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Atchafalaya Marine, LLC v. Nat'l Union Fire Insurance Co., of Pittsburgh

United States District Court, S.D. Alabama

April 1, 2013

ATCHAFALAYA MARINE, LLC, Plaintiff,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Defendant

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For Rodd Cairns, Intervenor Defendant: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

For M/V Barbary Coast, Intervenor Defendant: Paul Thomas Beckmann, Hand Arendall, L.L.C., Mobile, AL.

For M/V Barbary Coast, Counter Claimant: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

For Midsouth Bank, N.A., Counter Defendant: Alex F. Lankford, III, Paul Thomas Beckmann, Hand Arendall, L.L.C., Mobile, AL.

For Atchafalaya Marine, LLC, Rodd Cairns, Rodd Cairns, Rodd Cairns, M/V Barbary Coast, Rodd Cairns, M/V Barbary Coast, M/V Barbary Coast, ThirdParty Plaintiffs: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

For National Union Fire Insurance Company of Pittsburgh, PA, CSC Lawyers Incorporated, ThirdParty Defendant: David Abraham Rich, Birmingham, AL; Donald C. Radcliff, Brady Radcliff & Brown LLP, Mobile, AL; John W. Dodson, Ferguson, Frost & Dodson, LLP, Birmingham, AL.

For Midsouth Bank, N.A., Cross Claimant: Alex F. Lankford, III, Paul Thomas Beckmann, Hand Arendall, L.L.C., Mobile, AL.

For Rodd Cairns, Cross Defendant: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

For Midsouth Bank, N.A., Counter Claimant: Alex F. Lankford, III, Hand Arendall, L.L.C., Mobile, AL.

For National Union Fire Insurance Company of Pittsburgh, PA, ThirdParty Defendant: Donald C. Radcliff, Brady Radcliff & Brown LLP, Mobile, AL.

For National Union Fire Insurance Company of Pittsburgh, PA, ThirdParty Defendant: David Abraham Rich, Birmingham, AL.

For Midsouth Bank, N.A., Counter Claimant: Alex F. Lankford, III, Paul Thomas Beckmann, Hand Arendall, L.L.C., Mobile, AL.

For Rodd Cairns, Counter Defendant: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

For Marc E. Oliver, d/b/a Gulf Coast Environmental and Recovery, Counter Defendant: Frank L. Parker, Jr., Mobile, AL.

For Marc E. Oliver, d/b/a Gulf Coast Environmental and Recovery, Counter Claimant: Frank L. Parker, Jr., Mobile, AL.

For Marc E. Oliver, d/b/a Gulf Coast Environmental and Recovery, Cross Defendant: Frank L. Parker, Jr., Mobile, AL.

For National Union Fire Insurance Company of Pittsburgh, PA, Cross Defendant: Donald C. Radcliff, Brady Radcliff & Brown LLP, Mobile, AL.

For Rodd Cairns, ThirdParty Defendant: Margaret M. Miller, Margaret McDowell Miller, LLC, Mobile, AL.

OPINION

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ORDER

KRISTI K. DuBOSE, UNITED STATES DISTRICT JUDGE.

This matter came before the Court on March 14, 2013 for a Hammond-Green Oil hearing regarding the singular issue of damages relating to Defendant's Rule 50 Renewed Motion for Judgment as a Matter of Law (Doc. 377), Rule 59 Motion for New Trial (Doc. 378), and Motion for Remittitur (Doc. 379); Plaintiff's Response (Doc. 384); Defendant's Reply (Doc. 390); and Plaintiff's Supplement (Doc. 393).

I. Background and Facts[1]

In this case, Plaintiff Atchafalaya Marine, LLC (" Atchafalaya" ) asserted claims for breach of contract (Count VI), abnormal bad faith (Count VII) and normal bad faith (Count VIII) against Defendant National

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Union Fire Insurance Company of Pittsburgh, PA (" National Union" ). (Doc. 60 (as amended per Doc. 206)). These claims stem from damage sustained to a commercial tugboat (the M/V BARBARY COAST) during a January 2010 salvage operation on the Tombigbee River in Alabama and an insurance dispute, which resulted from the incident.

Specifically, through Midsouth Bank, on September 12, 2008, Atchafalaya purchased the tugboat the M/V BARBARY COAST, at a cost of $790,000. Atchafalaya obtained a Preferred Ship Mortgage for the $640,000. The remainder was paid by Rodd Cairns, a member of the Atchafalaya LLC.

