Reliance Ins. Co. v. Louisiana Land and Exploration Co.

• Decision Date: 04 April 1997
• Docket Number: No. 96-30303,96-30303
• Citation: 110 F.3d 253
• Parties: RELIANCE INSURANCE COMPANY, Plaintiff Third Party Defendant-Appellee-Appellant, v. The LOUISIANA LAND AND EXPLORATION COMPANY, Defendant Third Party Plaintiff-Cross Claimant-Appellant-Appellee, CBS Engineering, Inc., Defendant-Cross Defendant-Appellee, Gulf Island Fabrication, Third Party Defendant-Third Party Plaintiff-Appellant-Appellee, Lloyd's London, Third Party Defendant-Appellee, The United National Insurance Company, Third Party Defendant-Appellee. LOUISIANA LAND AND EXPLORATION COMPANY, Plaintiff-Appellant, v. GULF ISLAND FABRICATION, INC., Defendant-Appellee, Lloyd's Underwriters at London, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 253

110 F.3d 253

37 Fed.R.Serv.3d 360

RELIANCE INSURANCE COMPANY, Plaintiff Third Party Defendant-Appellee-Appellant, v. The LOUISIANA LAND AND EXPLORATION COMPANY, Defendant Third

Party Plaintiff-Cross Claimant-Appellant-Appellee,

CBS Engineering, Inc., Defendant-Cross Defendant-Appellee,

Gulf Island Fabrication, Third Party Defendant-Third Party

Plaintiff-Appellant-Appellee,

Lloyd's London, Third Party Defendant-Appellee,

The United National Insurance Company, Third Party

Defendant-Appellee.

LOUISIANA LAND AND EXPLORATION COMPANY, Plaintiff-Appellant, v. GULF ISLAND FABRICATION, INC., Defendant-Appellee, Lloyd's Underwriters at London, Defendant-Appellee.

No. 96-30303.

United States Court of Appeals,Fifth Circuit.

April 4, 1997.

Dean A. Sutherland, New Orleans, LA, for Plaintiff-Appellee.

James M. Tompkins, Galloway, Johnson, Tompkins & Burr, Houston, TX, J. Michael Grimley, Jr., Galloway, Johnson, Tompkins & Burr, New Orleans, LA, for Gulf Island Fabrication and Lloyd's London.

Bruce R. Hoefer, Jr., Robert T. Lorio, Milling, Benson, Woodward, Hillyer, Pierson & Miller, New Orleans, LA, for Louisiana Land and Exploration Co.

Robert A. Redwine, New Orleans, LA, for CBS Engineering, Inc. and United National Ins. Co.

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

Before HIGGINBOTHAM, SMITH and BARKSDALE, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

In the wake of an accident during the load-out of part of an offshore oil platform, the parties in this case find themselves litigating the question of who should bear the burden of the loss. We conclude that the district court resolved the cases properly, which means that none of the efforts to re-allocate expenses can survive summary judgment.

I.

Louisiana Land & Exploration Co. entered into two contracts in connection with its efforts to drill for oil off of the gulf coast. In February of 1991, LL & E contracted with Gulf Island Fabrication for the construction, load-out, and tie-down of an offshore facility. Gulf Island was to construct the "jacket"--the legs of the offshore platform--at its yard in Houma, Louisiana. LL & E would hold title to the jacket at all times. The contract specified that the risk of loss fell upon Gulf Island "until the Marine Surveyor has certified the acceptability of the Stowage of the Cargo upon the barge(s) supplied by the Installation Contractor." The contract required both that Gulf Island defend and indemnify LL & E against any claims arising out of damage caused by Gulf Island or any of its agents and also that Gulf Island maintain various insurance policies while performing work for LL & E. Gulf Island obtained a general liability insurance policy from Lloyd's. Gulf Island also maintained an insurance policy for builders' risk with Reliance Insurance Company, the original plaintiff in this case.

LL & E's second contract was with CBS Engineering, which agreed to provide "structural design, facilities design and project management" services in connection with Gulf Island's fabrication of the jacket. Essentially, LL & E hired CBS to oversee Gulf Island's progress on the project and to provide professional engineering services. The contract with CBS contained a comparative fault provision for damage to the property of either party. It also required CBS to defend and indemnify LL & E in case CBS's negligence caused any damage to or claims against LL & E. When the parties executed the contract, they crossed out and initialed a provision that would have required CBS to indemnify LL & E for CBS's negligence in performing professional services. In compliance with the contract, CBS obtained general liability insurance from United National Insurance Company ("UNIC") and named LL & E as an additional insured. The UNIC policy, however, did not insure against professional negligence.

