Williams v. Trinity Medical Management, L.L.C. et al
Filing
65
ORDER: IT IS HEREBY ORDERED that Defendant Hyperion Safety Services, L.L.C.'s 15 Motion for Summary Judgment IS GRANTED. Signed by Chief Judge Nannette Jolivette Brown on 7/18/2018. (mmv)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MICHAEL WILLIAMS
CIVIL ACTION
VERSUS
NO. 17-353
TRINITY MEDICAL
MANAGEMENT, L.L.C., et al.
SECTION: “G”(1)
ORDER
In this litigation, Plaintiff Michael Williams (“Plaintiff”) seeks declaratory judgment that
the defense and indemnification clause of a settlement agreement between Plaintiff and Hyperion
Safety Services, L.L.C. (“Hyperion”) does not obligate Plaintiff to defend and/or indemnify
Hyperion in litigation ongoing in the United States District Court for the Middle District of
Pennsylvania.1 Plaintiff argues that the defense and indemnification clause at issue does not cover
Hyperion’s contractual liability to a third party, and to read it as requiring defense and
indemnification of Hyperion in the Pennsylvania litigation would violate public policy.2 Pending
before the Court is Hyperion’s motion for summary judgment, in which Hyperion seeks
declaratory judgment that the defense and indemnification clause is valid and enforceable and that
Plaintiff owes a duty to defend and indemnify Hyperion against the claims made against Hyperion
in the Pennsylvania litigation.3 Plaintiff requests that the Court treat his opposition as his own
motion for summary judgment, seeking declaratory judgment and dismissal of Hyperion’s claim
1
Rec. Doc. 1.
2
Id.
3
Rec. Doc. 15.
1
for defense and indemnity.4
Having considered the motions, the complaint, the memoranda in support and opposition,
the record, and the applicable law, the Court will grant Hyperion’s motion for summary judgment,
and enter declaratory judgment in Hyperion’s favor insofar as the defense and indemnification
clause in the Settlement Agreement requires Plaintiff to defend and indemnify Hyperion against
claims based on contractual liability arising from the incident that allegedly gave rise to Plaintiff’s
injury.
I. Background
A.
Factual Background
In connection with the motion for summary judgment, Hyperion states the following
uncontested material facts. 5 Plaintiff worked for Hyperion as a safety representative and was
assigned to work at Inflection Energy, LLC (“Inflection”), located in Lycoming County,
Pennsylvania. 6 On January 5, 2014, Plaintiff slipped and fell, injuring his right ankle. 7 On
February 14, 2014, Plaintiff filed a claim petition for worker’s compensation in Pennsylvania
against Hyperion.8 On June 17, 2014, Plaintiff’s worker’s compensation claim was dismissed due
to Plaintiff’s failure to appear for a scheduled hearing.9 On July 28, 2014, Louisiana Worker’s
Compensation Corporation, Hyperion’s worker’s compensation insurer, sent a demand letter to
4
Rec. Doc. 21 at 2.
5
Rec. Doc. 15-2.
6
Id. at 1.
7
Id.
8
Id.
9
Id.
2
Plaintiff’s employer, asserting a lien of $20,644.81, which evidenced payments made to Plaintiff
under Hyperion worker’s compensation policy.10
On January 5, 2015, Plaintiff filed suit against Hyperion in the Eastern District of
Louisiana, seeking damages for negligence under the Jones Act and for maintenance-and-cure
benefits under general maritime law related to Plaintiff’s January 5, 2014 injury (hereinafter, the
“Louisiana Litigation”).11 The action was given Case No. 15-00011 and assigned to Section G of
this Court. Plaintiff later stated in a response to requests for production that no prior or current
lawsuits or worker’s compensation claims existed in which he was a party.12
That same day, on January 5, 2015, Plaintiff, while being represented by the same attorney
that filed the other lawsuit, filed suit against Inflection and U.S. Well Services, L.L.C (“U.S.
Well”) also in the Eastern District of Louisiana seeking damages related to Plaintiff’s January 5,
2014 injury.13 The action was given Case No. 15-00012 and assigned to Section F of this Court.
Plaintiff did not note the related litigation on the Civil Cover Sheet in the lawsuit against Inflection
and U.S. Well.14 On April 2, 2015, Civil Action No. 15-00012 was transferred to the Middle
District of Pennsylvania (hereinafter, “the Pennsylvania Litigation”).15
On September 22, 2015, U.S. Well filed a third-party complaint against Hyperion in the
10
Id. at 2.
11
Id.
12
Id.
13
Id.
14
Id. Plaintiff does not dispute this fact but states in response, “Unable to admit or deny due to non-specificity;
objection as to relevance to summary judgment.” Rec. Doc. 21-3 at 1.
15
Id.
3
Pennsylvania Litigation, seeking contribution and indemnification from Hyperion subject to a
Master Service Agreement.16
On January 11, 2016, Plaintiff and Hyperion held a mediation regarding the Louisiana
Litigation, during which a Mediation Agreement was signed. 17 The Mediation Agreement
provided: “Plaintiff agrees to defend, indemnify and hold harmless Trinity and Hyperion from and
against any and all claims arising out of this incident, including, but not limited to any contribution
or tort indemnity claims by U.S. Well Services, LLC and Inflection Energy, LLC.”18
On February 6, 2016, Plaintiff and Hyperion executed a “Release, Receipt, and
Indemnification Agreement” (the “Settlement Agreement”) for the Louisiana Litigation, which
contained the following acknowledgment: “It is specifically understood and agreed that Michael
Williams reserves all rights he has against Inflection Energy, LLC and U.S. Well Services, LLC.
Inflection Energy, LLC and U.S. Well Services, LLC are not released parties.”19 The Settlement
Agreement also contained the following defense and indemnification clause: “Michael Williams
agrees to defend, indemnity [sic], and hold harmless Trinity and Hyperion from and against
any and all claims arising out of this incident, including, but not limited to any contribution
or tort indemnity claims by U.S. Well Services, LLC and Inflection Energy, LLC.”20
At the time of the execution of the Settlement Agreement, which ended the Louisiana
Litigation, Plaintiff attested that he (1) was capable of fully understanding the terms and conditions
16
Id. at 3.
17
Id.
18
Id. at 4.
19
Id.
20
Id. (bold in original).
4
of this agreement, (2) was fully aware of all his legal rights arising out of or resulting from the
accident and injury sustained by him on January 5, 2014, and (3) consulted with an attorney as to
his rights and remedies and the terms of the Settlement Agreement.21
On September 26, 2016, Plaintiff filed a second claim petition for worker’s compensation
against Hyperion in Pennsylvania.22 On the claim petition for worker’s compensation filed on
September 26, 2016, Plaintiff was asked, “Is there other pending litigation in this case?”23 Plaintiff
checked the box marked “No.”24 On January 3, 2017, Hyperion sent its defense to Plaintiff and
demanded Plaintiff defend, indemnify, and hold harmless Hyperion against any and all claims
made by U.S. Well in the Pennsylvania Litigation.25
In addition to the uncontested facts stated by Hyperion, Plaintiff asserts that there is no
evidence that Plaintiff received additional compensation for the specific relinquishment of his
rights as a seaman, pursuant to the Settlement Agreement whereby Plaintiff agreed to defend,
indemnify, and hold harmless Hyperion.26 Plaintiff also asserts that Plaintiff’s counsel denied
there was any additional compensation, whether offered by Hyperion or received by Plaintiff.27
Furthermore, Plaintiff asserts that he did not understand that he was entering into an
21
Id.
22
Id.
23
Id.
24
Id.
25
Id.
26
Rec. Doc. 21-3 at 3.
27
Id.
