Avondale Shipyards, Inc. v. Insured Lloyd's

• Decision Date: 14 April 1986
• Docket Number: No. 85-3115,85-3115
• Citation: 786 F.2d 1265
• Parties: AVONDALE SHIPYARDS, INC., Plaintiff-Appellee, Cross-Appellant, v. INSURED LLOYD'S, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1265

786 F.2d 1265

AVONDALE SHIPYARDS, INC., Plaintiff-Appellee, Cross-Appellant, v. INSURED LLOYD'S, Defendant-Appellant, Cross-Appellee.

No. 85-3115.

United States Court of Appeals, Fifth Circuit.

April 14, 1986.

Francis P. Accardo, Montgomery, Barnett, Brown & Read, Terry J. Freiberger, New Orleans, La., for defendant-appellant, cross-appellee.

Edward J. Koehl, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Robert T. Lemon, II, New Orleans, La., for Avondale.

John T. Holmes, New Orleans, La., for Universal Systems, Inc.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before GARWOOD, PATRICK E. HIGGINBOTHAM, and W. EUGENE DAVIS, Circuit Judges.

GARWOOD, Circuit Judge:

Avondale Shipyards, Inc. (Avondale) brought this diversity suit against Universal Systems, Inc. (Universal) and its insurer, Insured Lloyd's (Lloyds), seeking contractual indemnity from Universal for sums Avondale had paid in settlement of a prior personal injury action brought against it by Frank King (King), a Universal employee who was injured while working on a ship then under construction at Avondale's shipyard. Avondale likewise sought recovery against Lloyds on this theory by reason of the contractual indemnity portion of the liability insurance policy Lloyds had issued to Universal. Additionally, Avondale requested a declaratory judgment that it was covered respecting the King claim as an additional insured under the comprehensive general liability portion of the same Lloyds insurance policy. On motions for summary judgment filed by all parties, the district court ruled that Avondale was covered by the comprehensive general liability portion of the Lloyds policy, but was not entitled to contractual indemnity from Universal or to recovery on that theory from Lloyds. On this appeal by Lloyds and cross-appeal by Avondale, we affirm the district court's determination as to the comprehensive general liability coverage, but reverse its ruling denying Avondale contractual indemnity recovery.

Facts and Proceedings Below

On December 12, 1980, King, a Universal employee, was injured while working as a shipfitter on the S/S OGDEN DYNACHEM, a vessel being constructed by Avondale for Ogden Shamrock Transport, Inc. at the Avondale shipyard. King's injury arose when he fell down a stairway on the ship allegedly as a result of stepping in a greasy substance on the deck. The OGDEN DYNACHEM had been removed from its shoreside ways and was positioned on a dry-dock afloat in the Mississippi River. At the time of King's accident, the vessel was approximately 74 percent complete; it was not capable of self-propulsion, but was able to float without assistance.

King's work as a Universal employee at the Avondale shipyard was pursuant to a contract in which Universal agreed to provide shipfitters to Avondale. The contract obligated Universal to indemnify Avondale against any claim for personal injury arising out of or connected with the work performed by Universal on or about Avondale's premises. In addition, Universal was required to obtain a comprehensive general liability policy naming Avondale as an additional insured and providing insurance to cover Universal's indemnity obligation. Pursuant to this agreement, Universal obtained a comprehensive general liability policy from Lloyds designating Universal as the named insured and Avondale as an additional insured. The policy also covered Universal's indemnity obligation. Avondale used Universal employees, including King, in building the OGDEN DYNACHEM for Ogden Shamrock Transport, Inc., the actual owner of the vessel and apparently a sister corporation of Avondale.

King filed suit in December 1981 against Avondale in the United States District Court for the Southern District of Mississippi to recover damages of $300,000 for his December 12, 1980 injuries. In that action, King asserted that Avondale was negligent and liable for negligence as a "vessel" pursuant to 33 U.S.C. Sec. 905(b). ¹ Avondale demanded defense and indemnity from Lloyds and Universal; Lloyds denied coverage to Avondale, but provided a defense. In the King litigation, the district court, in July 1982, entered an order granting a partial, interlocutory summary judgment on the issues of ownership and status of the OGDEN DYNACHEM. In this order, the court ruled that the OGDEN DYNACHEM was a vessel for purposes of section 905(b) and that the vessel was under Avondale's care and control at the time of the accident, making Avondale the vessel's owner pro hac vice for purposes of section 905(b). Almost two years after the partial summary judgment order was entered, a settlement was reached with King for $120,000, which was jointly funded by Avondale and Lloyds. In June 1984, the district court signed a final judgment approving the settlement.

