Raynes v. McMoRan Exploration Company et al
Filing
265
ORDER granting 192 Motion for Partial Summary Judgment re cmp of intervention. Signed by Judge Lance M Africk. (Reference: 08-5018)(car, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CIVIL ACTION
JAMIE RAYNES, ET AL.
VERSUS
No. 08-5018 C/W 10-1730
(REF: 08-5018)
MCMORAN EXPLORATION
COMPANY, ET AL.
SECTION “I”
ORDER AND REASONS
Before the Court is a motion1 for partial summary judgment filed by plaintiff, Jamie
Raynes (“Raynes”), to dismiss the complaint of intervention filed by Grasso Production
Management, Inc. (“Grasso”) and Signal Mutual Indemnity Association, Ltd. (“Signal”)
(collectively, “intervenors”). Intervenors oppose2 the motion. For the following reasons, the
motion is GRANTED.
BACKGROUND
Raynes was working on the West Delta 24-F1 platform (“platform”) in Louisiana waters
on September 24, 2008, when he was allegedly injured after his foot pierced a defective portion
of the platform deck.3 On the date of Raynes’s injury, Grasso employed Raynes as its lead
operator in charge of the platform.4 McMoRan Exploration Company (“McMoRan”) owned the
platform.5 Raynes filed this lawsuit against McMoRan; Production Services Network U.S., Inc.
(“PSN”), a contractor which allegedly inspected the platform prior to his accident; Newfield
1
R. Doc. No. 192.
R. Doc. Nos. 201 and 251.
3
R. Doc. No. 1, p. 2. At the time Raynes was injured, the parties believed that the platform was located on the
Outer Continental Shelf and Raynes filed his lawsuit pursuant to the Outer Continental Shelf Lands Act (“OCSLA”),
43 U.S.C. § 1331, et seq. R. Doc. No. 1, p. 2. The parties later discovered that the platform was actually located in
Louisiana waters. R. Doc. No. 188-1, p. 4.
4
R. Doc. No. 14, p. 1.
5
R. Doc. No. 1, p. 2.
2
Exploration Company (“Newfield”), the platform’s prior owner; and Petro Construction
Management, LLC (“Petro”), a contractor McMoRan retained to perform repair work on
McMoRan-owned platforms. Newfield and Petro have been dismissed from this lawsuit, leaving
only McMoRan and PSN as defendants.
At all relevant times Grasso has been insured by Signal for benefits paid to employees
pursuant to the Longshoremen’s and Harbor Workers’ Compensation Act (“LHWCA,” 33
U.S.C. § 901, et seq.) for injuries and/or death that its employees suffer in the course of their
employment.6 Intervenors have paid Raynes LHWCA benefits since the date of his accident.7
Intervenors sought and were granted leave to file a complaint of intervention to recover benefits
paid to Raynes from any tort award he may receive in judgment against, or from any settlement
with, the defendants.8
In his motion for partial summary judgment, Raynes argues that the complaint of
intervention must be dismissed because, pursuant to the 2004 Master Services Agreement
(“MSA”) between Grasso and McMoRan, as well as a specific endorsement in the relevant
insurance policy, intervenors waived any rights to subrogation with respect to LHWCA benefits
paid to Raynes for his injuries.9 Intervenors counter that such a waiver of subrogation is invalid
based on the rationale of Fontenot v. Chevron U.S.A., Inc., 676 So.2d 577 (La. 1996), because
Grasso has been defending and indemnifying McMoRan at all relevant times.10
6
R. Doc. No. 14, p. 2.
R. Doc. No. 201, p. 1.
8
R. Doc. Nos. 11, 13 and 14.
9
R. Doc. No. 192-1, p. 2.
10
R. Doc. No. 201, p. 2.
7
2
LAW AND ANALYSIS
I.
Summary Judgment Standard
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
3
drawn in [the nonmoving party’s] favor.” Id. at 255; see Hunt v. Cromartie, 526 U.S. 541, 552
(1999).
II.