5
agreement that had the effects portrayed by Hyperion’s pending motion for summary judgment.28
B. Procedural Background of Litigation Arising out of Plaintiff’s Injury on January 5, 2014
1. Worker’s Compensation Claims
On February 14, 2014, Plaintiff filed a claim petition for worker’s compensation in
Pennsylvania against Hyperion.29 That claim was dismissed on June 17, 2014 because Plaintiff
failed to appear for a scheduled hearing.30 On September 26, 2016, Plaintiff filed a second claim
petition for worker’s compensation against Hyperion in Pennsylvania.31 On December 22, 2016,
Plaintiff’s second worker’s compensation claim against Hyperion in Pennsylvania was
dismissed.32
2. The Louisiana Litigation
On January 5, 2015, Plaintiff filed suit against Hyperion in the Eastern District of Louisiana
pursuant to the Jones Act and general maritime law.33
On February 6, 2016, Plaintiff and Hyperion settled the Eastern District of Louisiana action
and executed the Settlement Agreement containing the defense and indemnification clause at issue
in the instant motion before this Court.34
28
Id. at 4.
29
Rec. Doc. 15-1 at 2.
30
Id.
31
Id. at 5.
32
Id. (citing Exhibit P, Decision Rendered Cover Letter).
33
Id. at 2.
34
Id. at 4.
6
3. The Pennsylvania Litigation
On January 5, 2015, Plaintiff filed suit against Inflection and U.S. Well in the Eastern
District of Louisiana.35 On April 2, 2015, Plaintiff’s lawsuit was transferred to the Middle District
of Pennsylvania. 36 On September 22, 2015, U.S. Well filed a third-party complaint against
Hyperion, seeking contribution and indemnification from Hyperion subject to a Master Service
Agreement.37 On January 3, 2017, Hyperion sent its defense to Plaintiff and demanded Plaintiff
defend, indemnify, and hold harmless Hyperion against any and all claims made by U.S. Well in
the Pennsylvania Litigation, pursuant to the Settlement Agreement.38
4. The Litigation Pending Before This Court
On January 13, 2017, Plaintiff filed a complaint in this Court seeking declaratory judgment
regarding the interpretation and/or legal effect of the defense and indemnification clause contained
in the Settlement Agreement.39 On November 14, 2017, Hyperion filed a motion for summary
judgment seeking declaration that the Settlement Agreement is valid and enforceable and that
Plaintiff owes Hyperion a duty to defend and indemnify Hyperion against the claims made against
it in the Pennsylvania Litigation.40 On November 28, 2017, Plaintiff filed his opposition, in which
Plaintiff requested the Court treat his opposition as Plaintiff’s own motion for summary judgment
35
Id.
36
Id. at 2.
37
Id. at 3.
38
Id. at 6.
39
Rec. Doc. 1.
40
Rec. Doc. 21
7
and enter a declaratory judgment dismissing Hyperion’s claim for defense and indemnity. 41
Alternatively, Plaintiff requested, should the Court find that summary judgment is not available to
Hyperion because a question exists as to Plaintiff’s intent, understanding, or compensation,
Plaintiff requests the Court deny the motion because there are genuine issue(s) of material fact.42
Proceedings in the Pennsylvania Litigation have been stayed pending the outcome of the
declaratory judgment action before this Court.43
II. Parties’ Arguments
A.
Hyperion’s Arguments in Support of the Motion for Summary Judgment
1. The Settlement Agreement Between Plaintiff and Hyperion Is Valid and
Enforceable
Hyperion first argues that Plaintiff was not a seaman as defined by the Jones Act at the
time of his injury. 44 Hyperion contends that by choosing to elect and receive worker’s
compensation, Plaintiff is precluded from asserting his status as a seaman pursuant to the Jones
Act.45 Moreover, Hyperion asserts, Plaintiff’s claimed status as a seaman is “an attempt to recover
three times for the same ankle injury.”46
Even if Plaintiff is a seaman as defined by the Jones Act, Hyperion contends that the
Settlement Agreement is still valid and enforceable.47 Hyperion acknowledges that “a seaman’s
41
Id. at 2.
42
Id.
43
Rec. Doc. 15-1 at 6 (citing Exhibit R, Order, Rec. Doc. 105 in the Pennsylvania Litigation, C.A. No. 15-00675).
44
Id. at 8.
45
Id.
46
Id.
47
Id.
8
release or settlement of his rights must be carefully scrutinized.”48 Hyperion further acknowledges
that on a motion for summary judgment enforcing a seaman’s settlement agreement, “courts have
generally looked to whether the parties have negotiated at arms-length and in apparent good faith,
whether the competency of counsel or the adequacy of medical or legal advice is questioned, and
whether there is any appearance of ‘taint or fraud, deception, coercion or overreaching . . . in the
negotiations eventuating in the settlement.’”49 Hyperion argues that the Settlement Agreement
was negotiated at arms-length and in good faith and that Plaintiff was fully aware of his rights
when he executed the Settlement Agreement.50 In fact, Plaintiff was represented by counsel. Thus,
Hyperion contends that the Agreement is valid and enforceable even under the heightened standard
applied to contracts involving Jones Act seamen.51
a. The Settlement Agreement Was Negotiated at Arms-Length and in Good Faith
Hyperion asserts that the Settlement Agreement executed between Plaintiff and Hyperion
was the result of meaningful negotiations and contained clauses that were beneficial to both
parties.52 Hyperion contends that Plaintiff and Hyperion agreed that Plaintiff could pursue any
claims related to his injuries against other parties, including U.S. Well and that Plaintiff explicitly
reserved his right to seek other recovery for his injuries outside the Jones Act or general maritime
48
Id. at 9 (citing Castillo v. Spiliada Mar. Corp., 937 F.2d 240, 244 (5th Cir. 1991) (quoting Garrett v. Moore–
McCormack Co., 317 U.S. 239, 248, 63 S.Ct. 246, 87 L.Ed. 239 (1942)); Baker v. Helix Energy Sols. Grp., Inc., 469
F. App'x 327, 329 (5th Cir. 2012)).
49
Id. (citing Borne v. A & P Boat Rentals No. 4, Inc., 780 F.2d 1254 (1986); Strange v. Gulf & South American
Steamship Co., Inc., 495 F.2d 1235, 1236 (5th Cir. 1974); Simpson v. Lykes Bros., 22 F.3d 601, 602 (5th Cir. 1994)).
50
Id.
51
Id. at 9–14.
52
Id. at 9.
9
law, such as through a worker’s compensation claim.53 In exchange for agreeing to allow Plaintiff
to pursue claims against Inflection and U.S. Well, Hyperion contends that Plaintiff and Hyperion
agreed Plaintiff would defend and indemnify Hyperion should Inflection or U.S. Well Services
seek contribution or indemnity from Hyperion.54
Hyperion argues that Plaintiff admitted that he was legally capable of entering into a
binding contract on the date he signed the Settlement Agreement.55 Furthermore, Hyperion asserts,
“the undisputed record evidence proves Plaintiff and his counsel were aware of U.S. Well’s ThirdParty Demand for defense and indemnity from Hyperion in the Pennsylvania Litigation.”56
According to Hyperion, it is undisputed that Plaintiff was represented by Marcus
Spagnoletti in both the litigation before the Eastern District of Louisiana and the Pennsylvania
Litigation, and therefore, Plaintiff and Plaintiff’s counsel knew about U.S. Well’s third-party
complaint against Hyperion in the Pennsylvania Litigation. 57 However, Hyperion asserts,
Hyperion was represented by different counsel in the separate actions, and Hyperion’s counsel in
the Eastern District of Louisiana case did not know about the Pennsylvania litigation until late
2015.58 Thus, according to Hyperion, any claim that Hyperion was somehow acting in “bad faith”
by agreeing to the defense and indemnification clause contained in Settlement Agreement is
53
Id. at 10.
54
Id.
55
Id. at 11.
56
Id.
57
Id. at 11–12.
58
Id. at 11.
10
completely without merit.”59
b. Plaintiff Was Fully Aware of His Rights When He Executed the Settlement Agreement
Hyperion acknowledges that the party claiming a matter has settled bears the burden of
demonstrating that a seaman’s release of claims was “executed freely, without deception or
coercion, and that it was made by the seaman with full understanding of his rights.”60 However,
Hyperion argues that the factors for determining whether a seaman had an informed understanding
of his rights—adequacy of consideration, and the nature of medical and legal advice available to
him—weigh in favor of enforcement here.61
Specifically, Hyperion avers that Plaintiff has not claimed that (1) he did not fully
understand his rights when he executed the Settlement Agreement; (2) he was not properly
compensated; (3) he did not understand the Settlement Agreement; and (4) he was inadequately
represented by his attorney.62 In contrast, Hyperion asserts, Plaintiff attested that the Settlement
Agreement was explained to him in full and that he understood the terms of the Settlement
Agreement.63 Hyperion further asserts that Plaintiff attested that he fully understood his legal
rights and, after consulting with his attorney, agreed to the terms of the Settlement Agreement in
exchange for settlement payment.64 Accordingly, Hyperion argues, there is no genuine issue of
59
Id.
