Batiste v. Quality Construction & Production L L C et al
Filing
146
MEMORANDUM RULING re 140 MOTION for Summary Judgment filed by Alliance Offshore L L C and 134 MOTION for Summary Judgment filed by Arena Energy L P. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained herein, Arena's motion is DENIED, and Alliance's motion is GRANTED. Signed by Magistrate Judge Patrick J Hanna on 7/9/2018. (crt,Alexander, E)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
DONALD BATISTE
CIVIL ACTION NO. 6:14-cv-03045
VERSUS
MAGISTRATE JUDGE HANNA
QUALITY CONSTRUCTION &
PRODUCTION LLC, ET AL.
BY CONSENT OF THE PARTIES
MEMORANDUM RULING
Currently pending are the cross-motions for summary judgment that were
filed on behalf of Arena Energy, LP and Alliance Offshore, LLC with regard to
Alliance’s cross-claim against Arena for defense and indemnity. (Rec. Docs. 134
and 140). Considering the evidence, the law, and the arguments of the parties, and
for the reasons fully explained below, Arena’s motion is DENIED, and Alliance’s
motion is GRANTED.
Background
In October 2013, the plaintiff, Donald Batiste, was employed by Quality
Construction and Production, LLC as a rigger. He and his crew were working on a
construction project on an offshore platform in the Gulf of Mexico that was owned
and operated by Arena Energy, LP. Helmerich & Payne International Drilling
Company (“H&P”) was conducting drilling operations on the platform pursuant to
a contract with Arena. The plaintiff claims that he was injured on October 26, 2013
while standing on the deck of a vessel engaged in the task of backloading material
baskets to the vessel from the platform. It is undisputed that the vessel was the M/V
NICHOLAS C, which was owned by Alliance Offshore, LLC and time-chartered to
Arena through an agreement brokered by Kilgore Marine Services, LLC.
The plaintiff contends that he gave an “all stop” signal that was ignored by
the H&P crane operator and that the crane operator proceeded to set a material basket
down on a pipe that was laying on the vessel’s deck. In his complaint, the plaintiff
alleged that he was injured when the basket’s contact with the pipe caused him to be
flung into the side of the basket and also caused the pipe to rise up into the air and
strike him in the head.
The plaintiff asserted negligence claims against several defendants, including
Arena and Kilgore.
Kilgore never answered the complaint, and the plaintiff
amended his complaint to substitute Alliance for Kilgore. (Rec. Doc. 60). Arena
filed a motion for summary judgment, which was granted, and the plaintiff’s claims
against it were dismissed with prejudice. (Rec. Docs. 126, 127). Similarly, Alliance
filed a motion for summary judgment, which was granted, and the plaintiff’s claims
against it were dismissed with prejudice. (Rec. Docs. 136, 137). The plaintiff’s
claim against H&P was settled.
The instant motions both address Alliance’s cross-claim against Arena for
defense and indemnity. (Rec. Doc. 75). Alliance argued that the provisions of the
2
time charter agreement entitle it to defense and indemnity from Arena, while Arena
argued that Alliance is not entitled to contractual defense or indemnity.
Analysis
A.
The Summary Judgment Standard
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment
is appropriate when there is no genuine dispute as to any material fact, and the
moving party is entitled to judgment as a matter of law. A fact is material if proof
of its existence or nonexistence might affect the outcome of the lawsuit under the
applicable governing law.1 A genuine issue of material fact exists if a reasonable
jury could render a verdict for the nonmoving party.2
The party seeking summary judgment has the initial responsibility of
informing the court of the basis for its motion and identifying those parts of the
record that demonstrate the absence of genuine issues of material fact.3 If the
moving party carries its initial burden, the burden shifts to the nonmoving party to
1
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Sossamon v. Lone Star State of
Tex., 560 F.3d 316, 326 (5th Cir. 2009); Hamilton v. Segue Software, Inc, 232 F.3d 473, 477 (5th
Cir. 2000).
2
Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008) (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. at 252); Hamilton v. Segue Software, Inc., 232 F.3d at 477.
3
Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007) (citing Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986)).
3
demonstrate the existence of a genuine issue of a material fact.4 All facts and
inferences are construed in the light most favorable to the nonmoving party. 5
If the dispositive issue is one on which the nonmoving party will bear the
burden of proof at trial, the moving party may satisfy its burden by pointing out that
there is insufficient proof concerning an essential element of the nonmoving party's
claim.6 The motion should be granted if the nonmoving party cannot produce
evidence to support an essential element of its claim.7
B.
