Tred R. Eyerly | Insurance Law Hawaii | December 23, 2015
The court found that the contractor was entitled to relief under the contractual indemnity provision, but not the policy’s additional insured clause. Chatelain v. Fluor Daniel Constr. Co., 2015 La. App. LEXIS 2257 (Ct. App. La. Nov. 10, 2015).
Following Hurricanes Katrina and Rita, FEMA retained Fluor Enterprises, Inc. as a contractor to transport and install FEMA trailers. Fluor entered a Blanket Ordering Agreement (BOA) with Bobby Reavis Contracting, Inc. to transport and install the trailers. The BOA provided Reavis would defend and indemnify Fluor from all liability arising from the subcontractor’s work. Reavis also agreed to name Fluor as an additional insured under its CGL policy.
Reavis installed a FEMA trailer for Connie Chatelain. Ms. Chatelain was injured when she fell exiting her FEMA trailer. She sued Fluor and Reavis. Fluor tendered the suit to Reavis and Reavis’ insurer, Guilford Insurance Company. The tender was rejected and Fluor filed a third-party action demanding indemnification, reimbursement of all legal expenses and damages for insurer misconduct.
Guilford settled Ms. Chatelain’s claims. The remaining parties filed cross-motions for summary judgment. The trial court granted Reavis’ and Guildord’s motions and dismissed Fluor’s claims.
Regarding indemnity under the BOA, the court of appeals noted that Reavis agreed to indemnify for “Injury or death of persons . . . arising directly or indirectly out of the acts or omissions to act of Contractor [Reavis] . . . in the performance of the Work.” In granting summary judgment to Reavis, the trial court interpreted the BOA to limit Reavis’ defenses and indemnity obligations to liability arising out of Reavis’ acts and omissions in the performance of its work as imposing a temporal requirement. Therefore, the language limited those obligations to claims arising during Reavis’ performance of its transportation and installation of Ms. Chatelain’s trailer. Fluor contended that this interpretation ignored the actual contract language.
Ms. Chatelain alleged that her injury resulted from defects and deficiencies in the prefabricated steps installed in her FEMA trailer. Reavis selected, purchased, and installed those steps as part of its performance for Fluor under the BOA. But for Reavis’ performance of its work under the BOA, the injury would not have occurred. The requirement of a minimal causal connection between Reavis’ work under the BOA and Ms. Chatelain’s injury was satisfied.
The analysis of the Additional Insured Endorsement led to a different result. The Endorsement provided coverage to Fluor for “liability arising out of your [Fluor’s] ongoing operations performed for that insured [Reavis].” The Endorsement excluded any coverage to Fluor if it was negligent. Ms. Chatelain alleged in her petition that Fluor’s negligence was the cause of her accident. The uncontroverted testimony was that the work on the trailer was completed, inspected, and approved by Flour six months prior to the accident. Therefore, the trial court determined that the Additional Insured Endorsement was no longer in effect at the time of the accident. The policy only provided coverage for the additional insured during the “ongoing operations.”
Fluor argued that when Ms. Chatelain was injured, the contract between it and Reavis remained in effect. Pursuant to the contract, Reavis was still actively transporting and installing trailers.
The court sided with the insurer. Given that ongoing operations could not encompass liability arising after the insured’s work was completed, Fluor’s claims arising out of Ms. Chatelain’s injury could not be covered under the Endorsement. Reavis’ work on the trailer was completed and accepted by Fluor at the time of Ms. Chatelain’s injury.