Weeks Marine, Inc. v. Standard Concrete Prods., Inc.

Citation737 F.3d 365
Decision Date06 December 2013
Docket NumberNo. 12–20610.,12–20610.
PartiesWEEKS MARINE, INCORPORATED, Plaintiff–Appellant v. STANDARD CONCRETE PRODUCTS, INCORPORATED, Defendant–Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

OPINION TEXT STARTS HERE

Daniel D. Pipitone, Kenneth Wayne Bullock, II, Chamberlain, Hrdlicka, White, Williams & Aughtry, Houston, TX, for PlaintiffAppellant.

Andrew T. McKinney, Litchfield Cavo, L.L.P., Houston, TX, for DefendantAppellee.

Appeal from the United States District Court for the Southern District of Texas.

Before DAVIS and JONES, Circuit Judges, and MILAZZO, District Judge. *

JONES, Circuit Judge:

This case revolves around the terms of an indemnity agreement between Weeks Marine, Inc. (Weeks Marine) and Standard Concrete Products, Inc. (Standard Concrete). In 2011, John Johnson, Jr., (“Johnson”) filed suit in Alabama state court against several entities, including Weeks Marine and Standard Concrete, for the injuries that he allegedly sustained when he fell from his crane while working on the I–10 Mississippi River Bridge fender replacement and reconditioning project (“the Project”).1 In the present case, Weeks Marine, the general contractor on the Project, seeks a declaration that Standard Concrete, Johnson's employer, is contractually obliged to defend and indemnify it in the underlying state court action. Because the indemnity agreement is not applicable to the underlying suit, we affirm the judgment in favor of Standard Concrete.2

BACKGROUND

Shortly after Weeks Marine was selected as general contractor for the Project, it accepted Standard Concrete's bid for the manufacture of pre-cast concrete fender modules. The parties executed a contract, which consists of two documents: Purchase Order No. 161845 (Purchase Order) and the Additional Terms and Conditions (“Additional Terms”). The present dispute involves the following provisions from the contract:

Description of Material (Purchase Order): Seller (Standard Concrete) shall furnish all supervision, equipment, forms, materials, labor, supplies, fabrication, coatings, quality control, etc. to provide pre-cast fender modules.

Paragraph 2 (Purchase Order): Inserts: Buyer (Weeks Marine) to provide all inserts for shear keys and whalers and lift hardware. Seller (Standard Concrete) to install lift hardware to facilitate lifting and handling.

Paragraph 10 (Purchase Order): Property and Personal Liability: Seller (Standard Concrete) shall save harmless and indemnify Buyer (Weeks Marine) from and against all claims, suits (including counsel fees and other expenses), judgments and awards stemming from any damage to property or injury (including death) to persons (including any damage or injury to the property or the person of any employee of either Buyer or Seller which may be caused or alleged to have been caused in whole or in part by), or which may occur or be alleged to have occurred in connection with the execution of this Purchase Order by Seller (Standard Concrete), or the use of the items furnished hereunder, excepting Buyer's (Weeks Marine) sole negligence.

Paragraph 4 (Additional Terms): Indemnification will be limited to actual damages relating to workmanship of Seller's (Standard Concrete) product. In no event is Seller (Standard Concrete) liable for indirect or consequential damages. Total damages are limited to $500,000.00.

Paragraph 6 (Additional Terms): It is mutually agreed that any provision in the purchase order which would modify, conflict with, or contradict any of these terms and conditions, shall be deemed to be null and void.

On March 10, 2009, seven months after the parties executed the contract, Johnson sustained the alleged injuries that form the basis of the underlying suit. In his state court pleadings, Johnson alleges that he fell from a “corner module” or “steel module” that was designed by Modjeski & Masters, Inc., manufactured by Helser Industries, Inc., and contracted for by Weeks Marine. The complaint describes the incident as occurring in the following manner:

[Johnson] was attempting to disassemble the corner module (hereinafter “corner module” or “steel module”) by lifting it away from a concrete form using a crane. Mr. Johnson placed two eye-hooks in pre-drilled holes in the top of the steel module. However, the eye-hooks could not be secured from the top. Instead, Mr. Johnson had to secure the eye-hooks to the module by placing a nut on the eye-hooks from the underside. Unlike in other locations on that and other modules, there were no pre-welded nuts on the underside of the holes in the corner module where the eye-hooks were placed. When Mr. Johnson attempted to secure the eye-hook to the corner module, he fell approximately fourteen feet to the ground.

