International Marine, LLC et al v. Integrity Fisheries, Inc.
Filing
130
ORDER AND REASONS: ORDERED that Integrity's 66 and Sea Eagle's 120 motions for summary judgment are GRANTED. FURTHER ORDERED that International's 89 , 121 and Tesla's 86 , 116 cross-motions for summary judgment are DENI ED. FURTHER ORDERED that International's 128 motion for leave to file a reply is GRANTED. FURTHER ORDERED that International's 57 appeal of the U.S. Magistrate Judge's order is DISMISSED AS MOOT. FURTHER ORDERED that all claims asserted by Tesla and International against all other parties in this matter are DISMISSED WITH PREJUDICE. Signed by Judge Lance M Africk on 4/11/2016.(blg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
INTERNATIONAL MARINE, LLC, ET
AL.
CIVIL ACTION
VERSUS
NO. 15-1446
INTEGRITY FISHERIES, INC.
SECTION I
ORDER AND REASONS
The Court has pending before it a motion1 for summary judgment filed by defendant,
Integrity Fisheries, Inc. (“Integrity”), a motion2 for summary judgment filed by defendant/third-party
defendant, Sea Eagle Fisheries, Inc. (“Sea Eagle”), and cross-motions for summary judgment with
respect to both Integrity and Sea Eagle filed by plaintiffs, International Marine, LLC and
International Offshore Services, LLC (collectively, “International”),3 and intervenor, Tesla Offshore,
L.L.C. (“Tesla”).4 For the following reasons, Integrity’s and Sea Eagle’s motions are granted and
International’s and Tesla’s motions are denied.
BACKGROUND
Understanding the above-captioned matter first requires a brief accounting of the facts and
history of Civil Action No. 13-6278. Shell Offshore Inc. v. Tesla Offshore, L.L.C., et al. (“Shell v.
Tesla”).5 Shell v. Tesla arose out of an incident involving a sonar towfish owned by Tesla and being
1
R. Doc. No. 66.
R. Doc. No. 120.
3
R. Doc. Nos. 89, 121.
4
R. Doc. Nos. 86, 116.
5
The facts recited below are not materially disputed by any party. Furthermore, no party has
suggested that additional discovery is required as to any material facts. International suggests that
additionally discovery “may be appropriate” to clarify the ownership and control relationships
between Integrity and Sea Eagle. R. Doc. No. 87, at 2. However, whatever uncertainties exist as to
2
1
towed by the M/V INTERNATIONAL THUNDER, a vessel owned by International and timechartered to Tesla for the purpose of conducting an underwater archeological sonar survey. On
November 2, 2012, the cable pulling the towfish behind the M/V INTERNATIONAL THUNDER
damaged a mooring line securing the M/V DEEPWATER NAUTILUS, a Mobile Offshore Drilling
Unit (“MODU”) drilling an oil well for Shell Offshore, Inc. (“Shell”). Shell filed a lawsuit against
Tesla and International and a jury returned a verdict in Shell’s favor in the amount of $9,041,552,
allocating 75% fault to Tesla and 25% fault to International.6
A second vessel was present at the November 2, 2012 incident: the F/V LADY JOANNA,
a fishing vessel owned by Sea Eagle. Tesla hired the F/V LADY JOANNA, pursuant to a Master
Service Agreement (“MSA”), which obligated the F/V LADY JOANNA to serve as the “chase
vessel” for the sonar survey operation, requiring it to stay above the towfish and receive
transmissions from it. Shell did not assert any claims against Sea Eagle in Shell v. Tesla, but Tesla
and International did, alleging tort claims as well as claims for defense and indemnity pursuant to
the MSA. Certain claims against Sea Eagle were settled and others were severed in advance of the
trial in Shell v. Tesla. The severed claims have been reasserted by International and Tesla in the
above-captioned matter.7
International as plaintiffs and Tesla as intervenor assert claims against Integrity in its alleged
capacity as owner and/or operator of either the F/V LADY JOANNA or the F/V INTEGRITY,8 the
those issues are immaterial to the interpretation and application of the identical Master Service
Agreements.
6
Shell v. Tesla, No. 13-6278, R. Doc. No. 295-4; R. Doc. No. 298.
