Alex M. Legros v. Great American Insurance Company of New York

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

CW02-1478

ALEX M. LEGROS

VERSUS

GREAT AMERICAN INSURANCE COMPANY OF NEW YORK, ET AL.

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ON APPLICATION FOR SUPERVISORY WRITS FROM THE
THIRTY-EIGHTH JUDICIAL DISTRICT COURT
PARISH OF CAMERON, NUMBER 10-15935
HONORABLE H. WARD FONTENOT, DISTRICT JUDGE

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BILLIE COLOMBARO WOODARD
JUDGE

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Court composed of Billie Colombaro Woodard, Michael G. Sullivan, and Billy
Howard Ezell, Judges.

WRIT DENIED.

Gregory P. Marceaux Randell E. Treadaway
Marceaux Law Firm Jessica G. Roux
1800 Ryan Street, Suite 101 Reich, Meeks & Treadaway, L.L.C.
Lake Charles, Louisiana 70601 3850 North Causeway Boulevard
(337) 433-3300 Two Lakeway Center, Suite 1000
Counsel for Plaintiff/Respondent: Metairie, Louisiana 70002
Alex LeGros (504) 830-3999
Counsel for Defendant/Applicant:
Billy Edward Loftin, Jr. Great American Insurance
Attorney at Law Company of New York
2901 Hodges Street
Lake Charles, Louisiana 70601 Robert Edwin Torian
(337) 310-4300 LaBorde & Neuner
Counsel for Plaintiff/Respondent: Post Office Drawer 52828
Alex LeGros Lafayette, Louisiana 70505-2828
(337) 237-7000
Counsel for Defendant/Respondent:
Crick Insurance Agency, Inc.

Marshall M. Redmon
Virginia Y. Trainor
Phelps, Dunbar, L.L.P.
Post Office Box 4412
Baton Rouge, Louisiana 70821-4412
(225) 346-0285
Counsel for Defendant/Respondent:
U.S. Risk Brokers, Inc.

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WOODARD, Judge.

Great American applied to this court for a supervisory writ, alleging that it can
have no liability to Mr. LeGros for damages to his fishing vessel; therefore, the trial
court erred in denying its motion for summary judgment. We find no error in the trial
court’s decision and deny Great American’s writ, accordingly.

*****

The Plaintiff, Mr. Alex LeGros, a self-employed commercial fisherman, had
just unloaded his catch at Don Bailey’s Fish House on June 5, 2001, when his vessel,
M/V MISS ANGIE, caught fire. He and some of the deck and dock hands were able
to extinguish the fire but not before it caused substantial damage to the vessel’s living
quarters and pilothouse.
Accordingly, Mr. LeGros filed a claim with his insurance company to recover
his loss. It denied recovery, both, because his policy had expired three days before the
fire and because he had violated the trading warranty designation of “port risk,” which
it claims voided the policy even before its expiration date. Mr. LeGros filed suit
against The Crick Agency, Inc., (Crick), U.S. Risk Brokers, Inc. (U.S. Risk), and
Great American Insurance Company of New York, f/k/a American National Fire
Insurance Company (Great American).
Great American, a foreign insurance company authorized to and doing business
in Louisiana, had issued Mr. LeGros a policy of limited coverage, on the vessel, from
June 2, 2000 to June 2, 2001. Crick was Mr. LeGros’ retail agent. Thus, he
communicated directly with Crick to obtain the policy. Afterwards, Crick contacted
U.S. Risk, one of the intermediate wholesale brokers with whom it had a contract, and
informed it of Mr. LeGros’ coverage needs. In turn, U.S. Risk communicated the
information it obtained from Crick to various insurance companies with whom it
contracted, seeking a company that would agree to issue Mr. LeGros a policy. Great
American agreed to issue the policy, which consisted of hull insurance and protection
and indemnity coverage. The policy contained the following “Trading Warranty:”
“PORT RISK OUT OF COMMISSION CAMERON, LA.” The policy does not
define or describe the terms “trading warranty,” “port risk,” or “out of commission.”

