Crown Zellerbach Corp. v. Ingram Industries

783 F.2d 1296, 1986 A.M.C. 1471 (1986)

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Crown Zellerbach Corp. v. Ingram Industries

United States Court of Appeals for the Fifth Circuit
783 F.2d 1296, 1986 A.M.C. 1471 (1986)

Facts

Ingram Industries, Inc. (Ingram) operated a tug and purchased protection and indemnity insurance on the tug from two insurers (defendants). Both policies included contractual language limiting the insurers’ liability to Ingram’s statutory maximum liability. For example, the federal Limitation of Liability Act would cap the amount of damages a person could seek from Ingram in the case of an accident; under Ingram’s insurance policies, the insurer’s liability would be capped at the same amount. While traveling down the Mississippi River, the tug caused a barge to collide with a water-intake structure owned by Crown Zellerbach Corporation (CZ) (plaintiff) in Baton Rouge, Louisiana. The cost of the damage exceeded what Ingram could be held liable for under the Limitation of Liability Act. CZ used Louisiana’s direct-action statute to file claims directly against Ingram’s insurers, seeking to bypass the cap. The district court held that CZ could seek uncapped damages in its direct action against the insurers, and a panel of the court of appeals affirmed. The court of appeals then agreed to rehear the matter en banc.

Rule of Law

Issue

Holding and Reasoning (Brown, J.)

Dissent (Tate, J.)

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