Ridings v. Danos & Curole Marine Contractors, Inc.

• Decision Date: 12 August 1998
• Docket Number: No. 97-CA-2710.,97-CA-2710.
• Citation: 723 So.2d 979
• Court: Court of Appeal of Louisiana — District of US
• Parties: Jerry B. RIDINGS v. DANOS & CUROLE MARINE CONTRACTORS, INC., et al.

723 So.2d 979

Jerry B. RIDINGS v. DANOS & CUROLE MARINE CONTRACTORS, INC., et al.

No. 97-CA-2710.

Court of Appeal of Louisiana, Fourth Circuit.

August 12, 1998.

Opinion Denying Rehearing November 10, 1998.

Robert P. McCleskey, Jr., William J. Riviere, New Orleans, for Defendant/Appellee Danos & Curole Marine Contractors, Inc.

Ralph E. Kraft, Trevor D. Hance, Preis, Kraft & Roy, Lafayette, for Defendant/Appellant American Oilfield Divers, Inc.

Before ARMSTRONG, PLOTKIN and JONES, JJ.

ARMSTRONG, Judge.

This case involves cross-claims between the two defendants in a maritime personal injury action. One of the cross-claims is based upon an insurance provision in a contract between the two defendants and the opposing cross-claim is based upon an indemnity provision in that same contract. Upon a motion for summary judgment, the trial court found the insurance provision "primed" the indemnity provision. Consequently, the trial court granted summary judgment in favor of the party claiming under the insurance provision and dismissed the opposing party's claim for indemnity. While we agree with the trial court's interpretation of the contract, we hold that there is a genuine issue of fact as to whether the insurance provision, the indemnity provision or both of these provisions are voided under the Louisiana Oilfield Anti-Indemnity Act, La. R.S. 9:2780 ("LOAIA"), and so we reverse and remand for further proceedings.

The original plaintiff, Jerry Barnett Ridings, was an employee of defendant Danos and Curole Marine Contractors, Inc. ("D & C") and was assigned to work aboard D & C's vessel the ERIC DANOS. Murphy Oil Company had contracted with D & C for the services of the ERIC DANOS in connection with certain offshore operations. Murphy Oil Company also contracted with defendant American Oilfield Divers ("AOD") to provide services in connection with those same operations offshore. AOD's crew and equipment were transported to the ERIC DANOS by another vessel. While AOD's men and equipment were being transferred to the ERIC DANOS, a ladder being handled by AOD personnel allegedly struck Mr. Ridings in the back injuring him.

Mr. Ridings sued D & C and AOD. D & C and AOD filed cross-claims against one another. AOD's cross-claims sought indemnity from D & C based upon reciprocal indemnity provisions contained in a Master Service Contract ("MSC") between D & C and AOD. D & C's cross-claim against AOD sought coverage as an additional insured under AOD's insurance policies based upon a provision of the MSC which obligated AOD to obtain (at its own expense) specified types and amounts of insurance coverage, to have D & C named as an additional assured on the insurance policies and to have the insurers waive any subrogation against D & C. AOD settled with Mr. Ridings and, as part of that settlement, took an assignment of Mr. Ridings' claim against D & C.

D & C filed a motion for summary judgment, seeking dismissal of AOD's cross-claim against D & C, based upon its status as an additional assured on AOD's insurance policies and the waivers of subrogation in those insurance policies. The principal issue addressed by the trial court in deciding that motion for summary judgment was the interaction of the above-discussed insurance provision of the MSC with the reciprocal indemnity provisions of that contract. The insurance provision, in effect, required AOD to purchase liability insurance coverage for D & C. The reciprocal indemnity provisions required (among other things) that D & C indemnify AOD for any claims made by D & C employees (such as Mr. Ridings) against AOD and that AOD indemnify D & C for any claims made by AOD employees against D & C. As to that interaction of those contractual provisions, the trial court held in its written Reasons for Judgment:

It is clear from Tullier v. Halliburton Geophysical Services, Inc. 81 F.3d 552 (5th Cir.1996) that the insurance obligation of American Oilfield Divers primes the contractual defense/indemnity obligation of Danos and Curole. Thus, Danos and Curole is entitled to first dollar protection as an additional insured. Danos and Curole's contractual defense/indemnity obligation to American Oilfield Divers does not become effective until after the insurance protection afforded Danos and Curole has been exhausted.