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At the time that Mr. LeGros sought the policy on the M/V MISS ANGIE, the
vessel was in port for repairs. Furthermore, he had been keeping it in port for a period
of time before this because of his divorce. He alleges that he told the Crick agent that
the vessel would only be in port for a couple of weeks for repairs, after which he
intended to start fishing again. The Crick agent, however, alleges that Mr. LeGros
knew that he was supposed to contact her before he took the vessel out of port. She
was not aware that he was using it until she tried to reach him to discuss the renewal
of his policy and was informed that he was unavailable because he was out fishing.
When he returned, he completed the renewal application and gave it to Crick.
Crick submitted it to U.S. Risk, indicating that the delay in getting it to U.S. Risk was
because Mr. LeGros had been out fishing. Facsimile records indicate that U.S. Risk
passed along this information to Great American. At that time, presuming that Mr.
LeGros had been using the vessel named in the policy for his fishing voyages, it told
U.S. Risk that it would not be offering a renewal to Mr. LeGros and, furthermore,
there was no existing coverage because the present policy was warranted “port risk.”
U.S. Risk informed Crick that Great American had declined to renew the policy and
that it attempted to get a quote from other companies, but they declined to offer
coverage. Whether Crick informed Mr. LeGros that his policy was not being renewed
is disputed. The fire occurred on June 5, 2001, three days after the end of the policy
term.
Mr. LeGros asserts that Great American and U.S. Risk had a duty to send him
a notice that his policy was not going to be renewed and that they breached this duty.
Great American moved for summary judgment, asserting that it did not have a duty
to provide him with a notice of non-renewal and, even if it had renewed the policy, his
breach of the trading warranty would have voided it. The trial court denied Great
American’s motion. Great American applied for a supervisory writ to this court.
Great American contends that it can have no liability for Mr. LeGros’ loss, as
a matter of law, and that the trial court should have dismissed it from the case,
accordingly. Specifically, it claims: (1) that its policy is exempt from the Louisiana
Insurance Code; therefore, it is relieved of providing policy holders notice of non-
renewal; and (2) Mr. LeGros’ use of the vessel outside of its “port risk” designation
was a material breach of his contract which voided the policy.

2

*****

DUTY TO NOTIFY UNDER LOUISIANA LAW

Louisiana Revised Statutes 22:636.4(D), which is applicable to renewals of
commercial insurance, provides, in pertinent part:

(1) An insurer may decide not to renew a policy if it delivers or
mails to the first-named insured at the address shown on the policy
written notice it will not renew the policy. Such notice of nonrenewal
shall be mailed or delivered at least sixty days before the expiration date.
. . . If the notice is mailed less than sixty days before expiration,
coverage shall remain in effect under the same terms and conditions until
sixty days after notice is mailed or delivered. . . .

(2) Notice of nonrenewal shall not be required if the insurer or a
company within the same insurance group has offered to issue a renewal
policy, or where the named insured has obtained replacement coverage
or has agreed in writing to obtain replacement coverage.

However, La.R.S. 22:636.4 is located in Part XIV of the Louisiana Insurance
Code, which is entitled “The Insurance Contract.” The provisions under Part XIV are
explicitly limited. Specifically, the Code says that “[t]he applicable provisions of this
Part shall apply to insurance other than ocean marine and foreign trade insurances.”1
(Emphasis added.) Traditional marine insurance, such as hull insurance, is considered
ocean marine insurance.2
Nevertheless, the Louisiana Supreme Court, answering a certified question of
law from the Fifth Circuit, concerning the ocean marine exclusion, stated:

This language seems to indicate that the legislature intended for
the exclusions to apply to only some of the sections of Part XIV. Had
the legislature intended for the exclusionary language of La.R.S. 22:611
to apply to all of Part XIV, it would have left out the “applicable
provisions” language and simply stated, “The provisions of this Part

1
La.R.S. 22:611(A).
2
See La.R.S. 22:1379(9). See also Grubbs v. Gulf Int’l Marine, Inc., 625 So.2d
495 (La.1993).

3

shall apply to insurances other than ocean marine and foreign trade
insurances.”3