Maritime Law Governs Alliance’s Cross-Claim
As explained in previous rulings, subject-matter jurisdiction in this case is
premised on the jurisdictional provision of the Outer Continental Shelf Lands Act
(“OCSLA”). But a finding that the court has OCSLA jurisdiction does not determine
the law that must be applied by the court in resolving the parties’ disputes. Here, the
parties agree that general maritime law applies to the contract at issue. An agreement
to transport people and supplies in a vessel to and from an offshore drilling rig is a
maritime contract, and the construction of a maritime contract is governed by
4
Washburn v. Harvey, 504 F.3d at 508.
5
Brumfield v. Hollins, 551 F.3d at 326 (citing Matsushita Elec. Indus. Co. v. Zenith Radio,
475 U.S. 574, 587 (1986)).
Norwegian Bulk Transport A/S v. Internat’l Marine Terminals P’ship, 520 F.3d 409, 412
(5th Cir. 2008) (citing Celotex Corp. v. Catrett, 477 U.S. at 325).
6
7
Condrey v. Suntrust Bank of Ga., 431 F.3d 191, 197 (5th Cir. 2005).
4
maritime law.8 Additionally, the time charter agreement at issue in this case
expressly states that it “shall be construed in accordance with the admiralty and
maritime laws of the United States of America.” (Rec. Doc. 134-2 at 11).
C.
Principles of Contract Law Apply
Charter party agreements, such as the master time charter agreement in this
case, are contracts subject to the general rules of contract law.9 The interpretation
of an indemnity provision in a maritime contract is ordinarily governed by federal
maritime law.10 It is also a matter of law.11 Under maritime law, “[a] contract of
indemnity should be construed to cover all losses, damages, or liabilities which
reasonably appear to have been within the contemplation of the parties, but it should
not be read to impose liability for those losses or liabilities which are neither
expressly within its terms nor of such a character that it can be reasonably inferred
that the parties intended to include them within the indemnity coverage.”12 “A
maritime contract should be read as a whole, and a court should not look beyond the
8
Laredo Offshore Constructors, Inc. v. Hunt Oil Co., 754 F.2d 1223, 1231 (5th Cir. 1985).
9
Marine Overseas Services, Inc. v. Crossocean Shipping Co., Inc., 791 F.2d 1227, 1234 (5th
Cir. 1986).
10
Corbitt v. Diamond M Drilling Co., 654 F.2d 329, 332 (5th Cir. 1981).
11
Becker v. Tidewater, Inc., 586 F.3d 358, 369 (5th Cir. 2009).
12
Fontenot v. Mesa Petroleum Co., 701 F.2d 1207, 1214 (5th Cir. 1986) (quoting Corbitt v.
Diamond M Drilling Co., 654 F.2d at 333).
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written language of the contract to determine the intent of the parties unless the
disputed language is ambiguous."13 The words used in a maritime contract should
be given their plain meanings unless the provision is ambiguous.14 To the extent
possible, all terms used in the contract should be interpreted, without rendering any
of them meaningless or superfluous.15 “A contract is unambiguous 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.”16
D.
Interpretation of The Master Time Charter Agreement
Alliance seeks defense and indemnity from Arena under the terms and
provisions of the master time charter agreement, dated January 12, 2005, which was
“entered into. . . between Kilgore Offshore, Inc. (hereinafter referred to as
“OWNER”), and ARENA OFFSHORE, LLC., its subsidiaries and affiliates
(hereinafter collectively referred to as ‘CHARTERER.’).” (Rec. Doc. 134-2 at 1).
After the agreement was confected, a short form charter agreement was executed
Channette v. Neches Gulf Marine, Inc., 440 Fed. App’x 258, 260 (5th Cir. 2011) (quoting
Fontenot v. Mesa Petroleum Co., 791 F.2d at 1214).
13
14
Becker v. Tidewater, Inc., 586 F.3d at 369.
15
Chembulk Trading, LLC v. Chemex Ltd., 393 F.3d 550, 555 (5th Cir. 2004).
Channette v. Neches Gulf Marine, Inc., 440 Fed. App’x at 260 (quoting Chembulk Trading,
LLC v. Chemex Ltd., 393 F.3d at 555 n. 6).