7
R. Doc. Nos. 108, 109.
8
For the reasons set forth below, indemnity is not available because Shell’s claims against
Tesla and International did not arise out of the operation of the F/V LADY JOANNA. Accordingly,
any potential factual disputes relating to whether Integrity was the owner or operator of the F/V
2
vessel initially chartered by Tesla pursuant to a MSA to serve as the chase vessel, but later replaced
by the F/V LADY JOANNA as a result of mechanical problems. International and Tesla also assert
various claims against insurance companies predicated on the viability of claims against Integrity
and/or Sea Eagle.
In the present posture of this case, International and Tesla assert analogous claims against
Sea Eagle and Integrity, each of which contracted with Tesla pursuant to substantively identical
MSAs. International, Tesla, Integrity, and Sea Eagle have all filed motions for summary judgment
with respect to the availability of indemnity pursuant to the MSAs. For convenience, the Court will
analyze the simplest permutation of the claims: whether Sea Eagle owes Tesla indemnity pursuant
to the terms of the Tesla-Sea Eagle MSA.9 Such analysis applies equally to any potential recovery
by Tesla from Integrity pursuant to the Tesla-Integrity MSA, as well as to International’s parallel
claims for indemnity as to both Sea Eagle and Integrity pursuant to either MSA.
The Tesla-Sea Eagle MSA contains the following indemnification provision defining Sea
Eagle’s obligations as “Contractor” to Tesla (and potentially International) as the “Company
Group”10:
LADY JOANNA or the corporate relationship between Integrity and Sea Eagle are immaterial to
resolution of the pending summary judgment motions.
9
Integrity filed a motion for summary judgment first. R. Doc. No. 66. After it was made a
party to this matter, Sea Eagle filed a “me-too” motion for summary judgment incorporating by
reference Integrity’s “memorandum in support of its motion for summary judgment, as if same were
fully set forth in extenso.” R. Doc. No. 120-1, at 1. Accordingly, although the Court analyzes the
Tesla-Sea Eagle MSA, the Court analyzes arguments articulated by Integrity.
10
“Company Group” is defined to “include Company [i.e., Tesla], its parent, subsidiaries, and
affiliates, and its and their joint owners, partners, joint ventures, contractors, and subcontractors
(other than Contractor and its contractors and subcontractors), and entities with whom Company has
entered a sharing agreement or for whom Company is performing services, and the owners,
shareholders, directors, officers, employees, agents, representatives, and invitees of all the
foregoing.” R. Doc. No. 1-3, at 9. International alleges that it falls within this definition of
3
d.
Property
(i)
Contractor’s Liability. Regardless of cause, Contractor shall be liable
for, and hereby releases Company Group from all liability for, and
shall protect, defend, indemnify, and hold Company Group harmless
from and against, any and all claims directly or indirectly arising out
of any loss, harm, infringement, destruction, or damage of Contractor
Group’s property, equipment, or instrument and damages sustained
by third party property owners arising out of or related in any way to
the operation of any vessel owned, operated, leased and/or chartered
by Contractor or any subcontractor of Contractor to perform work
under this agreement except to the extent such loss, harm,
infringement, destruction, or damages is caused by the indemnitee’s
gross negligence or willful misconduct.11
In summary, Sea Eagle contracted to defend and indemnify Tesla “from and against, any and all
claims directly or indirectly arising out of any loss, harm, infringement, destruction, or . . . damages
sustained by third party property owners arising out of or related in any way to the operation of any
vessel owned, operated, leased, and/or chartered by [Sea Eagle] . . . to perform work under this
agreement.”
The parties also point out other provisions of the MSAs. Integrity emphasizes that the
contract was “for the performance of work and/or for the provision of services,” that the MSA
“covers only Services to be performed within the United States of America, the territorial waters of
the United States of America, and the Gulf of Mexico,” and that the MSA requires Sea Eagle to
“maintain . . . sufficient insurance . . . to protect [Sea Eagle] and [Tesla] from third party claims
arising out of or connected with the performance of Service hereunder.”12 Tesla and International
“Company Group.” R. Doc. No. 1, at 6 (“As contractors of Tesla, both IOS and IM are members of
the ‘Company Group’ as defined in the MSA’s.”). Whether International is a member of the
“Company Group” and, therefore, a beneficiary of this indemnity provision, is immaterial to
resolution of the pending motions for summary judgment.
