Elf Exploration, Inc. v. CAMERON OFFSHORE BOATS

• Decision Date: 09 September 1994
• Docket Number: No. 1:93-CV-371.,1:93-CV-371.
• Parties: ELF EXPLORATION, INC. v. CAMERON OFFSHORE BOATS, INC.
• Court: U.S. District Court — Eastern District of Texas

863 F. Supp. 386

ELF EXPLORATION, INC. v. CAMERON OFFSHORE BOATS, INC.

No. 1:93-CV-371.

United States District Court, E.D. Texas, Beaumont Division.

September 9, 1994.

James Mayer Harris, Jr., Holmes & Harris, Beaumont, TX, for plaintiff.

J. Michael Vernon & Steven B. McAlister, Scofield Gerard Veron Singletary & Pohorelsky, Lake Charles, LA, for defendant.

MEMORANDUM

HINES, United States Magistrate Judge.

Pending are the parties' competing motions for summary judgment. On December 1, 1993, pursuant to consent of each party, this case was referred to the undersigned United States magistrate judge for further proceedings and entry of judgment.

I. Background

This cause of action arises from a previous lawsuit by Sherman Mouton, Sr., No. 1:91-CV-746, in the Eastern District of Texas. In that action, Mouton brought suit for personal injuries allegedly arising from an accident on June 15, 1990.

Due to a major oil spill off the coast of Galveston, Texas, (the "Megaborg" oil spill), plaintiff herein contacted M.T. Nash, defendant's manager on June 13, 1990 in an effort to charter boats. During that conversation, the parties agreed that defendant would supply boats, equip them, maintain them in seaworthy condition, and man them at a certain rate per day. That day, defendant dispatched vessels to Galveston as requested. Defendant received a written Boat Charter Agreement through the mail on approximately June 18, 1990.

Among the boats provided was the M/V Monique McCall and its two man crew consisting of a captain, Rodney Miller, and a deckhand, Sherman Mouton. Mouton claimed that he sustained injuries as a result of riding in rough seas on June 15, 1990, while the boat was en route to the spill site.

In the underlying litigation, Mouton brought suit against Cameron Offshore Boats, Inc., Elf Exploration, Inc. Elf Aquitaine, Inc., and Elf Trading, Inc. Elf Exploration (hereinafter "Elf") filed a cross-claim for breach of contract arising out of the Boat Charter Agreement. Elf Exploration then filed a motion to sever and realign parties which was granted by the Honorable Richard A. Schell, resulting in this separate cause of action.

Before trial of the personal injury cause of action, Mouton entered into a compromise with each of the Elf entities. The claim against Cameron Offshore Boats, Inc. proceeded to non-jury trial which occurred from May 3, 1993 to May 7, 1993. Upon conclusion, Judge Schell dismissed Mouton's Jones Act and unseaworthiness claims based upon Cameron Offshore's motion for judgment on partial findings under FED.R.CIV.P. 52(c).

Remaining for decision is Elf Exploration, Inc.'s breach of contract suit contending that defendant, Cameron Offshore Boats, Inc. ("Cameron"), failed to name Elf as an additional assured under a policy of insurance as required by the Boat Charter Agreement.

II. Motions for Summary Judgment

A. Plaintiff's Motion and Defendant's Response

Plaintiff contends that the Boat Charter Agreement entered into between Elf and Cameron required Cameron to name Elf as an additional insured under the various insurance policies purchased by Cameron at its own expense. Cameron failed to name Elf as an additional insured under any policy of insurance. As a result, Elf incurred expenses in defending and settling Mouton's claims.

Plaintiff further contends that the Boat Charter Agreement was entered into on June 13, 1990, pursuant to the language of the agreement, despite the fact that it was not actually signed until approximately June 18, 1990. Mickey Nash, Cameron's manager "backdated" the written agreement to the date of the original oral agreement. Therefore, the parties intended the contract to take effect on June 13, 1990.

Thus, plaintiff contends that Cameron's failure to procure insurance for Elf and name Elf as an additional insured, constituted a breach of the Boat Charter Agreement.

Defendant responds that no request was made on June 13, 1990 for Cameron to name Elf as an additional assured under any insurance policy. Furthermore, no such request was made in a subsequent conversation on June 14, 1990. Therefore, Cameron received no request for Elf Exploration to be named as an additional assured under an insurance policy prior to receipt of the Boat Charter Agreement on or about June 18, 1990. Even then, the agreement had not been signed by a representative of Elf. The document was returned to Elf, and Jean Pierre Guegan ultimately signed the agreement on behalf of Elf. Thus, the Boat Charter Agreement was not effective until long after June 15, 1990.