16
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between Arena and Kilgore on October 11, 2013, in which the M/V NICHOLAS C17
was chartered to work for Arena pursuant to the terms and provisions of the January
12, 2005 master time charter agreement. (Rec. Doc. 134-3 at 1). Although Kilgore
is shown as the owner of the vessel in both the short form agreement and in the
master time charter agreement, it has been established in this litigation that Kilgore
did not actually own the M/V NICHOLAS C. Instead, that vessel was actually
owned by Alliance, and Kilgore acted as a broker for Alliance in chartering the
vessel to Arena.18
The contract provision that both Alliance and Arena rely upon reads as
follows, in pertinent part:
Neither OWNER [Kilgore], its officers, directors, employees, the
vessel, her owners, operators, master, and crew, nor the underwriters of
any of the foregoing shall have any responsibility or liability for any
claim involving damage to or loss of any property or equipment of
Charterer, or CHARTERER’S [Arena’s] other contractors, or their
cargo and/or equipment carried by the vessel, or for any injury, illness,
disease or death of employees of CHARTERER [Arena], its other
contractors, or their employees or agents, and CHARTERER [Arena]
shall defend, indemnify, and hold harmless OWNER [Kilgore], its
officers, directors, employees, the vessel, its owners, operators, master,
and crew, and the underwriters of each of the foregoing from and
against any such claim, whether groundless or not, and whether caused
17
In some pleadings, the vessel was referred to as the M/V NICHOLAS rather than the M/V
NICHOLAS C. Because the short form time charter agreement refers to the vessel as Nicholas C,
that name will be used in this ruling.
This Court previously found that “[i]t is undisputed that Alliance was the owner and
operator of the M/V NICHOLAS, and that the vessel was time chartered to Arena pursuant to an
agreement brokered by Kilgore Offshore, Inc.” (Rec. Doc. 136 at 6).
18
7
in whole or in part by the negligence or faults of indemnities or by
unseaworthiness of the vessel or equipment of OWNER [Kilgore],
OWNER’S [Kilgore’s] property and OWNER’S [Kilgore’s]
subcontractor’s employees or property.19
It is undisputed that the plaintiff was an employee of Quality Construction,
which was one of Arena’s subcontractors. Therefore, his claim is a claim for injury
to an employee of one of the Charterer’s other contractors that falls within the
parameters of the indemnity provision.
Arena argued that the quoted contract provision should be interpreted in the
same way that the Fifth Circuit interpreted a time charter agreement in Channette v.
Neches Gulf Marine, Inc.20 There, as in this case, the vessel that was chartered was
not actually owned by the party that was designated in the contract as “OWNER;”
instead, the vessel broker was identified as “OWNER.” The court found that the
contract bound only the parties defined in the contract as “OWNER” and
“CHARTERER” and further found that “CHARTERER” did not owe indemnity to
the vessel’s actual owner. The court was persuaded that the contract did not require
the “CHARTERER” to indemnify the actual vessel owner because the actual owner
was neither a named party nor a signatory to the time charter agreement.
19
Rec. Doc. 134-2 at 7.
20
Channette v. Neches Gulf Marine, Inc., 440 Fed. App’x 258 (5th Cir. 2011).
8
Alliance argued, however, that Channette is substantially different from this
case because the master time charter agreement before the court in this case creates
a class of entities to whom indemnity is owed – including the vessel’s “owners,
operators, master, and crew,” while there is no evidence that the indemnity provision
interpreted in the Channette case contained a provision requiring that the
“CHARTERER” indemnify a class of entities in addition to the sole entity expressly
identified in the agreement as “OWNER.” Alliance is correct that the Fifth Circuit’s
Channette decision does not quote the indemnity provision or otherwise evidence
the creation of a class of indemnitees in the body of the agreement at issue.
However, the underlying district court decision does quote the indemnity provision,
which states that “CHARTERER shall indemnity [sic], defend and hold OWNER
and the Vessel harmless from and against any and all claims. . . .”21 Because the
language used in the two indemnity provisions is different, this Court cannot
conclude that Channette is controlling.
Alliance argued that the indemnity provision in the contract between Arena
and Alliance is broader than the one at issue in Channette, requiring a different
interpretation.
More particularly, Alliance argued that the words used in the
contract’s indemnity provision created a class of entities to whom defense and
21
Channette v. Evans Operating Co., No. 09-0202, 2010 WL 3154588, at *5 (W.D. La. Aug.
9, 2010), affirmed 440 Fed. App’x 258 (5th Cir. 2011).
