Breaux v. Halliburton Energy Services

• Decision Date: 06 March 2009
• Docket Number: No. 07-30964.,07-30964.
• Citation: 562 F.3d 358
• Parties: Shannon BREAUX, Etc., Plaintiff, v. HALLIBURTON ENERGY SERVICES, Defendant-Appellee-Cross-Appellant, v. Era Aviation, Inc.; Rowan Companies, Inc., Defendants-Appellants-Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

562 F.3d 358

Shannon BREAUX, Etc., Plaintiff, v. HALLIBURTON ENERGY SERVICES, Defendant-Appellee-Cross-Appellant, v. Era Aviation, Inc.; Rowan Companies, Inc., Defendants-Appellants-Cross-Appellees.

No. 07-30964.

United States Court of Appeals, Fifth Circuit.

March 6, 2009.

Ralph E. Kraft, Frederick Douglas Gatz, Jr., Bryan Edward Lege, Kraft, Gatz & Devitt, Lafayette, LA, Robert Alan York (argued), GodwinRonquillo, P.C., Dallas, TX, Jack Charles Benjamin, Jr., Charles R. Lane, Kraft, Gatz, Lane & Benjamin, Katharine Rachael Colletta, Lemle & Kelleher, LLP, New Orleans, LA, Misty Annette Hataway-Cone, Godwin Pappas Ronquillo, Houston, TX, for Halliburton Energy Services.

Kenneth H. Laborde (argued), Gieger, Laborde & Laperouse, New Orleans, LA, for Defendants-Appellants Cross-Appellees.

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

Before DAVIS, STEWART and DENNIS, Circuit Judges.

CARL E. STEWART, Circuit Judge:

This appeal involves the application of two separate contracts. Under one contract, the district court found that Era Aviation, Inc. ("Era") was required to indemnify Halliburton Energy Services ("HES") for liability arising out of Era's provision of aviation services. Under the second contract, the district court found that HES was required to indemnify Rowan Companies, Inc. ("Rowan") and its subsidiary Era, for liability relating to the death of HES's employees while they were on Era's equipment. Applying both indemnity provisions, the district court held that the reciprocal obligations created a circular indemnity resulting in no party being entitled to indemnity from the other, and likewise, no party was entitled to additional insured status. The parties filed cross-appeals. The issues raised on both appeals center on the applicability of the indemnity and insurance provisions under the contracts. Both parties raise as issues whether the district court's rulings were proper, and the cross-appeal separately presents alternative bases to support the judgment. For the following reasons, we affirm in part and remand in part for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Factual Background

This case arises out of a helicopter crash in March 2004 that resulted in the death of ten occupants, including some of HES's employees. HES is in the business of providing goods and services to customers with onshore and offshore operations in support of oil and gas exploration and production. Rowan likewise provides goods and services to customers in the oil and gas business who utilize Rowan's equipment and property. Era, a subsidiary of Rowan at the time of the helicopter accident, was a provider of specialized helicopter services. A helicopter operated by Era departed Galveston, Texas with two crew members and eight passengers. Four of the eight passengers aboard the helicopter, Tyler Breaux, Thomas Wayne Jackson, Jr., Andre Lake, and Jeffrey Willis Langley, were employed by HES. The purpose of the flight was to transport the oil field workers to an offshore drilling vessel, the Discover Spirit, operated by Transocean Offshore Deepwater Drilling, Inc. ("Transocean"). Union Oil Company of California ("Unocal"), the operator of wells in the Gulf of Mexico, had previously contracted with Transocean for the services of the Discover Spirit in connection with the operation of Unocal's offshore wells. Era and HES were providing services to the same customer, Unocal. The aircraft crashed during the flight, and all ten occupants were killed as a result of the accident.

II. The Procedural Background

In May 2004, Plaintiff Shannon Breaux, individually, and as administratrix of the succession of Tyler Breaux, filed suit against Era and Rowan, among others, for damages arising out of the death of her husband, HES's employee Tyler Breaux ("Breaux Action"). In June 2004, the Breaux Action was removed to federal court and consolidated with two other actions arising out of the same accident.

Era and Rowan filed a Third Party Complaint against HES seeking contractual defense, indemnity, and additional insured status relating to the claims of the four HES employees killed in the accident under a Mutual Hold Harmless and Indemnity Agreement between Rowan and HES ("Rowan/HES Agreement"). HES filed a Counterclaim against Era and Rowan seeking defense, indemnity, and additional insured status relating to all claims made against HES under a Commercial Agreement for Helicopter Transportation Services ("Era/Unocal Agreement"). The Era/Unocal Agreement and Rowan/HES Agreement are central to this appeal.