Afterwards, the court traced the history of the “direct action statute,” the statute at
issue in that case which is also found in Part XIV, and concluded that the statute
applied to ocean marine policies notwithstanding the exclusion found in La.R.S.
22:611.4
Likewise, we find that the provision, requiring the insurer to send the insured
a notice of non-renewal, is applicable to ocean marine insurance policies. The
Louisiana insurance laws were codified in Act 195 of 1948.5 However, as early as
1870, the U.S. Supreme Court had endorsed the application of international uniform
rules, practice, and laws, regarding contracts of marine insurance.6 Achieving this
uniformity required the application of federal law rather than each state’s law.7 The
Supreme Court continued its endorsement of applying federal law to marine insurance
contracts until 1955.8 Thus, in 1948, when the Louisiana insurance laws were
codified, there was no need to subject marine insurance policies to those laws which
would have been displaced, anyway, by federal maritime law.
However in 1955, the U.S. Supreme Court abandoned its position that federal
rules should uniformly apply in marine insurance matters.9 Instead, it concluded that
where there is no judicially established federal admiralty rule, courts should apply
state law, instead.10 The Fifth Circuit recently concluded that, in deciding which law
should govern, even when there is a federal admiralty rule, we should consider

3
Grubbs, 625 So.2d at 503 (quoting Giannouleas v. Phoenix Mar. Agencies,
Inc., 621 So.2d 1131, 1135 (La.App. 1 Cir. 1993).
4
Grubbs, 625 So.2d 495.
5
1948 La. Acts No. 195. See also Grubbs, 625 So.2d 495.
6
See, e.g., New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. 1(1870).
7
Dunham, 78 U.S. 1 (1870). See also Paula Hamilton Lee, Untying the Gordian
Knot and Opening Pandora’s Box: The Need for a Uniform Federal Maritime Rule
of Uberrimae Fidei with Respect to Marine Insurance, 19 TUL.MAR.L.J. 411 (1995).
8
See Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 368
(1955). See also Lee, supra note 7.
9
See Wilburn, 348 U.S. 310.
10
Id.

4

whether it constitutes “entrenched federal precedent,” whether the state’s law is
materially different, and evaluate the state’s interest in applying its law.11
In the instant case, we find no federal rule which addresses the issue of an
insurer’s duty, or lack of, to provide notice of non-renewal of a marine insurance
policy. Thus, we conclude that La.R.S. 22:636.4 applies to marine insurance policies.
Furthermore, we believe that federal law would surely dictate the same result as our
state law. The federal rules governing marine insurance contracts developed from the
uberrimae fidei doctrine.12 “The doctrine of uberrimae fidei in marine insurance law
requires both the insurer and the assured to exercise ‘the highest degree of good faith’
to inform each other of every fact material to the risk to be insured.”13 We cannot
imagine that the doctrine of uberrimae fidei would not impose the same duty on the
insurer; namely, the duty to notify its insured of its choice not to renew his policy.
It is undisputed that Great American did not send a notice, directly to Mr.
LeGros, that it was not renewing his policy. Thus, whether it fulfilled its duty by
disseminating the information to another party requires a determination of the
agent/principal relationships, if any, among all four parties. Whether an agency
relationship exists between parties is a question of fact and must be determined on the
particular circumstances in each case.14 Accordingly, this issue cannot be disposed
of on summary judgment.
Nonetheless, according to La.R.S. 22:636.4, failure to provide such notice
results in continued coverage “under the same terms and conditions” as the previous
policy. Accordingly, Great American asserts that there is no coverage under its policy
because Mr. LeGros breached the “port risk” trading warranty, which voided the
policy.

11
Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882 (5th Cir.), cert. denied, 502 U.S.
901, 112 S.Ct. 279 (1991).
12
See Lee, supra note 7.
13
David B. Sharpe, James E. Mercante, Diane M. Butler & Todd A. Zilbert,
Recent Developments in Maritime Law, 19 TUL.MAR.L.J. 301, 343 (1995) (citing
Albany Ins. Co. v. Horak, 1994 AMC 273 (E.D.N.Y. 1993)).
14
Venable v. U.S. Fire Ins. Co., 02-505 (La.App. 3 Cir. 10/30/02), 829 So.2d
1179.

