on December 10, 2020. The trial
court signed an order of appeal on December 10, 2020, notice of which was transmitted by the
Clerk of Court to the parties on December 11, 2020.

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DISCUSSION

In their first assignment of error, Brilliant and CCC, LLC argue that the trial

court erred in declaring that Lexington had no duty to defend or indemnify CCC,
LLC in the asbestos lawsuits. In their related second assignment of error, the

appellants argue that genuine issues of material fact exist as to whether CCC, LLC

is the successor to Lexington' s insured, i.e., the entity that allegedly distributed the

products at issue in the underlying asbestos lawsuits. The appellants argue these

genuine issues of material fact should have precluded the trial court from granting

summary judgment in Lexington' s favor.

An insurer' s duty to defend its insured arises solely under contract.

Arceneaux v. Amstar Corp., 2015- 0588 ( La. 9/ 7/ 16), 200 So. 3d 277, 286.

Generally, the insurer' s obligation to defend suits against its insured is broader

than its liability for damage claims. Yount v. Maisano, 627 So. 2d 148, 153 ( La.

1993). An insurer' s duty to defend its insured is determined by the allegations of

the plaintiff' s petition, with the insurer obligated to furnish a defense unless from

the petition, it is clear the policy unambiguously excludes coverage. Guste, 251

So. 3d at 1133. If, assuming the allegations of the petition are true, there is both

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

insured regardless of the outcome of the suit. Guste, 251 So. 3d at 1133. An

insurer' s duty to defend suits on behalf of an insured presents a separate and

distinct inquiry from that of the insurer' s duty to indemnify a covered claim after

judgment against the insured in the underlying liability case. See Elliott v. Cont' l

Cas. Co., 2006- 1505 ( La. 2/ 22/ 07), 949 So. 2d 1247, 1250.

Lexington' s Insureds

In moving for summary judgment, Lexington argued that it had no duty to

defend or indemnify CCC, LLC, nor its subrogee, Brilliant, because CCC, LLC is

not and has never been one of Lexington' s " insureds." Lexington' s evidence

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submitted in support of its motion shows that Lexington issued policy number

GL919- 1272 to Coastal, Inc. and Coastal Chemical Co. The policy was effective

from August 20, 1986, to August 20, 1987. The policy' s " duty to defend"

provision set forth:

I. COVERAGE A—BODILY INJURY LIABILITY
COVERAGE B— PROPERTY DAMAGE LIABILITY

The company will pay on behalf of the insured all
sums which the insured shall become legally obligated to
pay as damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence,
and the company shall have the right and duty to
defend any suit against the insured seeking damages
on account of such bodily injury or property damage,
even if any of the allegations of this suit are groundless,
false[,]or fraudulent, and may make such investigation
and settlement of any claim or suit as it deems expedient,
but the company shall not be obligated to pay any claim
or judgment or to defend any suit after the applicable
limit of the company' s liability has been exhausted by
payment of judgments or settlements.

Emphasis added). The Lexington policy defined " named insured" as:

named insured" means the person or organization

named in Item 1 of the declarations of this policy[.]

Item 1 of the policy lists the " named insured" as Coastal, Inc. and Coastal

Chemical Co. The Lexington policy defined " insured" as:

insured" means any person or organization qualifying as
an insured in the " Persons Insured" provision of the
applicable insurance coverage.

The Lexington policy defined " Persons Insured" as:

II. PERSONS INSURED

Each of the following is an insured under this
insurance to the extent set forth below[:]
a) if the named insured is designated in the declarations
as an individual, the person so designated but only
with respect to the conduct of a business of which he
is the sole proprietor, and the spouse of the named
insured with respect to the conduct of such a business;
b) if the named insured is designated in the declarations
as a partnership or joint venture, the partnership or
joint venture so designated[,] and any partner or

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member thereof[,] but only with respect to his liability
as such;

c) if the named insured is designated in the declarations
as other than an individual, partnership[,] or joint
venture, the organization so designated[,] and any
executive officer, director[,] or stockholder thereof

while acting within the scope of this duties as such;
d) any person ( other than an employee of the named
insured) or organization while acting as real estate
manager for the named insured; and
e) with respect to the operation, for the purpose of
locomotion upon a public highway, of mobile

equipment registered under any motor vehicle

registration law....

