International Marine, LLC et al v. Integrity Fisheries, Inc.

Filing 194

ORDER AND REASONS: ORDERED that OneBeacon's 168 and 169 motions for summary judgment with respect to coverage for Tesla and International are GRANTED and that all claims against OneBeacon set forth by Tesla and International in the capti oned matters are DISMISSED WITH PREJUDICE. FURTHER ORDERED that Tesla's 170 motion for summary judgment with respect to coverage by OneBeacon is DENIED. FURTHER ORDERED that NYMAGIC's 185 and 186 motions for summary judgment with resp ect to coverage for Tesla and International are GRANTED and that all claims against NYMAGIC set forth by Tesla and International in the captioned matters are DISMISSED WITH PREJUDICE. FURTHER ORDERED that Tesla's 184 motion for summary judgment with respect to coverage by NYMAGIC is DENIED. Signed by Judge Lance M Africk on 2/28/2018. (Reference: BOTH CASES)(blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
INTERNATIONAL MARINE, LLC ET AL.

CIVIL ACTION

VERSUS

No. 15-1446
C/W No. 17-8158

INTEGRITY FISHERIES, INC.

SECTION I
REF: BOTH CASES

ORDER & REASONS
Before the Court are cross-motions for summary judgment filed by plaintiff
Tesla Offshore, LLC (“Tesla”) and defendants Atlantic Specialty Insurance
Company/OneBeacon Insurance Company (“OneBeacon”) and New York Marine &
General Insurance Company (“NYMAGIC”). Despite insisting that they are entitled
to coverage from OneBeacon and NYMAGIC, plaintiffs International Marine, LLC
and International Offshore Services, LLC (collectively “International”) have not filed
any motions for summary judgment. For the following reasons, OneBeacon and
NYMAGIC’s motions are granted, and Tesla’s motions are denied.
I.
Summary judgment is proper when, after reviewing the pleadings, the
discovery and disclosure materials on file, and any affidavits, the court determines
that there is no genuine dispute 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 a 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, the nonmoving
party must come forward with specific facts showing that there is a genuine dispute
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). 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). “Although the substance or content of the evidence submitted to support
or dispute a fact on summary judgment must be admissible . . ., the material may be
presented in a form that would not, in itself, be admissible at trial.” Lee v. Offshore
Logistical & Transp., LLC, 859 F.3d 353, 355 (5th Cir. 2017) (quotation omitted).
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.
Anderson, 477 U.S. at 248. 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).

2

II.
Tesla was hired to conduct an archaeological survey in the Gulf of Mexico. In
order to complete the survey, Tesla required two vessels, a “tow vessel” and a “chase
vessel.” The tow vessel was to travel along the survey grid pulling a towfish attached
to a long cable near the bottom of the ocean as it emitted sonar signals. The chase
vessel was to operate directly above the towfish and receive its sonar transmissions.
Tesla contracted with International to provide and operate the tow vessel, the
M/V INTERNATIONAL THUNDER (“THUNDER”). For the chase vessel, Tesla
initially contracted with Integrity Fisheries, Inc. (“Integrity”). However, after its
vessel, the F/V INTEGRITY (“INTEGRITY”), developed mechanical problems,
Integrity substituted a vessel owned and operated by Sea Eagle Fisheries, Inc. (“Sea
Eagle”), the M/V LADY JOANNA (“LADY JOANNA”).1
Tesla installed its own equipment onto the THUNDER and the LADY
JOANNA and assigned Tesla personnel to work onboard the vessels.2 With respect
to the chase vessel, the crew of the LADY JOANNA was responsible for driving the
vessel and staying within reach of the towfish. Tesla personnel operated Tesla’s
towfish tracking equipment.
On November 2, 2012, with the THUNDER towing the towfish and the LADY
JOANNA operating above it, the cable pulling the towfish allided with a mooring line
of the M/V NAUTILUS (“NAUTILUS”), a mobile offshore drilling unit in use by Shell

Integrity and Sea Eagle are sister companies under common leadership. See Int’l
Marine, LLC v. Integrity Fisheries, Inc., 860 F.3d 754, 757 n.2 (5th Cir. 2017).
2 R. Doc. No. 170-1, at 5.
1

3

Offshore, Inc. (“Shell”). Following the allision, Shell sued Tesla and International for
negligence.3 A jury awarded $9,041,552 in damages, allocating 75 percent fault to
Tesla and 25 percent fault to International.4
In the present lawsuit, Tesla and International claimed that they were entitled
to indemnity from Integrity and Sea Eagle, arguing that the NAUTILUS allision
related to the operation of the LADY JOANNA. Tesla and International also claimed
that they were entitled to insurance coverage for liability arising from the allision,
because they were insured under the insurance policies that Integrity and Sea Eagle
procured from OneBeacon and NYMAGIC.5

See Shell Offshore, Inc. v. Tesla Offshore, LLC, No. 13-6278, R. Doc. No. 1 (E.D. La.
Oct. 28, 2013).
4 Id. at R. Doc. No. 295-4.
5 As the Fifth Circuit observed on appeal,
3

This indemnity and insurance lawsuit took a circuitous route . .
. . In response to Shell’s lawsuit, Tesla and International
impleaded Sea Eagle for indemnity. Upon discovering that
Integrity may have had an ownership interest in the [LADY]
JOANNA, International subsequently filed a separate
indemnity lawsuit against Integrity—which was the initiating
suit for the present action . . . . The district court concluded that
the Sea Eagle indemnity claim in Shell v. Tesla was related to
the International lawsuit, and thus decided to consolidate the
Sea Eagle indemnity claim with the International lawsuit. Shell
v. Tesla continued as a trial on International and Tesla’s fault
for the allision with the NAUTILUS, while the International
lawsuit was used to settle any indemnity and insurance claims.
Thus, the district court dismissed the claims against Sea Eagle
from Shell v. Tesla and permitted them to be reasserted here,
which International did via a second amended complaint and
Tesla did via a third-party demand. Tesla then impleaded Sea
Eagle’s and Integrity’s insurers, One Beacon and NY MAGIC.
Int’l Marine, 860 F.3d at 758 n.4.
4

Considering the parties’ cross-motions for summary judgment, this Court
determined that Tesla and International were not entitled to indemnity from
Integrity or Sea Eagle.6 In reaching its conclusion, the Court looked to language in
the underlying contracts, which limited Integrity and Sea Eagle’s indemnity
obligations to claims “arising out of or related in any way to the operation of any
vessel owned, operated, leased, and/or chartered by [Integrity or Sea Eagle].”7
The Court reasoned that “the [] NAUTILUS incident did not ‘arise out of the
operation’ of the [] LADY JOANNA in anything but the most attenuated sense; the []
LADY JOANNA was simply there as the chase vessel staying above the sonar towfish
as it was towed by the [] THUNDER in the course of Tesla’s sonar operation.” 8
Therefore, “Shell’s claims for damages based on the [] NAUTILUS incident did not
arise out of, and are not related to, the operation of the [] LADY JOANNA.”9
Consequently, the Court concluded, Integrity and Sea Eagle owed no indemnity to
Tesla or International for liability arising from Shell’s claims.10 Additionally, the
Court held that, because there was no indemnity obligation, Tesla and International’s
claims regarding insurance coverage also failed.11
appealed.12

