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A P&I policy generally requires a causal connection between a vessel and a resulting injury for coverage, according to a recent decision from the U.S. Fifth Circuit.

On March 22, 2016, the Fifth Circuit handed down another decision in the Naquin v. Elevating Boats litigation, which arises out of an accident in 2009.  In 2014, the Fifth Circuit determined that the Jones Act covered the plaintiff’s land-based accident.  744 F.3d 927.  The plaintiff, an employee of Elevating Boats, LLC, was operating a land-based crane to relocate a test block.  The crane toppled over when its pedestal snapped, and the plaintiff sustained injury when he jumped from the crane house.  A jury awarded him $2.4 million in pain and suffering and lost wages.

Elevating Boats filed a third-party complaint against its insurers, which denied coverage for this accident.  One insurer filed a motion for summary judgment, asserting that its protection and indemnity (P&I) policy did not cover the plaintiff’s land-based accident.  The trial court granted the insurer’s summary judgment.  In considering Elevating Boats appeal of the summary judgment, the Fifth Circuit observed that the P&I policy language provided that “[s]ubject to all exclusions and other terms of this Policy, the Underwriters agree to indemnify the Assured for any sums which the Assured, as owner of the Vessel, shall have become liable to pay, and shall have paid in respect of any casualty or occurrence during the currency of the Policy, but only in consequence of any other matters set forth hereunder ….”  (Emphasis in original.)

According to the Fifth Circuit, the insurer argued that the language “as owner of the vessel” limited the policy’s coverage to situations involving a vessel and did not extend to a land-based accident such as involved in this litigation.  Elevating Boats apparently focused on the “any casualty or occurrence” language in arguing for more expansive coverage.  The court looked to precedent in Lanasse v.  Travelers Ins. Co., 450 F.2d 580 (5th Cir.1971), which explained that “[t]here must be at least some causal operational relation between the vessel and the resulting injury.  The line may be a wavy one between coverage and noncoverage, especially with industrial complications in these ambiguous amphibious operations ….  But where injury is done through nonvessel operations, the vessel must be more than the inert locale of the injury.”  The court concluded that “[w]here there is no causal operational relation between the vessel and the resulting injury, there is no extension of coverage for liability.”

The Fifth Circuit concluded that the accident involved in this litigation “in no way arose” out of Elevating Boat’s ownership of a vessel.  The “land-based crane did not break on or even in close proximity to a vessel.”  Accordingly, the Fifth Circuit affirmed the district court’s grant of summary judgment, including the dismissal of claims against the insurer for bad faith.  This decision, therefore, affirms the vessel-related nature of a P&I policy.

Naquin v. Elevating Boats, LLC, No. 13-30471 (5th Cir. 3/22/16)