Matherne v. Huntington Ingalls Incorporated (E.D. La., Jan. 19, 2024, order 2)

Our plain-English summary of Matherne v. Huntington Ingalls Incorporated (U.S. District Court, Eastern District of Louisiana, January 19, 2024).

Roseanna Matherne was diagnosed with mesothelioma in December 2021 and died in March 2022. Her survivors sued several defendants, including Avondale Shipyard (now Huntington Ingalls), alleging she was exposed to asbestos on the clothes of her husband, who worked at Avondale. This order dealt with one narrow claim. The plaintiffs argued that Avondale had agreed, in buy-back agreements ending its policies with two insurers, Highlands and American Motorists, to take over those insurers' obligations and so act as its own additional insurer. Both insurers are insolvent or bankrupt and cannot be sued. Avondale asked for summary judgment on this claim. The court granted it. It relied on its earlier ruling in Vedros, which examined the same contracts. The agreements released the insurers and voided the policies, and they did not show that Avondale assumed the insurers' duties toward the plaintiffs. An assumption of an obligation must be explicit and in writing. The ruling did not affect the plaintiffs' tort claims against Avondale or its alleged vicarious liability for its executive officers.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: U.S. District Court, Eastern District of Louisiana
• Decided: January 19, 2024
• Docket: Civil Action No. 22-2656
• Stage: Summary judgment
• State: Louisiana

Outcome. The court granted Avondale's motion for partial summary judgment and dismissed plaintiffs' claims that Avondale assumed its insolvent insurers' obligations under the buy-back agreements; the plaintiffs lost this claim.

What the court held. An assumption of another's obligation under La. Civ. Code arts. 1821-1823 must be explicit and in writing, and buy-back agreements that release and void insurance policies do not assume the insurers' obligations to third parties.

Issues decided: Insurance Coverage, Settlements and Releases, Take-Home Exposure.

The people and their exposure

• Roseanna Matherne (family member): mesothelioma; died

The defendants

• Huntington Ingalls Incorporated (f/k/a Avondale Industries, Inc.) (employer)
• Highlands Insurance Company (insurer)
• American Motorists Insurance Company (insurer)

Other decisions in this case

Other rulings from the same court in the same case, in our library:

• Matherne v. Huntington Ingalls Incorporated (October 28, 2022). The court granted summary judgment for the Louisiana Insurance Guaranty Association (LIGA) and against the plaintiffs, holding that their claims were not timely 'covered claims' because they arose after the insolvent insurer's claim bar date.
• Matherne v. Huntington Ingalls Incorporated (March 2, 2023). The court denied LIGA's motion for entry of a Rule 54(b) final judgment on the earlier summary judgment in its favor, so LIGA must wait until the whole case ends to appeal; the plaintiffs prevailed on this motion.
• Matherne v. Huntington Ingalls Incorporated (January 2, 2024). The court granted in part and denied in part the plaintiffs' motion to compel a Rule 30(b)(6) deposition of Huntington Ingalls: Huntington need not present a witness, but must give the plaintiffs its litigation listing of prior cases within 14 days.
• Matherne v. Huntington Ingalls Incorporated (January 19, 2024). The court granted the plaintiffs' motion for partial summary judgment, so Avondale (Huntington Ingalls) and its insurers could not use the government contractor defense against the failure-to-warn and failure-to-enact-safety-measures claims.
• Matherne v. Huntington Ingalls Incorporated (January 20, 2024). The court granted the plaintiffs' motion for partial summary judgment that Roseanna Matherne had mesothelioma and that it caused her death, over the defendants' off-topic oppositions.
• Matherne v. Huntington Ingalls Incorporated (January 24, 2024). The court granted Hopeman Brothers' motion for partial summary judgment on the plaintiffs' intentional tort, alter ego and manufacturer strict liability claims, ruling against the plaintiffs and Avondale.
• Matherne v. Huntington Ingalls Incorporated (February 21, 2024). The court granted Avondale's motion and quashed the trial subpoenas that Plaintiffs and Defendants General Electric, Foster Wheeler and Paramount Global had directed to Avondale as a corporate entity.

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

TED J. MATHERNE, SR., ET AL.,

v.

HUNTINGTON INGALLS INCORPORATED, ET AL.

Civil Action No. 22-2656.

January 19, 2024.

United States District Court, E.D. Louisiana.

SECTION: "J"(2).

CARL J. BARBIER, District Judge.

ORDER & REASONS

Before the Court is a Motion for Partial Summary Judgment on La. C.C. Article 1821-1823 Claims (Rec. Doc. 206) filed by Defendant Huntington Ingalls Incorporated (f/k/a Northrop Grumman Shipbuilding, Inc. f/k/a Northrop Grumman Ship Systems, Inc. f/k/a Avondale Industries, Inc. f/k/a Avondale Shipyards, Inc. and f/k/a Avondale Marine Ways, Inc. ("Avondale"). Plaintiffs oppose this motion (Rec. Doc. 256), and Avondale has filed a reply (Rec. Doc. 299). Having considered the motion and legal memoranda, the record, and the applicable law, the Court finds that the motion should be GRANTED.