R. Doc. No. 130.
Id. at 4.
8 Id. at 10.
9 Id. at 13.
10 Id.
11 Id. at 14–15.
12 R. Doc. No. 133.
6
7

5

Tesla and International

On appeal, the Fifth Circuit affirmed the Court’s decision as to the indemnity
claims but reversed as to the insurance claims. Regarding the indemnity claims, the
Fifth Circuit agreed that the NAUTILUS incident did not arise out of, and was not
related to, the operation of the LADY JOANNA and that neither Integrity nor Sea
Eagle owed indemnity to Tesla or International.
As the panel stated,
the summary judgment evidence supports only one finding:
the operation of the [LADY] JOANNA was independent of
the negligent conduct found to have caused damage to the
NAUTILUS. . . . The principal activity of the contract
between Tesla and Integrity/Sea Eagle was for
Integrity/Sea Eagle to operate the [LADY] JOANNA as a
chase vessel—i.e., to navigate the [LADY] JOANNA so that
it remained above the towfish. The MSAs are clear that
the NAUTILUS’s damage must relate to or arise out of the
operation of the [LADY] JOANNA before an indemnity
obligation arises. Nothing about the [LADY] JOANNA’s
successful operation as a chase vessel, however, related to
Tesla’s decisions to redeploy the towfish near the
NAUTILUS and take the route back toward the grid that
caused an allision with a submerged mooring line. The
undisputed evidence shows that Tesla and International
were solely responsible for deploying the towfish,
positioning the towfish, releasing the appropriate amount
of towline dragging the towfish, and choosing the direction
in which the towfish would travel. The [LADY] JOANNA’s
job was simply to follow the THUNDER and stay above the
towfish, wherever it may go, which it performed
successfully. . . . The [LADY] JOANNA’s involvement in
such an effort—[the sonar survey]—did not cause the
accident and did not contribute to [Tesla’s and
International’s] decision to dr[ive] the [towfish] across [the
NAUTILUS’s mooring line]. . . . Although the [LADY]
JOANNA was still in operation carrying out the joint sonar
survey and in position over the towfish at the time of the
allision, its indisputably successful operation had no
bearing on the decision to redeploy the towfish near the
NAUTILUS and cross the NAUTILUS’s mooring line.
6

Because the summary judgment evidence supports only
the conclusion that the [LADY] JOANNA’s operation made
no contribution to the negligent act causing the
NAUTILUS’s damages, indemnity is not owed under the
MSAs.
Int’l Marine, 860 F.3d at 759–60.
With respect to the insurance claims, the Fifth Circuit noted that “[a]lthough
similarities in the contractual obligations for indemnity and insurance under the
MSAs may suggest that indemnity and insurance claims rise and fall together in this
litigation, such a parallel is not always the case.” Id. at 761. “The scope of insurance
coverage,” the panel observed, “is determined by the language of the insurance policy
obtained, which may yield a different result than the indemnity provision in the
original contract.” Id.
The relevant insurance policies, however, were not in the record at the time
the Court granted summary judgment. Hence, the Fifth Circuit vacated the dismissal
of the insurance claims and remanded the claims for further consideration, noting
that “[s]ummary judgment cannot be granted on the insurance claims without first
reviewing the insurance policies and determining their scope.” Id. at 762.
Accordingly, the only question now before the Court is whether Tesla and
International are entitled to insurance coverage under the policies issued to Integrity
and Sea Eagle by OneBeacon and NYMAGIC.13 The Court considers each insurer’s
policy and the scope of its coverage in turn.

International previously moved to amend its complaint to include claims against
OneBeacon and NYMAGIC. However, because the Court dismissed the insurance
claims on summary judgment, it denied leave to amend as futile. Upon reversing the
13

7

III.
“[T]he interpretation of a contract of marine insurance is—in the absence of a
specific and controlling federal rule—to be determined by reference to appropriate
state law.” Ingersoll-Rand Fin. Corp. v. Employers Ins. of Wausau, 771 F.2d 910, 912
(5th Cir. 1985). Under Louisiana law, “[a]n insurance policy is a contract between
the parties and should be construed by using the general rules of interpretation of
contracts set forth in the Civil Code.” Bernard v. Ellis, 111 So. 3d 995, 1002 (La.
2012). According to the Civil Code, “[i]nterpretation of a contract is the determination
of the common intent of the parties.” La. Civ. Code art. 2045. “When the words of a
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.
Additionally, “[e]ach provision in a contract must be interpreted in light of the other
provisions so that each is given the meaning suggested by the contract as a whole.”
La. Civ. Code art. 2050.
With respect to insurance contracts, “[t]he parties’ intent, as reflected by the
words of the policy, determine the extent of coverage.” Elliott v. Cont’l Cas. Co., 949
So. 2d 1247, 1254 (La. 2007).

Further, “[a]n insurance policy should not be

interpreted in an unreasonable or a strained manner so as to enlarge or to restrict its

dismissal of the insurance claims, the Fifth Circuit instructed the Court to reconsider
International’s motion to amend. Int’l Marine, 860 F.3d at 757 n.1. The Court
subsequently granted International’s motion, and International filed an amended
complaint naming OneBeacon and NYMAGIC as defendants. Additionally, the Court
instructed Tesla to file a new civil action concerning its insurance claims. Tesla filed
a new complaint asserting claims against OneBeacon and NYMAGIC. That action
was then consolidated with the instant case.
8

provisions beyond what is reasonably contemplated by its terms or so as to achieve
an absurd conclusion.” Bernard, 111 So. 2d at 1002. “If the policy wording at issue .
. . unambiguously expresses the parties’ intent, the insurance contract must be
enforced as written.” Cadwallader v. Allstate Ins. Co., 848 So. 2d 577, 580 (La. 2003).
A.
The relevant insurance obligations are set out in the two master services
agreements (“MSAs”) that Tesla entered into with Integrity and Sea Eagle.14 The
identical MSAs read, in relevant part:
INSURANCE
a.
Except as otherwise provided herein, Contractor
[Integrity/Sea Eagle] shall, at its sole cost and expense,
procure and maintain, in force at all times during the term
hereof sufficient insurance or Company [Tesla] approved
self-insurance (i) as may be required by law, and (ii) to
protect Contractor [Integrity/Sea Eagle] and Company
[Tesla] from third party claims arising out of or connected
with the performance of Service hereunder. All such
insurance shall be written with companies satisfactory to
Company [Tesla] and shall be of the types and in the
minimum amounts specified in Exhibit “A”.
b.
All insurance policies of Contractor [Integrity/Sea
Eagle] related to Services shall, to the extent of the risks
and liabilities assumed by Contractor [Integrity/Sea Eagle]
in this Agreement, (i) provide a minimum of thirty (30)
days notice to Company [Tesla] prior to cancellation or
material change, (ii) except for Workers’ Compensation
coverage, name Company Group [including Tesla and
International] as an additional assured; (iii) contain a
waiver of subrogation as to Company Group [including
Tesla and International]; and (iv) be considered primary
insurance in relation to any other insurance providing