60
Id. at 12 (citing Garrett v. Moore– McCormack Co., 317 U.S. 239, 248 (1942); Double J. Marine, LLC v. Nuber,
No. CIV.A. 13- 5825, 2013 WL 6502866, at *2 (E.D. La. Dec. 11, 2013)).
61
Id.
62
Id. at 13.
63
Id.
64
Id.
11
material fact regarding Plaintiff’s understanding of the Settlement Agreement and his voluntary
acceptance of its terms with the assistance of competent counsel.65 Thus, Hyperion contends, this
Court should grant Hyperion’s Motion for Summary Judgment finding the Settlement Agreement
is valid and enforceable.66
2. The Defense and Indemnification Clause Contained in the Settlement Agreement
Between Plaintiff and Hyperion Is Valid and Enforceable
Hyperion next asserts that federal maritime law governs the validity and interpretation of
the Settlement Agreement and that interpretation of contractual language in an indemnity contract
is a question of law suitable for summary judgment. 67 Hyperion further asserts that the Fifth
Circuit has noted that “[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”68 and
that the primary purpose and function of a court in the interpretation of a maritime contract is to
ascertain the intention of the parties.69
Hyperion argues that the defense and indemnification clause is not ambiguous.70 Rather,
according to Hyperion, the “clear language of the indemnification clause obligates Plaintiff to
defend and indemnify Hyperion from any and all claims made by U.S. Well.”71 Hyperion contends
that the phrase, “any and all claims,” clearly and unequivocally encompasses claims for contractual
65
Id. at 14.
66
Id.
67
Id. at 14–15.
68
Id. at 15 (citing Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir.1981)).
69
Id. at 16 (citing East v. Premier, Inc., 98 Fed. Appx. 317, 319 (5th Cir.2004)).
70
Id. at 16.
71
Id.
12
indemnity. 72 Furthermore, Hyperion asserts that the words, “any and all claims,” would be
rendered meaningless if the application of the defense and indemnification clause was limited to
claims explicitly stated after the phrase, “including, but not limited to.”73 Last, Hyperion asserts
that Plaintiff was aware that U.S. Well had demanded contractual indemnity from Hyperion and
had already filed a Third-Party Complaint, seeking defense and indemnity in the Pennsylvania
Litigation at the time of the execution of the Settlement Agreement; and therefore, U.S. Well’s
claim for contractual indemnity was “within the contemplation of the parties.”74
3. The Defense and Indemnification Clause Is Not Unworkable, Unconscionable, or
Against Public Policy
Hyperion asserts that Plaintiff’s argument that the defense and indemnification clause is
unworkable, unconscionable, or against public policy is meritless.75 In addition, Hyperion asserts
that Plaintiff should not be allowed to submit any extrinsic evidence, if any can be obtained, to
support these claims because the defense and indemnification clause is unambiguous.76 Hyperion
points out that Plaintiff offers no legal support in requesting that the Settlement Agreement be
interpreted in Plaintiff’s favor “given that the Plaintiff is a seaman and ward of the Court.”77
Hyperion further asserts that Plaintiff’s arguments that the defense and indemnification
clause is unconscionable or against public policy are disingenuous because Plaintiff and his
attorney knew about U.S. Well’s claim for contractual indemnity against Hyperion at the time of
72
Id.
73
Id. at 17.
74
Id.
75
Id. at 18.
76
Id.
77
Id. at 18–19.
13
the January 11, 2016 mediation and signing of the Settlement Agreement.78 In addition, Hyperion
argues that Plaintiff should be estopped from claiming unconscionability because Plaintiff has
unclean hands and acted in bad faith insofar as he seeks to collect from both the worker’s
compensation scheme and under the Jones Act for the same injury.79 Furthermore, Defendant
asserts that Plaintiff’s verified response indicating, “None,” to a request for production of copies
of all prior or current lawsuits or worker’s compensation claims in which Plaintiff was a party,
was indeed false.80 Moreover, Hyperion asserts that Plaintiff attempted to recover four times for
the same injury and was not forthcoming in either the Eastern District of Louisiana proceedings or
the Pennsylvania Litigation about the existence or events taking place in the other court.81 For
these reasons, Hyperion contends that Plaintiff’s argument that the Settlement Agreement is
unconscionable or against public policy is without merit and should be disregarded by the Court.82
B.
Plaintiff’s Arguments in Opposition to Hyperion’s Motion for Summary Judgment
1. The Indemnity Clause Contained in the Settlement Agreement Between Plaintiff
and Hyperion Must Be Interpreted in Plaintiff’s Favor
Plaintiff first asserts that “courts are required to interpret indemnity agreements
consistently with established social policies.”83 To that end, Plaintiff asserts that “seamen are
wards of the court and that their actual awareness of the substance of their releases requires
78
Id. at 19.
79
Id.
80
Id. at 20.
81
Id. at 21.
82
Id.
83
Rec. Doc. 21 at 10 (citing Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1217 (5th Cir. 1986)).
14
heightened scrutiny.”84
Plaintiff contends that the putative defense and indemnity clause contained in the
Settlement Agreement directly conflicts with another provision contained in the Settlement
Agreement, which states:
“It is specifically understood and agreed that Michael Williams
reserves all rights he may have against Inflection Energy LLC and U.S. Well Services, LLC.
Inflection Energy LLC and U.S. Well Services, LLC are not Released Parties.”85 According to
Plaintiff, any putative agreement whereby Plaintiff would be personally responsible for defending
and/or indemnifying Hyperion for costs and expenses made by Inflection and U.S. Well Services,
LLC in connection with such litigation would be unworkable and counterproductive.86 Given that
Plaintiff’s settlement arose out of a claim in which he alleged he was a Jones Act seaman, Plaintiff
argues that he is a ward of the court, and therefore, the Settlement Agreement must be interpreted
in his favor.87 Accordingly, Plaintiff argues, the inconsistency between the defense and indemnity
clause falls outside the permissible bounds of a settlement agreement pursuant to the Jones Act,
and therefore, the clause is not enforceable.88 In support, Plaintiff points to Parks v. Dowell Div.
of Dow Chem. Corp., a Fifth Circuit case in which Plaintiff asserts that based on admiralty courts’
tradition of protecting seamen, the court refused to enforce an indemnity provision absent a
showing that the defendants had (1) fully and fairly explained the indemnity provision to the
84
Id.
85
Id. at 11.
86
Id.
87
Id.
88
Id. at 11–12 (citing Parks v. Dowell Div. of Dow Chem. Corp., 712 F.2d 154, 160 (5th Cir. 1983)).
15
plaintiff and (2) had provided additional compensation to the plaintiff for the release of his rights.89
2. The Indemnity Clause Contained in the Settlement Agreement Between Plaintiff
and Hyperion Is Over-Broad and Unworkable
Plaintiff argues that if the defense and indemnification clause is interpreted as requiring
Plaintiff to defend, indemnify, and hold harmless Hyperion, not only from any and all claims
arising out of Plaintiff’s accident at issue in the pending personal-injury lawsuit in Pennsylvania,
but also from contribution or tort indemnity claims brought in any subsequent litigation by third
parties, the result would be unacceptably sweeping and uncertain.90 Plaintiff asserts that such a
result was not his intent or the intent of his counsel, nor is such reflected in the total amount of
money Plaintiff received in settlement of his Jones Act claim. 91 Moreover, Plaintiff asserts,
Hyperion has failed to carry its burden of proof that Plaintiff or his counsel intended to enter into
the type of sweeping, open-ended agreement that Hyperion supposedly envisions or that Plaintiff
received bargained-for compensation for such a sweeping agreement.92
3. The Defense and Indemnity Clause Contained in the Settlement Agreement
Between Plaintiff and Hyperion Is Not Sufficiently Specific to Satisfy the Notice
Requirements Imposed by Maritime Law
Citing Corbitt v. Diamond M. Drilling Co., Plaintiff argues that the Fifth Circuit has held
that indemnification clauses like the one here do not include indemnification for contractual claims
asserted by third parties.93 As in Corbitt, Plaintiff avers, the defense and indemnification clause in
the Settlement Agreement generally provides that Plaintiff will indemnify Hyperion for “all
89
Id. at 12.
