Amer Home Assurance v. Unitramp Ltd ( 1996 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 96-20006
Summary Calendar
AMERICAN HOME ASSURANCE COMPANY,
Plaintiff-Counter Defendant
Appellee,
versus
UNITRAMP LIMITED and
UNITRAMP, S.A.,
Defendants-Counter
Claimants-Appellants.
Appeal from the United States District Court
for the Southern District of Texas
(CA-H-95-522)
June 20, 1996
Before HIGGINBOTHAM, DUHÉ, and EMILIO M. GARZA, Circuit Judges.
PER CURIAM:*
Unitramp Limited and Unitramp, S.A. appeal the judgment of the
U.S. District Court declaring that American Home Assurance Company
owes them no indemnity for losses they incurred in a shipping
*
Local Rule 47.5 provides: "The publication of opinions that
have no precedential value and merely decide particular cases on
the basis of well-settled principles of law imposes needless
expense on the public and burdens on the legal profession."
Pursuant to that Rule, the Court has determined that this opinion
should not be published.
mishap. They further appeal the district court's award of
attorneys' fees to American Home. We vacate the district court's
judgment and remand for further proceedings.
I.
Unitramp was the time charterer of the M/V Glenita, a general
cargo vessel owned by Ugland. On June 8, 1993, Enjet Refining,
Inc. delivered 450 tons of fuel to the M/V Glenita at Enjet's
Ingleside facility near Corpus Christi, Texas. Unitramp ordered
that the fuel be kept in segregated bunkers while a laboratory
analysis of the fuel was performed. The M/V Glenita departed for
Mobile, Alabama on June 9. In Mobile, the ship took on a cargo of
coal. The M/V Glenita departed Mobile on June 13, 1993 bound for
Casablanca.
On June 14, 1993, while the M/V Glenita was at sea, Unitramp
received the report of the laboratory analysis of the fuel. The
report disclosed an unacceptably high level of water in the fuel.
Ugland informed Unitramp that the fuel could not be used. Unitramp
directed the M/V Glenita to proceed to Tampa, Florida, where Enjet
refueled the ship.
Unitramp sued Enjet for losses it incurred as a result of the
delay caused by the need to refuel the M/V Glenita. Enjet filed
for bankruptcy while the Unitramp suit was pending, but the
bankruptcy court lifted the automatic stay and permitted Unitramp
to continue prosecuting its lawsuit against Enjet. Unitramp and
Enjet subsequently settled the dispute for $210,000.
2
Unitramp then sought to recover its judgment from Enjet's
insurer, American Home. American Home had issued Galveston
Terminal, Inc. a comprehensive liability policy effective from June
12, 1992 to noon on June 12, 1993. The policy named Enjet as an
additional assured and covered liability arising from operations at
scheduled locations. Enjet's Ingleside facility was not one of
those covered locations. American Home renewed the policy. The
renewed policy was effective as of noon on June 12, 1993 and
covered Enjet's Ingleside facility.
Both policies defined an "occurrence" as:
an event or a continuous or repeated exposure to
conditions which unintentionally, from the standpoint of
the Assureds, causes injury, loss, damages or destruction
during the policy period. Any number of such injuries,
damage or destruction resulting from a common cause or
from exposure to substantially the same conditions shall
be deemed to result from one occurrence.1
The policies further provided that "[o]perations or products in
existence prior to the inception of this policy which cause or
result in bodily injury or property damage during the policy period
are covered by this policy."
American Home sued Unitramp, seeking a declaratory judgment
that it owed Unitramp no indemnity under its policies. Unitramp
counterclaimed, seeking a declaration to the contrary. The crux of
the litigation centered on when the covered "occurrence" happened:
1
The renewal policy omits the term "loss" from this
definition. The parties do not contend that the difference in
policy language affects this appeal.
3
when the fuel was loaded on board the ship or when Unitramp
discovered that the fuel was unacceptable. The district court
agreed with American Home that, under the terms of the policy,
liability attached at the time of the causative event, not at the
time damage was discovered. Since Enjet delivered the bad fuel at
a time when American Home's policy did not cover Enjet's Ingleside
facility, no coverage existed. The district court awarded American
Home declaratory relief and, subsequently, $7,750 in attorneys'
fees.
II.
On appeal, Unitramp argues that, under Texas law, an
"occurrence" is not when the act causing the damage is committed,
but rather when the damage from that act is actually sustained.
According to Unitramp, it did not sustain any damage until it
discovered that the fuel was bad, that is, on June 14, 1993 when
the M/V Glenita was at sea.
In Snug Harbor, Ltd. v. Zurich Ins., 968 F.2d 538, 544 (5th
Cir. 1992), we observed that "Texas courts have concluded that the
time of an occurrence is when a claimant sustains actual damage--
not necessarily when the act or omission causing that damage is
committed." See Dorchester Development v. Safeco Ins., 737 S.W.2d
380, 383 (Tex. App.--Dallas 1987, no writ); Cullen/Frost Bank of
Dallas v. Commonwealth Lloyd's Ins. Co., 852 S.W.2d 252, 257 (Tex.
App.--Dallas 1993, writ denied). In this case, the district court
held that liability attaches at the time of the causative event.
4
Although we are inclined to agree with the district court's reading
of the policy language, both Texas courts and this circuit have
construed similar policy language as requiring an analysis of when
the damage manifested itself.
We therefore VACATE the district court's judgment and REMAND
for a determination of when Unitramp sustained actual damage. We
also VACATE the district court's award of attorneys' fees.
5