Lirette v. Union Texas Petroleum Corp.

• Decision Date: 28 February 1985
• Docket Number: No. 84,84
• Citation: 467 So.2d 29
• Parties: Rhea Deroche LIRETTE, Individually, etc. v. UNION TEXAS PETROLEUM CORPORATION, et al. CA 0113.
• Court: Court of Appeal of Louisiana — District of US

Page 29

467 So.2d 29

Rhea Deroche LIRETTE, Individually, etc. v. UNION TEXAS PETROLEUM CORPORATION, et al.

No. 84 CA 0113.

Court of Appeal of Louisiana,

First Circuit.

Feb. 28, 1985.

Rehearing Denied April 12, 1985.

Robert M. Contois, Jr., New Orleans, for appellant-third party defendant, Antill Pipeline Constr. Co. and Liberty Mut. Ins. Co.

S. Gene Fendler, New Orleans, for third party plaintiff, Union Texas Petroleum Corp., Harvey Guthrey and Travelers Ins. Co.

Ken Charbonnet, Metairie, for Intervenor, Liberty Mut. Ins. Co.

Before EDWARDS, SHORTESS and SAVOIE, JJ.

SHORTESS, Judge.

On February 6, 1981, there was an explosion at the Union Texas Petroleum Corporation's tank battery at its Orange Grove field in Terrebonne Parish, Louisiana. This explosion took the lives of four employees of Antill Pipeline Construction Company, Barry J. Lirette, Murphy Pitre, Allen Bourgeois, and Danny Ledet. Four lawsuits were brought and consolidated by proper parties for the wrongful death of these employees. Cited as defendants in each suit were Union Texas Petroleum Corporation (U-Tex), Harvey Guthrey, a U-Tex supervisor in charge of the work being done, and The Travelers Insurance Company (Travelers), U-Tex's liability insurer. These defendants filed third party petitions against Antill Pipeline Construction Company (Antill) and its insurer, Liberty Mutual Insurance Company (Liberty), seeking indemnity based on a written contract which had been entered into between U-Tex and Antill in November of 1978.

Antill's workers' compensation carrier intervened and sought recovery for the amounts paid to the survivors.

Prior to trial U-Tex settled the claims of the survivors in the four suits, but Antill and Liberty did not participate. Liberty did pay a total of $60,000.00 ¹ to the survivors to settle any potential Jones Act claims. The amounts paid by U-Tex and Liberty Mutual as well as the reasonableness of those amounts were stipulated by all parties. The settlements were:

Liberty paid workers' compensation as follows:

                Bourgeois survivors  $ 8,642.38
                Ledet survivors       41,025.00
                Lirette survivors     23,050.00
                Pitre survivors       15,330.65
                

The third party claim of U-Tex and Travelers against Antill and

Liberty Mutual was tried. ² After trial, the trial judge, with

written reasons, decided in favor of third party plaintiffs and

against third party defendants; in favor of Liberty's workers'

compensation intervention and against third party defendants' claims

for the Jones Act settlements. From that judgment, Antill and Liberty

have appealed.

Appellants' specifications of errors are enumerated as follows:

I.

The trial court erred, as a matter of law, in failing to apply the

provisions of the Louisiana Anti-Indemnity Statute, La.R.S. 9:2780 to

invalidate the indemnity provisions of the contract under which Union

Texas Petroleum Corporation, Harvey Guthrey, and The Travelers

Insurance Company claimed indemnity. Alternatively,

II.

The trial court erred under Texas law, as a matter of fact and law,

in awarding contractual indemnity to the third-party plaintiffs

as the accident did not "arise out of" or "in connection with" the

performance of the work under the contract and was caused by the

third-party plaintiffs' sole negligence. Alternatively,

III.

The trial court erred, as a matter of law, in failing to limit

Antill's indemnity liability to no more than $100,000.00 per person or

$400,000.00 total.

IV.

The trial court erred, as a matter of fact and law, in failing to

allow Liberty Mutual and Antill to recover (or at least get credit

for) the amounts paid by them to settle the potential Jones Act

exposure.

I.

U-Tex' claim for indemnity is based upon its contract with Antill,

entered into in November of 1978. The indemnity provision found in

paragraph 5 provides in pertinent part as follows:

Contractor hereby indemnifies and agrees to protect, hold and save Union Texas

and its joint operators, if any, in the lease or facility operated by Union

Texas on their behalf, harmless from and against all claims, demands and

causes of action of every kind and character, including the cost of defense

thereof arising in favor of any person, firm or organization, including but

not limited to injuries to employees of Contractor, its agents,

representatives, or subcontractors, on account of, arising from or resulting,

directly or indirectly, from the work and/or services performed by Contractor

hereunder, whether on, off, or near the premises, or by conditions created

thereby, and whether the same is caused or contributed to by the negligence of

Union Texas, its agent or employees.