Additionally, Cameron contends that Elf's claim must be rejected because it failed to establish that it had any liability to Mouton. Cameron notes that where a party seeking indemnity settles with an injured party rather than proceeding to judgment, the party seeking indemnity must prove liability to the injured party in order to recover his indemnity claim.

Finally, Cameron contends that if the Boat Charter Agreement validly required Elf to be named an additional assured, then Elf actually became an additional assured. Cameron's P & I insurance policy recognizes additional assureds "if required in the ordinary course of their business." Thus, Elf would be recognized as an additional assured by virtue of the mere execution of the agreement to give them additional assured status, and Elf should be required to submit its claim to the P & I insurer.

B. Defendant's Motion and Plaintiff's Response

Cameron brings forth two additional arguments in its own motion for summary judgment. First, the charter agreement, by its own terms, does not require Cameron to name Elf as an "additional assured." Instead the document refers to the naming of "Charterer" (Elf) and other parties as "additional assurers."

Second, Cameron's P & I policy includes an "other insurance" escape clause. Such an escape clause renders the policy in which it is contained completely inapplicable if other insurance exists in favor of the assured. Because Elf was covered by other insurance, it could not have collected under Cameron's P & I policy, and no damages were sustained.

Plaintiff responds that the contract term, "additional assurer," was a typographical error. It is clear from reading the agreement as a whole that the term "assurer" was inadvertently inserted instead of the term "assured." As the court is to ascertain the parties' intentions by examining the entire writing, Cameron's argument is without merit.

Plaintiff further contends that Cameron may not avail itself of the P & I policy's escape clause. First, Cameron may not step into the shoes of the insurance carrier in order to claim this defense. Second, no facts prove that Elf would have been named under this insurance policy or that Elf would have consented to this policy. The Boat Charter Agreement requires insurance with insurers "satisfactory to Elf." Furthermore, plaintiff contends that the settlement and expenses were not ultimately paid for by the insurance carrier.

Finally, plaintiff contends that Paragraph 16 of the policy provides that the "other insurance" clauses contained in the policy shall be deemed deleted as respects the named assured or subsidiaries or related companies and as may be required by contract. The insurance shall be deemed primary as required by contract. As Cameron was required to provide insurance covering Elf by contract, the escape clause is inapplicable.

Defendant's reply to plaintiff's response argues that since the term "assurer" was used in the agreement on at least three occasions, it was no "typographical error." As both parties agree that the contract should be construed from its four corners, the contract does not require naming Elf as an additional "assured."

Furthermore, defendant contends that it is not attempting to "step into the shoes" of the P & I insured, but instead it is attempting merely to demonstrate that no damages have occurred as a result of the alleged breach of contract. Elf would have been named under the policy in question as the very meaning of "additional assured" is that one company is required to add another as an additional assured under its existing P & I policy. Cameron was in no way required to submit the policy to Elf for approval.

Defendant adds that it is irrelevant whether the insurance carrier actually paid Elf's settlement and expenses. The other insurance clause applies if the "additional assured" has other insurance.

Finally, defendant argues that the Boat Charter Agreement does not require deletion of the other insurance clause or that the P & I policy be deemed primary. In contrast, the agreement does make specific provision that the "as owner" provisions of the P & I policy must be deleted. As no specific provision was made for the deletion of the "other insurance" clause, its deletion was not required.

C. Summary

The parties' motions raise the following questions: (1) Did the contract require plaintiff to be named as an additional assured? (2) If so, was defendant required to obtain such insurance prior to the date of Mouton's alleged injury? (3) Did plaintiff sustain damages in light of the insurance contract's escape clause? and (4) Did defendant fail to obtain insurance in light of the insurance contract's omnibus clause? All must be answered in the affirmative in order for plaintiff to prevail.

III. Discussion

A. Choice of Law

The applicable law in a suit regarding a contract to procure insurance was discussed in Angelina Casualty Co. v. Exxon Corp., U.S.A., Inc., 876 F.2d 40 (5th Cir. 1989):

A ship charter is unquestionably a maritime contract. See Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 890, 6 L.Ed.2d 56 (1961); Theriot v. Bay Drilling Corp., 783 F.2d 527, 538-39 (5th Cir.1986). A contract to procure insurance, however, is not a maritime contract. See Koch-Ellis Marine Contractors, Inc. v. Phillips Petroleum Co., 219 F.2d 520, 521 n. 2 (5th Cir.1955); Syndicate 420

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