Coastal, Inc. and Coastal Chemical Co. were the " Persons Insured" under

the Lexington Policy. The parties do not dispute that the Lexington policy expired

prior to the formation of CCC, LLC' s predecessor, the second Coastal Chemical

Co., Inc., which was incorporated on December 8, 1987. Because neither CCC,

LLC nor its predecessor was a party to the Lexington policy, CCC, LLC cannot be

a " named insured" under the Lexington policy. Furthermore, neither CCC, LLC

nor its predecessor falls into the definition of " Persons Insured" under the

Lexington Policy.

Successor Liability

Lexington argued next that CCC, LLC could only be entitled to defense and

indemnity under the Lexington policy if CCC, LLC or its predecessor acquired the

named insureds'— Coastal, Inc. or Coastal Chemical Co.— rights and interests in

the Lexington policy. Lexington argues that its policy has never been transferred

to CCC, LLC or its predecessor. In 1987, Coastal Chemical Co., Inc. acquired the

chemical distribution business of Lexington' s insured, Coastal, Inc. Lexington

submitted evidence showing that Brilliant and CCC, LLC identified the 1987 asset

transfer agreement as the only documents through which the Lexington policy

could have been conveyed, sold, or otherwise transferred from Lexington' s insured

to Coastal Chemical Co., Inc. The 1987 asset transfer agreement documents

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submitted by Lexington in support of its motion shows a list of transferred assets;

however, the Lexington policy is not listed nor referenced in the asset transfer

agreement.
Lexington avers that because its policy was not transferred from its

insureds to Coastal Chemical Co., Inc. in the 1987 asset transfer agreement, CCC,

LLC never acquired the policy nor any rights thereunder from its predecessor.

Accordingly, Lexington argues it has no obligation to defend or indemnify CCC,

LLC or its subrogee, Brilliant.

The following facts are pertinent to the issue of successor liability. The

company alleged to have distributed the asbestos -containing products in the

asbestos lawsuits was incorporated in 1958 as the first " Coastal Chemical Co.,

Inc." In 1974, Coastal Chemical Co., Inc. amended its charter to change its

corporation' s name to " Coastal, Inc." In 1987, a new corporation named " Coastal

Chemical Co., Inc." was incorporated. In December 1987, the newly incorporated

Coastal Chemical Co., Inc. acquired the chemical distribution business of Coastal,

Inc. ( i.e., all usable inventory), which was transferred from Coastal, Inc. to Coastal

Chemical Co., Inc. in a 1987 asset transfer agreement. The Lexington policy was

not included in and not acquired by Coastal Chemical Co., Inc. in the 1987 asset

transfer. Coastal, Inc. remained in business and continued to operate after the 1987

asset transfer. In 2010, Coastal, Inc. merged with Coastal of Abbeville, LLC. In

2015, Coastal of Abbeville, LLC declared bankruptcy, and its assets were

liquidated in bankruptcy proceedings. Coastal Chemical Co., Inc. later merged

with CCC, LLC.

The 1987 asset transfer agreement provided, in pertinent part:

1. Coastal Chemical Company, Inc. offers to acquire the
list of assets outlined in Attachment A....

2. Coastal, Inc. will keep all assets not listed in
Attachment A.

3. Coastal Chemical Company, Inc. will not assume any
liabilities known or unknown prior to close of business
midnight December 31, 1987.

Louisiana Civil Code article 1821 provides that one person' s assumption of

the obligation of another must be in writing to be enforceable against third parties.

The Civil Code further provides that a person who assumes, by agreement, the

obligation of another " is bound only to the extent of his assumption." La. C. C. art.

1822. Applying this law to the above -quoted language of the 1987 asset transfer

agreement, it is undisputable that Coastal Chemical Co., Inc. did not assume any of

the liabilities or obligations of Coastal, Inc. when Coastal Chemical Co., Inc.

purchased certain assets of Coastal, Inc. in the 1987 asset transfer.

Despite this, appellants argue in opposition that because certain plaintiffs in

the underlying asbestos lawsuits alleged that CCC, LLC is the successor to

Coastal, Inc., Lexington owes CCC, LLC a duty to defend, irrespective of whether

the allegations of successor liability are ultimately proven, or whether the plaintiffs

prevail.' Even though CCC, LLC expressly denies that it is Coastal, Inc.' s

successor, the appellants argue that the plaintiffs in the asbestos lawsuits would

have to establish CCC, LLC' s successor liability in order to recover. Regardless of

whether the plaintiffs prevail, the appellants contend that Lexington owes CCC,

LLC a duty to defend based on the asbestos plaintiffs' allegations.