14

R. Doc. No. 168-5 ¶ 11; R. Doc. No. 168-6 ¶ 11.
9

coverage to any member of Company Group [including
Tesla and International].
B.
i.
Pursuant to its obligations under the MSA, Integrity obtained from OneBeacon
a marine comprehensive liability (“MCL”) policy.15 Neither Tesla nor International
are listed as named insureds on the policy.16 Thus, Tesla and International are only
entitled to coverage under the OneBeacon policy if they qualify as additional insureds
under the policy’s terms.
Section IV of the OneBeacon policy defines “who is an insured.”17 A later
endorsement to the policy then modifies that definition. That endorsement states, in
pertinent part:

R. Doc. No. 168-7.
Integrity is the only named insured listed on the policy. However, in a letter from
June 2015, OneBeacon clarified that it would also treat Sea Eagle as an insured
under the policy. See R. Doc. No. 170-5, at 38–39. The Court, therefore, considers
both Integrity and Sea Eagle to be insured by the OneBeacon policy.
17 R. Doc. No. 168-7, at 14–16.
15
16

10

MARINE COMPREHENSIVE LIABILITY
THIS ENDORSEMENT CHANGES THE POLICY.
PLEASE READ IT CAREFULLY.
ADDITIONAL
INSURED
AND
WAIVER
SUBROGATION ENDORSEMENT (BLANKET)

OF

...
It is agreed that:
1. Section IV. of the policy (Who is an Insured) is amended
to include any person or organization that you are
obligated by an “insured contract” to include as Additional
Insureds, but only with respect to liability arising out of
“your work.”18
The policy makes clear that “the words ‘you’ and ‘your’ refer to the Named
Insured shown in the Declarations, and any other person or organization qualifying
as a Named Insured under this policy.”19 Further, the policy provides:
“Your work” means:
a.

Work or operations performed by you or on your
behalf; and

b.

Materials, parts or equipment furnished
connection with such work or operations.

in

“Your work” includes:
a.

Warranties or representations made at any time
with respect to the fitness, quality, durability,
performance or use of “your work”; and

b.

The providing of or failure to provide warnings or
instructions.20

Id. at 31.
R. Doc. No. 168-7, at 3.
20 Id. at 28.
18
19

11

Additionally, the policy defines “insured contract” to mean:
That part of any other written contract or written
agreement pertaining to your business . . . under which you
assume the tort liability of another party to pay for “bodily
injury” or “property damage” to a third person or
organization. Tort liability means a liability that would be
imposed by law in the absence of any contract or
agreement.21
Accordingly, for Tesla and International to be considered additional insureds,
three criteria must be met. First, Integrity or Sea Eagle must have been obligated to
include Tesla and International as additional insureds on the OneBeacon policy.
Second, any such obligation must have arisen from an insured contract—that is, a
written contract or agreement pertaining to Integrity or Sea Eagle’s business under
which Integrity or Sea Eagle assumed Tesla and International’s tort liability. Third,
any liability for which Tesla and International seek coverage as additional insureds
must have arisen out of Integrity or Sea Eagle’s work—that is, work or operations
performed by Integrity or Sea Eagle; performed on Integrity or Sea Eagle’s behalf; or
involving materials, parts, or equipment furnished in connection with such work or
operations.

21

Id. at 24–25.
12

ii.
The third of these criteria is dispositive. Even if Integrity or Sea Eagle were
bound by an insured contract to include Tesla and International as additional
insureds on the OneBeacon policy, the liability for which Tesla and International now
seek coverage—i.e., the damage to the NAUTILUS and its mooring line—did not arise
out of Integrity or Sea Eagle’s work.
As this Court explained in addressing Tesla and International’s indemnity
claims, “[t]he [NAUTILUS] incident did not ‘arise out of the operation’ of the [LADY
JOANNA] in anything but the most attenuated sense; the [LADY JOANNA] was
simply there as the chase vessel staying above the sonar towfish as it was towed by
the [THUNDER] in the course of Tesla’s sonar operation.”22 The Court also noted
that “the [NAUTILUS] incident is not ‘related to’ the operation of the [LADY
JOANNA] merely because the [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.”23 Moreover, the Court reasoned that
“because Shell’s claims did not arise out of and are not related to the operation of the
[LADY JOANNA], a fortiori they did not arise out of and are not related to the
operation of the [] INTEGRITY, a vessel that was not even on the scene” at the time
of the allision.24 Therefore, the Court determined “that Shell’s claims for damages

R. Doc. No. 130, at 10.
Id. at 12.
24 Id. at 13.
22
23

13

based on the [NAUTILUS] incident did not arise out of, and are not related to, the
operation of the [LADY JOANNA].”25
The Fifth Circuit reached the same conclusion.

As it stated, “Tesla and

International’s negligence, as well as the resulting damage to the NAUTILUS, was
independent of the operation of the [LADY] JOANNA.” Int’l Marine, 860 F.3d at 760.
The panel elaborated further:
Nothing about the [LADY] JOANNA’s successful operation
as a chase vessel . . . related to Tesla’s decisions to redeploy
the towfish near the NAUTILUS and take the route back
toward the grid that caused an allision with a submerged
mooring line. The undisputed evidence shows that Tesla
and International were solely responsible for deploying the
towfish, positioning the towfish, releasing the appropriate
amount of towline dragging the towfish, and choosing the
direction in which the towfish would travel. The [LADY]
JOANNA’s job was simply to follow the THUNDER and
stay above the towfish, wherever it may go, which it
performed successfully. Tesla’s equipment would then
relay the position of the towfish. The [LADY] JOANNA’s
involvement in such an effort—the sonar survey—did not
cause the accident and did not contribute to Tesla’s and
International’s decision to drive the towfish across the
NAUTILUS’s mooring line . . . Although the [LADY]
JOANNA was still in operation carrying out the joint sonar
survey and in position over the towfish at the time of the
allision, its indisputably successful operation had no
bearing on the decision to redeploy the towfish near the
NAUTILUS and cross the NAUTILUS’s mooring line.
Id. (internal alterations and quotations omitted). In short, “the [LADY] JOANNA’s
operation made no contribution to the negligent act causing the NAUTILUS’s
damages.” Id. at 761.

25

Id.
14

Put plainly, these decisions definitively establish that the LADY JOANNA had
nothing to do with the NAUTILUS incident. Indeed, its operation was “completely
independent of [Tesla and International’s] negligent act.”
original).

See id. (emphasis in

Further, the provision and operation of the LADY JOANNA was

indisputably the only work or operations performed by Integrity or Sea Eagle. Thus,
the only work or operations performed by Integrity or Sea Eagle had no bearing on
the allision that gave rise to Tesla and International’s liability to Shell. Necessarily,
then, Tesla and International’s liability to Shell did not arise from Integrity or Sea
Eagle’s work. Accordingly, the third criteria of the additional insured endorsement
is not met, and neither Tesla nor International qualify as additional insureds under
the terms of the OneBeacon policy.