The Waiver of Subrogation
Grasso and McMoRan entered into an agreement for offshore services in February
2004.11 Articles 7.4 and 7.4.1 of the MSA require Grasso to provide workers’ compensation
insurance and coverage in compliance with the LHWCA and OCSLA “where appropriate.”12
Article 7.4.713 further mandates that:
The required insurance listed in all paragraphs above shall be endorsed to include
a waiver of subrogation in favor of the Owner Indemnified Parties.14 The
required insurance listed in subsections 3, 4, 5 and 6 of this Section 7.4 shall be
endorsed to name all of the Owner Indemnified Parties as additional insureds and
such insurance shall be primary as respects any other insurance that may be
available to such additional insureds. Contractor’s obligation to have its
insurance endorsed to include a waiver of subrogation in favor of the Owner
Indemnified Parties and to name the Owner Indemnified Parties as additional
insureds are applicable only to the extent of the liabilities and obligations assumed
by [Grasso] under this Agreement.
11
R. Doc. No. 192-3. Throughout the MSA, the term “OWNER” refers to McMoRan and the term
“CONTRACTOR” refers to Grasso. Id. at p. 1.
12
R. Doc. No. 192-3, pp. 5-6.
13
R. Doc. No. 192-3, p. 7.
14
With respect to “Owner Indemnified Parties,” Article 5.1 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-venturers and co-owners of oil, gas
or mineral properties, (iv) any and all of the respective employees, agents, contractors,
subcontractors, consultants, shareholders, members, directors, officers or assigns of each of the
persons or entities described in (i) through (iii), and (v) the insurers and subrogees of each of the
persons or entities described in (i) through (iv) (collectively the “Owner Indemnified Parties”)
from and against all claims, demands or causes of action of every kind and character for bodily
injury or death of, or for property damage or loss sustained by, [Grasso] or [Grasso’s] employees,
subcontractors or consultants arising directly or indirectly out of the Work under this Agreement
unless caused by the gross negligence or willful misconduct of [McMoRan]. For the purposes of
this Article 5.0, the reference to the contractors of [McMoRan] does not refer to [Grasso]
hereunder.
R. Doc. No. 192-3, pp. 4-5.
4
Pursuant to Article 7.4.7, Grasso’s insurers waived subrogation in favor of McMoRan and
McMoRan’s subcontractors.15
Intervenors acknowledge that they have waived their right to recover workers’
compensation benefits from third-party tortfeasors.16 Nevertheless, they argue that because the
MSA also requires Grasso to defend and indemnify the parties in whose favor subrogation was
waived, this waiver is unenforceable.17 Intervenors rely on the Louisiana Supreme Court’s
rationale in Fontenot v. Chevron U.S.A., Inc., 676 So.2d 577 (La. 1996), for their assertion that
their waiver of subrogation is unenforceable and, consequently, that the Court cannot dismiss
their complaint of intervention.18
In Fontenot, a Hercules Offshore Drilling Company (“Hercules”) employee was injured
on a platform owned by Chevron, USA, Inc. (“Chevron”). Fontenot, 676 So.2d at 558-59. The
contract between Chevron and Hercules required Hercules to provide LHWCA insurance
coverage for its employees. Id. The contract also required Hercules to waive its right, “and
consequently its insurer’s right,” to subrogation for any benefits it might be obligated to pay. Id.
The worker’s compensation policy covering the employee contained such a waiver of
subrogation. Id. The issue before the Louisiana Supreme Court was whether the waiver of
subrogation in the policy was invalid vis-à-vis the Louisiana Oilfield Anti-Indemnity Act
(“LOAIA”). Id. In its decision, the Fontenot Court interpreted the relevant sections of LOAIA
which provide:
15
R. Doc. Nos. 201-4, p. 2 and 263-5, p.1.
R. Doc. No. 201-4, p. 2.
17
R. Doc. No. 201, p. 2. Intervenors have been providing McMoRan with defense and indemnity for the claims
Raynes has asserted against McMoRan. R. Doc. No. 201-2, p. 2. Furthermore, in this Court’s June 14, 2011 order,
this Court determined that the 2004 Grasso-McMoRan MSA requires Grasso to also defend and indemnify Petro. R.