A. Era/Unocal Agreement

The Era/Unocal Agreement was executed by Era and Unocal on July 3, 2003. The Era/Unocal Agreement incorporated the indemnity provisions contained in the Services and Drilling Master Contract ("SDM") the two parties executed on June 9, 1992. While Rowan was not a signatory to the Era/Unocal Agreement, it was a wholly-owned subsidiary of Era. "Contractor" is defined as "Era Aviation, Inc. and any and all of its parent companies, subsidiaries and affiliates." The agreement also expressly applies to helicopter services and the transport of personnel and equipment.

The Era/Unocal Agreement provides in pertinent part as follows:

6.1¹ CONTRACTOR'S Indemnity. CONTRACTOR [Era] hereby agrees ... to release, defend, and indemnify COMPANY [Unocal] ... and its contractors and subcontractor(s) of any tier to the maximum extent permitted by the applicable law, in each and every case, irrespective of whether any indemnitee hereunder may be alleged or proven to have been negligent (including but not limited to active, passive, sole, joint, concurrent, comparative, contractual and gross negligence), or otherwise legally liable (with or without fault or whether strictly liable or in breach of any warranty), ... from and against any and all liability arising out of the following:

...

c. All claims, liabilities, demands, actions, damages, losses, and expenses, including but not limited to court costs, reasonable attorney's fees, and other litigation expenses for personal or bodily injury, illness, disease, or death resulting from [Era's] ownership, operation, maintenance or use of aircraft under the Contract, regardless of when, or where such injury, illness, disease or death occurs ....

B. Rowan/HES Agreement

The Rowan/HES Agreement was executed by Rowan and HES on August 26, 2003. Era was not a signatory to the Rowan/HES Agreement, but the provisions of the agreement inure to the benefit of Rowan's "subsidiary and affiliated companies." The four introductory paragraphs of the agreement establish the intent of the agreement.

WHEREAS, Contractor [HES] is engaged in the business of supplying goods or services to customers having onshore and offshore operations relating to the exploration and production of oil and gas;

WHEREAS, Company [Rowan] is engaged in the business of supplying goods or services to such customers utilizing equipment and property owned by or under the management of Company [Rowan] or its subsidiary or affiliated companies (the "Company's Property");

WHEREAS, Contractor's [HES] personnel or property are from time to time located near or placed on Company's Property under circumstances in which Company [Rowan] has not hired Contractor [HES] but Contractor [HES] and Company [Rowan] are providing goods or services to the same customer in connection with a project; and

WHEREAS, Contractor [HES] and Company [Rowan] hereby wish to apportion their respective liabilities and responsibilities under such circumstances.

The agreement then defines the scope of the indemnity obligation as follows:²

(a) The parties [Rowan and HES] expressly intend and agree that the phrase "be responsible for and hold harmless and indemnify," as used in this agreement, shall mean that the indemnifying party shall release, indemnify, hold harmless and defend the indemnified party from and against any and all claims, demands, fines, penalties, causes of action, damages, attorney's fees, cost of litigation, court costs, judgments and awards of any kind or character (collectively referred to hereinafter as the "claims"), without limit and without regard to the cause or causes thereof, including pre-existing conditions, defect or ruin of premises ..., the unseaworthiness of any vessel or vessels ..., the ownership, possession, management, maintenance, supply, operation (including but not limited to ingress, egress, loading and unloading operations) or navigation of any vessel, breach of representation or warranty ..., breach of duty (whether statutory, contractual or otherwise), strict liability, tort, breach of contract (including any claims which arise by reason of indemnification or assumption of liability contained in other contracts entered into between an indemnified party and a third party), fault, regulatory or statutory liability, the negligence of any person or persons, including that of an indemnified party, whether such negligence be sole, joint or concurrent, active, passive or gross, or any other theory of legal liability.

The agreement then details each party's respective indemnity obligation. Regarding HES's obligation, the agreement provides as follows:³

Contractor [HES] shall at all times be responsible for and hold harmless and indemnify company [Rowan] from and against all claims arising in connection herewith in favor of contractor, its parents, subsidiary and affiliated companies, each of their respective officers, directors and employees, each of their respective officers, directors and employees, and any legal representative, heir or survivor of any of the forgoing (... collectively referred to as the "Contractor's Group") on account of illness, injury, or death of contractor's group or damage to or loss of property owned, rented or provided by Contractor's Group....

The agreement also required Rowan and HES to maintain four types of...