Tesla and International are, therefore, not

entitled to coverage by OneBeacon.
Despite the seemingly straightforward nature of this conclusion, Tesla and
International nevertheless insist that they are owed coverage. Emphasizing that the
definition of “your work” found in the OneBeacon policy includes work done “on
[Integrity or Sea Eagle’s] behalf,” Tesla states, in conclusory fashion: “Given that the
LADY JOANNA was chartered to Tesla and performing services for Tesla pursuant
to the MSA, Tesla is an ‘additional insured’ under the blanket ‘additional insured’
endorsement in the MCL Policy.”26 What Tesla fails to explain, however, is how any
work related to the NAUTILUS incident was being done on Integrity or Sea Eagle’s

26

R. Doc. No. 170-1, at 20.
15

behalf. By Tesla’s own admission, the LADY JOANNA was “performing services for
Tesla.”
Put another way, the LADY JOANNA was doing work on behalf of Tesla, not
the other way around.

As OneBeacon notes, “[n]o one was performing work or

operations on behalf of Sea Eagle or Integrity.”27 And, as previously discussed, the
work or operations performed by Integrity or Sea Eagle did not give rise to Tesla or
International’s liability, and no materials, parts, or equipment furnished in
connection with such work or operations contributed to said liability.

Tesla’s

argument, therefore, fails.
Likewise, International’s contentions concerning the definition of “your work”
are unavailing.

First, International reminds the Court that “indemnity and

insurance obligations are wholly separate and independent.”28

“Thus[,] the

indemnity ruling does not foreclose coverage as an additional insured.”29 Tesla echoes
this argument at various points in its briefing.30
International and Tesla are correct. Indemnity and insurance obligations are
separate issues requiring distinct legal analyses.31 See, e.g., Int’l Marine, 860 F.3d at
761–62 (affirming summary judgment as to indemnity claims but reversing as to

R. Doc. No. 171, at 7.
R. Doc. No. 178, at 13.
29 Id.
30 See, e.g., R. Doc. No. 172, at 10–11.
31 The MSAs provide as much. See R. Doc. No. 170-4, at 65 (“All insurance obligations
under this Exhibit shall be independent of the indemnity obligations contained in the
contract/agreement and shall apply regardless of whether the indemnity provisions
contained in the contract/agreement are enforceable.”).
27
28

16

insurance claims); Mid-Continent Cas. Co. v. Swift Energy Co., 206 F.3d 487 (5th Cir.
2000) (interpreting insurance claims apart from indemnity claims). Accordingly, the
Fifth Circuit’s ruling with respect to the indemnity claims in this case does not
mandate an identical outcome for the insurance claims. But neither does it preclude
a congruent one.
To say that indemnity and insurance obligations are separate is not to say that
they require divergent results. The Fifth Circuit directed this Court to consider Tesla
and International’s insurance claims in light of the language found in the pertinent
insurance policies. In doing so, it noted the possibility “that Tesla and International
were added as additional insureds on a policy that provides more coverage than that
set forth in” the relevant indemnity provisions.

Int’l Marine, 860 F.3d 762. Yet it

also openly anticipated the possibility “that indemnity and insurance claims rise and
fall together in this litigation.” Id. at 761. Hence, it is entirely possible that Tesla
and International are owed neither indemnity nor insurance coverage.
Second, International argues that, because insurance policies are typically
construed more broadly than indemnity provisions, “the term ‘arising out of’ under
the [OneBeacon policy]–when read to effect rather than deny coverage–must be
interpreted here to mean” that the NAUTILUS allision arose out of the operation of
a “Tesla vessel flotilla of which the [LADY JOANNA] was an integral part.”32 The
Court is not so persuaded.

32

R. Doc. No. 178, at 13.
17

As the Court has previously observed, “the [NAUTILUS] incident is not
‘related to’ the operation of the [LADY JOANNA] merely because the [LADY
JOANNA] was ‘necessary’ or ‘integral’ to the entire sonar survey operation.”33
Moreover, both this Court and the Fifth Circuit have stated, in no uncertain terms,
that the operation of the LADY JOANNA was not connected to the NAUTILUS
incident in any significant way. “Tesla and International’s negligence, as well as the
resulting damage to the NAUTILUS, was independent of the operation of the [LADY]
JOANNA.” Id. at 760 (emphasis added). Further, Tesla and International were
“solely responsible” for the events leading up to the allision. Id. The LADY JOANNA
“did not cause the accident and did not contribute to” the decision to drive the towfish
across the mooring line.

Id.

In fact, the LADY JOANNA’s operation was

“indisputably successful” and it “made no contribution to the negligent act causing
the NAUTILUS’s damages.” Id. at 761 (emphasis added). Accordingly, Tesla and
International’s liability to Shell simply did not “arise out of” Integrity or Sea Eagle’s
work, even under the broadest reading of that term.
Third, International suggests that it is entitled to coverage because the term
“your work” is defined in the OneBeacon policy to include “[t]he providing of or failure
to provide warnings or instructions.”34 International states that “[o]ne of the central
contentions in this case has been that the potential liability of the LADY JOANNA
lay principally in the failure to warn Tesla and/or International that the vessels were

33
34

R. Doc. No. 130 at 12.
R. Doc. No. 178, at 13.
18

coming too close to the DEEPWATER NAUTILUS in time for the incident to have
been avoided.” Hence, in International’s view, its liability to Shell did arise out of
Integrity or Sea Eagle’s work—namely, Integrity and Sea Eagle’s purported failure
to provide warnings.
At the outset, the Court notes that Sea Eagle did provide a warning that the
THUNDER was problematically close to the NAUTILUS some 30 to 45 minutes
before the towfish allided with the mooring. Id. at 757. As summarized by the Fifth
Circuit,
[t]he precipitating incident for this litigation was an
allision between the towfish cable and a submerged
mooring line for the NAUTILUS. Prior to the allision, the
towfish had experienced technical problems, forcing Tesla
to reel it onto the THUNDER for repairs. The THUNDER
and the [LADY] JOANNA temporarily went off the grid
toward the south until the towfish was repaired and
redeployed, at which point the THUNDER turned north,
back toward the grid, followed by the [LADY] JOANNA.
According to International, this turn toward the north put
both vessels on a course that brought them closer to the
NAUTILUS. The [LADY] JOANNA’s captain informed
Tesla’s party chief, who was occupied with the Tesla
equipment, that the THUNDER was getting too close to the
NAUTILUS. The party chief then radioed the THUNDER
to warn of the danger, but his warning was met with
assurances that everything was okay. The party chief
testified that about thirty to forty-five minutes later the
towfish cable allided with the mooring line of the
NAUTILUS. The [LADY] JOANNA was over the towfish
and the Tesla equipment was sending sonar signals to the
THUNDER immediately prior to the allision.
Id. The panel went on to find that “the warning from the [LADY] JOANNA’s captain
to Tesla’s party chief that the THUNDER was moving too close to the NAUTILUS
was, as the district court correctly concluded, a gratuitous act that has no effect on
19