The basic principle of corporate successor liability was set forth by the

United States Supreme Court in Golden State Bottling Co., Inc. v. National

Labor Relations Board:

T] he general rule of corporate liability is that, when a
corporation sells all of its assets to another, the latter is
not responsible for the seller' s debts or liabilities, except
where ( 1) the purchaser expressly or impliedly agrees to
assume the obligations; ( 2) the purchaser is merely a

Brilliant and CCC, LLC state that in the underlying asbestos lawsuits, the courts never resolved
the issue of which entity succeeded to Coastal, Inc.' s liabilities and that all but one of the
underlying asbestos lawsuits has been dismissed.

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continuation of the selling corporation; or ( 3) the

transaction is entered into to escape liability.

414 U.S. 168, 182 n. 5, 94 S. Ct. 4145 424, 38 L.Ed.2d 388 ( 1973). Louisiana

Courts have followed this general rule of corporate successor liability. J.D. Fields

Co. v. Nottingham Const. Co., LLC, 2015- 0723 ( La. App. 1St Cir. 11/ 9/ 15),

184 So. 3d 99, 102.

Herein, the key consideration is whether the successor is in fact a

continuation" of the predecessor. See J.D. Fields & Co., 184 So. 3d at 103.

Brilliant and CCC, LLC point out that certain asbestos plaintiffs alleged that CCC,

LLC is a " continuation" of Coastal, Inc. and its former division, Coastal Chemical

Co. The extent to which a predecessor and a successor have common

shareholders, directors, officers, or even employees are pertinent considerations.

Further, prior business relationships should be considered, as should the continuity

of the identity of the business in the eyes of the public. J.D. Fields & Co., 184

So. 3d at 103. However, the threshold requirement to trigger a determination of

whether successor liability is applicable under the " continuation" exception is that

one corporation must have purchased all or substantially all the assets of another.

J.D. Fields & Co., 184 So. 3d at 103 ( citing Pichon v. Asbestos Defendants,

2010- 0570 ( La. App. 4th Cir. 11/ 17/ 10), 52 So. 3d 240, 244, writ denied, 2010- 2771

La. 2/ 4/ 11), 57 So. 3d 317). In the instant case, CCC, LLC admits that Coastal

Chemical Co., Inc. did not purchase all the assets of Coastal, Inc., only all the

assets " necessary to operate a chemical distribution business." There is no dispute

that Coastal, Inc. retained assets and remained in business after the 1987 asset

transfer.

The appellants argue that summary judgment was improper because there

are genuine issues of material fact as to whether CCC, LLC is the successor to

Coastal, Inc.; however, there is no actual dispute on the issue of successor liability.

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CCC, LLC admits that the Lexington policy was not among the assets transferred

from Lexington' s insured to CCC, LLC' s predecessor in the 1987 asset transfer

agreement. There are no allegations in the underlying asbestos lawsuits that CCC,

LLC' s predecessor acquired all of Coastal, Inc.' s assets and liabilities. Finally,

CCC, LLC has expressly and repeatedly denied that CCC, LLC is the successor to

Coastal, Inc.

The asbestos plaintiffs' allegations that CCC, LLC is the successor to

Coastal, Inc. are legal conclusions, not factual allegations. Any legal conclusions

regarding successor liability are irrelevant to any determination of Lexington' s

defense obligation. It is well settled that allegations of fact contained in a petition,

and not the conclusions, determine the obligation to defend. Henly v. Phillips

Abita Lumber Co., 2006- 1856 ( La. App. 1St Cir. 10/ 3/ 07), 971 So. 2d 1104, 1114.

Coverage Follows Liability"

Brilliant and CCC, LLC further argue that under the theory of " coverage

follows liability," the right to recover under an insurance policy transfers by

operation of law when the liability for which the coverage is sought also transfers

by operation of law. " The right to recover under an insurance policy follows the

liability that the insurer underwrote." See P.R. Mallory & Co., Inc. v. Am. States

Ins. Co., No. 54C01 -0005 -CP -00156 ( Ind. Cir. Ct. July 29, 2004), 2004 WL

1737489, at * 5( unpublished) ( citing Northern Insurance Co. of New York v.

