Parfait v. Jahncke Service, Inc.

• Decision Date: 24 October 1973
• Docket Number: No. 72-3316.,72-3316.
• Citation: 484 F.2d 296
• Parties: Wilson J. PARFAIT, Plaintiff, v. JAHNCKE SERVICE, INC., Defendant-Third Party Plaintiff-Appellee, Yo-Ro Diesel Service, Inc., Third Party Defendant-Fourth Party Plaintiff-Appellee-Appellant, Home Indemnity Company, Third Party Defendant-Appellee, The Travelers Indemnity Company, Fourth Party Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

484 F.2d 296 (1973)

Wilson J. PARFAIT, Plaintiff, v. JAHNCKE SERVICE, INC., Defendant-Third Party Plaintiff-Appellee, Yo-Ro Diesel Service, Inc., Third Party Defendant-Fourth Party Plaintiff-Appellee-Appellant, Home Indemnity Company, Third Party Defendant-Appellee, The Travelers Indemnity Company, Fourth Party Defendant-Appellant.

No. 72-3316.

United States Court of Appeals, Fifth Circuit.

August 31, 1973.

Rehearings Denied October 3 and October 24, 1973.

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John R. Peters, Jr., New Orleans, La., for Travelers Indemnity Co.

Walter F. Gemeinhardt, New Orleans, La., Leonard N. Bouzon, New Orleans, La., for Yo-Ro Diesel Service.

Christopher Tompkins, New Orleans, La., for Jahncke Service, Inc.

Michael A. Britt, M. N. Grossel-Rossi, New Orleans, La., for Home Indemnity Co.

William J. Daly, S. C. Gainsburgh, New Orleans, La., for Wilson J. Parfait.

Before THORNBERRY, AINSWORTH and RONEY, Circuit Judges.

THORNBERRY, Circuit Judge:

In this multiparty admiralty case we must determine whether the district court properly awarded a shipowner indemnity under the Ryan doctrine for amounts it paid in settlement of a claim against it and whether the district court correctly interpreted two insurance policies.

On October 1, 1967, Wilson Parfait, an employee of Yo-Ro Diesel Service, Inc., was injured while he was aboard a diesel dredge owned and operated by Jahncke Service, Inc. to repair a broken cylinder block of one of the vessel's engines. Parfait sued Jahncke to recover for his injuries, alleging negligence and unseaworthiness. Jahncke filed a third-party complaint against Yo-Ro for indemnity under the Ryan¹ doctrine. Jahncke and Yo-Ro both filed fourth-party actions against Yo-Ro's two insurers, Travelers Indemnity Company and Home Indemnity Company. Jahncke settled the original suit brought by Parfait, and the third- and fourth-party suits were tried to the Court. The district court awarded Jahncke indemnity from Yo-Ro, and held Yo-Ro's loss to be covered by the Travelers policy, but not by the Home policy. Travelers and Yo-Ro appeal, testing the strength of all links by which they are connected to the liability chain. Additionally, Yo-Ro seeks to forge a new protective link, arguing that the Home insurance policy, as well as the Travelers policy, should be construed to cover any loss which Yo-Ro may eventually suffer as a result of Parfait's injury. We affirm the district court's ruling that Jahncke is entitled to indemnity from Yo-Ro but reverse as to coverage under each insurance policy.

The district court summarized the facts relating to Parfait's injuries as follows:

Upon discovering that the main pump engine aboard The Manchac was broken, Jahncke contracted with Yo-Ro to weld the broken part. Parfait, the working foreman for Yo-Ro, came aboard the vessel to inspect the broken pump engine and determine what equipment should be used to make the repair. After completing his inspection, Parfait left the vessel to obtain the tools and equipment needed for performance of the repair job. About two hours later Parfait returned with his son, Wilson J. Parfait, Jr., who was employed by Yo-Ro as an apprentice welder and was to assist his father in the welding job. While Parfait was gone, Jahncke\'s employees had dismantled part of the engine to enable Parfait to perform his repair work, and, in doing so, the Jahncke employees disconnected a fuel line from which fuel oil was allowed to drip and accumulate on the catwalk adjacent to the engine, creating a dangerous condition. The Jahncke employees were not aware that fuel oil had dripped and created a hazard. Parfait, while standing on the catwalk to work on the engine, noticed that fuel oil was dripping and that it had accumulated on the floor where he was working; however, he neither attempted to remove the oil nor did he request Jahncke\'s employees to clean it up.

After working for approximately two hours on the repair, Parfait reached a point where the weld had to cool before he could continue. He walked to the end of the catwalk and up a short ladder to the deck above and proceeded straight to a wash stand a short distance away. After washing his hands he returned, in the same direction from which he had come, and headed for the ladder leading down to the catwalk. As he neared the ladder he slipped and fell, either as a result of fuel oil on the soles of his shoes that had been picked up while he worked on the catwalk where fuel oil had accumulated, or as a result of fuel oil tracked on the steel deck by his shoes when he walked toward the wash stand.

