Livings v. Service Truck Lines of Texas, Inc.

• Citation: 467 So.2d 595
• Decision Date: 10 April 1985
• Docket Number: No. 84-343,84-343
• Parties: Alex LIVINGS, Plaintiff-Appellee, v. SERVICE TRUCK LINES OF TEXAS, INC., et al., Defendants-Appellants.
• Court: Court of Appeal of Louisiana — District of US

Page 595

467 So.2d 595

Alex LIVINGS, Plaintiff-Appellee, v. SERVICE TRUCK LINES OF TEXAS, INC., et al., Defendants-Appellants.

No. 84-343.

Court of Appeal of Louisiana,

Third Circuit.

April 10, 1985.

Allen, Gooch & Bourgeois, St. Paul Bourgeois, IV, and Randall K. Theunissen, Lafayette, Woodley, Barnett, Cox, Williams, Fenet & Palmer, Edmund E. Woodley, Lake Charles, for defendants-appellants.

Caliste Beard, Jr., Lafayette, for plaintiff-appellee.

Glusman, Moore, Wilkinson, Arbour, Broyles & Glusman, Donna Garbarino and Edward F. Glusman, Baton Rouge, for defendant-appellee.

Before GUIDRY, LABORDE and YELVERTON, JJ.

GUIDRY, Judge.

Plaintiff, Alex Livings, an oilfield worker for M & G Testing & Services, Inc. (M & G), instituted suit against Service Truck Line of Texas, Inc. (Service) and Amoco Production Company (Amoco) seeking damages for personal injuries allegedly caused by the negligence of Service and Amoco. Plaintiff, allegedly, was injured while testing drill pipe owned by Amoco. The incident occurred on property leased by Amoco from Service.

Service and Amoco filed third party demands against M & G and its insurer, United General Insurance Company, seeking indemnity and/or defense pursuant to "master service contracts", then in effect, between third party plaintiffs and M & G. Also, Service alleged a breach of contract by M & G for M & G's failure to secure insurance coverage in favor of Service.

In response to the third party demands, M & G filed a motion for summary judgment alleging that the indemnity clauses in these contracts were unenforceable due to the enactment of the Louisiana Oilfield Anti-Indemnity Act, La.R.S. 9:2780.

The trial court granted M & G's motion for summary judgment, concluding that the indemnity provisions set forth in the "master service contracts", then in effect, between Service, Amoco and M & G were null and void under the provisions of La.R.S. 9:2780. Service and Amoco appeal the trial court's judgment dismissing their third party demands.

La.R.S. 9:2780 provides in pertinent part:

"...

A. The legislature finds that an inequity is foisted on certain contractors and their employees by the defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, to the extent those provisions apply to death or bodily injury to persons. It is the intent of the legislature by this Section to declare null and void and against public policy of the state of Louisiana any provision in any agreement which requires defense and/or indemnification, for death or bodily injury to persons, where there is negligence or fault (strict liability) on the part of the indemnitee, or an agent or employee of the indemnitee, or an independent contractor who is directly responsible to the indemnitee.

B. Any provision contained in, collateral to, or affecting an agreement pertaining to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, is void and unenforceable to the extent that it purports to or does provide for defense or indemnity, or either, to the indemnitee against loss or liability for damages arising out of or resulting from death or bodily injury to persons, which is caused by or results from the sole or concurrent negligence or fault (strict liability) of the indemnitee, or an agent, employee, or an independent contractor who is directly responsible to the indemnitee.

C. The term "agreement," as it pertains to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, as used in this Section, means any agreement or understanding, written or oral, concerning any operations related to the exploration, development, production, or transportation of oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, including but not limited to drilling, deepening, reworking, repairing, improving, testing, treating, perforating, acidizing, logging, conditioning, altering, plugging, or otherwise rendering services in or in connection with any well drilled for the purpose of producing or excavating, constructing, improving, or otherwise rendering services in connection with any mine shaft, drift, or other structure intended for use in the exploration for or production of any mineral, or an agreement to perform any portion of any such work or services or any act collateral thereto, including the furnishing or rental of equipment, incidental transportation, and other goods and services furnished in connection with any such service or operation.

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G. Any provision in any agreement arising out of the operations, services, or activities listed in Subsection C of this Section of the Louisiana Revised Statutes of 1950 which requires waivers of subrogation, additional named insured endorsements, or any other form of insurance protection which would frustrate or circumvent the prohibitions of this Section, shall be null and void and of no force and effect.

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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 indemnitee for all work performed between the indemnitor and the indemnitee 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 indemnitee 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.

Amoco and Service entered into master service contracts with M & G on May 5, 1971 and February 9, 1979, respectively. These contracts provided that M & G would defend and indemnify Amoco and Service against any claims which arose in connection with services rendered by M & G on behalf of the indemnitees under the contracts.

Appellants, Amoco and Service, point out that their service contracts with M & G were executed prior to the effective date of La.R.S. 9:2780, i.e., September 11, 1981. Accordingly, appellants urge that the indemnity clauses in their service contracts with M & G are enforceable since section 2780 is not applicable.

In Home Insurance Company v. Garber Industries, Inc., 588 F.Supp. 1218 (W.D.La.1984), the federal district court addressed the issue of whether section 2780 was applicable in situations where the master service contract was entered into prior to the effective date of La.R.S. 9:2780, stating:

"Section 2780 applies to agreements that are designed to provide indemnity for all work performed between the parties in the future. As the statute says, "[t]his 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." La.R.S. 9:2780(I). By way of contrast, the statute does not apply to contracts that govern a "specific terminable performance" when such a contract was executed before the effective date of the Act. Id. The clear inference from this statutory distinction between the two types of contracts is that the Act will apply to a master service contract even...