Allied Mut. Ins. Co., 955 F. 2d 1353, 1357 ( 9th Cir. 1992) (" the right to indemnity

arising from [ the policy] transferred together with the potential liability. This right

to indemnity followed the liability rather than the policy itself')). We note,

however, that the Northern Insurance case from which this theory of "coverage

follows liability" derives may no longer be good law.5

5 See Axis Reinsurance Co. v. Telekenex, Inc., 913 F. Supp. 2d 793, 808 ( N.D. Cal. 2012).
Subsequent decisions by California state courts raise questions as to the validity of the Northern
Insurance rule, even in California. At least one California court of appeals has rejected outright

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As noted by Lexington, the " coverage follows liability" theory has never

been adopted in Louisiana.6 Louisiana law is clear that liabilities do not

automatically transfer, but must be in writing. La. C. C. art. 1821. Successor

liability does not entitle a successor, by operation of law, to the insurance coverage

of its predecessor in Louisiana. Any person alleging that CCC, LLC assumed

Coastal, Inc.' s delictual obligations must demonstrate that the assumption was in

writing. Courts must look to the contract itself to determine whether liabilities

were transferred.' See La. C. C. art. 1821; J.D. Fields & Co., 184 So. 3d at 102.

As stated previously, the 1987 asset transfer agreement excluded the

Lexington policy from the list of assets acquired by CCC, LLC' s predecessor from

Lexington' s insured. To conclude that CCC, LLC acquired the Lexington policy,

we would have to ignore the parties' contract.'

the Northern Insurance rule. See Gen. Accident Ins. Co. v. Superior Ct., 55 Cal. App. 4th
1444, 1454, 64 Cal. Rptr. 2d 781, 788 ( 1997).

6 The U. S. Fifth Circuit Court of Appeals has also rejected the " coverage follows liability"
theory in a case similar to the current matter, where a purchase agreement between two parties
did not transfer a policy of insurance. The Fifth Circuit noted that the purchase agreement
specifically excluded the insurance policy from the asset transfer agreement, holding that the
parties clearly intended for the insurance coverage to remain with [ the policyholder]." Keller
Foundations, Inc. v. Wausau Underwriters Ins. Co., 626 F. 3d 871, 876- 78 ( 5th Cir. 2010).

7 Louisiana may enforce certain post -loss transfers of liability insurance, entitling the assignee to
certain rights:

There is no public policy in Louisiana which precludes an anti -assignment clause
from applying to post -loss assignments. However, the language of the anti -
assignment clause must clearly and unambiguously express that it applies to post -
loss assignments. Thus, it is necessary for the federal district court to evaluate the
relevant anti -assignment clauses on a policy -by -policy basis to determine whether
the language is sufficient to prohibit post -loss assignments.

In re Katrina Canal Breaches Litig., 2010- 1823 ( La. 5110111), 63 So. 3d 955, 964.

8 In support of the " coverage follows liability" theory, the appellants cite to AMEC Constr.
Mgmt., Inc. v. Fireman' s Fund Ins. Co., No. CIV.A. 13- 718- JJB ( M.D. La. May 9, 2014),
2014 WL 1875264 ( unpublished). In AMEC, the insurer filed a Fed. R. Civ. P. 12( b)( 6) motion,
seeking a dismissal of an alleged successor entity' s complaint for " failure to state a claim upon
which relief can be granted," which is similar to an exception of no cause of action in Louisiana
state courts. The federal district court found that the complaint alleged facts sufficient to show
that successor liability may exist under the corporate successor liability " continuation"
exception, and that the alleged successor entity may be able to establish that its alleged
predecessor' s insurer may have a duty to defend and indemnify under the policy at issue.
AMEC Constr. Mgmt., Inc., 2014 WL 1875264, at * 3. The appellants mischaracterize the
AMEC case, however, by claiming that the federal district court held that rights under a liability
policy transfer by operation of law. The AMEC court merely denied an insurer' s Fed. R. Civ. P.

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Eight -Corners Rule"

Brilliant and CCC, LLC argue that based on the " eight -corners rule," the

allegations of the petitions in the underlying asbestos lawsuits and the terms of the

Lexington policy determine whether Lexington owes CCC, LLC a duty to defend.