11
R. Doc. No. 1-3, at 10 (emphasis omitted).
12
R. Doc. No. 66-7, at 5-7 (citing R. Doc. No. 1-3, at 1, 2, 12).
4
emphasize that the defense and indemnity provisions apply “regardless of cause including who may
be at fault or otherwise responsible under any contract, statute, rule, or theory of law, and including
without limitation, the sole, joint, or concurrent negligence of any indemnitee, whether active or
passive, [and] strict liability (including unseaworthiness) . . . .”13
LAW AND ANALYSIS
A.
Standard of Law
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. See Fed. R. Civ. P. 56. “[A] party seeking summary judgment always bears the initial
responsibility of informing the district court of the basis for its motion and identifying those portions
of [the record] which 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. Id.; 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, the
nonmoving 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,’ by ‘unsubstantiated assertions,’ or by only a ‘scintilla’
of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (citations omitted).
13
R. Doc. No. 1-3, at 8.
5
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 drawn in [the nonmoving party’s]
favor.” Id. at 255; see also Hunt v. Cromartie, 526 U.S. 541, 552 (1999).
B.
Discussion
The dispositive question is simple: Do the claims for damages brought by Shell against Tesla
and International constitute claims “arising out of or related in any way to the operation of any vessel
owned, operated, leased and/or chartered by [Sea Eagle] to perform work under this agreement”?14
Because the incident and the resulting claims arose out of the operation of the M/V
INTERNATIONAL THUNDER which was towing the sonar towfish, Integrity contends that such
claims self-evidently did not arise out of the operation of the F/V LADY JOANNA. International
and Tesla contend that the MSA indemnity provision should be read broadly such that the M/V
DEEPWATER NAUTILUS incident “arose out of” the operation of the F/V LADY JOANNA
because Tesla could not have conducted the sonar survey from the M/V INTERNATIONAL
THUNDER without the M/V LADY JOANNA as the chase vehicle.
The issue before this Court relates to its interpretation of a maritime contract in light of
undisputed facts. The Court can, therefore, resolve this issue through motions for summary
judgment. See, e.g., Corbitt v. Diamond M. Drilling Co., 654 F.2d 329 (5th Cir. 1981) (affirming
grant of summary judgment on the basis that “as a matter of law, the indemnity clause” in a maritime
14
R. Doc. No. 1-3, at 10.
6
contract did not apply).
The parties agree that interpretation of the Tesla-Sea Eagle MSA is governed by federal
maritime law.15 See Corbitt, 654 F.2d at 332 (“The interpretation of an indemnity clause in a
maritime contract is ordinarily governed by federal maritime law rather than by state law.”).
“Express contractual indemnity agreements generally are enforceable under maritime law” and are
governed by the “usual rules of contractual interpretation.” Hardy v. Gulf Oil Corp., 949 F.2d 826,
834 (5th Cir. 1992). “A maritime contract containing an indemnity agreement should be read as a
whole and its words given their plain meaning unless the provision is ambiguous.” Id. (citation and
alteration omitted).
“A contract of indemnity should be construed to cover all losses, damages, or liabilities
which reasonably appear to have been within the contemplation of the parties, but it should not be
read to impose liability for those losses or liabilities which are neither expressly within its terms nor
of such a character that it can be reasonably inferred that the parties intended to include them within
the indemnity coverage.” Corbitt, 654 F.2d at 333. Accordingly, the Fifth Circuit has “refused to
extend the reach of an indemnity provision beyond the intent of the parties to the agreement where
the undertaking urged would create ‘an unusual and surprising obligation.’” Marathon Pipe Line Co.
v. M/V Sea Level II, 806 F.2d 585, 591 (5th Cir. 1986) (quoting Corbitt, 654 F.2d at 333)).
The parties rely primarily on two Fifth Circuit opinions. On the one hand, International and
Tesla rely heavily on Fontenot v. Mesa Petroleum Co., in which the Fifth Circuit noted that it has
“broadly construed language identical or similar to . . . ‘arising in connection herewith’” as used in
indemnity provisions in maritime contracts. See 791 F.2d 1207, 1214 (5th Cir. 1986). On the other