5

BREACH OF TRADING WARRANTY

Great American alleges that Mr. LeGros’ violation of the “port risk”
designation automatically voided the policy. Relying on Forrester v. Arco Oil & Gas
Co.,15 Great American asserts that the policy was void from the moment the vessel left
port. We cannot agree. Forrester is not instructive in the instant case. In that case,
the endorsement, itself, “provided that the vessel was covered only when it remained
in port; once the vessel commenced voyage, the coverage would terminated [sic].”16
The Forrester court continued, “Indisputably, the accident occurred after the vessel
had left port and commenced a voyage.”17
Thus, there are two important distinctions which render Forrester inapplicable
to the instant situation. First, the policy in Forrester defined the port risk designation
and, also, included the penalty for violating it. Thus, the court was construing
language within the policy. In the instant case, we must determine what the law
provides when the policy is silent. Secondly, the vessel in Forrester was in violation
of the policy provisions at the time of the accident. Therefore, the court was not
required to determine coverage in a situation where the vessel had committed a
violation of the policy before the accident but was no longer in violation at the time
of the accident. And, most significantly, the parties conceded that there was no
coverage under the policy; thus the Forrester court did not, specifically, address the
issue.18
Like Forrester, the other cases that the parties cite involve an accident that
happened while the vessel was in violation; thus, it was unnecessary in those cases for
the courts to determine the precise effect, per se, of the respective violations.
Therefore, the facts in the instant case present a res nova issue. Although we
find no cases that squarely address the effects of a previous violation of a port risk
designation, when the vessel is no longer in violation at the time of the accident, the
Fifth Circuit has stated, “[a] warranty as to the place where the policy stipulates the

15
No.CIV.A.88-777, 1989 WL 114006 (E.D.La. Sept. 25, 1989). See also
Forrester v. Arco Oil & Gas Co., No. CIV.A.88-777, 1991 WL 110389 (E.D.La. June
13, 1991).
16
Forrester, 1991 WL 110389 at *1.
17
Id. at *1.
18
Forrester, 1989 WL 114006.
6

insured vessel is to be located during the period covered by the policy makes the right
of the insured to recover for damages or loss dependent upon the vessel being at the
stated place when the damage or loss occurred.”19 As Mr. LeGros points out, the
vessel was in port at the time of the fire. Therefore, we do not find that his previous
violation automatically voided his policy.
An “insurer is required to clearly express exclusions to its insuring obligations
and . . . any doubt or ambiguity is to be resolved against the insurer . . . and in favor
of what reason and probability dictate was intended by the parties with respect to
coverage.”20 We find that the “port risk” designation is ambiguous when read in
conjunction with the “HELD COVERED CLAUSE” which states:

PROVIDED, HOWEVER, SHOULD THE VESSEL AT THE
EXPIRATION OF THIS POLICY BE AT SEA, OR IN DISTRESS, OR
AT A PORT OF REFUGE OR CALL, SHE SHALL, PROVIDED
PREVIOUS NOTICE BE GIVEN TO THE UNDERWRITERS, BE
HELD COVERED AT A PRO RATA DAILY PREMIUM TO HER
NEXT RETURN TO FIRST PORT IN THE UNITED STATES.

Additionally, while Mr. LeGros’ testimony was unclear regarding whether he
understood what the “port risk” designation meant, he alleges that, when he applied
for the policy, he informed Crick that he would be putting the vessel back in
navigation in the next couple of weeks after he had completed the repairs. Whether
Crick told him that he needed to notify them when the repairs were finished and
before he took it on a voyage is disputed. The determination of this factual dispute
bears on what the parties reasonably intended concerning coverage. In fact,
ascertaining what the parties reasonably intended regarding coverage, in the instant
case, will require a survey of all of the facts. Therefore, we agree with the trial court
that summary judgment in Great American’s favor is inappropriate.
Furthermore, even if it is ultimately determined that there is no coverage under
the policy between Great American and Mr. LeGros, nevertheless, he should have the
opportunity to demonstrate whether Great American’s breach of its duty not to send
notice of its non-renewal was a cause of his failure to obtain insurance covering the

19
Graham v. Milky Way Barge, Inc., 824 F.2d 376, 383 (5th Cir. 1987) (quoting
Robinson v. Home Ins. Co., 73 F.2d 3, 4 (5th Cir. 1934).
20
Graham, 824 F.2d at 383 (quoting Benton Casing Serv., Inc. v. Avemco Ins.
Co., 379 SO.2d 225, 232 (La.1979)).
7

vessel at the time of the loss, therefore, contributing to damages his lack of coverage
caused.
While we express no opinion on these issues, we agree with the trial court that
there are mixed questions of law and fact, in dispute, in this case, making it
inappropriate for a decision on summary judgment. Thus, we deny Great American’s
writ, finding that the trial court was correct in denying summary judgment in its favor.

CONCLUSION

We agree with the trial court that disputed issues of material fact preclude Great
American’s dismissal on summary judgment. Therefore, we deny Great American’s
writ. We tax costs associated with this writ to Applicant/Great American.

WRIT DENIED.

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