The Louisiana Fourth Circuit Court of Appeal held that an insurer must provide a complete defense to its insured in long-latency disease cases and that the duty to defend is not subject to proration. See Arceneaux v. Amstar Corp., 2014-0271 (La. App. 4 Cir. 2/25/15), 2015 WL 798980.
In Arceneaux, American Sugar sued its insurer, Continental, for a defense against claims filed by a number of American Sugar’s former employees, who alleged they suffered occupational hearing loss from their exposure to industrial noise while working for American Sugar from 1941 to 2006. Continental offered to pay, and began paying, 25% of American Sugar’s defense costs under a reservation of rights, arguing that it did not owe a complete defense because its policies covered only 26 months of the approximately 60–year time span during which the former employees alleged the exposure occurred. American Sugar rejected Continental’s offer and filed a motion for partial summary judgment seeking, in part, a declaration that Continental owed American Sugar a full defense going forward. The trial court held, with the appellate court affirming, that Continental must provide American Sugar with a full (100%) defense going forward. Both courts rejected the insurers’ efforts to treat the insurers’ duty to defend like its indemnity obligations in long-latency damage cases.
Arceneaux reinforces long-standing Louisiana jurisprudence that an insurer who owes a duty to defend must provide its insured a complete defense, and cannot simply prorate the defense based on its time on the risk or on covered versus “uncovered” claims. See American Home Assurance Company v. Czarniecki, 230 So. 2d 253 (1969) (insurer must accept defense of the entire lawsuit, even though there was ultimately no coverage); Treadway v. Vaughn, 633 So. 2d 626, 628 (La. App. 1 Cir. 1993) (“Once a complaint states one claim within the policy’ s coverage, the insurer has a duty to accept defense of the entire lawsuit, even though other claims in the complaint fall outside the policy’s coverage.”); Vaughn v. Franklin, 2000-0291 (La. App. 1 Cir. 3/28/01); 785 So.2d 79, 89 (though two insurers were entitled to seek contribution from each other, they were solidarily bound to provide a complete defense to their insured); Riley Stoker Corp. v. Fid. & Guar. Ins. Underwriters, Inc., 26 F.3d 581, 589 (5th Cir. 1994) (“Under Louisiana law, when an insurer has a duty to defend any claim asserted, the insurer must defend the entire action brought against its insured.”); Liberty Mut. Fire Ins. Co. v. Fluor Enterprises, Inc., 2012 WL 255763 (E.D. La. 2012) (insurers were solidary liable with respect to their obligation to defend their common insured); Jensen v. Snellings, 1991 WL 28988 (E.D. La. 1991) (same).