The Travelers Ins. Group Inc. v. OCS, INC.
| Decision Date | 10 January 1996 |
| Docket Number | Civ. A. No. 95-0666. |
| Citation | 914 F. Supp. 126 |
| Parties | THE TRAVELERS INSURANCE GROUP INC. and the Travelers Indemnity Company of Connecticut v. O.C.S., INC. a/k/a Oilwell Control Services Inc. and Janex Oil Company. |
| Court | U.S. District Court — Eastern District of Louisiana |
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Russell Keith Jarrett, Liskow & Lewis, New Orleans, LA, for plaintiffs.
Vincent Ross Cicardo, Cicardo Law Offices, Alexandria, LA, for O.C.S., Inc.
David Louis Carrigee, Rebecca Alison Fariss, Burke & Mayer, New Orleans, LA, for Janex Oil Company.
ORDER GRANTING IN PART, DENYING IN PART, PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This matter is before the Court on the separate motions of plaintiff, The Travelers Insurance Group Inc. and The Travelers Indemnity Company of Connecticut (collectively known as "Travelers"), for summary judgment against defendants, O.C.S., Inc. a/k/a Oilwell Control Services Inc. ("OCS") and Janex Oil Company ("Janex"). As to OCS, the Court DENIES plaintiff's motion. As to Janex, the Court GRANTS plaintiff's motion.
On November 10, 1994, an explosion occurred on a natural gas platform that was used to produce natural gas from a nearby gas well. Janex owned and operated the platform and well, which was located on Lake St. Catherine in Orleans Parish. The explosion killed a man and damaged a pipeline leading from the platform, allowing gas to escape into the atmosphere. Janex, through its president, Noell Rather, contacted OCS, a company that specializes in controlling well fires, to put out the fire. The next morning, Rather met with Steve Clark, the president of OCS, in Slidell, Louisiana.
In his deposition, Clark testified that Rather hired him to extinguish the fire and control the well soon after their meeting started at 5:30 a.m. on the morning of November 11. (Plaintiff's Ex. A., Depo. of Steve Clark.) In addition, Clark stated that after he and Rather had an opportunity to survey the site by boat, Rather renewed his offer to hire OCS for the job. (Id. at 79.) At some point prior to returning to the dock, Clark and Rather discussed payment. According to Clark, Rather told him that "even though he didn't have cash, that he had the world's best insurance and that all of this was covered and that the insurance agent would be there in the morning when we got to the dock." (Id. at 70.)
When Clark and Rather returned to the dock between 8:30 a.m. to 9:00 a.m., they were met by James Currie, a claims adjuster from Travelers.1 After introductions, Clark stated that Currie, on behalf of Travelers, agreed to pay for OCS's fire containment services.2 Clark "asked Jim Currie at that time if Travelers was the responsible party and he Currie said that Travelers was the responsible party with liability interest in this matter." (Plaintiff's Ex. A, Clark Depo. at 82.) Clark testified that he would not have started work to control the fire had he not received assurances from Travelers that it would pay for his company's services. (Id. at 271.) Clark explained that Rather had told him he had no money to pay OCS and it was not until Travelers authorized the work that Clark "consented to go out and do it." (Id. at 272.)
On December 16, 1994, OCS sent an invoice and letter requesting payment for $635,000 in firefighting services to Currie, the Travelers claims adjuster. (Defendant's Ex. F, Letter from Steve Clark to James Currie of Dec. 16, 1994.) Travelers refused to pay. It stated that no valid contract existed between OCS and Travelers and that the services performed by OCS were excluded from Janex's general liability policy.
On February 24, 1995, Travelers filed a complaint requesting declaratory judgment that (1) it owes no obligation to OCS under the purported oral agreement, and (2) the general liability policy it issued to Janex does not cover OCS's claim. In the event the Court found that Travelers owed an obligation to OCS, Travelers seeks judgment against Janex for a like amount to prevent unjust enrichment. On April 27, 1995, OCS filed a counterclaim and cross-claim against Travelers and Janex for the $764,800 in services it provided in extinguishing the fire on Janex's production platform. On June 19, 1995, Janex filed a counterclaim against Travelers seeking a declaratory judgment requiring Travelers to pay should the Court render judgment against Janex and in favor of OCS.
