The U.S. Fifth Circuit Court of Appeals has affirmed a district court’s grant of summary judgment in favor of a general maritime liability insurer and an excess insurer that no coverage existed for False Claim Act (FCA), common law fraud, unjust enrichment, and negligent misrepresentation claims against the insured. XL Spec. Ins. Co. v. Bollinger Shipyards, Inc., 800 F.3d 178 (5th Cir. 2015).
The insured won a contract to upgrade eight U. S. Coast Guard vessels. The vessels failed, and the U. S. sued the insured, alleging causes of action under the FCA, common law fraud, negligent misrepresentation, and unjust enrichment. The insured sought coverage from its general maritime liability insurer, and in the ensuring litigation the district court granted summary judgment for the insurer, holding that the policy did not cover the claims in the lawsuit and thus did not impose a duty to defend. The court concluded that all claims in the underlying complaint fit into either an exclusion related to the failure of the insured’s products to meet any predetermined level of fitness or one related to liability “arising out of or incidental to any alleged violation(s) of any federal or state law regulating, controlling, and governing antitrust or the prohibition of monopolies, activities in restraint of trade, unfair methods of competition or deceptive acts and practices in trade and commerce…” and liability “arising out of or contributed to by… dishonesty or infidelity.” The insured appealed, and the insurer cross-appealed.
The Fifth Circuit agreed with the district court that exclusions excluded coverage for all claims.