Bollinger Shipyards v. Certain Undwr Lloyds

United States Court of Appeals
Fifth Circuit
F I L E D
May 7, 2004
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 03-30697
_______________
BOLLINGER SHIPYARDS LOCKPORT, L.L.C.; ET AL,
Plaintiffs,
BOSTON OLD COLONY INSURANCE COMPANY,
Plaintiff-Appellant,
VERSUS
CERTAIN UNDERWRITERS AT LLOYD’S, LONDON,
Defendant-Appellee.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
m H-01-CV-708
_________________________

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Before GARWOOD, HIGGINBOTHAM, and
SMITH, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
Bollinger Shipyards Lockport, L.L.C.
(“Bollinger”), a party in the district court but
not a combatant in this appeal, was contracted
by the Army to build cargo barges. Bollinger
sub-contracted AmClyde Engineered Products,
Inc. (“AmClyde”), to fabricate and install a
cargo crane on one of those barges, the D/B
SPRINGFIELD.
Pursuant to the subcontract, AmClyde
named Bollinger as an Assured under its
Builder’s All Risk Policy, with appropriate re-
muneration to be paid to the insurer, Certain
Underwriters at Lloyd’s, London and/or In-
stitute Companies (“Lloyd’s”). Coverage also
was extended under a Commercial General Li-
ability (“CGL”) policy issued by Lloyd’s.
Bollinger handed over the SPRINGFIELD
to AmClyde, which duly installed the crane on
the barge at its facility in Slidell, Louisiana.
Possession of the barge then was returned to
Bollinger, which contracted for tugboats to
transport it to Newport News, Virginia, for
delivery to the Army.
The crane and its associated operator’s
house snapped off the barge during transit and
fell overboard. The accident apparently did
not result in damage to the barge, apart from
the $1.2 million loss of the craneitself. Boston
Old Colony Insurance Company (“Boston Old
Colony”), with which Bollinger had contracted
specifically to insure the trip, was left re-
sponsible for payment to Bollinger to the ex-
tent of $900,000.
Bollinger and Boston Old Colony sued
Lloyd’s, alleging that the Builder’s All-Risk
Policy and CGL policy required that Lloyd’s
cover the loss. On Lloyd’s’ motion for
summary judgment, the district court found
that the losses fell outside the coverage of the
Builder’s All Risk Policy and the CGL policy.
The district court accordingly dismissed all
claims of Bollinger and Boston Old Colony
against Lloyd’s. Only Boston Old Colony
appeals.
I.
We review the district court’s legal
conclusions, including its interpretation of
contracts, de novo. Taita Chem. Co. v.
Westlake Styrene Corp., 246 F.3d 377, 385
(5th Cir. 2001); Nolan v. Golden Rule Ins.
Co., 171 F.3d 990, 992 (5th Cir. 1999). In
reviewing a summary judgment, we view any
reasonably disputable facts in the light most
favorable to the non-moving party, in this case
Boston Old Colony.
The insurance policies are governed by
Louisiana law, under which we utilize the gen-
eral rules of contract interpretation, requiring
determination of the common intent of the
parties. See Thermo Terratech v. GDC En-
viro-Solutions, Inc., 265 F.3d 329, 334 (5th
Cir. 2001). The intent of the parties as
reflected in the words of the policy determines
the proper extent of its coverage. Id.
The first question is whether the Builder’s
All-Risk Policy extended coverage to the loss
of the crane. That policy is a one-size-fits-all
document, intended to apply to the numerous
projects AmClyde might pursue. AmClyde
* Pursuant to 5TH CIR. R. 47.5, the court has de-
termined that this opinion should not be published
and is not precedent except under the limited cir-
cumstances set forth in 5TH CIR. R. 47.5.4.