the outcome of this litigation.”35 Id. at 761. Thus, Sea Eagle’s warning—or lack
thereof—did not give rise to International’s liability.
Additionally, with respect to any duty Sea Eagle may have had to provide
warnings, the Court agrees with OneBeacon’s interpretation of the definition of “your
work.” In its reply to International’s arguments, OneBeacon states:
Clearly, “the providing of or failure to provide warning or
instructions” relates to “your work” which is “work or
operations performed by [Sea Eagle] or on [Sea Eagle’s]
behalf and materials, parts, or equipment furnished in
connection with such work or operations.” Thus, Sea Eagle
would only be required to provide warning or instructions
in relation to the operation of the LADY JOANNA—not in
relation to the operation of the THUNDER or in relation to
the sonar survey.
The Court finds this interpretation to be the most logical reading of the plain
language in the definition of “your work.”
Ultimately, then, Tesla and International have failed to show how their
liability arose from Integrity or Sea Eagle’s work. Having not fulfilled this necessary

35

In its summary judgment opinion, this Court observed:
Attempting to establish a connection to the operation of the
[] LADY JOANNA, International and Tesla mention that
the captain of the [] LADY JOANNA noticed the proximity
of the [] THUNDER to the [] NAUTILUS and alerted Tesla
personnel. 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 [] NAUTILUS incident about to
occur made the incident “arise out of” the operation of the
[] JOANNA.
20

prerequisite, they cannot be considered additional insureds under the OneBeacon
policy. Tesla and International, therefore, are not entitled to coverage.
iii.
Assuming arguendo that Tesla and International’s liability did arise from
Integrity and Sea Eagle’s work, Tesla and International still fail to meet the criteria
required to be considered an additional insured under the OneBeacon policy.
In order for Tesla and International to be additional insureds entitled to
coverage by OneBeacon, Integrity or Sea Eagle must have been obligated to include
them as additional insureds on the OneBeacon policy. Any obligation to name Tesla
and International as additional insureds would come from the MSAs, both of which
state, in pertinent part:
INSURANCE
a.
Except as otherwise provided herein, Contractor
[Integrity/Sea Eagle] shall, at its sole cost and expense,
procure and maintain, in force at all times during the term
hereof sufficient insurance . . . (ii) to protect Contractor
[Integrity/Sea Eagle] and Company [Tesla] from third
party claims arising out of or connected with the
performance of Service hereunder. All such insurance
shall be written with companies satisfactory to Company
[Tesla], and shall be of the types and in the minimum
amounts specified in Exhibit “A”.
...
b.
All insurance policies of Contractor [Integrity/Sea
Eagle] related to Services shall, to the extent of the risks
and liabilities assumed by Contractor [Integrity/Sea Eagle]
in this Agreement, . . . name Company Group [including
Tesla and International] as an additional assured . . .36
36

R. Doc. No. 168-5 ¶ 11; R. Doc. No. 168-6 ¶ 11.
21

Thus, Integrity and Sea Eagle were required to acquire insurance to protect
themselves and Tesla from claims arising out of or connected to services. As a
threshold matter, the parties dispute the meaning of “services.”
The recitals to the MSAs provide:
From time to time, Company [Tesla] desires to contract
with independent contractors for the performance of work
and/or for the provision of services, which may include the
furnishing of labor, equipment, vehicles, vessels, aircraft,
tools, instruments, materials, supplies, or other products
(collectively “Services”).37
Tesla puzzlingly insists that “the term ‘Services’ runs in favor of Tesla, not Sea
Eagle or Integrity.”38 It argues that “[t]he intent of the definition of ‘Services’ is to
establish that Tesla, not Sea Eagle or Integrity, desired ‘to contract with independent
contractors for the performance of work and/or for the provision of services.’ Tesla
was providing ‘Services’ to its client and employed the LADY JOANNA to accomplish
its ‘Services.’”39 In other words, Tesla invites the Court to look at the very contract
under which Integrity or Sea Eagle agreed to perform services for Tesla and somehow
arrive at the conclusion that “Services” does not refer to Integrity and Sea Eagle’s
work, but rather the work Tesla undertook for a third party.
Such a reading of the term “Services,” though inventive, borders on the absurd.
The definition of “Services” set out in the above recital is clearly tied to the work that
Integrity and Sea Eagle contracted to perform for Tesla. After all, the entire purpose

R. Doc. No. 168-5, at 1.
R. Doc. No. 172, at 5.
39 Id.
37
38

22

of the MSAs, in which the recital is found, was to arrange for Integrity and Sea Eagle
to provide services to Tesla. The very text of the recital states that Tesla sometimes
“desires to contract with independent contractors” like Integrity and Sea Eagle “for
the provision of services.”
Not to mention, the meaning Tesla ascribes to “Services” cannot be squared
with the way the term is used throughout the remainder of the MSAs. For example,
the MSAs state:


Contractor [Integrity/Sea Eagle] represents that it . . . desires to perform
Services for Company [Tesla] in accordance with the terms and
conditions of this Agreement.40



This Agreement shall become effective upon the date first written above,
or, in the absence of a prior master service agreement between the
Parties, the date Contractor [Integrity/Sea Eagle] first commenced
Services for Company [Tesla] . . .41



At any time and from time to time during the term of this Agreement,
when Company [Tesla] desires Services to be performed by Contractor
[Integrity/Sea Eagle], a Company [Tesla] Representative . . . shall give
Contractor [Integrity/Sea Eagle] a request for such Services.42



Contractor [Integrity/Sea Eagle] shall thereafter commence the
performance of the Services in accordance with the terms and conditions
of the Work Request and this Agreement.43



Any and all Services performed by Contractor [Integrity/Sea Eagle] for
Company [Tesla] after the Effective date of this Agreement shall be
performed pursuant to the terms and conditions of the Agreement.44

R. Doc. No. 168-5, at 1.
Id. at 3 ¶ 2.
42 Id. ¶ 3(c).
43 Id.
44 Id. ¶ 3(f).
40
41

23

The MSAs even go so far as to state that “[i]n Company’s [Tesla’s] sole discretion,
Services may be performed by [Tesla] . . . and such Services shall not be considered
to be Services performed pursuant to this Agreement.”45 If Tesla’s definition of
services applies, these provisions make little sense.

Tesla’s interpretation is,

therefore, inapt.
OneBeacon, on the other hand, gives the term “Services” its most natural
meaning. In the MSAs governing services that Integrity or Sea Eagle agreed to
provide to Tesla, “Services” means exactly that: services provided by Integrity or Sea
Eagle to Tesla.46
Applying this definition, Integrity and Sea Eagle were required under the
MSAs to insure themselves and Tesla against claims arising from or connected to the
performance of “Services,” i.e., Integrity and Sea Eagle’s “furnishing of labor,
equipment, vehicles, vessels, aircraft, tools, instruments, materials, supplies, or other
products.” The LADY JOANNA and its crew were the only services proffered to Tesla
at the time of the NAUTILUS allision. The INTEGRITY was not on the scene. Hence,
Integrity’s insurance obligations are irrelevant to Shell’s claims, and Sea Eagle’s
obligation was limited to providing insurance for the operation of the LADY
JOANNA.