The M/V BARBARY COAST was the only asset of Atchafalaya. With the M/V BARBARY COAST as its only source of revenue, Atchafalaya earned gross receipts of $87,660 for the remainder of 2008; $330,253 in 2009; and $25,188 in 2010. Starting in February 2009, Atchafalaya entered into an oral charter agreement with an entity named Eagle Inland Towing (" Eagle" ), through which Eagle used the M/V BARBARY COAST.

On March 18, 2009, National Union issued an insurance policy (#H2035) to Eagle for the period of March 18, 2009-March 18, 2010; this policy provided coverage to Eagle for the towboats MR. LESTER, MISS KATEYLN and CARL T. The insurance policy was obtained through Point Clear Insurance (" Point Clear" ), with National Union as the insurer. Per Endorsement #17 (also effective as of March 18, 2009), Atchafalaya was listed as an additional assured on the policy.[2] On June 2, 2009, the M/V BARBARY COAST tugboat was also added to the Schedule of Vessels on Eagle's insurance policy per Endorsement #18 with " all other terms and conditions remain[ing] unchanged." According to the endorsement, the M/V BARBARY COAST's " Hull Agreed Valuation" was $800,000, with $1,000,000 for " Protection & Indemnity." On September 2, 2009, the M/V BARBARY COAST was deleted from Eagle's insurance policy per Endorsement #19. On December 21, 2009, the M/V BARBARY COAST was added back to Eagle's insurance policy per Endorsement #23. According to the endorsement, the M/V BARBARY COAST's " Hull Agreed Valuation" was $650,000, with $1,000,000 for " Protection & Indemnity."

On or about January 7, 2010, the M/V BARBARY COAST ran aground near mile marker 81 on the Tombigbee River during the course of a " rescue operation" (to free a grounded barge from a sandbar so a flotilla could continue to travel). As a result, the M/V BARBARY COAST received extensive and severe damage, which required it to be salvaged, taken out of service, and towed to shore. Once Atchafalaya learned of the damage to the M/V BARBARY COAST, it sought information regarding its insurance coverage (as it did not have a copy of the policy).

On January 21, 2010, the M/V BARBARY COAST was deleted from Eagle's insurance policy per Endorsement #24, and Eagle's insurance policy was cancelled

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in its entirety per Endorsement #26 on March 18, 2010. At the time of the January 2010 incident, the M/V BARBARY COAST was insured under Eagle's policy #H2035 with National Union. Thereafter, Atchafalaya made numerous attempts to not only file, but to resolve, the insurance claim with National Union for the damages to the M/V BARBARY COAST. However, these attempts were fraught with obstacles, and in the end, Atchafalaya's efforts failed for over a year.

Specifically, on February 2, 2010, Atchafalaya, through Jerri Lowrimore (" Lowrimore" - one of its members), made its first attempt to file an insurance claim with Point Clear (who issued the policy). In response, Point Clear flatly rejected Atchafalaya's effort to file an insurance claim, instructing that the holder of the policy, Eagle, must file such claim. Atchafalaya, through Lowrimore and Rodd Cairns (" Cairns" ), placed additional follow-up phone calls to Point Clear, but met with the same resistance and instruction. Atchafalaya then contacted Eagle directly several times, but Eagle's owner did not want to file an insurance claim for the damage to the M/V BARBARY COAST, even though he had already filed claims on two (2) other boats that had been damaged in the same incident.[3] Atchafalaya also called Midsouth Bank and requested assistance in filing an insurance claim. Initially, Midsouth Bank did not assist Atchafalaya. Later, in March 2010, Midsouth Bank, through Jay Angelle (its counsel) made an unsuccessful attempt to file an insurance claim with Point Clear.

Faced with no insurance to repair the extensive damage to the M/V BARBARY COAST, no ability to pay the mortgage on the tugboat since it was not in working order, and a huge salvage claim, on April 9, 2010, Atchafalaya borrowed another $100,239 from Midsouth Bank to repair the tugboat in order to get it back in service.[4] Cairns collateralized his home in Morgan City, Louisiana so that Atchafalaya could borrow this money. In addition, because the salvager had removed the propellers, until the salvager was paid for his services (which was an ...


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