Jackson v. Tenneco Oil Co.

• Decision Date: 05 December 1985
• Docket Number: Civ. A. No. 84-4677.
• Parties: Tyrone JACKSON and Eva Saunders Jackson v. TENNECO OIL COMPANY, et al.
• Court: U.S. District Court — Eastern District of Louisiana

623 F. Supp. 1452

Tyrone JACKSON and Eva Saunders Jackson v. TENNECO OIL COMPANY, et al.

Civ. A. No. 84-4677.

United States District Court, E.D. Louisiana.

December 5, 1985.

Michael H. Bagot, Jr., Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., for third-party defendant.

Guy E. Wall, Gordon, Arata, McCollam, Stuart & Duplantis, New Orleans, La., for defendant.

ORDER AND REASONS

MENTZ, District Judge.

This matter is before the Court upon motion of defendant, Halliburton Services, Inc. (Halliburton) and third party defendant, Highlands Insurance Company (Highlands) for summary judgment as to Tenneco Oil Company's (Tenneco) claims for contractual indemnity, tort indemnity, and coverage under insurance policies issued to Halliburton by Highlands. Halliburton contends that Tenneco's claim for contractual indemnity is barred by the Louisiana Oilfield Indemnity Act, La.Rev.Stat.Ann. 9:2780 (West Supp.1985) ("Indemnity Act:). Halliburton further claims that Tenneco's claim for tort indemnity is barred by § 905(a) of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. § 901 et seq. Highlands avers that Tenneco's third party claim against it for coverage under insurance policies issued to Halliburton is without merit, because the policies issued by Highlands do not cover Tenneco or, in the alternative, are void under the Indemnity Act. For the reasons set forth below, the motion for summary judgment is GRANTED dismissing Tenneco's claim against Halliburton for tort indemnity, and Tenneco's third party claim for insurance coverage against Highlands. As to Tenneco's claim against Halliburton, the motion for summary judgment is GRANTED insofar as Tenneco seeks indemnity for its own negligence. Halliburton, should Tenneco be exonerated at trial, will be required to reimburse Tenneco its costs of defense.

Plaintiff herein was allegedly injured on or about November 25, 1983 while performing acidation and gravel packing work on a Tenneco platform on the outer continental shelf. At the time of his alleged injury, plaintiff was employed by Halliburton and the parties have stipulated that Halliburton was working for Tenneco pursuant to an August 4, 1980 Master Service or Work Agreement. Paragraph VII of the Agreement contains indemnity provisions which read as follows:

VII. INDEMNITY

A. Company agrees to defend, indemnify and hold Contractor, its subsidiary and affiliate companies, their agents, employees, directors, officers, servants, and insurers, harmless from and against any and all losses, claims, demands, liabilities or causes of action of every kind and character, in favor of any person or party, for injury to or illness or death of any employee of Company or its joint interest owners, which injury, illness or death arises out of or is incident to the work performed under this Contract, and regardless of the cause of such injury, illness or death, even though caused in whole or in part by a pre-existing defect, indemnitees' negligence or strict liability, or other legal fault of indemnitees. Company shall fully defend any such claim, demand or suit as its sole expense, even if the same is groundless. This indemnity shall be limited to the extent necessary for compliance with applicable State and Federal laws.

B. Contractor agrees to defend, indemnify and hold Company, its joint interest owners, its subsidiary and affiliate companies, their agents, employees, directors, officers, servants, and insurers, harmless from and against any and all losses, claims, demands, liabilities or causes of action of every kind and character in favor of any person or party, for injury to or illness or death of any employee of Contractor or any employee of subcontractors of Contractor, which injury, illness or death arises out of or is incident to the work performed under this Contract, and regardless of the cause of such injury, illness or death, even though caused in whole or in party by a pre-existing defect, indemnitees' negligence or strict liability, or other legal fault of indemnitees. Contractor shall fully defend any such claim, demand or suit at its sole expense, even if the same is groundless.

These reciprocal provisions require Halliburton and Tenneco to be responsible for personal injuries sustained by their own employees, regardless of fault. Other contractual provisions require Halliburton to provide certain insurance coverages and name Tenneco as an additional assured on its marine insurance policies.

The 1980 Agreement does not specify a "terminable performance of a specific job or activity". See R.S. 9:2780(I). It is, in fact, an open-ended Master Service Agreement which governs work performed by Halliburton for Tenneco. This Court finds that the execution of the Agreement prior to effective date of the Indemnity Act does not preclude the Act's application to the Agreement. See § 9:2780(I); Rigby v. Tenneco Oil Co., 607 F.Supp. 1247, 1248 (E.D. La.1985); Home Ins. Co. v. Garber Industries, Inc., 588 F.Supp. 1218, 1222 (W.D.La. 1984); Tobin v. Gulf Oil Corp., 535 F.Supp. 116, 117 (E.D.La.1982).