90
Id. at 13.
91
Id.
92
Id. at 14.
93
Id. at 15 (citing Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir. 1981)).
16
claims.” 94 However, Plaintiff contends that the defense and indemnification clause in the
Settlement Agreement does not expressly require Plaintiff to indemnify anyone against Hyperion’s
contractual liability to third persons, as is required pursuant to the Fifth Circuit’s decision in
Corbitt.95 Accordingly, Plaintiff argues, the indemnification provision should be interpreted as
excluding contractual liability from indemnification and Hyperion’s motion for summary
judgment should be denied.96
4. Enforcement of the Indemnity Clause Contained in the Settlement Agreement
Between Plaintiff and Hyperion Would Create a Conflict of Interest and Thus
Violate Public Policy
Plaintiff argues that the indemnity clause in the Settlement Agreement is voidable because
the enforcement that it proposes would create an impermissible conflict of interest in which one
party to a lawsuit would be required to defend and indemnify a party with directly opposite and
conflicting interests.97 Citing Lirette v. Popich Bros. Water Transport, Inc., Plaintiff contends that
“any form of defense and indemnification would create an ethical dilemma and lead to the
impermissible result that the attorney might have to defend one client at another’s–i.e., an
adversary’s–expense.” 98 Plaintiff asserts that Hyperion has unclean hands in submitting the
Settlement Agreement, knowing that it would potentially violate Plaintiff’s rights as an injured
seaman, as well as his attorney’s ethical requirements.99 Therefore, Plaintiff argues, Hyperion’s
94
Id.
95
Id.
96
Id. at 16.
97
Id.
98
Id. at 16–17 (citing 699 F.2d 725, 727 n.7 (5th Cir. 1983)).
99
Id. at 17.
17
motion for summary judgment should be denied, because Plaintiff contends that enforcement of
the Settlement Agreement would violate public policy, as counsel for Plaintiff would be faced with
conflicts of interest.100
5. Enforcement of the Indemnity Clause Contained in the Settlement Agreement
Between Plaintiff and Hyperion Would Be Unconscionable and Violate Public
Policy
Finally, Plaintiff argues that the defense and indemnification clause in the Settlement
Agreement, as advocated by Hyperion, is unconscionable when applied to Plaintiff, as “an injured
seaman who can afford neither the defense nor indemnification of an adverse party, and whose
ability to earn a living was retarded by the accident made [sic] the basis of the underlying
litigation.” 101 Citing Bass v. Phoenix Seadrill/78, Ltd., Plaintiff asserts that courts must “be
particularly vigilant to guard against overreaching when a seaman purports to release his rights to
compensation for personal injuries.”102 Moreover, Plaintiff asserts, “Courts’ ultimate concern in
these cases is whether, at the time the seaman relinquished those rights, he did so with an informed
understanding of his rights and a full appreciation of the consequences of executing the release.”103
Accordingly, Plaintiff argues that Hyperion’s motion for summary judgment should be denied, as
enforcement would violate public policy favoring heightened scrutiny of contracts to which a
seaman is party.104
100
Id.
101
Id.
102
Id. (citing Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154, 1160–61 (5th Cir.1985)).
103
Id. at 17–18 (citing Cates v. United States, 451 F.2d 411, 414 (5th Cir.1971)).
104
Id.
18
C.
Hyperion’s Arguments in Reply
1. Plaintiff Understood the Settlement Agreement and Scope of the Defense and
Indemnification Clause
In reply, Hyperion argues that the “undisputed record evidence shows Mr. Williams’s
attorney, Marcus Spagnoletti, received notice of U.S. Well’s Third-Party Complaint in the
Pennsylvania Litigation and knew U.S. Well was seeking contribution and indemnification from
Hyperion before Mr. Williams agreed to the terms of the Settlement Agreement.”105 In addition,
Hyperion argues that Plaintiff previously attested that he fully understood the Settlement
Agreement and all its terms and conditions, which would include the defense and indemnification
clause.106
With respect to the scope of the defense and indemnification clause, Hyperion argues that
the clause is sufficiently specific when subjected to the established rules of interpretation for
maritime contracts.107 Hyperion argues that pursuant to Corbitt v. Diamond M. Drilling, a contract
of indemnity “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.” 108 Here, Hyperion argues, “[t]he
uncontroverted record evidence establishes the parties intended for the indemnification clause to
include U.S. Well’s claim for contractual indemnity from Hyperion in the Pennsylvania
105
Rec. Doc. 27 at 2.
106
Id.
107
Id. at 3.
108
Id. (citing Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir.1981)).
19
Litigation.”109
2. Additional Compensation is Not Necessary to Enforce the Defense and
Indemnification Clause
Hyperion argues that the Fifth Circuit’s decision in Parks v. Dowell Division of Dow
Chemical Corporation is not applicable to this case, and therefore, Plaintiff is not entitled to
compensation “above and beyond” the amount he obtained to settle his Jones Act case. 110
According to Hyperion, in Parks, the Fifth Circuit held that the indemnification clause in the
seaman’s contract with his employer was not enforceable, as “admiralty courts have refused to
enforce agreements in which seaman have relinquished their protective rights absent a clear
showing that the agreement is fair and fully compensated.”111 Hyperion explains further, the Fifth
Circuit found the indemnification clause in the seaman’s contract with his employer was “never
fully explained to [the seaman] and there is no evidence he received additional compensation for
the relinquishment of his rights as a seaman.”112
Hyperion argues that the facts in this case are distinguishable from those in Parks for
several reasons.113 First, Hyperion argues, unlike the seaman in Parks, Plaintiff in this case has
never been judicially determined to be a Jones Act seaman.114 Second, Hyperion argues, Plaintiff
in this case did not agree to relinquish any of his rights as a Jones Act seaman by agreeing to the
109
Id. at 4.
110
Id. at 5 (citing Parks v. Dowell Div. of Dow Chem. Corp., 712 F. 2d. 154 (5th Cir. 1983)).
111
Id. (quoting 712 F. 2d. at 160).
112
Id.
113
Id. at 6.
114
Id.
20
defense and indemnification clause in the Settlement Agreement, whereas in Parks, the
indemnification agreement containing a relinquishment of rights was in Parks’ non-negotiated
employment contract.115 Here, Hyperion argues, Plaintiff, in fact, exercised those rights by suing
Hyperion pursuant to the Jones Act, and Plaintiff was compensated for agreeing to indemnify
Hyperion in the Settlement Agreement. 116 Last, Hyperion argues, unlike in Parks, Plaintiff
negotiated the defense and indemnification clause with the assistance of counsel, and the defense
and indemnification clause and entire Settlement Agreement was fully explained to Plaintiff.117
Accordingly, Hyperion contends, the Court should enforce the Settlement Agreement and grant
Hyperion’s motion for summary judgment.118
D. Hyperion’s Supplemental Memorandum in Support
In the supplemental memorandum, Hyperion argues that any “misunderstanding” Plaintiff
may have as to the scope of the defense and indemnification clause results from his attorney’s
failure to properly explain the provision to Plaintiff and is not due to any vague or ambiguous
language within the provision itself.119 Hyperion asserts that in Plaintiff’s deposition testimony
Plaintiff alleges that the defense and indemnification clause was never explained to him by his
attorney; however, Hyperion argues that Plaintiff’s assertion contradicts Plaintiff’s prior signed
statements.120
115
Id.
116
Id. at 7.
117
Id.
118
Id.
119
Rec. Doc. 60.
120
Id. at 4–5.