Id. ¶ 3(g).
Tesla interestingly adopts this definition at one point in its memorandum in
opposition to NYMAGIC’s motion for summary judgment. See R. Doc. No. 187, at 3
(“To the contrary, it was Sea Eagle and Integrity that were providing sonar survey
‘Services’ to Tesla under the MSAs.”).
45
46

24

With regard to this obligation, Sea Eagle was required to name Tesla and
International as additional insureds, but only “to the extent of the risks and liabilities
assumed by [Sea Eagle] in” the MSA. Put another way, Sea Eagle had a duty to list
Tesla and International as additional insureds, but this duty was limited to those
scenarios connected to the risks and liabilities that Sea Eagle agreed to undertake as
part of the MSA. Therefore, the Court must discern the pertinent risks and liabilities
the MSA required Sea Eagle to assume.
The risks and liabilities assumed by Sea Eagle are set forth in the liability and
indemnity provision of the MSA. That provision states, in relevant part:
9. LIABILITY AND INDEMNITY. In those matters in
which a Party is required to indemnify the other Party, the
indemnifying Party shall release, protect, defend,
indemnify, and hold the indemnified Party and its Group .
. . harmless from and against any and all Claims . . . against
the indemnified Party or any member of its Group, and
shall pay all costs, expenses, fines, penalties, and interest
incidental thereto and judgments resulting therefrom
(including, without limitation, court costs and reasonable
attorneys’ fees incurred in the defense of any such Claims).
d. PROPERTY
(i)
CONTRACTOR’S
[SEA
EAGLE’S]
LIABILITY.
REGARDLESS OF CAUSE,
CONTRACTOR [SEA EAGLE] SHALL BE
LIABLE FOR, AND HEREBY RELEASES
COMPANY GROUP [INCLUDING TESLA AND
INTERNATIONAL] FROM ALL LIABILITY
FOR, AND SHALL PROTECT, DEFEND,
INDEMNIFY, AND HOLD COMPANY GROUP
[INCLUDING TESLA AND INTERNATIONAL]
HARMLESS FROM AND AGAINST, ANY AND
ALL CLAIMS DIRECTLY OR INDIRECTLY
ARISING OUT OF ANY LOSS HARM,
INFRINGEMENT,
DESTRUCTION,
OR
25

DAMAGE OF CONTRACTOR GROUP’S [SEA
EAGLE’S] PROPERTY, EQUIPMENT, OR
INSTRUMENTS 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 [SEA EAGLE]
. . . 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.47
Accordingly, Sea Eagle assumed the risk and liability of indemnifying Tesla and
International for damages to a third party’s property “arising out of or related in any
way to the operation of any vessel owned, operated, leased, and/or chartered” by Sea
Eagle, and it was only obligated to name Tesla and International as additional
insureds to such an extent.
As correctly summarized by OneBeacon,
Integrity [] or Sea Eagle [were] only obligated to defend and
indemnify and, thus, only obligated to name as an
additional assured, Tesla or International [] for liabilities
arising out of operation of a vessel owned, operated, leased,
or chartered to Integrity [] or [] Sea Eagle . . . Stated
another way, the insurance obligations are linked to, and
co-extensive with, the indemnity obligations. The
obligation to name Tesla and International as additional
assureds is predicated on the allocation of risk under the
MSAs. In short, if the indemnity obligations are not
triggered, the insurance obligations regarding additional
assured status are not triggered.48

47
48

R. Doc. No. 168-5, at 9–11.
R. Doc. No. 168-1, at 14.
26

This Court has previously held, and the Fifth Circuit has previously affirmed, that
neither Integrity nor Sea Eagle owe indemnity to Tesla or International.
Consequently, Integrity and Sea Eagle had no obligation to name Tesla or
International as additional insureds on the OneBeacon policy for damages resulting
from the NAUTILUS incident. As a result, Tesla and International are not entitled
to coverage for their liability to Shell.
Notably, Tesla and International fail to address the language in the MSAs that
limits Integrity and Sea Eagle’s obligation to name them as additional insureds “to
the extent of the risks and liabilities assumed by [Sea Eagle].” In any event, the
Court is persuaded by OneBeacon’s interpretation of that language, which—as
OneBeacon argues—is supported by Becker v. Tidewater, 586 F.3d 358 (5th Cir.
2009).
In Becker, an employee of Baker Hughes was injured while working aboard a
vessel operating in the Gulf of Mexico. Id. at 363. Baker Hughes was using the vessel
pursuant to a time-charter contract with the vessel’s owner, Tidewater. Id. The
employee suffered catastrophic injuries and sued Baker Hughes, Tidewater, and the
owner and operator of the oil rig on which the vessel was performing services. Id. at
364. After a bench trial, the district court found Baker Hughes to be 55 percent at
fault and Tidewater to be 45 percent fault. Id. at 365. However, the court found that
Baker Hughes had an obligation to indemnify Tidewater, pursuant to an indemnity
provision in the time-charter contract. Id.

27

Under the terms of the time-charter contract, Tidewater was to procure
insurance to cover its liabilities. Id. at 370. The contract further provided that
Tidewater’s insurance policy “shall include [Baker Hughes], in its capacity as timecharterer of the vessel, as an additional assured, but only with respect to the risks
assumed by [Tidewater] in this Charter.”

Id.

The policy defined “assured” to

“include[] . . . any person, organization, trustee or estate to whom or to which the
‘Named Assured’ [Tidewater] is obligated by virtue of a contract or agreement to
include or name as an assured, co-assured or additional assured.” Id.
On appeal, Baker Hughes maintained that Tidewater was required to exhaust
its liability insurance policies before turning to it for indemnification. This argument
turned on whether Baker Hughes could be considered an additional insured under
the Tidewater policy—the same issue presented here. See id.
Baker Hughes argued it was an additional insured, because Tidewater was
obligated to maintain insurance designating it as an additional insured.

Id.

Tidewater argued that, under the time-charter contract’s plain language, its duty was
“more limited,” in that it was only obligated to procure insurance designating Baker
Hughes as an additional insured with respect to the risks that it assumed under the
time-charter. Id. at 371. In other words, Tidewater contended that, because it did
not assume the risk of injury to Baker Hughes employees under the terms of the timecharter contract, it was not required—under the terms of the insurance policy—to
name Baker Hughes as an additional insured.

