Raynes v. McMoRan Exploration Company et al

Filing 182

ORDER granting 159 Motion for Summary Judgment; denying 164 Motion for Summary Judgment. Signed by Judge Lance M Africk. (Reference: 08-5018)(car, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

JAMIE RAYNES, ET AL

CIVIL ACTION

VERSUS

No. 10-1730 C/W 08-5018
(REF: 08-5018)

MCMORAN EXPLORATION CO., ET
AL

SECTION I

ORDER AND REASONS
Before the Court is the motion of cross-plaintiff, Petro Construction Management
(“Petro”), for summary judgment on its cross-claim seeking indemnity and defense from crossdefendant, Grasso Production Management Company (“Grasso”).

1

Grasso has filed an

opposition, which it also styles as a cross-motion for summary judgment, asking this Court to
determine that Grasso is not required to indemnify and defend Petro. For the following reasons,
Petro’s motion is GRANTED and Grasso’s motion is DENIED.
BACKGROUND
Jamie Raynes, a Grasso employee, was allegedly injured in September 2008 on an offshore platform currently owned by McMoran Exploration Company (“McMoran”) and formerly
owned by Newfield Exploration Company (“Newfield”). Raynes has sued Petro which allegedly
repaired a defect in the off-shore platform which led to Raynes’ alleged injury. Raynes has also
sued Grasso which operated the off-shore platform at the time that Raynes’ alleged injury
occurred.

1

No. 08-5018, R. Doc. No. 159.
1

Petro subsequently filed a cross-claim against Grasso seeking indemnity and defense.
Petro argues in its summary judgment motion that a 2004 Grasso-McMoran master services
agreement (“MSA”) requires Grasso to indemnify and defend contractors such as Petro that are
sued by Grasso employees.2
In turn, Grasso argues that Grasso is not obligated to indemnify and defend Petro because
a 1990 contract between Grasso and Newfield does not list contractors as parties whom Grasso
must indemnify.3 According to Grasso, the 1990 Grasso-Newfield contract was effected between
McMoran and Grasso through a 2007 assignment letter4 which allegedly rescinded the
conflicting 2004 Grasso-McMoran MSA.5 The assignment letter was from Newfield to Grasso
and it notified Grasso that “the terms, conditions, and obligations” of certain agreements between
Newfield and Grasso had been assigned to McMoran.6 As such, Grasso maintains that the Court
should give no effect to the conflicting provisions in the 2004 Grasso-McMoran MSA.7
Additionally, in its cross-motion for summary judgment, Grasso asserts that the Court should
conclude that the 1990 Grasso-Newfield agreement governs this dispute and that it does not
require Grasso to indemnify and defend Petro.

2

R. Doc. No. 159. Petro further argues that the indemnity and defense provision is enforceable because the
Louisiana Oilfield Anti-Indemnity Act (LOAIA) does not apply to this matter. Grasso offers no argument
whatsoever that the indemnity provision is unenforceable under the LOAIA. Accordingly, the Court assumes that
the LOAIA does not apply.
3
R. Doc. No. 164-1.
4
The assignment letter was sent by Newfield to Grasso. In the letter, Newfield notified Grasso that Newfield was
selling a number of its off-shore platforms to McMoran.
5
Id. Petro asserts that the 2007 Assignment Letter from Newfield to Grasso has no effect on the contractual
relationship between McMoran and Grasso in 2004. However, Petro argues that in the event that the 2007 letter does
have some bearing on this dispute, its assignment of the 1990 contractual obligations is not inconsistent with the
terms of the 2004 MSA. (R. Doc. No. 169, pgs. 5-6).
6
R. Doc. No. 166-3.
7
R. Doc. No. 164-1.
2

LAW AND ANALYSIS
Summary Judgment
Summary judgment is proper when, after reviewing “the pleadings, the discovery and
disclosure materials on file, and any affidavits,” the court determines there is no genuine issue of
material fact. Fed.R.Civ.P. 56(c). The party seeking summary judgment always bears the initial
responsibility of informing the court of the basis for its motion and identifying those portions of
the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The party seeking summary judgment need not
produce evidence negating the existence of material fact, but need only point out the absence of
evidence supporting the other party's case. Celotex, 477 U.S. at 323; Fontenot v. Upjohn Co.,
780 F.2d 1190, 1195 (5th Cir.1986).
Once the party seeking summary judgment carries its burden pursuant to Rule 56(c), the
other party must come forward with specific facts showing that there is a genuine issue of
material fact for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp ., 475 U.S. 574, 587
(1986). The showing of a genuine issue is not satisfied by creating “ ‘some metaphysical doubt
as to the material facts,’ by ‘conclusory allegations,’ ‘unsubstantiated assertions,’ or by only a
‘scintilla’ of evidence.” Little v. Liquid Air Corp ., 37 F.3d 1069, 1075 (5th Cir.1994) (citations
omitted). Instead, a genuine issue of material fact exists when the “evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). The party responding to the motion for summary judgment may not
rest upon the pleadings, but must identify specific facts that establish a genuine issue. Id. The
nonmoving party's evidence, however, “is to be believed, and all justifiable inferences are to be