Parfait v. Jahncke Service, Inc., E.D. La.1972, 347 F.Supp. 485, 488-489. The fall caused serious injury to Parfait's neck and back.

As outlined above, Parfait sued Jahncke on theories of negligence and unseaworthiness, Jahncke impleaded Yo-Ro as the third-party defendant, and both Yo-Ro and Jahncke impleaded Yo-Ro's insurers as fourth-party defendants. In early January of 1972, counsel for Parfait offered to settle the $160,000 suit for $90,000. Upon receiving notice of the offer, counsel for Yo-Ro wrote Jahncke, Travelers, and Home indicating that he would regard as favorable a settlement in any amount within the $100,000 limit of Yo-Ro's general liability insurance policy with Travelers and called upon Travelers and Home to effect such a settlement immediately.² In reply counsel for Jahncke offered Yo-Ro the defense of the action in exchange for a hold-harmless agreement, and indicated he would attempt to settle the case along the lines indicated by Yo-Ro if Yo-Ro did not accept the offer to take over the defense.³ In the absence of any further objection by Yo-Ro, Jahncke settled with Parfait for a total of $74,635.84 shortly before trial of Parfait's action was to begin. At trial of the third- and fourth-party claims Yo-Ro objected to the reasonableness of the settlement, and Travelers and Home denied coverage under their respective policies.

The district court found that the oil which had dripped on to the catwalk created an unseaworthy condition which was a proximate cause of the accident, and that, even assuming substantial contributory negligence on the part of Parfait, the settlement was reasonable in amount. The court held further that Yo-Ro had breached its duty to Jancke to perform its work in a workmanlike manner and that Jahncke was therefore entitled to indemnification from Yo-Ro for the sum it paid to satisfy its potential liability to Parfait. Finally, the district court construed the Travelers policy, but not the Home policy, as covering the indemnity expense incurred by Yo-Ro, so that the cost of the settlement ultimately fell on Travelers.

I. Indemnity

We treat first the question whether the district court properly awarded Jahncke indemnity from Yo-Ro. To establish its entitlement to indemnity for the amount paid in settlement of Parfait's claim, Jahncke was required to show first that an indemnitor-indemnitee relationship existed between Yo-Ro and itself. If there was such a relationship, Jahncke had the additional burden of satisfying the district court that it, Jahncke, had acted in accordance with equitable indemnity principles in making the settlement and had not spent its indemnitor's money too freely.

Below Jahncke relied on the breach of warranty theory set forth in Ryan Stevedoring Company v. Pan-Atlantic Steamship Corporation, 1956, 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 to establish an indemnitor-indemnitee relationship. Under the Ryan doctrine stevedores and other shore-based contractors who go aboard a vessel by the owner's arrangement or by his consent to perform service for the ship's benefit impliedly warrant to the shipowner that they will accomplish their task in a workmanlike manner.⁴ The essence of the contractor's warranty of workmanlike performance is to perform its work "properly and safely." Id. 350 U.S. at 133, 76 S.Ct. at 237. See also Whisenant v. Brewster-Bartle Offshore Company, 5th Cir. 1971, 446 F.2d 394, 399. The maritime contractor's warranty, just as a manufacturer's warranty against defective products, may be breached even when the contractor has not been negligent. Italia Societa v. Oregon Stevedoring Company, 1964, 376 U.S. 315, 84 S. Ct. 748, 11 L.Ed.2d 732. If the contractor breaches its warranty, and the breach proximately causes liability on the part of the shipowner, then the shipowner is entitled to indemnity unless its own conduct is "sufficient to preclude indemnity." Weyerhaeuser Steamship Company v. Nacirema Operating Company, 1958, 355 U.S. 563, 567, 78 S.Ct. 438, 441, 2 L.Ed.2d 491. To determine whether the shipowner has engaged in conduct sufficient to preclude indemnity, the conduct in question must be weighed against the contractor's breach of warranty under contract principles. Waterman Steamship Corporation v. David, 5th Cir. 1966, 353 F.2d 660. If the shipowner did not "prevent or seriously handicap the stevedore in his ability to do a workmanlike job," then its conduct will not preclude indemnity. Albanese v. N. V. Nederl. Amerik Stoomv., 2nd Cir. 1965, 346 F.2d 481. Negligence on the shipowner's part is not necessarily fatal to its claim for indemnity. Weyerhaeuser Steamship Company v. Nacirema Operating Company, supra; see Italia Societa v. Oregon Stevedoring Company, supra, 376 U.S. at 320, 84 S.Ct. at 751. In summary, "the determination of whether contractual indemnity should be allowed involves a weighing process evaluating the conduct of both parties to determine (1) whether the WWLP warranty of workmanlike performance was breached; (2) whether that breach proximately caused the injury; and (3) whether the shipowner's conduct prevented the workmanlike performance." Garner v. Cities Service Tankers Corp., 5th Cir. 1972, 456 F.2d 476, 481.

This Court has previously recognized the "equitable spirit behind the Ryan doctrine." Whisenant v. Brewster-Bartle Offshore...