IN RE: Crescent Energy Services, LLC

Filing 353

ORDER AND REASONS denying Starr's 307 , 333 Motions for Summary Judgment; denying Carrizo's 317 Motion for Summary Judgment; granting Lloyd's 320 Motion for Summary Judgment. Carrizo's claims against Lloyd's are DISMISSED WITH PREJUDICE. Signed by Judge Jane Triche Milazzo. (Reference: All cases)(ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CIVIL ACTION
IN RE: CRESCENT ENERGY
SERVICES, LLC

NO. 15-819 c/w 15-5783
SECTION: “H”
(Applies to all consolidated matters)
ORDER AND REASONS

Before the Court are Defendant Starr Indemnity’s Motion for Summary
Judgment (Doc. 307), Defendant Carrizo’s Motion for Summary Judgment
(Doc. 317), Defendant Lloyd’s Motion for Summary Judgment (Doc. 320), and
Defendant Starr’s Motion for Summary Judgment (Doc. 333). For the following
reasons, Defendant Lloyd’s Motion for Summary Judgment is GRANTED and
the other motions are DENIED.
BACKGROUND
This is a limitation action brought by Crescent Energy Services, LLC
(“Crescent”) as owner of the S/B OB 808. On February 13, 2015, Claimant
Corday Shoulder, a pump operator employed by Crescent aboard the S/B OB
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808, was severely injured in a well blowout. Crescent was hired by Carrizo Oil
& Gas, Inc. (“Carrizo”) to plug and abandon one of Carrizo’s offshore wells.
Before the accident, Shoulder attached a piece of pipe to Carrizo’s well and
screwed the pipe into a flange. When Shoulder began releasing pressure from
the well, the pipe separated from the flange, severely injuring Shoulder’s leg
and resulting in an above-the-knee amputation.
In response to the accident, Crescent filed a limitation of liability action,
in which both Shoulder and Carrizo filed claims. In addition, Carrizo filed a
cross-claim against Crescent and third-party claims against Crescent’s
insurers: Liberty Mutual Insurance Company, Starr Indemnity & Liability
Company (“Starr”), Torus National Insurance Company (“Torus”), and Certain
Underwriters at Lloyd’s of London (“Lloyd’s”). Carrizo alleges that it is entitled
to contractual indemnity from Crescent and coverage as an additional insured
from Crescent’s insurers pursuant to its Master Service Agreement (MSA) with
Crescent.

Shoulder likewise filed a third-party complaint against the

aforementioned insurance companies.
On November 7, 2016, the Court ruled on a series of motions for
summary judgment, holding that general maritime law applied to the MSA
and refusing to dismiss the indemnity claims brought by Carrizo against
Crescent’s insurers. On December 14, 2016, the parties agreed to a partial
settlement. All claims by Shoulder and against Torus were resolved. The
remaining parties reserved rights to pursue claims relating to attorney’s fees
and policy coverage. The latter is at issue here. Starr, Carrizo, and Lloyd’s
have each filed a motion for summary judgment on the issue of whether
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Crescent’s policy with Lloyd’s provides coverage to Carrizo as an additional
assured. This Court will discuss their arguments in turn.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with 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.” 8 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” 9
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 10 “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.” 11 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.” 12 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
10 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 532 (5th Cir. 1997).
11 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
12 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
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sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.” 13 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
necessary facts.” 14 Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.” 15
LAW AND ANALYSIS
A. Starr’s Motions for Summary Judgment
Starr, which provides an umbrella policy to Crescent, has filed two
Motions for Summary Judgment, asking this Court to find that the Lloyd’s
policy provides coverage to Carrizo. Curiously, though, Starr has not filed any
claim against Lloyd’s, and Lloyd’s argues that it therefore should not be
allowed to move for summary judgment against it. This Court agrees. The
only claim at issue in Starr’s motions is Carrizo’s claim against Lloyd’s. Starr
has not brought a claim against Lloyd’s on which it can seek judgment, and it
has no standing to move for judgment on Carrizo’s behalf. Accordingly, these
motions are denied.
B. Carrizo’s and Lloyd’s Cross-Motions for Summary Judgment
In its Motion, Carrizo argues that the Hull/Protection and Indemnity
Policy (“the Policy”) provided to Crescent by Lloyd’s covers Carrizo for its
John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
14 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
15 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
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potential liability in this matter. The Policy insures Crescent for any liabilities
it may incur as owner of the vessel, the OB 808. Shoulder was a member of
the crew of the OB 808, which was performing plug and abandon work on
Carrizo’s well at the time that Shoulder was injured. Carrizo argues that the
Policy provides it coverage in two ways: (1) as an additional insured, and (2)
for Crescent’s contractual liability to Carrizo. This Court will address each
argument in turn.
I.

