ADA Resources, Inc. v. Don Chamblin & Associates, Inc.
| Decision Date | 04 August 1978 |
| Docket Number | No. 6583,6583 |
| Citation | 361 So.2d 1339 |
| Court | Court of Appeal of Louisiana — District of US |
| Parties | ADA RESOURCES, INC., and Emerald Oil Company v. DON CHAMBLIN & ASSOCIATES, INC., C. D. Johnston, Seaboard Pipe & Equipment Company, Employers Casualty Company, American Motorists Insurance Company, Goldrus Drilling Company, Weatherford-Lamb, Inc., W. A. Smith, Employees Mutual Liability Insurance Company of Wisconsin. |
Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Randall C. Songy, Lafayette, for defendant-appellant.
George H. Robinson, Jr., Lafayette, Aycock, Horne, Caldwell, Coleman & Duncan by Jack C. Caldwell, Franklin, for plaintiff-appellant.
Lemle, Kelleher, Kohlmeyer & Matthews by Allen R. Fontenot, New Orleans, J. Barry Mouton and L. H. Olivier, Lafayette, Jacob D. Landry, of Landry, Watkins, Cousin & Bonin, New Iberia, Gordon, Arata, McCollam & Watters, Blake G. Arata and Sheryl Hopkins, New Orleans, for defendant-appellee.
Before DOMENGEAUX, GUIDRY and CUTRER, JJ.
Plaintiffs, Ada Resources, Inc. (hereinafter Ada) and Emerald Oil Company (hereinafter Emerald), instituted this action against various defendants seeking recovery for property damage allegedly sustained during the drilling of an oil well. One of the defendants, Seaboard Pipe & Equipment Company, Inc. (hereinafter Seaboard), brought a third party demand upon its insurer, Employers Casualty Company (hereinafter Employers), as a result of Employers' refusal to defend Seaboard in the main demand. Thereafter, plaintiffs filed an amending and supplemental petition making Employers a defendant in the original demand. Employers filed a motion for summary judgment seeking a dismissal of the demands of the original plaintiffs and third party plaintiff on the grounds that Employers' policy did not cover the liability asserted against Seaboard by the plaintiffs. From a trial court judgment in favor of Employers dismissing the demands of original plaintiffs Ada and Emerald and third party plaintiff Seaboard, Ada and Seaboard appeal.
The issue on appeal concerns the correctness of the summary judgment that Employers had no duty to defend Seaboard against the allegations contained in the original plaintiffs' petition.
According to the evidence introduced in connection with the motion for summary judgment, plaintiffs were engaged in the drilling of an oil well in St. Martin Parish, Louisiana. After the well had been drilled to a depth of approximately 12,000 feet, it was decided that an attempt should be made to complete the well as a producing unit. On or about April 28, 1975, in preparation for the completion attempt, Emerald ordered from Seaboard a cross-over joint necessary to convert a casing string from eight (8)-round to Extreme line threads. The cross-over joint was supposed to contain eight-round threads at the pin end and Extreme line threads at the box end of the joint. Seaboard agreed to supply Emerald with the cross-over joint and in return Emerald would send a similar joint that required rethreading to Seaboard to replace the one made available to them. The cross-over joint was shipped from Seaboard's premises to the drilling location by a private trucking line. Allegedly, Seaboard sent a cross-over joint with Hydril threading at the box end instead of the Extreme line thread as ordered. The alleged mistake went undetected and as a result of the problems with the cross-over joint having the wrong thread, the casing string allegedly became stuck in the hole. When an attempt was made to extricate the casing string from the hole in order to remove the cross-over joint, the cross-over joint pulled apart at the lower end and the casing string fell into the hole. Further efforts to remove the casing were to no avail.
The allegations of negligence set forth in plaintiffs' petition, insofar as Seaboard is concerned, can be summarized as follows:
(1) Seaboard was negligent in delivering a cross-over joint different from that which was ordered and it was also negligent in failing to properly inspect the cross-over joint requested in order to determine that it met the specifications of the joint ordered by Emerald.
(2) Seaboard was negligent in delivering a defective cross-over joint that did not meet strength or quality requirements.
Seaboard, at the time of this alleged occurrence, had in force a policy of comprehensive general liability insurance issued by Employers. The policy contains the following provisions:
Exclusion No. 16 contained in the policy provides in pertinent part:
"It is agreed that such insurance as is afforded by the Bodily Injury Liability Coverage and the Property Damage Liability Coverage does not apply to bodily injury or property damage included within the Completed Operations Hazard or the Products Hazard."
The phrase "Completed Operations Hazard" is defined in the policy as being
The phrase "Products Hazard" is defined as follows:
" 'products hazard' includes Bodily injury and Property damage arising out of the Named insured's products or reliance upon a representation or warranty made at any time with respect thereto, but only if the Bodily injury or Property damage occurs away from premises owned by or rented to the Named insured and after physical possession of such products has been relinquished to others; "
"Named insured's products" are defined as:
" 'named insured's products' means goods or products manufactured, sold, handled or distributed by the Named insured or by others trading under his name, including any container thereof (other than a vehicle), but 'Named insured's products ' shall not include a vending machine or any property other than such container, rented to or located for use of others but not sold;"
The motion for summary judgment filed by Employers was based on Exclusion No. 16 which states that property damage liability coverage does not apply to property damage included within the completed operations hazard or the products hazard. Appellants argue that Employers has a duty to defend Seaboard based upon the allegations of plaintiffs' petition and that the policy...
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