FACTS AND PROCEDURAL BACKGROUND

The Court has recounted the facts of this case in numerous previous orders and provides the following summary. Roseanna Matherne was diagnosed with mesothelioma on or around December 1, 2021 and died on March 10, 2022 as a result of the disease. Her survivors subsequently filed suit against numerous Defendants including Avondale, alleging that she contracted mesothelioma from her exposure to asbestos on the clothes of her husband who worked at Avondale Shipyard. In their Petition, Plaintiffs assert a number of claims against Avondale. Relevant here, Plaintiffs allege that Avondale is liable for its executive officers' personal tort liability pursuant to certain agreements ("buy-back agreements") that it entered with its now-insolvent insurers (American Motorists Insurance Company and Highlands Insurance Company) to terminate the contracts or policies of insurance. Both Highlands Insurance Company ("Highlands") and American Motorists Insurance Company ("American Motorists") are now insolvent or bankrupt and no longer subject to suit.

However, Plaintiffs assert that Avondale assumed its insurers' responsibilities under the policies pursuant to buy-back agreements. Plaintiffs claim that Avondale assumed the role of an "additional insurer" of itself under the agreements, alleging that Avondale assumed the obligations of the insurers with regard to third persons such as Matherne, within the meaning of Louisiana Civil Code articles 1821-1823. In the instant motion, Avondale seeks summary dismissal of these buy-back claims.

LEGAL STANDARD

Summary judgment is appropriate when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56); see Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, a court considers "all of the evidence in the record but refrains from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but a party cannot defeat summary judgment with conclusory allegations or unsubstantiated assertions.

Little, 37 F.3d at 1075. A court ultimately must be satisfied that "a reasonable jury could not return a verdict for the nonmoving party." Delta, 530 F.3d at 399.

If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party "must come forward with evidence which would `entitle it to a directed verdict if the evidence went uncontroverted at trial.'" Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonmoving party can then defeat the motion by either countering with sufficient evidence of its own, or "showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The nonmovant may not rest upon the pleadings but must identify specific facts that establish a genuine issue for trial. See id. at 325; Little, 37 F.3d at 1075.

DISCUSSION

As it relates to Plaintiffs' claims here, the Louisiana Civil Code provides that an obligor (here, Highlands and American Motorists), and a third person (here, Avondale) may agree that the third person can assume an obligation of the obligor. La. Civ. Code art. 1821. "A person who, by agreement with the obligor, assumes the obligation of the latter is bound only to the extent of his assumption. The assuming obligor may raise any defense based on the contract by which the assumption was made." La. Civ. Code art. 1822.

Plaintiffs claim that the buy-back agreements contained in Avondale's settlement and release agreements with Highlands and American Motorists constitute Avondale's assumption of those insurers' obligations. The buy-back agreement between Avondale and Highlands states, "In exchange for the mutual covenants, promises and consideration which are described throughout this Agreement, the Settling Parties hereby agree to compromise, release and settle all claims arising out of or incident to the Policies and to undertake the acts and obligations set forth in this section." (Rec. Doc. 206-17, at 2). In exchange for a lumpsum payment, Avondale "expressly release[d], acquit[ted] and forever discharge[d] Highlands from any and all obligations arising under or related in any way to the Policies." Id. at 3. The agreement further rendered "void ab initio" Highlands' obligations to Avondale under the policies. Id. at 4. Lastly, Avondale agreed to indemnify Highlands for claims brought by third parties asserting coverage under the policies. Id. at 4-5.

Avondale and American Motorists similarly agreed to extinguish the policies of insurance in exchange for a lump-sum payment. The agreement states that "the Parties intend to fully and forever extinguish all rights, duties and coverage under the P[olicies] and to render them null and void, as if they had never been issued." (Rec. Doc. 206-18, at 1). Again, in exchange for payment, Avondale "fully, forever, and irrevocably releases and discharges [American Motorists] from any [claim, known or unknown, from the beginning of time until the end of time, arising out of, based upon, or in any manner relating to, or implicating, the terms and conditions of the policies]." See id. at 3, 5. The agreement further provides that the policies were thereafter "rescinded for all purposes," "null and void, and are void ab initio, as if they had never been issued." Id. at 5. The agreement included indemnity provisions similar to those of the Highlands agreement. Id. at 6-7. This Court previously addressed this type of buy-back claim on Avondale's motion for partial summary judgment in Vedros v. Northrop Grumman, No. 11-1198, 2015 WL 3772447 (E.D. La. June 17, 2015). In Vedros, the Court examined the same contracts at issue here and concluded that the language of the agreements did not evince an assumption by Avondale of the putative obligations of Highlands and American Motorists with respect to Plaintiffs. Vedros, 2015 WL 3772447 at [*3]. Further, because Plaintiffs did not pursue their claims while Highlands and American Motorists were subject to suit, the indemnity provisions were not implicated. Id. (citing Comardelle v. Pennsylvania Gen. Ins. Co., No. 13-6555, 2014 WL 6485642, at [*3] (E.D. La. Nov. 18, 2014)).

Plaintiffs have not presented any reason to deviate from an identical ruling in this case. The plain language of the buy-back agreements here demonstrates that the agreements have no effect on the rights of third parties, and an agreement to assume an obligation must be explicit and in writing; thus Plaintiff's claims related to Avondale's assumption of its insurers' obligations under these agreements must be dismissed. Of course, as this Court noted in Vedros, this Order has no effect

on Plaintiffs' claims against Avondale for its alleged tort liability or its vicarious liability for the alleged tortious acts of its executive officers.

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that Avondale's Motion for Partial Summary Judgment on La. C.C. Article 1821-1823 Claims (Rec. Doc. 206) is GRANTED.

Sources

• The opinion on Google Scholar
• Louisiana asbestos laws
• Louisiana asbestos exposure sites