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M/G Transp. Servs., Inc. v. Water Quality Ins. Syndicate

ELR Citation: 31 ELR 20327
Nos. No. 99-3889, 234 F.3d 974/(6th Cir., 12/12/2000)

The court upholds the dismissal of a transporter company's claim that its insurer breached its duty under a marine insurance policy to defend and indemnify the company in a qui tam action brought under the False Claims Act (FCA). The transporter was hired as a subcontractor to transport coal to the Tennessee Valley Authority under a contract between a coal company and the United States. The transporter's employees, who alleged that the transporter knowingly hid Clean Water Act (CWA) violations from the United States in order to obtain payment, filed an FCA action against the transporter. After the insurer refused to defend or indemnify the transporter, the transporter commenced the instant action. The court first holds that the insurer had no duty to defend the transporter. The underlying complaint stated claims under the FCA exclusively. An FCA action is not converted into a CWA action simply because a CWA violation is a predicate to establishing the falsity of a claim. Moreover, the complaint was not so vague, ambiguous, nebulous, or incomplete as to obligate the insurer to provide a defense under the insurance policy. Similarly, the court holds that because the transporter's settlement with the employees only concerned FCA violations, the insurer had no duty to indemnify the transporter.

Counsel for Plaintiff
Todd M. Powers
Schroeder, Maundrell, Barbiere & Powers
Governor's Knoll
11935 Mason Rd., Ste. 110, Cincinnati OH 45249
(513) 583-4200

Counsel for Defendant
George W. Taliaferro Jr.
McKinney & Namei
15 E. 8th St., Cincinnati OH 45202
(513) 721-0200

Before Kennedy and Moore, JJ.