The parties planned to load the jacket onto a barge with a width of 100 feet in order to transport it for installation in the gulf. But the widest barge available was only 72 feet wide. Gulf Island proposed a plan to modify the barge to accommodate the jacket. Gulf Island's strategy was to build load-out beams across the barge so that the legs of the jacket would have someplace to rest. This would have been relatively safe, but it was also very expensive, and LL & E and CBS rejected the plan. CBS developed an alternative plan, which LL & E and Gulf Island agreed to implement. This plan involved reinforcing interior components of the jacket so that they could bear the weight of the jacket without help from the jacket's legs. During load-out, however, the jacket collapsed and rolled off of the barge. Both the jacket and the barge were damaged.

In an August 26, 1991, letter from its vice president of operations, Gulf Island acknowledged its responsibility under the risk-of-loss provision to repair the jacket. Gulf Island performed these repairs and eventually loaded out the jacket successfully. Reliance fulfilled its obligations under the builders' risk policy and reimbursed Gulf Island in the amount of $275,425.22.

Then Reliance, as Gulf Island's subrogee, sued LL & E and CBS to recover the costs of the jacket repairs, which Reliance claims were due to the fault of LL & E and CBS. LL & E filed a cross-claim against CBS and third-party claims against UNIC, Gulf Island, and Lloyd's. ¹ Gulf Island eventually filed its own third-party claim against Reliance.

On September 30, 1993, the district court dismissed Reliance's claim against CBS on a summary judgment motion. On October 4, it dismissed Reliance's claim against LL & E. Both dismissals were predicated on the insufficiency of evidence presented by Reliance's expert, Dennis Sherman. Mr. Sherman offered muddled deposition testimony, and the court had denied Reliance's request to supplement his report in order to clarify the testimony. Two days later, the court dismissed LL & E's claim against CBS. The court further held that the indemnity provision in the contract between LL & E and Gulf Island would not be triggered unless Gulf Island was at fault in causing damage to the jacket.

After Reliance's claims were dismissed, Gulf Island filed its third-party demand against Reliance in order to recover the costs of defending against LL & E and to claim a right to reimbursement for any damages Gulf Island might suffer in LL & E's third-party claim against Gulf Island. In November of 1995, LL & E settled its claim against Gulf Island for LL & E's defense costs and attorneys' fees throughout this litigation. The district court dismissed Gulf Island's third-party complaint on February 14, 1996.

Three parties have appealed. Reliance appeals the summary judgments granted in favor of LL & E and CBS. LL & E appeals the summary judgments granted in favor of CBS, UNIC, Gulf Island, and Lloyd's. And Gulf Island appeals the summary judgment granted in favor of Reliance. We take up each of these disputes in turn.

II.

A.

Reliance filed its expert report on time, and Mr. Sherman gave his deposition during the 30 days between the deadline for Reliance's expert report and the deadline for LL & E's and CBS's expert reports. Mr. Sherman's report did not address CBS's load-out plan. Instead, it analyzed the quality of the original design of the jacket. At the deposition, Mr. Sherman seemed to deny that his analysis contributed to an understanding of what caused the jacket to fail during the load-out. When asked whether he was "asked to form an opinion as to the cause of this casualty," he said: "No. Not really. I was not looking into how or why it was caused." He admitted that he "never went to the point of failure analysis to determine if [the jacket] is under designed enough to be failing, or to expect it to fail." Instead, he limited himself to asking whether the jacket was designed so that it could handle the load-out plan as designed by CBS and as executed by Gulf Island. As LL & E and CBS prepared for trial, they operated on the theory that Mr. Sherman had no opinion as to whether deficiencies in CBS's work contributed to the load-out accident. ²

Based on the report and the deposition, LL & E and CBS decided that it did not need to counter Mr. Sherman's testimony with an engineering expert of its own. Ten days after the defendants' deadline for submitting expert reports had passed, Reliance sought the court's permission to supplement Mr. Sherman's report. Mr. Sherman's supplemental report would "specifically address his opinion regarding the cause of the failure of the load out method provided by defendants in plain English, as opposed to being contained in mathematical calculations as it was in the original report." Reliance assured the court that Mr. Sherman would be available for further depositions and that supplementing the report would not delay trial.

LL & E and CBS vigorously opposed Reliance's motion to supplement the report. They pointed out that the discovery cut-off date was only three weeks away and that the supplement might cause them to need an engineering expert of their own. With pre-trial conference only two months away, delays were likely. LL & E and CBS also argued that the court should not allow a modification of the discovery schedule because Reliance failed to request supplementation at the earliest possible date.

Whatever the import of Mr. Sherman's testimony, the district court did not abuse its discretion when it denied Reliance's request to supplement its expert report. Fed.R.Civ.P. 16(b) allows a scheduling modification only for good cause. We consider four factors in determining whether the district court abused its discretion in holding that Reliance did not show good cause: "(1) the explanation for the failure to [submit a complete report on time]; (2) the importance of the testimony; (3) potential prejudice in allowing the testimony; and (4) the availability of a continuance to cure such prejudice." Geiserman v. MacDonald...