21
E. Plaintiff’s Supplemental Memorandum in Opposition
Plaintiff contests Hyperion’s characterization of Plaintiff and his counsel Marcus
Spagnoletti’s deposition testimony, arguing that the absence of deposition testimony stating that
the release was explained to Plaintiff does not prove that the Settlement Agreement was not
explained. 121 Plaintiff argues that the deposition excerpts show only that Plaintiff or Marcus
Spagnoletti could not answer certain questions posed by counsel for Hyperion because of attorneyclient privilege or because they were unable to recall certain conversations.122 Plaintiff points to
the Certificate of Attorney, where Marcus Spagnoletti contemporaneously attested that he
explained to Plaintiff the rights Plaintiff was releasing and where Plaintiff confirmed to Spagnoletti
that he fully understood those rights.123
III. Legal Standard on Summary Judgment
Summary judgment is appropriate when the pleadings, the discovery, and any affidavits
show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.”124 When assessing whether a dispute as to any material fact exists, the court
considers “all of the evidence in the record but refrains from making credibility determinations or
weighing the evidence.”125 All reasonable inferences are drawn in favor of the nonmoving party,
but “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and
121
Rec. Doc. 64.
122
Id. at 2.
123
Id. at 5.
124
Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986); Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994).
125
Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398–99 (5th Cir. 2008).
22
conclusions of law’ are insufficient to either support or defeat a motion for summary judgment.”126
If the record, as a whole, “could not lead a rational trier of fact to find for the non-moving party,”
then no genuine issue of fact exists, and the moving party is entitled to judgment as a matter of
law.127 The nonmoving party may not rest upon the pleadings, but must identify specific facts in
the record and articulate the precise manner in which that evidence establishes a genuine issue for
trial.128
The party seeking summary judgment always bears the initial responsibility of informing
the Court of the basis for its motion and identifying those portions of the record that it believes
demonstrate the absence of a genuine issue of material fact.129 Thereafter, the nonmoving party
should “identify specific evidence in the record, and articulate” precisely how that evidence
supports his claims.130 To withstand a motion for summary judgment, the nonmoving party must
show that there is a genuine issue for trial by presenting evidence of specific facts. 131 The
nonmovant’s burden of demonstrating a genuine issue of material fact is not satisfied merely by
creating “some metaphysical doubt as to the material facts,” “by conclusory allegations,” by
“unsubstantiated assertions,” or “by only a scintilla of evidence.” 132 Rather, a factual dispute
precludes a grant of summary judgment only if the evidence is sufficient to permit a reasonable
126
Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
127
Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
128
See Celotex, 477 U.S. at 325; Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
129
Celotex, 477 U.S. at 323.
130
Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.), cert. denied, 513 U.S. 871 (1994).
131
Bellard v. Gautreaux, 675 F.3d 454, 460 (5th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248–49 (1996)).
132
Little, 37 F.3d at 1075.
23
trier of fact to find for the nonmoving party. Hearsay evidence and unsworn documents that cannot
be presented in a form that would be admissible in evidence at trial do not qualify as competent
opposing evidence.133
It is well settled that “summary judgment in Jones Act cases is rarely appropriate and that
even marginal cases ordinarily should go to the jury.”134 However, the Fifth Circuit has held that
a district court may resolve an issue involving the determination of parties’ intentions with respect
to an agreement governed by maritime law, where the question may be resolved as a matter of law
without relying upon any disputed issues of material fact.135
IV. Analysis
A. Whether the Indemnity Clause Contained in the Settlement Agreement Is
Enforceable in Light of the Heightened Scrutiny Courts Apply to Contracts to Which
a Jones Act Seaman Is Party
As an initial matter, Plaintiff argues that the indemnity provision contained in the
Settlement Agreement must be interpreted in his favor because seamen are wards of the court and
their actual awareness of the substance of their releases requires heightened scrutiny. Hyperion
argues, in turn, that even if Plaintiff is a seaman as defined by the Jones Act, the Settlement
Agreement is still valid and enforceable because the Settlement Agreement was negotiated at armslength and in good faith, and Plaintiff was fully aware of his rights when he executed the Settlement
Agreement. Although the issue of whether Plaintiff is a seamen as defined by the Jones Act was
133
Fed. R. Civ. P. 56(c)(2); Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir. 1987).
134
Buras v. Commercial Testing & Eng'g Co., 736 F.2d 307, 309 (5th Cir. 1984) (citing Bouvier v. Krenz, 702 F.2d
89, 90 (5th Cir.1983)).
135
Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332 (5th Cir. 1981) (affirming the district court’s resolution on
summary judgment of whether parties intended to give the indemnitee a right of indemnification for its contractual
liability to a third party pursuant to an indemnification agreement between indemnitor and indemnitee, as a matter of
law).
24
not decided by this Court prior to the execution of the Settlement Agreement, Plaintiff cannot
prevail on his assertion that the contract is invalid or voidable, even under the heightened standard
applicable to Jones Act seamen, because neither party argues that the parties did not negotiate at
arms-length or in bad faith, the competency of the legal advice given to Plaintiff has not been
challenged, and because there are no allegations of fraud or deception.
“[A] seaman’s release or settlement of his rights must be carefully scrutinized.”136 On a
motion for summary judgment enforcing a seaman’s settlement agreement, courts have generally
looked to whether the parties have negotiated at arms-length and in apparent good faith, whether
the competency of counsel or the adequacy of medical or legal advice is questioned, and whether
there is any appearance of “taint or fraud, deception, coercion or overreaching . . . in the
negotiations eventuating in the settlement.”137
In this case, the parties do not dispute the competency of counsel and the adequacy of legal
advice provided to Plaintiff in entering the Settlement Agreement.138 Further, Plaintiff does not
allege that Hyperion acted fraudulently, deceptively, or coercively in the negotiations eventuating
in the Settlement Agreement.
Rather, Plaintiff relies on Parks v. Dowell Div. of Dow Chem. Corp., a Fifth Circuit case
in which Plaintiff asserts that based on admiralty courts’ tradition of protecting seamen, the court
136
Castillo v. Spiliada Mar. Corp., 937 F.2d 240, 244 (5th Cir. 1991) (quoting Garrett v. Moore–McCormack Co.,
317 U.S. 239, 248 (1942)); Baker v. Helix Energy Sols. Grp., Inc., 469 F. App'x 327, 329 (5th Cir. 2012).
137
Borne v. A & P Boat Rentals No. 4, Inc., 780 F.2d 1254 (5th Cir. 1986); see also Strange v. Gulf & South American
Steamship Co., Inc., 495 F.2d 1235, 1236 (5th Cir. 1974); Simpson v. Lykes Bros., 22 F.3d 601, 602 (5th Cir. 1994).
138
In the supplemental memorandum, Hyperion asserts that Plaintiff contradicts himself as to whether the
indemnification provision was fully explained to him by his counsel. Rec. Doc. 60. However, in Plaintiff’s
supplemental memorandum in opposition, Plaintiff states unequivocally that Plaintiff’s counsel Marcus Spagnoletti
explained which rights Plaintiff was releasing, including indemnity provisions, by signing the Settlement Agreement.
Rec. Doc. 64 at 5.
25
refused to enforce an indemnity provision absent a showing that the defendants had (1) fully and
fairly explained the indemnity provision to the plaintiff and (2) had provided additional
compensation to the plaintiff for the release of his rights.139
However, this case is distinguishable from Parks. In Parks, the indemnification provision
at issue was contained in an employment contract between the plaintiff, a seamen, and the
defendant.140 In that case, the Fifth Circuit determined that “[t]he indemnification clause in the
contract was never fully and fairly explained to [the plaintiff] and there [was] no evidence that he
received additional compensation for the relinquishment of his rights as a seaman.”141 Here, at the
time of the execution of the Settlement Agreement, Plaintiff averred he was fully aware of all his
legal rights arising out of or resulting from the accident and injury allegedly sustained by him on
January 5, 2014.142 Also at the time of the execution of the Settlement Agreement, Plaintiff averred
he consulted with an attorney as to his rights and remedies and the terms of the Settlement
Agreement.143 Furthermore, Plaintiff was compensated for agreeing to the terms of the Settlement
Agreement through the monetary award he received in exchange for agreeing to certain terms and
conditions of settlement. Therefore, the Settlement Agreement was “free of infirmities and fairly
made” and does not violate the protections afforded by the Court to Jones Act seamen. The fact
139
Parks v. Dowell Div. of Dow Chem. Corp., 712 F.2d 154, 160 (5th Cir. 1983).