TENNECO'S CONTRACTUAL CLAIMS

Tenneco correctly notes that the application of the Indemnity Act voids only the obligation to indemnify Tenneco for Tenneco's negligence or strict liability and does not bar Tenneco's contractual claim against Halliburton for Halliburton's fault or negligence. See Rigby v. Tenneco Oil Co., 607 F.Supp. 1247, 1248 (E.D.La.1985); Home Ins. Co. v. Garber Indus., Inc., 588 F.Supp. 1218, 1222-23 (W.D.La.1984). However, Tenneco also argues that the Indemnity Act is inconsistent with the Outer Continental Shelf Lands Act, 43 U.S.C. § 1333(a)(2)(A) and § 905(a) of the LHWCA, 33 U.S.C. § 901, et seq. This argument was addressed by Judge Schwartz in Rigby supra, 607 F.Supp. at 1247-50 and by this Court in Wilson v. J. Ray McDermott & Company, Inc., 616 F.Supp. 1301 (E.D.La.1985). For the reasons set forth in these opinions, the Court finds that R.S. 9:2780 is not inconsistent with federal law.

Consequently, Louisiana law governs a platform owner's right to seek contractual indemnity for injuries sustained by non-employees on fixed platforms on the outer continental shelf. See Rodrigue v. Aetna Cas. & Serv. Co., 395 U.S. 352, 89 S.Ct. 1835, 23 L.Ed.2d 360 (1969).

TENNECO'S TORT INDEMNITY CLAIMS

Tenneco contends that tort indemnity is not barred by § 905(a) of the LHWCA. This section provides that:

The liability of an employer prescribed in Sec. 4 shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death.... (emphasis added)

Notwithstanding jurisprudence to the contrary, Tenneco argues that tort indemnity is not barred in light of Lockheed Aircraft Corporation v. United States, 460 U.S. 190, 103 S.Ct. 1033, 74 L.Ed.2d 911 (1983).

In Lockheed the administrator of the estate of a civilian employee of the United States Navy brought a wrongful death action against the aircraft manufacturer. The manufacturer, in turn, sought indemnity from the United States pursuant to the Federal Tort Claims Act, 28 U.S.C. § 1346(b), § 2671 et seq. The Court examined the exclusive liability provision of the Federal Employees' Compensation Act, 5 U.S.C. 8116(c) as well as the earlier case of Weyerhaeuser Steamship Company v. United States, 372 U.S. 597, 83 S.Ct. 926, 10 L.Ed.2d 1 (1963). Without ruling on the substantive basis of Lockheed's claim, the court held that the exclusive liability provision of the § 8116(c) did not bar a tort indemnity claim.

Neither Lockheed nor Weyerhaeuser interpreted the substantive provisions of the LHWCA. A thorough review of the legislative histories shows that Congress has had ample opportunity to and has, in fact, addressed the substantive rights of third parties without even suggesting any intention of making the employer liable in tort to third parties.

Although it cited the existence of "nearly identical language" in the exclusive remedy provisions of the FECA and the LHWCA, the Supreme Court did not rule on the question of whether a third party tortfeasor is entitled to seek tort indemnity from a longshoremen's employer, as Tenneco does here. In fact, the Supreme Court has declined the invitation to hold employers of injured longshoremen liable in either tort indemnity or contribution to third party tortfeasors. See Halcyon Line v. Haenn Ship Ceiling Corp., 342 U.S. 282, 72 S.Ct. 277, 96 L.Ed. 318 (1952); Atlantic Coast Line R. Co. v. Erie Lackawana Railroad Company, 406 U.S. 340, 92 S.Ct. 1550, 32 L.Ed.2d 110 (1972).

The Supreme Court's refusal to hold employers liable for tort indemnity to third parties in addition to requiring them to pay compensation benefits to the injured employee is consistent with the compromise between employers and employees that the LHWCA represents.

The LHWCA provides that a covered employee is entitled to receive compensation benefits from his employer regardless of fault and, in turn, relinquishes his right to a tort recovery from his employer. See Peters v. No. River Ins. Co. of Morristown, N.J., 764 F.2d 306, 310 (5th Cir.1985); Louviere v. Shell Oil Co., 509 F.2d 278, 283 (5th Cir.1975), cert. denied, 423 U.S. 1078, 96 S.Ct. 867, 47 L.Ed.2d 90 (1976); 33 U.S.C. 905(a). In a third party tort situation such as the instant litigation, the Fifth Circuit, in Peters, supra, stated:

We have recognized that the compensation scheme of the Act furthers at least two other objectives, both of which are particularly relevant to the issue in this case; (1) "placing the burden ultimately on the company whose default caused the injury," Louviere, 509 F.2d at 283 (quoting Italia Societa v. Oregon Stevedoring Co., 376 U.S. 315, 324, 84 S.Ct. 748, 754, 11 L.Ed.2d 732 (1964)), and (2) "protecting

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