28

The Fifth Circuit agreed. Reading the “insurance and indemnity provisions of
the time-charter contract in conjunction in order to properly interpret the meaning of
the contract,” the panel noted that “the time-charter contract expressly limit[ed]
Tidewater’s obligation to designate Baker [Hughes] as an ‘additional assured’ to ‘the
risks assumed by [Tidewater]’” in the contract. Id. at 370–71. It also observed that
“Tidewater’s insurance policy, in turn, limit[ed] [Baker Hughes’] status as an
‘additional assured’ to when Tidewater ‘is obligated by virtue of a contract or
agreement’ to designate Baker [Hughes] as an ‘additional assured.’” Id. Thus, the
Court concluded, “Because Tidewater did not assume the risk of injury to [Baker
Hughes’ employees], Baker [Hughes] is not an ‘additional assured’ to Tidewater’s
insurance for [the Baker Hughes employee’s] injuries.” Id.
The same result is warranted here. The MSA expressly limits Sea Eagle’s
obligation to designate Tesla and International as additional insureds “to the extent
of the risks and liabilities assumed by [Sea Eagle].” Sea Eagle’s insurance policy, in
turn, limits Tesla and International’s status as additional insureds to when Sea Eagle
is “obligated by an ‘insured contract’” to designate Tesla and International as
additional insureds. Therefore, because Sea Eagle did not assume the risk of injury
to a third party’s property that did not arise out of and was not related in any way to
the operation of the LADY JOANNA, Tesla and International are not additional
insureds under the OneBeacon policy for the damage caused to Shell.
To summarize, Integrity and Sea Eagle were only required to obtain insurance
in order to protect themselves and Tesla from third party claims arising out of or

29

connected to the provision of “Services.” Here, “Services” can only mean the operation
of the LADY JOANNA. Hence, Integrity and Sea Eagle had no duty to insure against
the third party claim resulting from the NAUTILUS incident, an incident that had
nothing to do with the LADY JOANNA’s operation. And, if Integrity and Sea Eagle
were under no obligation to insure against the third party claim resulting from the
NAUTILUS incident, then Integrity and Sea Eagle were not obligated to name Tesla
and International as additional insureds for liability arising from such a claim.
Moreover, any duty that Integrity and Sea Eagle did have to name Tesla and
International as additional insureds was circumscribed “to the extent of the risks and
liabilities assumed by [Sea Eagle] in” the MSA. As the only risks and liabilities
assumed by Sea Eagle relative to third party property damage are those “arising out
of or related in any way to the operation of” the LADY JOANNA, Integrity and Sea
Eagle were not required to list Tesla and International as additional insureds for
liability stemming from the NAUTILUS allision, which, again, was wholly
independent of the LADY JOANNA’s “indisputably successful” operation.”

Int’l

Marine, 860 F.3d at 761. Tesla and International, then, are owed no coverage from
OneBeacon.49

As for the last criteria, the Court concludes that the MSAs are “insured
contracts.” Under the definition set forth in the OneBeacon policy, to be insured
contracts, the written MSAs must pertain to Integrity and Sea Eagle’s business and
require Integrity and Sea Eagle to assume the tort liability of another party. The
first of these criteria is easily met, as the MSAs clearly relate to Integrity and Sea
Eagle’s business. Thus, the critical question is whether, under the MSAs, Integrity
and Sea Eagle assumed Tesla and International’s tort liability.
49

30

iv.
In sum, Tesla and International fail to satisfy the OneBeacon policy’s definition
of additional insured, which extends coverage to those that Integrity and Sea Eagle
were required by an insured contract to include as additional insureds, but only with
respect to liability arising out of Integrity and Sea Eagle’s work. Though the MSAs
in place between Tesla and Integrity and Sea Eagle are insured contracts as defined
by the OneBeacon policy, Integrity and Sea Eagle were not obligated to name Tesla
and International as additional insureds for liability stemming from the NAUTILUS
allision. Furthermore, the liability for which Tesla and International seek coverage
clearly did not arise out of Integrity or Sea Eagle’s work. Accordingly, Tesla and

Integrity and Sea Eagle assumed Tesla and International’s tort liability under
the indemnity provisions of the MSAs. Section 9(d)(i) of the MSAs, for example,
required Integrity and Sea Eagle to protect, defend, indemnify, and hold Tesla and
International harmless from any claims for damages to third party property
regardless of cause, provided that such claims arose out of or were related in any way
to the operation of the LADY JOANNA and were not the result of Tesla or
International’s gross negligence or willful misconduct.
Under the MSAs’ terms, such a requirement would apparently apply to claims
for third party property damage resulting from Tesla or International’s mere
negligence, so long as a sufficient connection to the LADY JOANNA was found to
exist. OneBeacon effectively concedes as much. In arguing that the MSAs are not
insured contracts, OneBeacon states that Integrity and Sea Eagle “did not agree to
assume [Tesla and International’s] tort liability unless that liability arose out of the
operation of the LADY JOANNA.” Implicit in that statement is an admission that
Integrity and Sea Eagle agreed to assume Tesla and International’s tort liability, at
least in some circumstances. Hence, Integrity and Sea Eagle assumed Tesla and
International’s tort liability, and the MSAs are insured contracts.
31

International are not additional insureds under the OneBeacon policy. They are,
therefore, not entitled to coverage from OneBeacon.50
C.
i.
Tesla and International also seek coverage from NYMAGIC. Pursuant to its
MSA with Tesla, Integrity procured a Bumbershoot policy51 from NYMAGIC for the
policy period of February 2, 2012 to February 2, 2013.52 The only named insured on
the policy is “Integrity Fisheries, Inc.”53 The policy was initially drafted to cover the
operations of the INTEGRITY. However, the schedule of vessels was later amended
to add the LADY JOANNA.54
Unlike the OneBeacon policy, the NYMAGIC policy does not contain an
additional insured endorsement.55

Accordingly, as an initial matter, Tesla and

International must fall within the policy’s definition of “assured” in order to be
entitled to coverage.56 The policy’s definition of “assured” states, in relevant part:

Because the Court concludes that Tesla and International are not additional
insureds under the OneBeacon policy and are thus precluded from obtaining coverage
from OneBeacon, it need not address OneBeacon’s arguments regarding policy
exclusions and conditions that might otherwise bar coverage.
51 “The ‘bumbershoot’ policy is a marine ‘umbrella cover,’ which provides general
liability coverage of a marine nature. The bumbershoot policy is excess of the
underlying insurance policies scheduled on the policy.” Robert T. Lemon, II,
Allocation of Marine Risks: An Overview of the Marine Insurance Package, 81 TULANE
L. REV. 1467, 1489 (2007).
52 R. Doc. No. 185-6, at 2.
53 Id.
54 Id. at 48.
55 See id.; R. Doc. No. 185-1, at 10.
56 Id. at 3 (“This policy is to indemnify the “Assured” in respect of the following . . .”).
50

32

B. ASSURED
The unqualified word “Assured”,
wherever used in this Policy, includes not only the Named
Assured but also:
b.
any person, organization, trustee or
estate to whom the Named Assured
[Integrity] is obligated by virtue of a written
contract or agreement to provide insurance
such as is afforded by this policy, but only in
respect of operations by or on behalf of the
Named Assured [Integrity].57
This definition is unambiguous, and it provides for a clear resolution of the instant
motion. For Tesla and International to be owed coverage by NYMAGIC, Integrity
must have been obligated by a written contract or agreement to provide them with
insurance of the type provided by the NYMAGIC policy. And, to the extent such an
obligation existed, Tesla and International are only insured for liability in respect of
operations performed by Integrity or on Integrity’s behalf.
ii.
The first of these criteria appears to be met. Pursuant to the MSA, Integrity
was required to provide Tesla with “insurance such as is afforded by [the NYMAGIC]
policy.” Specifically, Section 11(a) of the MSA required Integrity to provide insurance
to protect itself and Tesla from third party claims arising out of or connected with the
performance of services, i.e., the provision and operation of the LADY JOANNA.
Section 11(a) states that all such insurance shall be of the types and in the minimum
amounts specified in Exhibit A. Exhibit A requires the procurement of excess (or

57

Id. at 5.
33

umbrella) liability insurance.58

The NYMAGIC policy provides such insurance.