140
Id. at 159.
141
Id. at 160.
142
Rec. Doc. 15-2 at 5.
143
Id. In fact, Plaintiff is represented in this action by the same law firm that represented Plaintiff in both the Louisiana
and Pennsylvania Litigations underlying this case and negotiated and executed the Settlement Agreement at issue
here. Marcus Spagnoletti of Spagnoletti & Co. represented Plaintiff in the underlying Louisiana and Pennsylvania
Litigations and advised Plaintiff on the Settlement Agreement, and Eric Rhine of Spagnoletti and Co. is representing
Plaintiff in the instant matter before the Court.
26
that Plaintiff and his counsel now challenge the application of the defense and indemnification
clause contained in the Settlement Agreement does not change the uncontroverted facts that
Plaintiff was represented by counsel and that he attested at the time of settlement that he understood
the terms of the Agreement.
B. Whether the Indemnity Clause Contained in the Settlement Agreement Includes
Contractual Liability Within Its Scope of Indemnity
Plaintiff argues that the indemnity clause contained in the Settlement Agreement between
Plaintiff and Hyperion is not sufficiently specific to satisfy the notice requirements imposed by
maritime law, which according to Plaintiff, requires express notice when a party seeks to shift its
contractual liability to indemnify a third party. Hyperion argues that the clear language of the
defense and indemnification clause obligates Plaintiff to defend and indemnify Hyperion from any
and all claims, which includes U.S. Well’s claim against Hyperion in the Pennsylvania Litigation
pursuant to the Master Service Agreement. Specifically, Hyperion contends that the phrase, “any
and all claims,” clearly and unequivocally encompasses claims for contractual indemnity.
“When interpreting maritime contracts, federal admiralty law rather than state law
applies.”144 “Under admiralty law, a contract ‘should be read as a whole and its words given their
plain meaning unless the provision is ambiguous.’”145 “A basic principle of contract interpretation
in admiralty law is to interpret, to the extent possible, all the terms in a contract without rendering
any of them meaningless or superfluous.”146 Under federal maritime law, “a court may not look
144
Holmes Motors, Inc. v. BP Expl. & Prod., Inc. 829 F.3d 313, 315 (5th Cir. 2016) (citing Int'l Marine, L.L.C. v.
Delta Towing, L.L.C., 704 F.3d 350, 354 (5th Cir. 2013)); Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22–23 (2004).
145
Holmes Motors, Inc., 829 F.3d at 315 (quoting Breaux v. Halliburton Energy Servs., 562 F.3d 358, 364 (5th Cir.
2009)).
146
In re Deepwater Horizon, 785 F.3d 986, 994 (5th Cir. 2015) (citing Chembulk Trading LLC v. Chemex Ltd., 393
F.3d 550, 555 (5th Cir. 2004)).
27
beyond the written language of the document to determine the intent of the parties unless the
disputed contract provision is ambiguous.”147
Pursuant to the “Choice of Law and Venue Selection” provision of the Settlement
Agreement, “The parties to this [Settlement Agreement] agree that it is a maritime contract and
that any dispute involving the validity, interpretation, performance, breach or enforcement of this
agreement shall be governed by the United States General Maritime Law . . . .”148 Here, the parties
do not argue that the language contained in the Settlement Agreement is unclear. Hyperion
expressly states that the Settlement Agreement is “clear,” 149 while Plaintiff argues that the
language in the Settlement Agreement would need to be more specific, if the defense and
indemnification provision were to be extended to contractual liability, not that the language used
in the indemnity provision is unclear or ambiguous.150 Accordingly, the Court will not consider
parol evidence of the parties’ intentions and will focus solely on the unambiguous language of the
Settlement Agreement.151
In Corbitt v. Diamond, a case involving interpretation of a contract in maritime law, the
Fifth Circuit held that 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
147
Corbitt, 654 F.2d at 332 (citing Hicks v. Ocean Drilling and Exploration Co., 512 F.2d 817, 825 (5th Cir. 1975)).
148
Rec. Doc. 1-1 at 6.
149
Rec. Doc. 15-1 at 16.
150
Rec. Doc. 21 at 14–15.
151
See Corbitt, 654 F.2d at 332 (citing Hicks, 512 F.2d at 825 (5th Cir. 1975)).
28
to include them within the indemnity coverage.”152 In Corbitt, the Purchase Order provided for
indemnity “against all claims, suits, liabilities and expenses on account of personal injury . . .
arising out of or in connection with performance of this Order . . . .”153 The Fifth Circuit noted
that the Purchase Order did not expressly provide that the indemnitor will indemnify the
indemnitee for “[the indemnitee]’s contractual liability to third persons.”154
Given the specific factual circumstances of Corbitt, the Fifth Circuit reasoned that the
indemnitee’s contractual duty to indemnify a third party is not the kind of liability which the parties
to that agreement containing an indemnification clause intended to include within the scope of the
indemnitor’s duty. 155 Furthermore, the Fifth Circuit stated, “In the absence of such explicit
language [requiring indemnification of the indemnitee’s contractual liability], it is unreasonable to
assume that [the indemnitor] intended to undertake such an unusual and surprising obligation.”156
Moreover, the Fifth Circuit articulated in Corbitt that there was “nothing in the contractual
language itself or in the realities of the situation in which the parties executed the [indemnification
agreement] which reflects any such intention.”157
In Breaux v. Halliburton Energy Services, the Fifth Circuit again considered whether a
district court properly decided whether an indemnity provision extended to contractual liability
152
Corbitt, 654 F.2d at 333.
153
Id.
154
Id.
155
Id.
156
Id.
157
Id. at 334.
29
under maritime law.158 In Breaux, two parties, a contractor, Era Aviation, Inc. (“Era”), and a
company, Union Oil Company of California (“Unocal”), executed an Agreement, whereby Era
agreed to indemnify Unocal, as well as its contractors and subcontractors, against all claims for
personal or bodily injury, disease, or death that resulted from Era’s ownership, operation,
maintenance, or use of aircraft under the Agreement “in each and every case, irrespective of
whether any indemnitee hereunder may be alleged or proven to have been negligent . . . or
otherwise legally liable.”159 In Breaux, one of Unocal’s contractors, Haliburton Energy Services
(“HES”), filed an indemnification claim against Era, when one of its employee’s families sued
HES related to an employment contract.160
On appeal, Era argued that the indemnity provision did not extend to contractual liability,
relying on the Fifth Circuit’s decision in Corbitt, to assert that more specific language must be
included to indicate the parties intended to include indemnity for contractual liability.161 The Fifth
Circuit distinguished the facts in Breaux from those present in Corbitt when assessing whether the
language in an indemnity agreement required Era to indemnify HES against contractual liability.162
The Fifth Circuit reasoned that in Corbitt, the indemnitor was asked to indemnify an undisclosed
third party, while in Breaux, HES is listed as an indemnitee in the ERA/Unocal Agreement,
because it was acting as a contractor for Unocal.163 The Fifth Circuit reasoned that Era had express
158
Breaux v. Halliburton Energy Servs., 562 F.3d 358 (5th Cir. 2009).
159
Id. at 361–62.
160
Id. at 360.
161
Id. at 365.
162
Id.
163
Id.
