Opinion
CIVIL ACTION NO. 01-243, SECTION "L" (2)
September 20, 2002
ORDER REASONS
Before the Court is the Motion for Summary Judgment of third-party defendants, Superior Energy Services, L.L.C. ("Superior"), Fastorq, L.L.C. ("Fastorq"), and Lexington Insurance Company. Defendants ask this Court to dismiss them from the lawsuit on the grounds that the Louisiana Oilfield Indemnity Act ("LOIA"), La.Rev.Stat. Ann. § 9:2780, voids the indemnity agreement between the third-party defendants and the third party plaintiffs. For the reasons set forth below, the third-party defendants' Motion for Summary Judgment is GRANTED IN PART AND DENIED IN PART to the extent that defendants are found free from fault following a trial in the main demand.
BACKGROUND
The facts of this case are not in dispute. On January 30, 2002, plaintiff Brian Morgan was employed by Fastorq, a wholly owned subsidiary of Superior. On that date, Morgan and Troy Cormier were working on an oil and gas well owned and/or operated by Union Oil Company of California ("Union"). The well is located on the Outer Continental Shelf, off the coast of Louisiana.
Union and Fastorq were parties to a Master Services Contract requiring Fastorq to provide services to Union's well, such as those being performed by Morgan and Cormier on January 30, 2002. The contract also contained an indenmity clause requiring Fastorq to indemnify Union for any injuries suffered by Fastorq's employees "directly or indirectly arising out of or in connection with any operations or goods and services under this contract."
Alongside the fixed platform of the well was the jack-up drilling vessel, the ADRIATIC III, owned by Global Marine Drilling Company ("Global"). Morgan and Cormier were working on the well performing a procedure known as "nippling down," which involves tightening a flange on the well. In making the repairs, it became necessary for Morgan to obtain oil to add to the equipment. Morgan walked from the platform to the jack-up rig to get the oil. While returning to the platform, he tripped on a bent tread on a staircase on the ADRIATIC III and sustained injuries to his shoulder and arm.
Although Morgan was injured on the ADRIATIC III, OCSLA still applies because the rig was jacked-up on the OCS. See Demette v. Falcon Drilling Co., 280 F.3d 492, 498-99 (5th Cir. 2002) (holding that a jacked-up rig is an OCSLA situs).
Morgan sued Union and Global alleging claims under the General Maritime Law. Union assumed Global's defense pursuant to a contractual obligation between the parties. Union and Global then filed a third party demand against Superior, Fastorq, and Lexington for defense, indemnity, and insurance coverage as provided in the Master Services Agreement. The third party defendants now file this motion for summary judgment asking the Court to dismiss the complaint because the LOLA voids coverage.
ANALYSIS
Summary Judgment Standard
A district court can grant a motion for summary judgment only when the "'pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute . . . [to be] 'genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] 'material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
"If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24, and Fed.R.Civ.P. 56(e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248. "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50 (citations omitted).
Application of the LOIA to the contract in this case
This case arises under the Outer Continental Shelf Lands Act (OCSLA) and, therefore, the LOIA is applicable to the case since it is not inconsistent with federal law. Thus, the only issue is the extent to which the LOLA voids the indemnity policy. Since this involves resolution of questions of law, not fact, summary judgment is appropriate.
The LOIA 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.
LA.REV.STAT. ANN. § 9:2780(A)-(B) (West Supp. 2002).
In Meloy v. Conoco, Inc., 504 So.2d 833 (La. 1987), the Louisiana Supreme Court held the act "nullifies only those contractual provisions that provide for defense or indemnity where the indemnitee is in some way at fault." Id. at 838. Union and Global do not dispute that if they are found at fault for Morgan's injuries, the LOLA precludes them from seeking indemnity from Fastorq or Superior. However, Union and Global argue that Meloy does provide them with some relief if they are found free from all fault. They are correct in their assertion. Answering a certified question from the Fifth Circuit Court of Appeals, the Louisiana Supreme Court held: "After trial on the merits, if the indemnitee is found free from fault, the [LOLA] does not prohibit the indemnitee from recovering its cost of defense. Whether the injury is found to have resulted in whole or in part from the fault of the indemnitor does not affect the indenmtee's right to recover its cost of defense provided it is free from fault." Id. at 838.
The Fifth Circuit has noted the holding of Meloy and held that a party found free from fault may recover costs and attorney's fees so long as the contract provides for them. See Perry v. Chevron U.S.A., Inc., 887 F.2d 624, 629 (5th Cir. 1989). The indemnity agreement between Union and Fastorq requires Fastorq to pick up any costs or attorney's fees as part of its agreement to indemnify. Therefore, Union and Global may recover costs and attorney's fees only if they are found free from fault following a trial on the merits. However, if Global or Union are judged to be at fault for Morgan's injuries, the LOLA will void that part of the Master Services Contract.
CONCLUSION
The Court finds that the LOLA precludes Fastorq's indemnification of Union and Global to the extent that the latter are found to be free from fault following a trial on the merits. Therefore, the third party defendants' Motion for Summary Judgment is GRANTED IN PART AND DENTED IN PART to the extent that the claims of Union and Global for costs and attorney's fees will not be dismissed pending trial on the main demand.