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---------------------------CASE NO. 10-30886 ---------------------------IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT STEPHEN MARSHALL GABARICK, on behalf of himself and all others similarly situated; Et Al Plaintiffs v. LAURIN MARITIME (AMERICA) INCORPORATED, Et Al Defendants ---------------------------------------------------------------------------------------------------INDEMNITY INSURANCE COMPANY OF NORTH AMERICA, Plaintiff - Intervenor - Appellant HOUSTON CASUALTY INSURANCE COMPANY, Intervenor - Appellant v. AMERICAN COMMERCIAL LINES, L.L.C.; AMERICAN COMMERCIAL LINES, INCORPORATED, Defendants - Appellees -------------------------------------------------------------On Appeal from the United States District Court for the Eastern District of Louisiana --------------------------------------------------------------

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-------------------------------------------------------------Reply Brief on Behalf of Appellants, Houston Casualty Insurance Company and Indemnity Insurance Company of North America --------------------------------------------------------------

Respectfully submitted,

S/ Richard A. Cozad MICHAEL L. MCALPINE (9195) RICHARD A. COZAD (4537) FRANKLIN H. JONES, III (7480) EMMA A. MEKINDA (28151) McALPINE & COZAD 365 Canal Street, Suite 3180 New Orleans, LA 70130 Tel 504-561-0323 / Fax 504-528-9442 Attorneys for Houston Casualty Insurance Company and Indemnity Insurance Company of North America

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TABLE OF CONTENTS

Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii Supplemental Jurisdictional Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Certificate of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Certificate of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

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TABLE OF AUTHORITIES CASES Anderson v. USF&G, 339 S.E.2d 660 (Ga.App. 1986) . . . . . . . . . . . . . . . . . . . . . . 5 Brown v. Lumbermens, 390 S.E.2d 150 (N.C. 1990) . . . . . . . . . . . . . . . . . . . . . 5, 6 Douglas v. Allied American Insurance, 727 N.E.2d 376 (Ill.App. 2000) . . . . . . . . 6 Farmers-Merchants Bank & Trust Co. v. CIT Group/ Equipment Financing, Inc., 888 F.2d 1524 (5 th Cir. 1989) f.3 . . . . . . . . . . . . . . . . 4 Marthas Vineyard Scuba Headquarters, Inc. v. Unidentified Vessel, 833 F.2d 1059 (1 st Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Millers Mutual Insurance Association v. Iowa National Mutual Insurance, 618 F.Supp. 301 (D.Colo. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Mongrue v. Monsanto Co., 249 F.3d 422 (5 th Cir. 2001) . . . . . . . . . . . . . . . . . . . . 4 Primrose Operating Co. v. National American Insurance Co., 382 F.3d 546 (5 th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Stoot v. Fluor Drilling Services, Inc., 851 F.2d 1514 (5 th Cir. 1988) . . . . . . . . . . . 2 Theriot v. United States, 245 F.3d 388 (5 th Cir. 1998) . . . . . . . . . . . . . . . . . . . . . . 3

STATUTES 28 U.S.C. 1292(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,2 La.R.S. 13:4203 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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SUPPLEMENTAL JURISDICTIONAL STATEMENT In its brief, ACL did not formally oppose this Courts exercise of appellate jurisdiction. However, Appellees seem to question whether the trial courts ruling that IINA and HCC owe interest on their policy limit, and directing Appellants to deposit $495,000 into the registry of the court, is a determination of substantive rights. 28 U.S.C. 1292(a)(3) does not contain a definition of substantive, and ACL has not suggested one. However, the cases cited by ACL provide such a definition by stating what is not substantive. As stated in Marthas Vineyard Scuba Headquarters, Inc. v. Unidentified Vessel,1 substantive rights are those rights that are not merely procedural, tactical, or adjectival entitlements. 2 As ACL then acknowledges, to be subject to interlocutory appeal a maritime ruling must merely lash down the merits of some particular claim or defense. 3 ACL requested that the court rule that IINA and HCC were obligated to pay interest on their policy limit. The district court ruled in favor of ACL and ordered Appellants to deposit the sum of $495,000 into the registry of the court. Thus, the trial court interpreted IINA/HCCs policy of insurance in light of General Maritime

833 F.2d 1059 (1 st Cir. 1987). Id., at p. 1063. Id., at p. 1064. -1-

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and Louisiana law, and entered the functional equivalent of a money judgment. The trial courts ruling disposes of all claims against IINA and HCC because Appellants will be discharged from further liability once this issue is decided by the court. It has long been the rule, in the Fifth Circuit and elsewhere, that an interlocutory decree which finally determines the liability of at least one party to a maritime suit is appealable under 1292(a)(3). 4 On these facts, and under Fifth Circuit precedent, there is no question but that the trial courts Order is a determination of the substantive rights and liabilities of IINA and HCC. Thus, this Court clearly has appellate jurisdiction.