15
R. Doc. No. 66-7, at 8; R. Doc. No. 85-1, at 5; R. Doc. No. 87, at 9.
7
hand, Integrity and Sea Eagle rely on Marathon Pipe Line, in which the Fifth Circuit held that the
phrase “occurring in connection with, arising out of, or in any wise incident or related to” contracted
services, “while broad, cannot be read in a vacuum to apply to any situation for which a colorable
argument could be made” that a claim was related to the contracted services. See 806 F.2d at 589,
591.16
The Court also notes the Fifth Circuit’s holding in Smith v. Tenneco Oil Co., in which a
seaman was injured while being lowered by a crane from an oil platform owned by Tenneco to a
vessel chartered by Tenneco from John E. Graham & Sons (“Graham”). See 803 F.2d 1386, 1387-88
(5th Cir. 1986). The time-charter agreement obligated Graham to indemnify Tenneco for “any claim
that ‘arises out of or is incident to performance’ of the charter agreement.” Id. at 1388 (emphasis
added). The Fifth Circuit found that “performance of the charter in the present case involves
16
In Marathon Pipe Line, TETCO contracted with Sea-Con to perform construction work in
the vicinity of a fixed oil platform in the Gulf of Mexico, and TETCO separately contracted with
Oceanonics to locate and mark submerged natural gas pipelines in the vicinity of the fixed platform.
See 806 F.2d at 587. Oceanonics agreed to indemnify TETCO and its contractors and subcontractors
from claims “occurring in connection with, arising out of, or in any wise incident or related to”
Oceanonics’ performance of its contract. Id. at 590-91. After Oceanonics marked the submerged
pipeline, Sea Level (a Sea-Con subcontractor) anchored the M/V SEA LEVEL II and damaged a
pipeline. See id. at 587-88.
Litigation ensued and Sea Level claimed indemnification from Oceanonics pursuant to the
TETCO/Oceanonics contract, contending “that the damage to Marathon’s pipeline occurred in
connection with, arose out of, or was related or incident to services performed by Oceanonics under
its contract with TETCO.” Id. at 591. The district court disagreed and the Fifth Circuit affirmed,
rejecting an expansive reading of the indemnity provision and concluding that “[Sea Level’s] view
of the contract . . . would have us read the ‘occurring in connection with’ language to cover a
limitless number of unforeseeable casualties that might have occurred during the pendency of the
construction work on TETCO’s pipeline.” Id. Accordingly, the Fifth Circuit “declined to
characterize” the property damage as arising out of Oceanonics’ performance of its contract with
Tetco “in the absence of any indication that TETCO sought and Oceanonics agreed to such an
unusual undertaking.” Id. Notably, the Fifth Circuit expressly declined to Fontenot’s broad reading
of “occurring in connection with” to the facts of Marathon Pipe Line. See id. at 591.
8
possession, navigation, management and operation of the vessel” and perhaps “other activities, [but]
it does not involve those aspects of operation of the crane on the drilling platform which are
independent of the operation of the” vessel. Id. at 1388. Accordingly, the indemnity provision was
not triggered because although the injured seaman was being lowered onto the vessel, as a matter
of law his injury was “not directly or indirectly connected with the operation of the vessel.” Id. at
1388-89. This was the case even though indemnification was owed regardless of fault because “the
specific inclusion of third-party fault does not broaden the basic coverage of the indemnity
agreement to events that do not arise out of or are not incident to the performance of the charter
agreement.” Id. at 1389.17
With Fontenot, Marathon Pipe Line, and Tenneco Oil as guidance, the Court must construe
the MSA “to cover all losses, damages, or liabilities which reasonably appear to have been within
17
Tenneco Oil relied on the Fifth Circuit’s earlier opinion in Lanasse v. Travelers Insurance
Co., which likewise found that an accident arising out of a platform crane did not trigger indemnity
for claims arising out of the operation of the vessel from which cargo was being removed. 450 F.2d
580, 583 (5th Cir. 1971) (“As broad as those terms are to comprehend injuries caused by the
operation of the vessel in a practical sense, they do not comprehend an occurrence in which the
vessel’s sole contribution is to be there as the carrier from which the cargo is being removed.”).
Tesla and International cites several cases which distinguished Lanasse on the basis of
different facts and different contractual indemnity language. R. Doc. No. 116-1, at 6-8; R. Doc. No.