Additional Insured Coverage

Carrizo argues that it is an additional insured on the Lloyd’s P & I policy
because the MSA required that Crescent add it as an additional insured on all
of its insurance policies. Lloyd’s P & I policy explicitly covers Crescent for any
liabilities it may incur “as owner” of the OB 808. Carrizo argues that under
the Policy the MSA’s requirement that Carrizo be added as an additional
insured renders the “as owner” clause of the Policy deleted, thereby expanding
coverage to Carrizo. Lloyd’s disputes this reading of the Policy but argues that
even if the “as owner” clause is deleted, the Policy does not provide coverage to
Carrizo for a myriad of other reasons. Most notably, Lloyd’s argues that the
Policy’s coverage does not extend to cover liabilities beyond vessel operations.
Because this Court ultimately finds this argument compelling, it need not
address the parties’ additional arguments.
There are two provisions relevant to Lloyd’s argument that the Policy’s
coverage is limited to liabilities arising out of vessel operations. The first states
that:
In respect to any/all Additional Assureds named herein, it is noted
and agreed, where required by written contract; . . . (2) Any
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reference to “other Than Owner”, “As Owner” and/or “other
Insurance” clauses contained in this policy shall be deemed
deleted. Notwithstanding, if a claim is made by anyone other than
the Owner and/or Operator of the Vessel(s) insured hereunder,
such person or entity shall not be entitled to wider coverage than
would the Owner and/or Operator had claim been made by the
Owner and/or Operator as an Assured under this policy. 16
The second reiterates that:
The so-called Other Than Owner, As Owner and/or Other
Insurance Clauses . . . shall . . . be deemed deleted as may be
required by contract in respect of additional assureds. . . .
Notwithstanding the above, this clause shall not extend the
insuring conditions beyond vessel operations. 17
These provisions explicitly state that whether or not a claim is brought by the
owner or operator of the OB 808 or by some additional assured, the coverage
provided by the Policy is unchanged. 18 The Policy’s coverage is limited to
vessel-related risks. None of Carrizo’s potential liability to Shoulder relates to
vessel operations. All of Shoulder’s claims against Carrizo arise out of its
operation, control, maintenance, and supervision of the well upon which
Shoulder was working when he was injured. Indeed, the only allegations of
Shoulder’s complaint against Carrizo that could be construed as arising out of
vessel operations have been acknowledged by all parties to be the result of a
typographical error. 19 Accordingly, even if Carrizo is an additional insured and

Doc. 320-2, p. 31.
Doc. 320-3, p. 32.
18 See Gaspard v. Offshore Crane & Equip., Inc., 106 F.3d 1232, 1238 (5th Cir. 1997)
(“In that event [a third party brings a claim], coverage is limited to what Seacor or Chevron
[the owner and operator] could have obtained under the policy.”).
19 See Doc. 317-7, p. 10–12.
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the “as owner” clause is deemed deleted from the Policy, the Policy would still
not provide coverage to Carrizo for its potential liability to Shoulder.
The case law confirms this interpretation. In Certain Underwriters at
Lloyds v. L&M Bo Truc Rental, Judge Clement, while serving on the Eastern
District of Louisiana, held that because none of the additional assured’s
liability arose from vessel operations, it was not covered by a P & I policy that
stated that even if the “as owner” clause was deleted such “shall not extend the
insuring conditions beyond vessel operations.” 20 This policy language is
identical to that at issue here, and therefore an identical holding is warranted.
The Fifth Circuit confirmed this interpretation in Gaspard v. Offshore
Crane and Equipment, Inc. 21 In Gaspard, the court interpreted limiting policy
language identical to that at issue here and held that it meant that when a
third party, other than the owner or operator of the vessel, brings a claim,
coverage is limited to that which could have been obtained by the owner or
operator under the policy. 22