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could pay Lloyd’s to have additional projects
covered by the policy, with its clients named as
“additional assureds.” Its provisions, then,
were not specially crafted to reflect the tasks
associated with the installation of the crane on
the SPRINGFIELD, but instead were of a
more general nature.
Among the Builder’s All-Risk Policy’s pro-
visions was the following:
Insurance hereunder in respect to each
part, item, or portion of the subject mat-
ter(s) of this insurance shall attach from
the time of beginning at the risk of an
Assured where that insurance becomes
the responsibility of the named Assured
and continued thereafter until
completion of the entire project under
the contract(s) or agreement(s), and
acceptance by client and/or customer
and/or as per contract(s), or agree-
ment(s).
(Emphasis added.) In other words, the
coverage ended when the “entire project” was
completed.
Lloyd’s argues that the entire project was
completed with the return of the
SPRINGFIELD to Bollinger and before the
loss of the crane during the delivery trip. Bos-
ton Old Colony contends that “entire project”
should be read to refer not to AmClyde’s
whole contract work for Bollinger, but rather
to the work to be done under the entire prime
contract. Under Boston Old Colony’s view,
coverage under the Builder’s All-Risk Policy
would have ceased only when the Army
accepted the SPRINGFIELD and only after
the loss of the crane.
The district court, reasoning that the Build-
er’s All-Risk Policy should be read in the
factual context of the subcontract that required
its application, concluded that the “entire pro-
ject” language referred only to the work done
under the AmClyde subcontract. The court
noted especially that the subcontract provided
that risk of loss was intended to shift from
AmClyde to Bollinger on return of the barge
to the latter. The subcontract stated:
SUPPLIER [AmClyde] shall provide
Builder’s All Risk Insurance for 100%
replacement cost for all PURCHASER
[Bollinger] supplied equipment while
said equipment is in the possession of
SUPPLIER [AmClyde]. Risk of loss
shall pass on delivery of this LSB-18
Crane to PURCHASER [Bollinger].
The parties thus contemplated that the in-
surance yet to be provided by AmClyde would
lapse after the SPRINGFIELD was returned to
Bollinger. It is in light of these circumstances
that the district court interpreted the contract’s
“entire project” language to mean only the
work performed under the subcontract.
Boston objects to the district court’s
reference to the subcontract in interpreting the
Builder’s All Risk Policy. As Boston Old Col-
ony correctly notes, the language of the sub-
contract cannot overwhelm or defeat the plain
language of the insurance contract. See
Saavedra v. Murphy Oil USA, Inc., 930 F.2d
1104, 1110 (5th Cir. 1991). But the district
court did not act improperly by looking to the
circumstances surrounding the inclusion of
Bollinger as an additional assured under the
Builder’s All Risk Policy. Indeed, it is
impossible to interpret the policy in any
fashion without looking to surrounding
circumstances, for its terms are almost wholly
generic.