The trial court's interpretation of the MSC is well supported by the Tullier decision as well as by other decisions. See Klepac v. Champlin Petroleum Co., 842 F.2d 746 (5th Cir. 1988)

; Woods v. Dravo Basic Materials Co., 887 F.2d 618 (5th Cir.1989); Ogea v. Loffland Brothers Co., 622 F.2d 186 (5th Cir.1980). But see Spell v. N.L. Industries, Inc., 618 So.2d 17 (La.App. 3rd Cir.1993) (minority position and perhaps limited to situation in which contractor failed to obtain additional assured coverage despite contractual obligation to do so).

However, we hold that there is a genuine issue of fact as to whether the provision of the MSC which obligated AOD to purchase additional assured insurance coverage is void under the LOAIA. The most pertinent provisions of that statute state:

A. The legislature finds that an inequity is foisted on certain contractors and their employees by the defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, to the extent those provisions apply to death or bodily injury to persons. It is the intent of the legislature by this Section to declare null and void and against public policy of the state of Louisiana any provision in any agreement which requires defense and/or indemnification, for death or bodily injury to persons, where there is negligence or fault (strict liability) on the part of the indemnitee, or an agent or employee of the indemnitee, or an independent contractor who is directly responsible to the indemnitee.

B. Any provision contained in, collateral to, or affecting an agreement pertaining to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, is void and unenforceable to the extent that it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee.

C. The term "agreement," as it pertains to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, as used in this Section, means any agreement or understanding, written or oral, concerning any operations related to the exploration, development, production, or transportation of oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, including but not limited to drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, plugging, or otherwise rendering services in or in connection with any well drilled for the purpose of producing or excavating, constructing, improving, or otherwise rendering services in connection with any mine shaft, drift, or other structure intended for use in the exploration for or production of any mineral, or an agreement to perform any portion of any such work or services or any act collateral thereto, including the furnishing or rental of equipment, incidental transportation, and other goods and services furnished in connection with any such service or operation.

* * *

G. Any provision in any agreement arising out of the operations, services, or activities listed in Subsection C of this Section of the Louisiana Revised Statutes of 1950 which requires waivers of subrogation, additional named insured endorsements, or any other form of insurance protection which would frustrate or circumvent the prohibitions of this Section, shall be null and void and of no force and effect.

* * *

I. This Act shall apply to certain provisions contained in, collateral to or affecting agreements in connection with the activities listed in Subsection C which are designed to provide indemnity to the indemnitee for all work performed between the indemnitor and the indemnitee in the future. This specifically includes what is commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name. The provisions of this Act shall not apply to a contract providing indemnity to the indemnitee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C.

La. R.S. 9:2780(A), (B), (C), (G) and (I) (emphasis added). The plain and clear import of these statutory provisions, particularly those portions which we have emphasized, is that a party which is solely or even concurrently negligent or at fault (strictly liable) as to a death or bodily injury may not enforce a contractual provision calling for it to be made on additional assured on the other party's insurance policy (or receive the benefit of such additional assured status) and may not enforce a contractual provision for a waiver of subrogation (or receive the benefit of a waiver of subrogation in the other party's insurance policy). See Livings v. Service Truck Lines of Texas, Inc., 467 So.2d 595, 599 (La.App. 3rd Cir.1985)

; Babineaux v. McBroom Rig Building Service, Inc., 806 F.2d 1282, 1284 (5th Cir.1987),

on rehearing, 811 F.2d 852, supplemental opinion, 817 F.2d 1126 (5th Cir.1987); Davis v. Mobil Oil Exploration and Producing Southeast, Inc., 864 F.2d 1171, 1176 (5th Cir.1989). See also Murray v. Trunkline Gas Co., 544...