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Fifth Circuit Reverses District Court's Decision in Dispute between Insurers over P&I Exclusion

InĀ Cal-Dive International, Inc. v. Seabright Insurance Company, the Fifth Circuit Court of Appeals considered a dispute between two (2) insurers over which insurer was obligated to defend a vessel owner in a Jones Act action arising from an injury sustained aboard the owner's vessel. Upon review of the relevant policies at issue, the Fifth Circuit reversed the District Court's grant of summary judgment in favor of the maritime general liability insurer and rendered judgment in favor of the appellant.

The underlying tort action arose when a caterer was injured aboard the M/V AMERICAN HORIZON and brought suit under the Jones Act against both the catering company ("Coastal") and the owner of the vessel ("Horizon"). Pursuant to the contract between Horizon and Coastal, Coastal was obligated to defend Horizon, which it did through its Maritime General Liability ("MGL") insurer, appellee State National Insurance Company ("SNIC"). Coastal also had a Maritime Employer's Liability ("MEL") policy with appellant Seabright Insurance Company ("Seabright"), who defended Coastal in the litigation. At the conclusion of the underlying litigation, SNIC sought reimbursement from Seabright for the costs incurred in defending Horizon. The District Court granted SNIC's motion for summary judgment, finding that an alternate employment endorsement in Coastal's MEL policy triggered Seabright's obligation to defend Horizon.

On appeal by Seabright, the Fifth Circuit reversed. In reaching its conclusion, the Court looked to an exclusion in the MEL policy applying to bodily injury claims covered by a protection and indemnity (P&I) policy that might provide coverage for the clam. Because Horizon maintained a P&I policy covering the crew on its vessel, the Fifth Circuit accepted Seabright's argument on appeal that the exclusion unambiguously freed it from any duty to defend Horizon in the underlying tort action.

Read a copy of the Fifth Circuit Court of Appeals' decision

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