After Weeks Marine was served with Johnson's complaint, it sent demand letters to Standard Concrete, seeking defense and indemnification in the state court action. When Standard Concrete concluded that it had no duty to defend or indemnify, Weeks Marine sought declaratory relief in federal court, and Standard Concrete counter-claimed. Cross-motions for summary judgment were filed. The district court referred the motions to a magistrate judge, who issued a Report and Recommendation (“Report”), concluding that the court should grant Standard Concrete's motion for exoneration from defense or indemnification. The district court adopted the magistrate judge's Report and dismissed the case. Weeks Marine filed a timely appeal.

STANDARD OF REVIEW

We review the district court's grant of summary judgment de novo, applying the same standards as the district court. St. Paul Surplus Lines Ins. Co. v. Settoon Towing, L.L.C. (In re Settoon Towing, L.L.C.), 720 F.3d 268, 275 (5th Cir.2013). Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). We must view all facts and evidence in the light most favorable to the non-moving party when considering a motion for summary judgment. Dameware Dev., L.L.C. v. Am. Gen. Life Ins. Co., 688 F.3d 203, 206–07 (5th Cir.2012) (citation omitted). The interpretation of a contractual indemnity provision is a question of law that is also reviewed de novo. Becker v. Tidewater, Inc., 586 F.3d 358, 369 (5th Cir.2009).

Under the Purchase Order's choice of law provision, disputes between Weeks Marine and Standard Concrete must be resolved under Texas law. Such choice-of-law provisions are unquestionably enforceable, DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677–78 (Tex.1990); Restatement (Second) of Conflict of Laws § 187.

Texas courts apply general contract law principles when construing indemnity agreements. Ideal Lease Service, Inc. v. Amoco Production Co., 662 S.W.2d 951, 952–953 (Tex.1983). The primary concern of contract interpretation under Texas law is to ascertain the true intentions of the parties as expressed in the instrument. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003). Texas courts examine the entire contract in an effort to harmonize and give effect to all provisions so that none is rendered meaningless. Id.

Under Texas law, the duties to defend and indemnify “are distinct and separate duties” and “enjoy a degree of independence from each other.” D.R. Horton–Texas, Ltd. v. Markel Int'l Ins. Co., 300 S.W.3d 740, 743–44 (Tex.2009). The “duty to defend” is the broader of the two. Northfield Ins. Co. v. Loving Home Care, Inc., 363 F.3d 523, 528 (5th Cir.2004). It is “circumscribed by the eight-corners doctrine,” so that it is determined solely by the language of the indemnity provision and the allegations in the third-party pleadings. Gilbane Bldg. Co. v. Admiral Ins. Co., 664 F.3d 589, 594 (5th Cir.2011). Moreover, the court must review the third-party pleadings “without regard to the truth or falsity of those allegations.” GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 308 (Tex.2006). The duty to indemnify, by contrast, “is triggered by the actual facts that establish liability in the underlying lawsuit.” Guar. Nat'l Ins. Co. v. Azrock Indus. Inc., 211 F.3d 239, 243 (5th Cir.2000).

DISCUSSION
Duty to Defend

Applying the eight-corners rule here, the indemnity agreement and Johnson's pleadings govern whether Standard Concrete owes Weeks Marine a defense. If Johnson's factual allegations potentially support a claim covered by the indemnity agreement, then Standard Concrete's duty to defend is invoked. GuideOne Elite Ins. Co., 197 S.W.3d at 310 (citation omitted).

Paragraph 10 of the Purchase Order requires Standard Concrete to “save harmless and indemnify Buyer (Weeks Marine) from and against all ... suits 5 (including counsel fees and other expenses).” Paragraph 4 of the Additional Terms, however, limits indemnification to “actual damages relating to the workmanship of Seller's (Standard Concrete) product.” Since the Additional Terms also provide that any term in the Purchase Order modified by one of the Additional Terms is “null and void,” the limiting language in the Additional Terms controls.3 Thus, the indemnity agreement, read as a whole, does not require Standard Concrete to defend Weeks Marine in suits where the claim for damages is unrelated the workmanship of Standard Concrete's product.

In the underlying complaint, Johnson alleges that he fell and was injured while “attempting to disassemble the corner module.” According to Johnson's complaint, the module was designed, manufactured and contracted for by companies other than Standard Concrete. Johnson asserts that that he was unable to secure eye-hooks to the pre-drilled holes on the top of the corner module, and as a result, he resorted to placing a nut on the eye-hooks from the underside. He further claims that the corner module lacked a pre-welded nut on the underside, preventing him from simply securing the eye-hooks to the module from the topside.

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