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Further, the existence and nature of the
subcontract are among the most important
circumstances relevant to the interpretation of
the policy. It was no error for the district
court to look to the subcontract in concluding
that the likely meaning of “entire project” un-
der the policy was limited to the completion of
work under the subcontract. The court’s ref-
erence to other circumstances surrounding the
policy, such as its price and the typical extent
of builder’s all risk policies as a species, was
likewise appropriate.
In addition to its criticism of the district
court’s use of the subcontract, Boston Old
Colony points to language in the policy that
Boston Old Colony contends supports its in-
terpretation of “entire project.” Primarily,
Boston Old Colony points to provisions in the
policy that it says support its view that the
policy extends coverage for the duration of the
prime contract. The provisions Boston Old
Colony cites, however, are illustrative only of
the contract’s wide expansive coverage, not
of its temporal extent.
For instance, Boston Old Colony notes that
the policy explicitly extends its coverage to
“prefabrication and/or fabrication and/or erec-
tion and/or construction and/or installation
and/or repairs and/or remodeling and/or
movements by any means (including ocean
transits by steamer(s) and/or motor vessels(s)
and/or barge(s) in tow).” This generic
language underscores the intended effect of
the contract to cover damages resulting from
all manner of activities in which AmClyde
might engage while undertaking its work. The
“Delivery Trip” language was not added in
contemplation of the voyage of the SPRING-
FIELD from Louisiana to Virginia, but rather
to encompass any and all “transits” of a
covered item from one place to another.
The delivery trip of the SPRINGFIELD
was very short, as the parties elucidated at oral
argument, only from AmClyde’s facilities to
the custody of towing vessels contracted by
Bollinger, just outside of Slidell. For that
matter, there was evidently no “remodeling” or
“repairs” planned or undertaken as part of
AmClyde’s work under the subcontract––the
language is included merely to note the many
circumstances covered by Lloyd’s’ generic and
widely applicable Builder’s All Risk Policy.
The “Delivery Trip” language cannot be read
to suggest that the “entire project” language
was intended to cover events after the
completion of AmClyde’s own subcontract.
Similarly, language in the Policy noting
that the coverage of the policy extended
“worldwide” (with exceptions for icy ports of
call) is evidence neither that AmClyde
expected to move the SPRINGFIELD across
the Seven Seas, nor that the Louisiana-to-
Virginia trip was covered by the contract.
Again, evidence of the policy’s expansive spa-
tial coverage is not probative of its temporal
extent.1
Boston Old Colony’s arguments are
unconvincing, and, as the district court
observed, the nature of the Builder’s All Risk
Policy and the circumstances surrounding its
extension of coverage to Bollinger as an
additional assured support the conclusion that
coverage ended at the completion of
AmClyde’s “entire project” under the
subcontract.
1 Boston Old Colony notes that under Adden-
dum 21 of the Builder’s All Risk Policy, a main-
tenance risks clause may extend coverage of the
Builder’s All Risk Policy for up to a year. There
is, however, no evidence to show that any such
extension was exercised.

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II.
Boston Old Colony also asserts, separately
from its arguments concerning the Builder’s
All Risk Policy, that the CGL policy should
have provided coverage of the loss of the
crane and pilot house. It is undisputed that the
temporal coverage of the CGL policy extended
past the handover of the SPRINGFIELD. Its
express terms, however, included exclusions
that prevent the loss of the crane from
coverage under the policy.
The relevant exclusions were the “faulty
workmanship” exclusion, also known as the
“business risk” exclusion, and the “profession-
al services” exclusion. The district court con-
cluded that these exclusions placed outside the
coverage any damages to the crane itself,
where they resulted from poor work by either
AmClyde’s skilled laborers or its professional
staff. They function to leave the risk of
replacing or repairing defective materials as a
commercial risk of the purchaser. In other
words, they prevent a commercial liability pol-
icy from becoming a product or service war-
ranty.
Inasmuch as the loss of the crane may be,
as Boston Old Colony alleges, the result of
faulty welding and ot her bad work by Am-
Clyde’s blue collar employees, the loss falls
under the “faulty worksmanship” exclusion.
Because loss of the crane was the result of
poor design by AmClyde’s engineers, as Bos-
ton Old Colony alternatively contends, the loss
falls under the “professional services”
exclusion.
Boston Old Colony also argues that a sep-
arate “Architects / Engineers Professional Lia-
bility Policy” was added to the CGL policy,
but Boston Old Colony cannot show where
within the contract such an addendum actually
appears. A heading concerning such a policy
appears in the table of contents but was ex-
pressly “subject to full wording to be agreed to
by Underwriters of the Assured.” Because
such an addendum was never agreed upon, it
is not now a part of the contract. The
“professional services” exclusion must apply
with full force.
The CGL policy would have acted to cover
damage that the destruction of the crane
caused to other parts of the SPRINGFIELD,
but it cannot cover the failure of the crane.
Boston Old Colony has not alleged that the
loss of the crane damaged other parts of the
SPRINGFIELD.
AFFIRMED.

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