Travelers brings these motions for summary judgment seeking judgment as to (1) its claim for declaratory judgment against OCS holding that there is no enforceable contract between Travelers and OCS; (2) OCS's counterclaim against Travelers for breach of contract; and (3) its claim for declaratory judgment against Janex holding that the services rendered by OCS are excluded from the general liability policy Travelers issued to Janex. The Court will first address Travelers' motion regarding OCS.
Under Fed.R.Civ.P. 56, summary judgment is proper when there is no genuine issue of material fact, and the moving party is entitled to a judgment as a matter of law. Celotex v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). All inferences will be made in favor of the party opposing summary judgment. However, the opposing party may not rely on mere allegations or denials but must set forth specific facts establishing that genuine issues exist for trial. See Fed.R.Civ.P. 56(e). Only factual disputes "that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).
Although Travelers and its representative, James Currie, dispute that it ever agreed to pay for the services offered by OCS, it states that this dispute will not affect the outcome of the suit. Travelers asserts that even under the version of events offered by Steve Clark of OCS, a valid contract does not exist between Travelers and OCS. The crux of Travelers' argument is that the alleged contract is one of suretyship. Because a suretyship contract under Louisiana law must be in writing and cannot be proven with parol evidence, Travelers asserts that the oral agreement alleged by OCS is invalid as a matter of law.
Under Louisiana law, a suretyship is "an accessory contract by which a person binds himself to a creditor to fulfill the obligation of another upon the failure of the latter to do so." La. Civ.Code art. 3035; SNS Contractors v. Algernon Blair, Inc., 892 F.2d 430, 433 (5th Cir.1990). A "contract is accessory when it is made to provide security for the performance of an obligation." La. Civ.Code art. 1913; SNS Contractors, 892 F.2d at 433. An obligation to pay the debt of a third party must be in writing. See La. Civ.Code art. 1821; United States v. Park Towers, Inc., 8 F.3d 306, 310 (5th Cir.1993).
The facts alleged by OCS are not consistent with a suretyship contract. Travelers did not guarantee payment in the event Janex did not pay; instead, it allegedly agreed to pay OCS regardless of Janex's actions. There is simply no evidence that Travelers agreed to pay only if Janex did not. Further, Clark testified that Travelers gave him tasks to perform and that Travelers directed him to send the invoice for OCS's services to Janex who would pass it on to Travelers for payment. (Plaintiff's Ex. A, Clark Depo. at 91, 169.) These facts are not indicative of a contract of suretyship. See SNS Contractors, 892 F.2d at 433 () Instead, the alleged facts indicate that Travelers "unconditionally obligated" itself to pay OCS. Thus, Travelers becomes primarily responsible for the debt. Rice, Fowler, Kingsmill, Vance, Flint & Booth v. J.A.R., Inc., 1993 WL 255135 (E.D.La. June 30, 1993); Nesser, King & LeBlanc v. Laredo Marine Services, Inc., 630 So.2d 327, 329 (La.App. 4th Cir. 1994). This type of promise does not create a suretyship and can be proven with parol evidence. Id.
In addition, Travelers may have had a pecuniary interest in paying for OCS's services. The question of whether Travelers had a pecuniary interest in getting the fire under control is a factor in determining whether Travelers' alleged obligation is primary or as a surety. Smith v. Anderson, 517 So.2d 926, 927 (La.App. 3d Cir.1987) (); Seashell, Inc. v. Simon, 398 So.2d 99, 101 (La.App. 3d Cir.1981) () Noell Rather, the president of Janex, testified that Clark had told him that Currie, the Travelers representative, said that OCS should extinguish the fire so that Travelers would not be subject to any more liability as to personal injury and property damage. (Defendant's Ex. L, Depo. of Noell Rather at 121-23.) This indicates that Travelers may have obtained OCS's promise to extinguish the fire to limit the personal and property liability it had under the insurance policy it issued to Janex. These facts, as alleged by OCS, offer one explanation why Travelers may have "unconditionally" obligated itself to pay OCS.
In its briefs, Travelers claims that OCS and Janex already had an agreement before meeting with the Travelers representative. According to Travelers, the timing of the alleged contracts could only mean that its alleged contract with OCS was a suretyship. First, this argument is immaterial if the contract is primary, for the reason discussed above. In addition, it is not entirely clear that there was a valid contract between OCS and Janex prior to the meeting with Travelers. Although Clark agreed that Janex had "hired" him and OCS, he also stated that he did...
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