The plaintiffs in the underlying asbestos lawsuits alleged they were exposed to

asbestos -containing products that were supplied and distributed by CCC, LLC

during the time period when Lexington' s policy was issued to Coastal, Inc. and

Coastal Chemical Co. Overlapping with successor liability issues, certain asbestos

plaintiffs alleged that CCC, LLC is the successor to Coastal, Inc. Accepting the

asbestos plaintiffs' allegations as true, CCC, LLC would be liable for conduct that

took place during the effective dates of the Lexington policy. In contrast,

Lexington argues that there are no allegations against CCC, LLC in the underlying

asbestos lawsuits that trigger coverage under the Lexington policy. Lexington

contends that the appellants cannot point to any factual allegations made by the

plaintiffs in the underlying asbestos lawsuits which, if assumed true, transforms

CCC, LLC into a " Persons Insured" under the Lexington policy.

Referred to as the " eight -corners rule" by our Supreme Court in American

Home Assurance Co. v. Czarniecki, 230 So. 2d 253, 259 ( La. 1969), an insurer

must look to the four corners of the petition and the four corners of the policy to

determine whether it has a duty to defend. Vaughn v. Franklin, 2000- 0291 ( La.

App. 1St Cir. 3/ 28/ 01), 785 So. 2d 79, 84, writ denied, 2001- 1551 ( La. 10/ 5/ 01), 798

So. 2d 969. Cases applying the " eight -corners rule" hold that an insurer owes a

duty to defend if, assuming the factual allegations are true, there would be both ( 1)

coverage under the policy, and ( 2) liability to the plaintiff. Maldonado v. Kiewit

Louisiana Co., 2013- 0756 ( La. App. 1St Cir. 3/ 24/ 14), 146 So. 3d 210, 218- 19.

12( b)( 6) motion. The court did not make any substantive holding on the " coverage follows
liability" theory, nor on an insurer' s duty to defend.

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When making this analysis, the allegations of the petition are liberally interpreted

in determining whether they set forth grounds that bring the claims within the

scope of the insurer' s duty to defend. An insurer' s duty to defend arises whenever

the pleadings against the insured disclose even a possibility of liability under the

policy. Although the allegations of the petition may ultimately turn out to be

incorrect or untrue, the insurer is still obligated to provide a defense. Vaughn, 785

So. 2d at 84. If, however, a petition does not allege facts within the scope of

coverage, an insurer is not required to defend a suit against its insured. Guste, 251

So. 3d at 1134.

Even though the asbestos plaintiffs allege that CCC, LLC " negligently and

defectively designed, manufactured, marketed, distributed, supplied, sold and

used" the " asbestos products," those allegations do not trigger coverage under the

four corners of the Lexington policy. The pertinent Lexington policy provision

clearly defines " Persons Insured" and includes only specific individuals.' None of

The Lexington policy defined " named insured" as:
named insured" means the person or organization named in Item I of the
declarations of this policy.

Item 1 of the policy lists the " named insured" as Coastal, Inc. and Coastal Chemical Co. The

Lexington policy defined " insured" as:
insured" means any person or organization qualifying as an insured in the
Persons Insured" provision of the applicable insurance coverage.

The Lexington policy defined " Persons Insured" as:
II. PERSONS INSURED
Each of the following is an insured under this insurance to the extent set
forth below[:]
a) if the named insured is designated in the declarations as an individual, the
person so designated but only with respect to the conduct of a business of which
he is the sole proprietor, and the spouse of the named insured with respect to the
conduct of such a business;
b) if the named insured is designated in the declarations as a partnership or joint
venture, the partnership or joint venture so designated[,] and any partner or
member thereofj,] but only with respect to his liability as such;
c) if the named insured is designated in the declarations as other than an

individual, partnership[,] or joint venture, the organization so designated[,] and
any executive officer, director[,] or stockholder thereof while acting within the
scope of his duties as such;
d) any person ( other than an employee of the named insured) or organization
while acting as real estate manager for the named insured; and

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the asbestos plaintiffs' allegations could, even if proven, transform CCC, LLC into

an individual defined as a " Persons Insured" under the Lexington Policy— i.e., an

executive officer, director, or stockholder of the " named insured" Coastal, Inc. or

Coastal Chemical Co.

DECREE

For the reasons discussed herein, we affirm the trial court' s October 7, 2020

judgment. All costs of this appeal are assessed against the appellants, Brilliant

National Services Inc. and Coastal Chemical Company, LLC.

AFFIRMED.

e) with respect to the operation, for the purpose of locomotion upon a public
highway, or mobile equipment registered under any motor vehicle registration
law....

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