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drawn in [the nonmoving party's] favor.” Id. at 255; see Hunt v. Cromartie, 526 U.S. 541, 552
(1999).
Contract Interpretation
“Under Louisiana law,8 the interpretation of an unambiguous contract is an issue of law
for the court.” Amoco Prod. Co. v. Texas Meridian Resources Exploration Inc., 180 F.3d 664,
668 (5th Cir.1999) (citing Texas Eastern Transmission Corp. v. Amerada Hess Corp., 145 F.3d
737, 741 (5th Cir.1998)). “The interpretation of a contract is the determination of the common
intent of the parties.” La. Civ.Code. art.2045. “The words of a contract are to be construed using
their plain, ordinary and generally prevailing meaning, unless the words have acquired a
technical meaning.” Guidry v. American Public Life Ins. Co., 512 F.3d 177, 181 (5th Cir.2007).
“When the words of the contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of the parties' intent.” La.
Civ.Code art.2046. “A contract provision is not ambiguous where only one of two competing
interpretations is reasonable or merely because one party can create a dispute in hindsight.”
Amoco Prod., 180 F.3d at 668-69 (quoting Tx. Eastern Transmission Corp. v. Amerada Hess
Corp., 145 F.3d 737, 741 (5th Cir.1998)) (internal quotation marks omitted). “In the context of
contract interpretation, only when there is a choice of reasonable interpretations of the contract is
there a material fact issue concerning the parties' intent that would preclude summary judgment.”
Id. at 669.
Discussion
The Court determines that the 2004 Grasso-McMoran MSA requires Grasso to indemnify
and defend Petro. The 2007 assignment letter from Newfield to Grasso indicates that the terms
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The parties agree that Louisiana law applies to this dispute.
4

of the 1990 Grasso-Newfield contract applied as between Grasso and McMoran only until
“[McMoran] puts their [sic] own agreements into place with Grasso.”9 McMoran put its own
agreement into place with Grasso in 2004.10 The 2004 agreement applied to all work performed
by Grasso for McMoran.11 Such contract plainly states that it remains in effect until it is
terminated in writing by either Grasso or McMoran. Grasso has produced no evidence that either
McMoran or Grasso terminated such agreement in writing.12
Even assuming, without deciding, that Grasso is correct and that the 1990 GrassoNewfield contract is in some way applicable in this case, the Court rejects Grasso’s argument
that the indemnity provisions in the 1990 Grasso-Newfield contract conflict with the 2004
Grasso-McMoran MSA. The 2004 Grasso-McMoran MSA, which governs all work Grasso
performs for McMoran, states that Grasso is required to indemnify contractors sued by Grasso
employees.13 The 1990 Grasso-Newfield contract lists various parties that Grasso is required to

9

R. Doc. No. 166-3. Petro also argues that the 1990 agreement is not in effect because it was not renewed by any of
the parties in November 2007. (, R. Doc. No. 169). However, the terms of the 1990 contract provide for automatic
renewal each year for twenty-four years. Accordingly, the contract had not been terminated by a lack of affirmative
renewal. (R. Doc. No. 166-2).

10

R. Doc. No. 159-2.

11

Id.

12

See R. Doc. No. 159-2. Grasso has produced the affidavit of Patrick Fogarty (“Fogarty”), a former Grasso
employee, who asserts that he was a part of the discussions that led to both the 2004 Grasso-McMoran contract and
the sale of various Newfield assets to McMoran in 2007. According to Fogarty’s affidavit, in 2007 Grasso intended
the 1990 Grasso-Newfield contract to govern its relationship with McMoran. Fogarty’s affidavit notwithstanding,
the 2004 Grasso-McMoran contract plainly states that “[t]he terms and provisions of this Agreement shall continue
in full force and effect until the same is terminated in the manner provided for herein.” R. Doc. No. 159-2. The
contract then states that it “may be terminated by either party hereto by giving the other party thirty (30) days
written notice of an intention to terminate . . . .” Id. Such contract provides no other means of termination. Grasso
has produced no evidence that either Grasso or McMoran terminated the contract in writing.
13

R. Doc. No. 159-2. The 2004 Grasso-McMoran MSA states that:
[Grasso] shall protect, indemnify, defend and save harmless: (i) [McMoran], (ii) any
parent subsidiary or other affiliate of [McMoran], (iii) any and all co-ventureres and coowners of oil, gas, or mineral properties, (iv) any and all of the respective employees,
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indemnify and defend pursuant to such contract, but it is silent with respect to Grasso’s duty to
indemnify and defend contractors that are sued by Grasso employees.14 However, the Court
notes that nothing contained in 1990 Grasso-Newfield contract states that Grasso cannot be
required to indemnify and defend such contractors pursuant to other contractual arrangements.
As such, these two contracts are not in “direct conflict” as Grasso maintains.15
CONCLUSION
IT IS ORDERED that Petro’s motion for summary judgment is GRANTED and that
Grasso is required to indemnify and defend Petro.
IT IS FURTHER ORDERED that Grasso’s cross-motion for summary judgment is
DENIED.

14th
New Orleans, Louisiana, June ________, 2011.
__________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

agents, contractors, subcontractors, consultants, shareholders, members, directors,
officers, or assigns of each of the persons or entities described in (i) through (iii), . . .
from and against all claims, demands or causes of action of every kind and character for
bodily injury or death of, or for property damages or loss sustained by, [Grasso] or
[Grasso’s] employees . . . arising directly or indirectly out of the Work under this
Agreement . . . . R. Doc. No. 159-2, pgs. 4-5.
14

The 1990 Grasso-Newfield contract states that:
[Grasso] agrees to defend, indemnify and hold [Newfield], its joint owners, its
subsidiary and affiliate companies, their agents, employees, directors, officers, servants,
and insurers, harmless from and against any and all losses, claims, demands, liabilities
or causes of action of every kind and character, in favor of any person or party, for
injury to or illness or death of any employee of [Grasso] or any employee of
subcontractors of [Grasso] . . . . R. Doc. No. 166-2, pgs. 1-2.

15

Grasso asserts that the, “1990 Grasso/Newfield MSA effected between Grasso and McMoran on July 18, 2007
contains indemnity terms in direct conflict with the indemnity terms found in the 2004 Grasso/McMoran MSA
effected between Grasso and McMoran on February 1, 2004.” R. Doc. No. 164-1, pg. 7.
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