Accordingly, Integrity was obligated to furnish Tesla with the type of insurance
offered by the NYMAGIC policy.
iii.
The second criteria, however, is not met. Under the clear terms of its policy,
NYMAGIC agreed to consider as an assured any organization to which Integrity was
obligated to provide insurance of the type specified in the NYMAGIC policy. But
NYMAGIC limited this assurance. Insurance of those organizations qualifying as
assureds under the policy would apply “only in respect of operations by or on behalf
of” Integrity. “In respect of” means “as regards, as relates to; with reference to.”
Oxford English Dictionary (3d ed. 2010); see also, In Regard To, BLACK’S LAW
DICTIONARY (6th ed. 1990) (defining “in regard to” to mean “concerning, relating to;
in respect of; with respect to; about”). Accordingly, assuming Integrity was bound by
a contract to procure insurance of the type offered by NYMAGIC’s policy for the
benefit of Tesla and International, Tesla and International would be considered
assureds under such a policy, but only as related to work by Integrity or on Integrity’s
behalf.
Tesla and International’s liability to Shell, however, simply did not relate to
work performed by Integrity or on Integrity’s behalf. Nor did it relate to work by Sea
Eagle or on Sea Eagle’s behalf. Again, the INTEGRITY was not on the scene of the
NAUTILUS allision, and the only work performed by Sea Eagle at that time was the

58

R. Doc. No. 168-13, at 2–3.
34

provision and operation of the LADY JOANNA, whose “indisputably successful”
operation was “independent” of the NAUTILUS incident. Int’l Marine, 860 F.3d at
759. Further, under the terms of the MSAs, Integrity and Sea Eagle contracted to
perform services on Tesla’s behalf. No work was completed on Integrity or Sea Eagle’s
behalf. Thus, the damage to the NAUTILUS did not concern work by Integrity or Sea
Eagle or on Integrity or Sea Eagle’s behalf. Consequently, Tesla and International
do not meet the definition of assured under the NYMAGIC policy, and they are not
entitled to coverage.59
IV.
Finally, International argues that—regardless of whether it is owed coverage
under the OneBeacon or NYMAGIC policy—it was entitled to a defense from both
insurers.60
“Under Louisiana law, an insurer has a duty to defend its insured unless the
allegations in the complaint unambiguously exclude coverage.” Alert Centre, Inc. v.
Alarm Protection Services, Inc., 967 F.2d 161, 163 (5th Cir. 1992). “Coverage is
determined by comparing the allegations in the complaint with the terms of the
policy, and the court is to look only at the face of the complaint and the insurance
contract in reaching this determination.” Id. “The insurer has a duty to defend its
insured if the complaint discloses the possibility of liability under the policy.” Id.

Because the Court concludes that Tesla and International are not insureds under
the NYMAGIC policy and are, therefore, precluded from obtaining coverage from
NYMAGIC, it need not address NYMAGIC’s arguments regarding policy exclusions
and conditions that might otherwise bar coverage.
60 R. Doc. No. 178, at 16; R. Doc. No. 189, at 9.
59

35

Additionally, “[a] liability insurer’s duty to defend and the scope of its coverage are
separate and distinct issues. . . . [Further,] the obligation of a liability insurer to
defend suits against its insured is generally broader than its obligation to provide
coverage for damages claims.” Mossy Motors, Inc. v. Cameras Amer., 898 So.2d 601,
606 (La Ct. App. 4th Cir. 2005).
Accordingly, International contends that “at minimum, [it] is entitled to a
defense” from OneBeacon and NYMAGIC. In support of this argument, International
selectively quotes from a single allegation made against Sea Eagle in connection with
the Shell litigation.61 Interestingly, that allegation was made by International itself
in its third-party complaint. It states, in full:
Nonetheless, in the event that the alleged incident is
determined to be the fault of any vessel involved in the
seismic surveying work, International avers that Sea Eagle
must bear primary responsibility for any such acts or
omissions of negligence, including but not limited to failing
to keep a proper watch on the “sonar fish” and/or the
proximity of the “sonar fish” to the Shell mooring system,
and/or any other acts or omissions of Sea Eagle or
unseaworthiness of the [] LADY JOANNA as may be
established at the trial of this matter.62
International argues that this assertion, taken as true, required OneBeacon and
NYMAGIC to provide a defense to it in the Shell matter.63 In effect, this argument
boils down to something like this: because International asserted claims against Sea
Eagle by way of a separate third-party complaint, OneBeacon and NYMAGIC had a

Id.
R. Doc. 178-6, at 7–8 ¶ 32.
63 See id.
61
62

36

duty to defend International against the allegations made against it in Shell’s original
complaint, a complaint that, notably, did not assert any claims against Sea Eagle.
International’s argument fails. For one, the aforementioned allegation was
made against Sea Eagle by International. Thus, any duty to defend would, logically,
be due to Sea Eagle, not International.

Moreover, to be entitled to a defense,

International would have to be an insured under the OneBeacon and NYMAGIC
policies.

As stated herein, International is not an insured under either policy.

International is, therefore, not entitled to a defense from OneBeacon or NYMAGIC.
See Hanover Ins. Co. v. Superior Labor Servcs., Inc., No. 14-1933, 2017 WL 2984867,
at *12 (E.D. La. July 12, 2017) (Morgan, J.) (“Because Allied cannot meets its burden
of proving its status as an additional insured under the 2000-2001 Lexington Policy,
Lexington owes Allied no defense . . . .”).
V.
For the foregoing reasons,
IT IS ORDERED that OneBeacon’s motions for summary judgment with
respect to coverage for Tesla and International are GRANTED and that all claims
against OneBeacon set forth by Tesla and International in the above-captioned
matters are DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that Tesla’s motion for summary judgment
with respect to coverage by OneBeacon is DENIED.
IT IS FURTHER ORDERED that NYMAGIC’s motions for summary
judgment with respect to coverage for Tesla and International are GRANTED and

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that all claims against NYMAGIC set forth by Tesla and International in the abovecaptioned matters are DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that Tesla’s motion for summary judgment
with respect to coverage by NYMAGIC is DENIED.
New Orleans, Louisiana, February 28, 2018.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

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