Paragraph 10 of the agreement provides that the contract is to be

governed by the laws of the state of Texas. The trial court in its

written reasons addressed appellants' contention that the provisions

of the Louisiana anti-indemnity statute, LSA-R.S. 9:2780, were

applicable to invalidate the indemnity provisions of the contract.

Said reasons address the issue squarely, are well considered, and we

adopt same as our own. They provide in pertinent part as follows:

"Parties are free to contract as to the law applicable to their

agreements, and such stipulations will be given effect in the courts

of another state unless there are legal or strong public policy

considerations justifying the refusal to honor the contract as

written." ADR v. Graves, 374 So.2d 699 (La.App. 1st Cir.1979).

Davis v. Humble Oil & Refining Company, 283 So.2d 783, (La.App. 1st

Cir.1973).

Therefore, the laws of the State of Texas must be applied to this

contract unless there are legal or strong public policy considerations

to the contrary.

The contract was entered into in November, 1978. The accident

occurred in February, 1981. In the summer of 1981, the Louisiana

Legislature enacted LSA-R.S. 9:2780 which became effective on

September 11, 1981. Subsection A of LSA-R.S. 9:2780 declared

indemnity provisions such as the one at issue here to be null and

void and against the public policy of the State of Louisiana. This

represented a change in the law of Louisiana, as the jurisprudence had

previously enforced such agreements.

Therefore, at the time the agreement was entered into, as well as the

date of the accident, the agreement was valid and enforceable under

Louisiana law and the parties were free to contract for the application

of Texas law. However, such agreements are presently against the public

policy of the State of Louisiana and any provision that the agreement is

to be governed by the laws of another state is void and unenforceable.

Therefore, the Court must determine if LSA-R.S. 9:2780 is to be applied

retroactively.

Substantive laws, which are neither procedural nor remedial, are not

to be applied retroactively unless the statute specifically provides for

retroactive application. La.C.C. Article 8, LSA-R.S. 1:2. If the language

used by the legislature does not clearly show intent that a statute should

have retroactive effect, the statute must be construed to operate

prospectively only. Long v. Northeast Soil Conservation District of

Louisiana, 226 La. 824, 77 So.2d 408 (1954).

LSA-R.S. 9:2780 is a substantive law and not merely remedial or procedural.

Accordingly, the statute is to be given prospective application unless

specific provisions for retroactive application have been included in the

statute.

In Tobin v. Gulf Oil Corporation, 535 F.Supp. 116, (E.D.La.1982), the court

found that LSA-R.S. 9:2780 makes no specific provision for retroactive effect.

The Court said,

'Mr. Tobin's injury, his initial suit against Gulf, and Gulf's claim against S.E.E.

all predate the effective date of LRS 9:2780. S.E.E. would therefore have us rule that the statute is to be applied retroactively to void indemnity contracts applicable to accidents occurring prior to the effective date of the act. The law is to the contrary. While the statute may be constitutional and apply to contracts executed prior to the effective date and existing after it with respect to accidents occurring after September 11, 1981, we hold that it is not applicable to accidents or injuries such as Mr. Tobin's which occurred prior to that date.'

Antill and Liberty Mutual allege that the Court in Tobin did not consider section I of LSA-R.S. 9:2780. They claim that this section contains a retroactive provision.

Section I provides as follows:

'I. This act shall apply to certain provisions contained in, collateral to or affecting agreements in connection with the activities listed in Subsection C which are designed to provide indemnity to the indemnities for all work performed between the indemnitor and the indemnities in the future. This specifically includes what is commonly referred to in the oil industry as master or general service agreements or blanket contracts in whatever form and by whatever name. The provisions of this Act shall not apply to a contract providing indemnity to the indemnitiee when such contract was executed before the effective date of this Act and which contract governs a specific terminable performance of a specific job or activity listed in Subsection C.'

This is not a provision for retroactive effect. This provision merely makes this statute applicable to the continuation of a pre-existing contract. A statute is not retroactive merely because it is applied to the continuation of a pre-existing contract. Louisiana Insurance Guaranty Association v. Guglielmo, 276 So.2d 720 (La.App. 1st Cir.1973).

For these reasons the Court is of the opinion that LSA-R.S. 9:2780 has no retroactive effect and the indemnity agreement between the parties is governed by the laws of the State of Texas.

II.

Appellants argue that the accident did not "arise out of" or "in connection with" the performance of the work under the contract and was caused by the third-party plaintiffs' sole negligence, so the trial court erred under Texas law,...