30
notice of its indemnity obligation to HES for any and all liability arising out of those claims and
referred to language in the indemnity provision that stated that Era would indemnity Unocal and
its contractors, as to “each and every case, irrespective” of whether the indemnitee was “negligent
. . . or otherwise legally liable.”164
In this case, it is undisputed that U.S. Well filed a third-party complaint against Hyperion
in the Pennsylvania Litigation, seeking contribution and indemnification from Hyperion subject to
a Master Service Agreement. 165 Moreover, Hyperion seeks defense and indemnification from
Plaintiff for its contractual liability to U.S. Well arising out of the Master Service Agreement. It is
further undisputed that the Settlement Agreement contains the following defense and
indemnification clause, “Michael Williams agrees to defend, indemnity, and hold harmless
Trinity and Hyperion from and against any and all claims arising out of this incident,
including, but not limited to any contribution or tort indemnity claims by U.S. Well Services,
LLC and Inflection Energy, LLC.”166
Here, the factual circumstances differ significantly from those in Corbitt and more closely
align with Breaux. In Corbitt, there was no indication that the indemnitor had any knowledge of
the indemmnitee’s contractual liability to any third parties. In this case, it is undisputed that
Plaintiff was represented by Marcus Spagnoletti in both the Louisiana Litigation and the
Pennsylvania Litigation, and therefore that Plaintiff and Plaintiff’s counsel knew about U.S. Well’s
164
Id. at 366.
165
Rec. Doc. 15-2 at 3.
166
Rec. Doc. 15-2 at 4 (bold in original).
31
third-party complaint against Hyperion in the Pennsylvania Litigation.167 The record shows that
Spagnoletti enrolled as counsel in the Pennsylvania Litigation on June 17, 2015, several months
before U.S. Well filed its third-party complaint against Hyperion in that case.168 As counsel of
record for Plaintiff, Spagnoletti would have received notice of the third-party complaint.
Spagnoletti enrolled as counsel of record in the Louisiana Litigation on March 6, 2015.169 In the
Louisiana Litigation, Hyperion and Plaintiff executed the Settlement Agreement on February 6,
2016. 170 Therefore, Hyperion correctly argues that the “undisputed record evidence shows
Plaintiff’s attorney, Marcus Spagnoletti, received notice of U.S. Well’s Third-Party Complaint in
the Pennsylvania Litigation and knew U.S. Well was seeking contribution and indemnification
from Hyperion before [Plaintiff] agreed to the terms of the Settlement Agreement.”171
Furthermore, in Corbitt, the injured worker sued the third party, who sued the indemnitee
pursuant to contractual liability, and the indemnitee sued the indemnitor pursuant to the
indemnification agreement at issue. In Corbitt, the indemnitor was being asked to indemnify an
“undisclosed third party,” while in Breaux, the indemnitor was being required to indemnify HES,
which was designated as an express indemnitee under the Agreement. Here, like the underlying
facts in Breaux, and unlike the underlying facts in Corbitt, Plaintiff is being asked to defend and
indemnify Hyperion, the designated indemnitee under the Settlement Agreement, and not some
unknown entity or person.
167
Rec. Doc. 15-1 at 11–12.
168
Rec. Doc. 15-10.
169
Rec. Doc. 15-11.
170
Rec. Doc. 15-2 at 4.
171
Rec. Doc. 27 at 2 (emphasis added).
32
Moreover, here, Plaintiff sued both Hyperion and U.S. Well in separate actions in the
Eastern District of Louisiana, failing to inform either court of the related actions; subsequently,
the litigation between Plaintiff and U.S. Well was transferred to Pennsylvania. Moreover, this is
not a case of an indemnitor being unfairly obligated to defend and indemnify an indemnitee for
contractual liability outside of the indemnitor’s possible realm of contemplation. Plaintiff chose to
litigate his claims in separate cases without acknowledging to the courts or other litigants the
existence of the parallel litigation. Apparently, Plaintiff believes that this entitles him to ignore the
collateral effect of the related litigations, namely, that he could, in fact, be held accountable for
arguments that he made in one that affects the other. Simply because Plaintiff chose not to admit
to the existence of the parallel litigation does not entitle him to immunity from the agreements he
entered.
The Fifth Circuit has recognized that “[a] court of admiralty is, as to all matters falling
within its jurisdiction, a court of equity. Its hands are not tied up by the rigid and technical rules
of the common law, but it administers justice upon the large and liberal principles of courts which
exercise a general equity jurisdiction.”172 Moreover, the circumstances of this case do not correlate
with those in Corbitt, when the Fifth Circuit sought to protect a particular party from an
unanticipated or unknown risk at the time of the settlement. Rather, the facts more closely align
with the Fifth Circuit’s reasoning in Breaux, where the parties knew or should have known of the
risk presented at the time of the Settlement Agreement. Here, Plaintiff’s duty to indemnify
Hyperion pursuant to the Settlement Agreement for Hyperion’s contractual liability to U.S. Well
would not be an “unusual and surprising obligation,” to the extent Plaintiff was aware that U.S.
172
Cates, 451 F.2d at 414.
33
Well was seeking contractual indemnification from Hyperion prior to the execution of the
Settlement Agreement, which obligates Plaintiff to indemnify Hyperion.173 Moreover, it could be
“reasonably inferred,” from the facts of this case, “that the parties intended to include [contractual
liability] within the indemnity coverage.”174 Given the Fifth Circuit’s attention to the “realities of
the situation” in reaching its determination in Corbitt and its decision in Breaux, it would not seem
like a departure from the Fifth Circuit’s reasoning to require Plaintiff to defend and indemnifiy
Hyperion’s contractual liability to Plaintiff, pursuant to the Settlement Agreement.175
In this case, the Settlement Agreement requires Plaintiff to defend and indemnify Hyperion
against “all claims, suits, liabilities and expenses . . . .” It is well established that a basic canon of
contractual interpretation requires words and phrases in a contract to be given their plain
meanings.176 Accordingly, the plain meaning of the phrase, “all . . . liabilities” in this provision
envisions that every type of liability is encompassed, including contractual liability. The very
contractual liability being claimed here was pending and known to Plaintiff and his counsel at the
time the Settlement Agreement, which contained the defense and indemnification clause, was
signed. Therefore, considering principles of contractual interpretation, the nature of admiralty
jurisdiction, and the spirit of the Fifth Circuit’s decisions in Corbitt and Breaux, this Court finds
173
Corbitt, 654 F.2d at 333.
174
Id.
175
It may be that Plaintiff’s claim should be against his attorney for creating and advising him to consent to the tangled
web of litigation; however, that issue is not before the Court.
176
See Becker v. Tidewater, 586 F.3d 358, 369 (5th Cir.2009); see also Weathersby v. Conoco Oil Co., 752 F.2d 953,
955 (5th Cir.1984)); Cargill, Inc. v. Kopalnia Rydultowy Motor Vessel, 304 Fed. App'x 278, 282 (5th Cir. 2008)
(quoting Chembulk Trading, LLC v. Chemex Ltd., 393 F.3d 550, 555 n. 6 (5th Cir. 2004) (“A contract is not ambiguous
if ‘its language as a whole is clear, explicit, and leads to no absurd consequences, and as such it can be given only one
reasonable interpretation.’”).
34
that the language contained in the Settlement Agreement is clear and includes defense and
indemnification for the contractual liability at issue here.177
C. Whether the Defense and Indemnification Clause of the Settlement Agreement, If
Interpreted to Include Contractual Liability, Violates Public Policy
Hyperion argues that Plaintiff has attempted to recover four times from the same injury
and was not forthcoming in either the Eastern District of Louisiana proceedings or the
Pennsylvania Litigation about the existence or events taking place in the respective courts;
therefore, according to Hyperion, the Settlement Agreement is not unconscionable. Plaintiff, on
the other hand, argues that the defense and indemnification clause in the Settlement Agreement is
unconscionable because enforcement would create an impermissible conflict of interest for
Plaintiff’s counsel and because Plaintiff, as a seaman, did not fully appreciate the consequences of
executing the release to the extent the defense and indemnification clause covers contractual
liability.
Plaintiff cites Lirette v. Popich Bros. Water Transport, Inc., a case in the Fifth Circuit, for
the proposition that a contractual obligation to defend may be voidable if the act of defending
potentially adverse parties would put the attorney in ethical strain.178 In Lirette, the plaintiff was
the captain of a vessel, owned and operated by his employer, who time chartered the vessel to a
third party, who chartered it to an oil company.179 The case involved two contracts among the
parties: (1) the charter between the vessel owner and the charterer and (2) the charter between the
177
Moreover, Plaintiff knew or should have known of the pending contractual liability in the Pennsylvania Litigation
at the time; therefore, Plaintiff had specific knowledge.