In August 1983, during the course of the King litigation, Avondale filed the present suit against Lloyds and Universal in the United States District Court for the Eastern District of Louisiana, seeking to establish insurance coverage by Lloyds for Avondale's liability to King and to recover full contractual indemnity from Universal plus all costs, expenses, and attorneys' fees incurred by Avondale in both the King litigation and this action. Lloyds denied coverage to Avondale based on a "watercraft exclusion" contained in the comprehensive general liability policy, which excluded coverage for liabilities arising from vessel ownership. ² Lloyds contends that the district court's determination in the King litigation that Avondale was pro hac vice owner of the OGDEN DYNACHEM brings it within the scope of this exclusion. Similarly, Universal bases its denial of indemnity on Avondale's status as pro hac vice owner because section 905(b) bars claims for contractual indemnity by such owners against employers of persons injured on such vessels.

As part of the settlement of the King litigation, Avondale and Lloyds agreed that the outcome of the present declaratory judgment action would determine the responsibility for the settlement payment made to King. In the instant litigation, the parties agreed at a pretrial conference that the insurance coverage issue between Avondale and Lloyds as well as Avondale's contractual indemnity claim against Universal could be resolved by motions for summary judgment. In December 1984, the district court in the case at bar, acting on cross-motions for summary judgment, ruled that Avondale had insurance coverage as an additional named insured under the comprehensive general liability policy issued by Lloyds to Universal. The court reasoned that, although in its view Avondale was collaterally estopped by the determination in the King litigation that Avondale was pro hac vice owner of the vessel for purposes of section 905(b), this status under section 905(b) was not coextensive with the meaning of "owner" under the watercraft exclusion. The court determined that Avondale was not an owner of the vessel for purposes of the exclusion and hence was covered by the policy. The district court, however, ruled that Avondale could not recover for contractual indemnity against Universal or Lloyds, because under section 905(b) an indemnification agreement between the employer of an injured worker and the pro hac vice owner of a vessel is invalid.

Lloyds appeals the district court's determination that Avondale is covered by its comprehensive general liability policy. Avondale cross-appeals the district court's denial of recovery for contractual indemnity.

Discussion

Comprehensive General Liability Policy

Lloyds challenges the district court's finding that pro hac vice ownership status under section 905(b) is not coextensive with the meaning of ownership as used in the watercraft exclusion of its comprehensive general liability policy. We do not reach that issue. Avondale argues that it was not collaterally estopped from relitigating pro hac vice ownership because the previous King litigation was resolved by a monetary settlement approved in a consent judgment. Moreover, Avondale asserts that the previous determination was incorrect because Avondale lacked the necessary relationship to the vessel to establish pro hac vice ownership. Finding that Avondale was not collaterally estopped by the King litigation and was not the pro hac vice owner of the OGDEN DYNACHEM, we affirm the district court's conclusion that the watercraft exclusion was inapplicable and that Avondale was covered by the comprehensive general liability policy.

(a) King litigation preclusion

The July 12, 1982 order of the district court, granting partial summary judgment that the OGDEN DYNACHEM was a vessel and that Avondale was its pro hac vice owner for purposes of King's section 905(b) action against Avondale, was not a final judgment for purposes of either true res judicata or collateral estoppel. ³ As we said in International Union of Operating Engineers v. Sullivan Transfer, Inc., 650 F.2d 669, 676 (5th Cir.1981), "[t]he requirement of finality applies just as strongly to collateral estoppel as it does to res judicata." ⁴ See also, e.g., White v. World Finance of Meridian, Inc., 653 F.2d 147, 149-52 (5th Cir.1981) (reciting "final judgment" requirement for both claim and issue preclusion). This partial summary judgment order did not even determine Avondale's liability--there being no determination either of fault on its part or of causation--much less King's damages, and hence was interlocutory and not appealable. Cf. Fed.R.Civ.P. 56(c) (summary judgment on liability alone "interlocutory in character"). Not only is such an order not appealable, but it remains within the plenary power of the district court to revise or set aside in its sound discretion without any necessity to meet the requirements of Fed.R.Civ.P. 60(b). Zimzores v. Veterans Administration, 778 F.2d 264, 266-67 (5th Cir.1985). And, obviously, King's claim against Avondale could not be...