Stoot v. Fluor Drilling Services, Inc., 851 F.2d 1514, 1516 (5 th Cir. 1988). -2-

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ARGUMENT STANDARD OF REVIEW IINA and HCC did not identify the applicable standard of review. However, ACL is mistaken in asserting abuse of discretion is the appropriate standard merely because the case involves an award of pre-judgment interest. The proper standard of review for the trial courts ruling is de novo. In an earlier case addressing interest, the Fifth Circuit stated: Because the method of calculating prejudgment interest is a question of the law, the review is de novo.5 If the method of calculating pre-judgment interest is a question of law, certainly the issue of whether to award pre-judgment interest is an issue of law subject to de novo review. The principal issue before the trial court was the interpretation of a contract, i.e. the policy of excess insurance issued by Appellants to DRD Towing Company. The Fifth Circuit has made it clear that [c]ontract interpretation is a question of law, subject to de novo review. 6 Furthermore, the district court did not make any factual findings or conclusions. It simply ruled, as a matter of law, that IINA and HCC were

Primrose Operating Co. v. National American Insurance Co., 382 F.3d 546, 564 (5 Cir. 2004).
th 6

Theriot v. United States, 245 F.3d 388, 394 (5 th Cir. 1998). -3-

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responsible for interest on their policy limit. It has always been true that issues of law are subject to de novo review: When the district courts ruling is predicated on its view of a question of law, it is subject to de novo review.7

Finally, to the extent this appeal addresses the question of whether a Louisiana statute (La.R.S. 13:4203) obligates marine insurers to pay interest on their policy limit regardless of the wording of the policy, the issue presented is one of statutory construction. An issue of statutory interpretation is, of necessity, a question of law subject to de novo review. 8 Therefore, it is clear this Courts review of the trial courts ruling is de novo, rather than abuse of discretion.

APPELLEES POINT ONE At pages 17 through 22 of the Appellees Brief, ACL argues the General Maritime Law requires that IINA and HCC pay interest on their policy limit. This point is thoroughly briefed by IINA/HCC in their Appellants Brief. Therein, IINA and HCC establish that, under the General Maritime Law, a marine insurer is not

Mongrue v. Monsanto Co., 249 F.3d 422, 426 (5 th Cir. 2001), citing Munn v. Algee, 924 F.2d 568, 575 (5 th Cir. 1991). Farmers-Merchants Bank & Trust Co. v. CIT Group/Equipment Financing, Inc., 888 F.2d 1524, 1526 (5 th Cir. 1989) f.3 -48

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responsible for interest on its policy limit unless the language of the policy specifically provides for payment of interest. The IINA/HCC excess policy does not provide for payment of interest.

APPELLEES POINT TWO One of IINA/HCCs arguments, presented in their original brief, is that their liability was not triggered, and they do not owe interest on their policy limit, because the limit of the primary policy has not even now been exhausted. ACL responded by claiming the primary insurers limits were exhausted by its filing an interpleader action soon after the accident. Although ACL cited several cases for this proposition, closer examination reveals those cases are not good authority for ACLs argument. The principal case cited by ACL, Brown v. Lumbermens,9 is a duty to defend case decided under North Carolina law. The North Carolina Supreme Court

ultimately ruled that the term exhausted was ambiguous as used in the policy of automobile insurance under review. The inapplicability of the Brown decision to the matter now before the Court is evident in the Brown courts reliance on a case titled Anderson v. USF&G,10 which stands for the exact opposite position as that advanced

390 S.E.2d 150 (N.C. 1990), cited at pp. 25-26 of Appellees Brief. 339 S.E.2d 660 (Ga.App. 1986). -5-

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by ACL herein. The court in Anderson held that an insurers policy limit is not exhausted through interpleader: We do not agree...that the term exhaustencompasses the paying into court of the policy limits, but interpret that term to mean the payment either of a settlement or of a judgment wholly depleting the policy amount.11