178
Rec. Doc. 21 at 16 (citing Lirette v. Popich Bros. Water Transp., 699 F.2d 725, 727 n.7 (5th Cir. 1983)).
179
Lirette, 699 F.2d at 726.
35
charterer and the oil company.180 The first charter provided that the owner would indemnify and
hold the charterer and the oil company harmless from injury claims by the owner’s employees.181
The second charter required the charter to indemnify the oil company against claims for injuries
of the oil company’s employees or employees of parties other than the charterer resulting from
willful or negligent acts of the charter or its agents.182
In Lirette, the plaintiff first sued the vessel owner, and later made the oil company an
additional defendant.183 The oil company then filed a third-party complaint against the charterer
seeking indemnity.184 The charterer formally tendered its defense of this complaint to the vessel
owner. 185 Following the oil company’s third-party claim, the charterer and the oil company
tendered the defense to the vessel owner whose qualified offer of defense was declined by both
the oil company and the charterer.186
Although there were two separate contracts in Lirette, there is no dispute that at the time
of the vessel owner/charterer contract, it was contemplated that the charterer would in turn charter
or contract with the oil company, or “broker the vessel” to the oil company for its use.187 Thus,
the oil company called upon both the vessel owner and the charterer to defend the plaintiff’s claim
180
Id.
181
Id.
182
Id.
183
Id. at 727.
184
Id.
185
Id.
186
Id.
187
Id. at 728.
36
pursuant to both contracts, and the charterer tendered its defense to the vessel owner pursuant to
the first contract.188 In Lirette, the Fifth Circuit reasoned that the relation of the parties, and the
confirmed liability of the vessel owner and the charterer to the oil company, “eliminate[d] many
of the problems which the vessel owner conjure[d] up.”189 There, the Fifth Circuit held that the
indemnity agreement running to the benefit of both the charterer and the oil company was adequate
in scope to cover the entirety of the oil company’s losses, and was accordingly enforceable.190
Moreover, there is no support for Plaintiff’s proposition that the court in Lirette “observed
that a contractual obligation to defend may be voidable if the act of defending potentially adverse
parties would put the attorney in ethical strain.”191 To the extent the vessel owner in Lirette made
such an argument, which is not clear from the opinion, the Fifth Circuit held that many of the
problems which the vessel owner conjured up were eliminated by the factual circumstances of the
case; and ultimately, the Fifth Circuit determined that the indemnity agreement was enforceable
against the vessel owner.
Here, too, any ethical strain conjured up by Plaintiff is eliminated by the factual
circumstances of this case. Any conflict of interest created by enforcing the Settlement Agreement
as to require Plaintiff to defend and indemnify Hyperion as a third-party defendant to the
Pennsylvania Litigation, in which Plaintiff is the plaintiff of record, was created by Plaintiff’s own
doing. In effect, Plaintiff’s counsel could have avoided subjecting himself to “the impossible
188
Id.
189
Id.
190
Id.
191
Rec. Doc. 21 at 16.
37
stress,” of which Plaintiff now warns, by advising his client against signing the Settlement
Agreement or raising the issue prior to execution of the Settlement Agreement. Moreover, Plaintiff
cannot seek equitable relief based on the violation of public policy, when Plaintiff has unclean
hands in seeking to recover in multiple venues and failing to inform the courts about those related
cases.192
In support of his argument that it would violate public policy to enforce the Settlement
Agreement against Plaintiff given his status as a seaman, Plaintiff cites Parks v. Dowell Division
of Dow Chemical Corporation, where the Fifth Circuit held that the contract was unenforceable as
contrary to public policy. However, as discussed supra, the circumstances regarding the Settlement
Agreement between Plaintiff and Hyperion are factually distinguishable from those in Parks.193
As previously discussed, even applying the heightened standard of scrutiny afforded to contracts
involving seamen, the Settlement Agreement in this case is enforceable because, in particular,
Plaintiff had advice from legal counsel, Plaintiff stated on the record at the time of execution of
the Agreement that he understood his rights in entering the contract, and Plaintiff negotiated for
the compensation he received in exchange for entering the Settlement Agreement with advice of
counsel.
Plaintiff additionally cites Cates v. U.S., a case in the Fifth Circuit, for the proposition that
courts’ ultimate concern in these cases is whether, at the time the seaman relinquished those rights,
he did so with “an informed understanding of his rights and a full appreciation of the
192
Henderson v. United States, 135 S. Ct. 1780, 1783, n.1 (2015) (“The unclean hands doctrine proscribes equitable
relief when, but only when, an individual's misconduct has immediate and necessary relation to the equity that he
seeks.”) (internal citation and quotation marks omitted).
193
Parks, 712 F. 2d. 154 (5th Cir. 1983).
38
consequences” of executing the release.194 In Cates, the plaintiff, a seaman brought suit against
the United States and his employer.195 On the eve of trial, the plaintiff settled his claim against his
employer and executed a release in their behalf and their vessels.196 After the trial date was reset,
the Government argued for the first time that failure to reserve rights against it expressly in the
release operated to absolve the United States from liability.197 Following trial, the district court
entered judgment against the United States; the Fifth Circuit affirmed.198 In affirming the district
court, the Fifth Circuit reasoned that (1) a court of admiralty is a court of equity; (2) the common
law rule requiring express reservation of rights against one tortfeasor in a written instrument
releasing another is an “anachronistic and rigid rule”; and (3) an omnipresent characteristic of
modern maritime litigation is its multiparty nature, settlements with some, but not all, parties are
frequently made, and adoption of the ancient common law rule would frustrate such partial
settlements. 199 Moreover, the Fifth Circuit held that the modern, sensible rule is that “the
consequence of the release is to be determined by the intentions of the parties.”200
In this case, the intention of the parties is reflected in the plain meaning of the defense and
indemnification provision, which requires Plaintiff to defend and indemnify Hyperion against “all
claims, suits, liabilities and expenses . . . .” As previously stated, the plain meaning of the phrase,
194
Rec. Doc. 21 at 17–18.
195
Cates, 451 F.2d at 412.
196
Id.
197
Id. at 413.
198
Id. at 412.
199
Id. at 414–15.
200
Id. at 415.
39
“all . . . liabilities” in this provision is that every type of liability is encompassed, including
contractual liability. Furthermore, Plaintiff makes no allegation that anything about the
circumstances in which the Settlement Agreement was executed indicates that the parties intended
the consequence of the defense and indemnification clause to be otherwise, where Plaintiff was
advised by legal counsel and freely negotiated the terms of the agreement. 201 Therefore,
enforcement of the Settlement Agreement does not violate public policy, and the Court hereby
grants summary judgment in favor of Hyperion.
IV. Conclusion
Since there is no genuine issue of material fact regarding the existence of a valid Settlement
Agreement or the defense and indemnification clause contained therein, and only the interpretation
of the unambiguous terms contained within that clause are in dispute, which is a matter of law,
summary judgment is appropriate.202 Pursuant to the principles of contract law and admiralty law,
as discussed above, the Court finds that the indemnification provision contained within the
Settlement Agreement requires Plaintiff to defend and indemnify Hyperion against all claims,
including those for contractual liability, arising out of this incident. The Court further finds that
enforcement of the Settlement Agreement does not violate public policy for the reasons stated
above.
201
Again, if Plaintiff’s counsel mistakenly thought that because defendants had different attorneys representing them
that defendants would not enforce an agreement entered in the litigation occurring in another state, that does not make
the agreement unfair or unconscionable –it just means that Plaintiff and his counsel will reap what they sowed.
202
Id. at 332 (affirming the district court’s resolution of whether parties’ intended to give the indemnitee a right of
indemnification for its contractual liability to a third party pursuant to an indemnification agreement between
indemnitor and indemnitee, as a matter of law).
40
Accordingly,
IT IS HEREBY ORDERED that Defendant Hyperion Safety Services, L.L.C.’s Motion
for Summary Judgment IS GRANTED.
18th
NEW ORLEANS, LOUISIANA, this ____ day of July, 2018.
_________________________________
NANNETTE JOLIVETTE BROWN
CHIEF JUDGE
UNITED STATES DISTRICT COURT
41
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