Doc. No. 182.
18
R. Doc. No. 201 p. 201, pp. 5-9.
5
16
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. . . .
Any provision in any agreement . . . which requires waivers of subrogation,
additional named insured endorsements, or any other form of insurance protection
which would frustrate or circumvent the prohibitions of this Section, shall be null
and void and of no force and effect.
La. Rev. Stat. §§ 9:2780(B) and (G). With respect to these provisions, the Louisiana Supreme
Court concluded that “voiding a waiver of subrogation clause only achieves the purpose of
[LOAIA] when such a clause is sought to be enforced in conjunction with the enforcement of an
indemnification clause.” Fontenot, 676 So.2d at 565. Only when the two provisions work in
tandem, the court reasoned, is LOAIA implicated because the injured worker’s employer would
be responsible for both worker’s compensation benefits and the third-party tort claim. Id. As
Chevron was not seeking to enforce an indemnification clause, the Fontenot court did not find
the waiver of subrogation invalid because it did not “frustrate or circumvent the prohibitions” of
LOAIA. Id.
Intervenors argue that had the Louisiana Supreme Court in Fontenot been faced with the
factual situation present in this case – whereby Grasso is defending and indemnifying
McMoRan, as well as having waived subrogation in McMoRan’s favor – the court would have
invalidated the waiver of subrogation. LOAIA’s applicability to the MSA turns on the question
of whether a two-part test is satisfied: “(1) whether the agreement pertains to an oil, gas or water
well; and (2) whether the agreement relates to the exploration, development, production, or
6
transportation of oil, gas, or water.” Hudson v. Forest Oil Corp., 372 F.3d 742, 745 (5th Cir.
2004) (citing Fontenot, 676 So.2d at 564). The parties agree that LOAIA does not apply.19
Regardless, intervenors urge that the Court recognize that “the situation here is precisely the type
of scenario wherein Louisiana law should invalid waivers of subrogation.”20
The Court notes that Louisiana law generally allows waivers of subrogation. Alexie v.
Bisso Marine Co., 2009 WL 1507307, at *1 (E.D. La. May 28, 2009) (Vance, J.) (citing Hudson
v. Forest Oil, 2003 WL 21276385, at *4 (E.D. La. June 2, 2003), aff’d 372 F.3d 742 (5th Cir.
2004)); E.S. Upton Printing Company v. Gomila, 674 So.2d 422 (La. App. 4th. Cir. 1996)
(interpreting statute permitting waivers of subrogation where such a waiver is “clear and
explicit”). Moreover, with respect to whether a waiver of subrogation is invalid, the court in
Fontenot specifically interpreted LOAIA’s terms. Fontenot, 676 So.2d at 562-65. Only when a
waiver of subrogation might run afoul of LOAIA would Louisiana’s general rule permitting
waivers of subrogation not apply. Id. at 565. Consequently, as the parties agree that LOAIA is
inapplicable in this case, the Court will not look to LOAIA or the cases interpreting it when
determining whether an otherwise valid waiver of subrogation is enforceable.
The Louisiana Supreme Court and the Fifth Circuit have held that when an intervenor has
waived the right to recoup worker’s compensation benefits, the complaint of intervention must
be dismissed. Fontenot, 676 So.2d at 566; Hudson, 372 F.3d at 743-44, 478. An injured
employee may enforce a waiver of subrogation as a third-party beneficiary. Alexie, 2009 WL
19
20
R. Doc. Nos. 263, p. 5 and 264, p. 1.
R. Doc. No. 251, p. 4.
7
1507307, at *1 (citing Fontenot, 676 So.2d at 566). Intervenors here acknowledge that they have
waived subrogation.21
Accordingly,
IT IS ORDERED that Raynes’s motion for partial summary judgment is GRANTED
and that intervenors’ complaint of intervention is DISMISSED WITH PREJUDICE.
19th
New Orleans, Louisiana, September _____, 2011.
__________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE
21
R. Doc. Nos. 201-4, p. 2 and 263-5, p.1.
8
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