121-1, at 19. In particular, they cite Gaspard v. Offshore Crane & Equipment, in which the Fifth
Circuit held that the vessel charterer had expressly contracted around the holding in Lanasse by
going “out of its way to include ‘loading or unloading’ in the indemnification agreement.” See 106
F.3d 1232, 1236 (5th Cir. 1997). But Gaspard is inapposite to these facts and this contractual
language; although the MSAs in this case do expressly include indemnity for “claims arising out of
ingress, egress, loading and unloading of personnel or cargo,” R. Doc. No. 1-3, at 8, Shell’s claims
in no way arose out of “ingress, egress, loading and unloading of personnel or cargo.” International
and Tesla do not cite any other language in the MSAs clearly expressing an intent that Sea Eagle (or
Integrity) indemnify them for the claims asserted by Shell based on the M/V DEEPWATER
NAUTILUS incident.
The remaining cases cited by Tesla are similarly distinguishable based on the different
underlying facts and indemnity language at issue. See Hellaire v. Mobil Oil Co., 709 F.2d 1031 (5th
Cir. 1983); Lefort v. C&E Boat Rental, 795 So. 2d 359 (La. App. 1 Cir. 2001).
9
the contemplation of the parties,” but not “ to impose liability for those losses or liabilities which
are neither expressly within its terms nor of such a character that it can be reasonably inferred that
the parties intended to include them within the indemnity coverage.” Corbitt, 654 F.2d at 333. The
Court should not extend “the reach of an indemnity provision beyond the intent of the parties to the
agreement where the undertaking urged would create ‘an unusual and surprising obligation.’”
Marathon Pipe Line, 806 F.2d at 591 (quoting Corbitt, 654 F.2d at 333).
Having reviewed the briefing, the record, and the applicable law, the Court finds as a matter
of law that Integrity’s and Sea Eagle’s application of the language of the MSA to the facts of this
case is correct and that neither owes defense or indemnity to Tesla or International for the M/V
DEEPWATER NAUTILUS incident. The MSA is a contract for the F/V LADY JOANNA to operate
as a chase vessel, navigating above Tesla’s sonar towfish while following the M/V
INTERNATIONAL THUNDER. The plain language of the MSA obligates Sea Eagle to indemnify
Tesla for “losses arising out of the operation of” the F/V LADY JOANNA. The M/V DEEPWATER
NAUTILUS incident did not “arise out of the operation” of the F/V LADY JOANNA in anything
but the most attenuated sense; the F/V LADY JOANNA was simply there as the chase vessel staying
above the sonar towfish as it was towed by the M/V INTERNATIONAL THUNDER in the course
of Tesla’s sonar operation.18 Accordingly, pursuant to the only reasonable reading of the plain
18
Attempting to establish a connection to the operation of the F/V LADY JOANNA,
International and Tesla mention that the captain of the F/V LADY JOANNA noticed the proximity
of the M/V INTERNATIONAL THUNDER to the M/V DEEPWATER NAUTILUS and alerted
Tesla personnel. R. Doc. No. 85-1, at 5-6. R. Doc. No. 87, at 12. But neither International nor Tesla
articulate how this act was a contractual obligation, as opposed to a gratuitous action, of Sea Eagle
pursuant to the MSA, or how merely witnessing the M/V DEEPWATER NAUTILUS incident about
to occur made the incident “arise out of” the operation of the F/V LADY JOANNA. See Marathon
Pipe Line, 806 F.2d at 590-91.
10
language of the MSA and on these undisputed facts, Sea Eagle does not owe indemnity to
International and Tesla for Shell’s damages. The Court rejects International’s and Tesla’s arguments
to the contrary.
First, to hold that the M/V DEEPWATER NAUTILUS incident “arose out of” the operation
of the F/V LADY JOANNA would “extend the reach of [the] indemnity provision beyond the intent
of the parties to the agreement” and would “create ‘an unusual and surprising obligation.’” Marathon
Pipe Line Co., 806 F.2d at 591 (quoting Corbitt, 654 F.2d at 333). Sea Eagle contracted to provide
a chase vessel to perform one role in the broader sonar operation; it would be “an unusual and
surprising obligation” if Sea Eagle thereby agreed to indemnify Tesla for every possible third-party
claim resulting from other parts of the sonar survey operation which Sea Eagle had not contracted
to perform. See id. at 591.