ACL also relied on the case of Douglas v. Allied American Insurance.12 Douglas is also a duty to defend case, where the court found the phrase exhausted by payment was subject to more than one reasonable interpretation. The Douglas court cited both Brown v. Lumbermens and Anderson v. USF&G in concluding there was no fixed rule of law on this issue.13 In sum, there is no clear legal principle holding that a primary policy of insurance is exhausted when the primary insurer tenders its policy limit into the registry of the court. In this instance, virtually the entire limit of the primary policy was still in the courts registry, untapped by any claimant, when IINA and HCC filed their interpleader. Therefore, the liability of IINA and HCC had not been triggered
11

Id., at p. 661. 727 N.E.2d 376 (Ill.App. 2000).

12

ACL also cited Millers Mutual Insurance Association v. Iowa National Mutual Insurance, 618 F.Supp. 301 (D.Colo. 1985). This case was examined at length in Appellants Original Brief, where it was shown that the interpleader therein differed markedly from the interpleader filed by the primary insurer herein. -6-

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by the primary insurers interpleader, and IINA/HCC were not tardy in filing their own interpleader.

APPELLEES POINT THREE IINA and HCC thoroughly addressed the issue of the rate of interest and the date from which interest should accrue in their Appellants Brief. Interest should accrue at the rate earned by deposits into the registry of the court, 0.05%, and it should be calculated from September 3, 2009.

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CERTIFICATE OF SERVICE I hereby certify that the foregoing Reply Brief of Appellant has been filed in the office of the Clerk for the United States Court of Appeals for the Fifth Circuit, and a true and correct copy of the same has been served on counsel listed below via the courts electronic filing system on this 31st day of January, 2011.

Glenn G. Goodier, Esq.

JONES, WALKER, WAECHTER, POITEVENT, CARRERE & DENEGRE

Mr. John Nicoletti

NICOLETTI, HORNIG & SWEENEY

Place St. Charles 201 St. Charles Avenue New Orleans, LA 70170

Wall Street Plaza 88 Pine Street New York, NY 10005-1801

s/ Richard A. Cozad RICHARD A. COZAD

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CERTIFICATE OF COMPLIANCE (FEDERAL RULE 32.3)

1. This brief complies with the type-volume limitation of FED. R. APP. P. 32(a)(7)(B) because:

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this brief contains 1,297 words, excluding the parts of the brief exempted by FED. R. APP. P. 32(a)(7)(B)(iii), or this brief uses a monospaced typeface and contains [state the number of] lines of text, excluding the parts of the brief exempted by FED. R. APP. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of FED. R. APP. P. 32(a)(5) and the type style requirements of FED. R. APP. P. 32(a)(6) because:

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this brief has been prepared in a proportionally spaced typeface using WordPerfect 11 in 14 pt., Times New Roman type style, or this brief has been prepared in a monospaced typeface using [state name and version of word processing program] with [state number of characters per inch and name of type style].

s/ Richard A. Cozad RICHARD A. COZAD (Bar #4537) Attorney for Houston Casualty Company and Indemnity Insurance Company of North America Dated: January 31, 2011

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United States Court of Appeals

FIFTH C IR C U IT O FFIC E O F TH E C LER K LYLE W . C A YC E C LER K TEL. 504-310-7700 600 S. M A ESTR I PLA C E NEW O R LEA N S, LA 70130

February 01, 2011

Mr. Franklin Hardy Jones III McAlpine & Cozad 365 Canal Street Suite 3180 New Orleans, LA 70130-0000 No. 10-30886, Stephen Gabarick v. Laurin Maritime (America),Inc. USDC No. 2:08-CV-4007 USDC No. 2:08-CV-4156 The following pertains to your brief electronically filed on 1/31/11. You must submit the seven paper copies of your brief required by 5TH CIR. R. 31.1 within 5 days of the date of this notice pursuant to 5th Cir. ECF Filing Standard E.1.

Sincerely, LYLE W. CAYCE, Clerk

By:_________________________ Misty L. Fontenot, Deputy Clerk 504-310-7716 cc: Mr. Mr. Mr. Ms. Ms. Mr. Richard David Bertram Richard A. Cozad Glenn G. Goodier Emma Alexandra Mekinda Nooshin Namazi John A.V. Nicoletti