It went on to say that such language was

inapplicable in that case, however, because the party bringing a claim,
Chevron, was both the operator of the vessel and the platform owner. 23 It held,
therefore, that Chevron could be entitled to coverage under the policy for its
vessel-related negligence. 24 “The deletion of the ‘as owner’ clause created at
Certain Underwriters at Lloyd's v. L & M Bo Truc Rental, Inc., No. 91-1528, 1993
WL 139481, at *6 (E.D. La. Apr. 28, 1993), order amended on reconsideration, No. 91-1528,
1993 WL 370630 (E.D. La. Sept. 13, 1993), and on reconsideration sub nom. Certain
Underwriters at Lloyd's v. L & M Bo Truck Rental, Inc., No. 91-1528, 1993 WL 488590
(E.D. La. Nov. 22, 1993).
21 Gaspard, 106 F.3d 1232.
22 Id. at 1238.
23 Id.
24 Id.
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least a genuine issue of material fact as to whether [the insurer’s] policy
covered vessel-related liabilities involving Chevron’s negligence in its capacity
as a platform operator.” 25 At no point did the court indicate that the policy
might cover Chevron’s non-vessel liability, as is sought here. Accordingly,
Gaspard likewise supports a reading of the Policy that limits coverage to
vessel-related negligence.
In support of its argument that the Policy should provide it coverage,
Carrizo relies on the Fifth Circuit’s opinion in Helaire v. Mobil Oil Company. 26
This Court finds that decision distinguishable. In Helaire, the platform
operator and vessel charterer, Mobil, was found to be at fault for the injury of
the plaintiff for its actions in ordering the unloading of cargo on the vessel to
continue in bad weather. 27 The Court first held that Mobil’s negligence was
vessel-related, and it was therefore covered by the vessel’s P and I policy. 28 It
went on to say, however, that:
[E]ven assuming that Mobil’s liability may have arisen from its
status as platform operator, indemnification was still properly
awarded. The indemnity policy which named Mobil as assured was
a standard fleet insurance policy providing assured’s coverage
“against liabilities . . . in respect of the vessel”, with one significant
deletion. The words “as owner of the vessel named herein” were
deleted from the policy. The district court found that this deletion
was intended to providez coverage for Mobil regardless of the
capacity in which Mobil was sued. Certainly this finding was not
clearly erroneous. The policy in contention here makes no
distinction between coverage for unloading activities on the one
hand and platform activities on the other. Consequently, the
Id. at 1239.
Helaire v. Mobil Oil Co., 709 F.2d 1031, 1042 (5th Cir. 1983).
27 Id.
28 Id.
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court’s indemnification order is proper regardless of whether Mobil
incurred liability as a “vessel owner” or as a “platform operator”. 29
The court, in dicta, indicated that Mobil might be covered for negligence arising
out of platform activities. It acknowledged, however, that the policy at issue
made no distinction between the activities for which it would provide coverage.
Here, the Policy explicitly states that even if the “as owner” clause is deleted,
it will not provide coverage beyond vessel operations. The facts of Helaire are
distinguishable from the facts here. The facts of this case and the language of
the Policy are consistent with the Bo Truc Rentals and Gaspard decisions.
Accordingly, this Court holds that the Lloyd’s policy does not provide coverage
to Carrizo as an additional insured for its potential liability to Shoulder
because its liability does not arise out of vessel operations.
II.

Contractual Liability

Carrizo next argues that the Policy provides coverage for Crescent’s
contractual obligations to Carrizo under the MSA. The MSA provides for a
reciprocal indemnification agreement between Crescent and Carrizo.

The

Policy states that Lloyd’s will provide coverage to Crescent for its liability
arising out of hold harmless or indemnity agreements “contained in such
contracts as have or may be entered into by [Crescent] for the furnishing of
vessel services.”

Carrizo alleges, therefore, that the Policy must provide

Crescent coverage for its contractual obligations to Carrizo under the MSA.
In response, Lloyd’s asserts two arguments: (1) that Carrizo has no right
to assert a claim for coverage allegedly owed to Crescent and (2) that, even if
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Id.

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it does, the Policy does not cover Crescent’s contractual liability to Carrizo. As
to the first, Carrizo argues that it is a third-party beneficiary as to the Policy
and therefore can bring such a claim. Because this Court ultimately holds that
the Policy does not provide coverage for Crescent’s contractual liability to
Carrizo, however, it need not address whether Carrizo has standing to bring
such a claim.
The Policy provision at issue states that:
In consideration of the premium charged for which this insurance
is written, the coverage afforded under this Policy is extended to
insure the liability of the Assured arising out of hold harmless
and/or indemnity agreements contained in such contracts as have
been or may be entered into by the Assured for the furnishing of
vessel services.
However, the language of this or any other endorsement of this
policy shall not be construed to extend the Underwriters’
agreement to indemnify the Insured for any type of claim not
otherwise covered by the Hull and Machinery policy to which this
endorsement is attached nor for amounts beyond the Amount of
Insurance for the appropriate vessel insured herein . . . .
Lloyd’s contends, and this Court agrees, that this language limits the
Policy’s coverage of Crescent’s contractual liability to claims that would
otherwise be covered by the Policy—i.e. those arising out of vessel operations.
The case law supports such a reading. Interpreting identical language, the
Fifth Circuit in Cater v. Placid Oil Co. held that a contractual liability
endorsement was limited by the “as owner” clause set out in the policy. 30 It

30

Cater v. Placid Oil Co., 986 F.2d 1418 (5th Cir. 1993).
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stated that the policy’s coverage was limited to liabilities incurred “as owner”
of the vessel, and therefore, the platform owner was not afforded coverage
under the contractual liability endorsement for liability it incurred from
operation of its platform. 31
As previously discussed, the coverage provided by the Policy at issue here
is limited to those liabilities arising out of vessel operations. None of Carrizo’s
potential liability is vessel-related.

Therefore, this limitation applies to

prevent the contractual liability endorsement from providing Crescent with
coverage for its obligation under the MSA to indemnify Carrizo. Accordingly,
Carrizo’s argument for coverage under the contractual liability endorsement
fails.
CONCLUSION
For the foregoing reasons, Lloyd’s does not owe Carrizo coverage for its
potential liability in this matter. Lloyd’s Motion for Summary Judgment is
GRANTED, and Starr’s and Carrizo’s Motions for Summary Judgment are
DENIED.

Carrizo’s

claims

against

Lloyd’s

are

DISMISSED

WITH

PREJUDICE.

New Orleans, Louisiana this 8th day of June, 2017.

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Id.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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