Second, in this particular case the Court declines to find Fontenot to be controlling or to
require an expansive reading of “arising out of” as International and Tesla contend.19 Fontenot and
its predecessors addressed personal injury claims and a specific type of reciprocal indemnity
agreement intended “to divide the responsibility for personal injury/death among the many
employers and contractors according to the identity of the injured employee rather than according
to which party’s fault or negligence caused the injury.” 791 F.2d at 1216. Those concerns are absent
here. Rather, Marathon Pipe Line and Tenneco involved more analogous provisions for indemnity
based on claims arising out of the contracted services of a vessel, and both of those cases expressly
declined to apply Fontenot and instead imposed reasonable limits on what damages “arise out of”
the performance of a contract. See Marathon Pipe Line, 806 F.2d at 591; Tenneco Oil, 803 F.2d at
19
See R. Doc. No. 85-1, at 5; R. Doc. No. 87, at 9-10.
11
1389. In this particular case the Court declines to rely on Fontenot as controlling the interpretation
of “arising out of.”20
Third, the M/V DEEPWATER NAUTILUS incident is not “related to” the operation of the
F/V LADY JOANNA merely because the F/V LADY JOANNA was “necessary” or “integral” to
the entire sonar survey operation in the sense that Tesla could not have conducted the survey but for
the presence of a chase vessel.21 Marathon Pipe Line and Tenneco Oil demonstrate why such
arguments must fail. In Marathon Pipe Line, the pipeline-marking vessel was an “integral” part of
TETCO’s construction project in the vicinity of underwater pipelines. Likewise, in Tenneco Oil,
Tenneco self-evidently could not have lowered a seaman from its platform onto the chartered vessel
“but for” the presence of that vessel. Nonetheless, in both cases the Fifth Circuit rejected the
conclusion that the accidents “arose out of” the operation of the respective vessels. The tenuous
causal connection urged by International and Tesla in this matter is at best the same type of merely
“colorable argument” that does not suffice. See Marathon Pipe Line. 806 F.2d at 591.
Fourth, International and Tesla appear to suggest that the MSA should be read to establish
indemnification because the MSA expressly obligates Sea Eagle to indemnify Tesla for Tesla’s own
fault.22 But as the Fifth Circuit held in Tenneco Oil, “the specific inclusion of third-party fault does
not broaden the basic coverage of the indemnity agreement to events that do not arise out of or are
not incident to the performance of the charter agreement.” 803 F.2d at 1389. Put another way,
20
The Court does not find two unpublished lower court opinions cited by International to be
apposite. In re Horizon Vessels, Inc., No. 03-3280, 2005 WL 6935854 (S.D. Tex. Nov. 18, 2005)
and Tinoco v. Marine Systems, Inc., No. 07-6845, 2009 WL 1405029 (E.D. La. May 19, 2009), both
addressed different relationships between facts and indemnity provisions in contracts for different
types of services, and neither is persuasive with respect to the issues presented in this case.
21
See R. Doc. No. 85-1, at 5-6; R. Doc. No. 87, at 4-7, 14.
22
See R. Doc. No. 85-1, at 8. R. Doc. No. 87, at 14.
12
although Sea Eagle agreed to indemnify for certain claims regardless of fault (except for gross
negligence or willful misconduct), such indemnification is still limited to claims “arising out of or
related to” the operation of the F/V LADY JOANNA.
In sum, the Court concludes that Shell’s claims for damages based on the M/V
DEEPWATER NAUTILUS incident did not arise out of, and are not related to, the operation of the
F/V LADY JOANNA. As a result, pursuant to the plain language of the Tesla-Sea Eagle MSA, Sea
Eagle does not owe Tesla a defense or indemnity for those claims.23
This conclusion necessarily requires summary judgment in favor of Sea Eagle and Integrity
and against Tesla and International as to all possible permutations. With respect to claims against
Integrity, because Shell’s claims did not arise out of and are not related to the operation of the F/V
LADY JOANNA, a fortiori they did not arise out of and are not related to the operation of the F/V
INTEGRITY, a vessel that was not even on the scene. Consequently, the Integrity-Sea Eagle MSA
does not give rise to indemnification.
With respect to International, the Court concludes that neither Sea Eagle nor Integrity owes
indemnity to the “Company Group.” Accordingly, assuming for the sake of argument that
International is included in the definition of “Company Group,” it is not entitled to indemnity
23
Tesla cursorily asserts that “the duty to defend is broader than the indemnity obligation.”
R. Doc. No. 85-1, at 8-9. The single district court case cited by Tesla held that the allegations in a
complaint fell “within the indemnity and defense language of the time charter agreement,” which
obligated an indemnifying party to defend against those claims regardless of whether indemnity
would ultimately be owed. See Clement v. Marathon Oil Co., 724 F. Supp. 431, 433 (E.D. La. 1989).
Tesla’s underdeveloped argument fails because Shell’s allegations against Tesla and International
(which Tesla omits) did not mention the M/V LADY JOANNA or otherwise misstate the undisputed
facts set forth above in any fashion that could possibly suggest the applicability of the defense and
indemnity provision in the Tesla-Sea Eagle MSA. See Shell v. Tesla, No. 13-6278, R. Doc. No. 1.
13
pursuant to either MSA for the same reasons that Tesla is not.24 Consequently, all claims by
International and Tesla against Integrity and Sea Eagle fail as a matter of law.
C.
Corollary Effects of the Court’s Holding
As Integrity and Sea Eagle point out, the claims by International and Tesla for insurance
coverage are self-evidently predicated on insurance Sea Eagle was required to procure pursuant to
the MSA “to protect [Sea Eagle] and [Tesla] from third party claims arising out of or connected with
the performance of Services” under the MSA.25 Because, for the reasons set forth above, there were
no claims asserted against Tesla “arising out of or connected with [Sea Eagle’s] performance of
Services” under the MSA, claims based on the dependent insurance obligations must fail as well.26
Likewise, the claims asserted by International in its proposed amended complaint are futile.27 See,
e.g., Adams Family Trust v. John Hancock Life Ins. Co., 424 F. App’x 377 (5th Cir. 2011) (affirming
24
Tesla argues that it “is owed both a defense and indemnity from Sea Eagle regardless of
whether or not International, as a member of the ‘Company Group,’ is so entitled.” R. Doc. No. 1161, at 10. The Court disagrees. Such argument finds no basis in the language of the MSAs which state
that indemnity is available, if at all, to the “Company Group” in general. Furthermore, Tesla’s
characterization of Marathon Pipe Line as depending on whether it was the customer or another
subcontractor which sought indemnity finds no support in that opinion which did not address
indemnity sought by the prime contractor at all. See 806 F.2d at 587-88.
25
R. Doc. No. 66-7, at 12; see also R. Doc. No. 1-3, at 12 (requiring Sea Eagle to “procure
and maintain . . . sufficient insurance . . . to protect Contractor and Company from third party claims
arising out of or connect with the performance of Services hereunder”) (emphasis added); R. Doc.
No. 108, at 4 (“Integrity and Sea Eagle were also obligated under their MSAs to obtain and provide
insurance to Tesla to cover their contractual liability and indemnity obligations . . . .”); R. Doc. No.
109, at 4 (“Section 9(g) of the MSA’s requires Integrity and Sea Eagle to support their indemnity
obligations to members of the ‘Company Group’ by procuring certain policies of insurance.”).
26
Integrity squarely asserted that “the contractual insurance claims of Tesla and International
against Integrity/Sea Eagle are unavailing when read and interpreted in context.” R. Doc. No. 66-7,
at 12. Neither International nor Tesla responded to Integrity’s arguments regarding the insurance
provisions in the MSA.
27
International filed a motion for leave to file an amended complaint asserting claims against
the insurers, which motion was denied by the U.S. Magistrate Judge. R. Doc. No. 55. International
appealed that order. R. Doc. No. 57.
14
denial of motion for leave to amend as futile because “amending the complaint would not have
enabled the Trust to defeat summary judgment”). Accordingly, it follows that International’s appeal
of the U.S. Magistrate Judge’s denial of International’s motion for leave to amend to assert claims
against the insurers should be dismissed as moot and all claims by International and Tesla against
the insurers should be dismissed with prejudice.
CONCLUSION
Accordingly, for the foregoing reasons,
IT IS ORDERED that Integrity’s and Sea Eagle’s motions for summary judgment are
GRANTED.
IT IS FURTHER ORDERED that International’s and Tesla’s cross-motions for summary
judgment are DENIED.
IT IS FURTHER ORDERED that International’s motion28 for leave to file a reply is
GRANTED.
IT IS FURTHER ORDERED that International’s appeal of the U.S. Magistrate Judge’s
order is DISMISSED AS MOOT.
IT IS FURTHER ORDERED that all claims asserted by Tesla and International against all
other parties in the above-captioned matter are DISMISSED WITH PREJUDICE.
New Orleans, Louisiana, April 11, 2016.
________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE
28
R. Doc. No. 128.
15
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