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indemnity was owed by Arena. Alliance cited several cases in which courts found
that indemnity was owed to entities who were not signatories to contracts creating
indemnity obligations but were members of a class identified in the contracts.
The indemnity provision in the master time charter agreement between
Kilgore and Arena states that “CHARTERER shall defend, indemnify, and hold
harmless OWNER, its officers, directors, employees, the vessel, its owners,
operators, master, and crew. . . .” Unlike the indemnity provision construed in
Channette, the indemnity provision in this case does not require the charterer to
indemnify only the entity designated in the contract as “OWNER.” Instead, the
indemnity provision clearly and unambiguously requires Arena to indemnify
Kilgore because it is designated as the “OWNER” in the contract and to indemnify
Alliance because it was the “owner” and “operator” of the vessel at relevant times.
The language used in the indemnity provision clearly obligates Arena to
indemnify the members of two different groups. Arena must indemnify “OWNER
[Kilgore], its officers, directors, [and] employees,” and it must also indemnify “the
vessel, its owners [Alliance], operators [Alliance], master, and crew.” A clear
distinction is made between the word “owner” when it is capitalized and the word
“owner” when it is written in lower-case letters and used in connection with the
vessel. The capitalized word “owner” refers solely to Kilgore, while the lower-case
word “owner,” preceded by the words “the vessel, its” refers to any party established
10
as being the owner of the vessel. In this case, there is no dispute that Alliance owned
the M/V NICHOLAS C at all material times and, consequently, is among the
“owners” referred to when the word is printed in lower-case letters.
Any other interpretation of indemnity provision would require the words “the
vessel, its owners, operators” to be ignored. Doing so would violate a cardinal rule
of contract interpretation, which requires that all terms used in the contract should
be given meaning and, consistently, that no terms used in the contract should be
rendered superfluous. The only way to read the indemnity provision without
ignoring the words “the vessel, its owners, operators, master, and crew,” is to find
that Arena owes indemnity to Alliance because it was both the owner and operator
of the vessel at the time of the plaintiff’s alleged injury.
Another rule of contract interpretation is potentially implicated. That rule
requires that a word used in one sense in one part of a contract is presumed to retain
that same meaning throughout the contract.22 In the master time charter agreement,
the words “owner” and “OWNER” were both used. But interpreting the indemnity
provision as requiring Arena to indemnify Alliance will not violate that rule because
the words “owner” and “OWNER” are used differently in the agreement. When set
22
Matador Petroleum Corp. v. St. Paul Surplus Lines Ins. Co., 174 F.3d 653, 657 (5th Cir.
1999). Cf. Sullivan v. Stroop, 496 U.S. 478, 484 (1990) (mentioning the “normal rule of statutory
construction that identical words used in different parts of the same act are intended to have the
same meaning (quotation marks omitted; citations omitted)).
11
off in quotation marks and capitalized following Kilgore’s name in the contract’s
introductory paragraph, the word “OWNER” became a term of art with a single
meaning, referring solely to Kilgore. Without the capitalization, however, the word
“owner” retained its common and customary definition.
Therefore, when the
indemnity provision referred to both “OWNER” and “owners” in the same sentence,
it referred to two different entities – “OWNER” meant only Kilgore and “owners”
meant whatever persons or entities actually owned the M/V NICHOLAS C.
However, even if the terms “OWNER” and “owners” did not have different
meanings, the result would be the same. The indemnity provision requires that
Arena indemnify not just the vessel’s owners but also its operators. It is undisputed
that Alliance was operating the vessel at relevant times. Therefore, irrespective of
any potential confusion in the contract’s use of both the term “owners” and the term
“OWNER,” indemnity would have to be extended to Alliance because it was the
vessel’s operator even if it were not the vessel’s owner.
Accordingly, this Court concludes that Arena is obligated to defend and
indemnify Alliance under the plain and unambiguous language of the master time
charter agreement.
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Conclusion
Having found that the relevant indemnity provision in the master time charter
agreement between Kilgore and Arena requires Arena to defend and indemnify
Alliance with regard to the plaintiff’s claimed injury,
IT IS ORDERED that Arena’s motion for summary judgment with regard to
Alliance’s cross-claim against Arena for defense and indemnity (Rec. Doc. 134) is
DENIED, and Alliance’s motion for summary judgment with regard to its crossclaim against Arena for defense and indemnity (Rec. Doc. 140) is GRANTED.
Signed at Lafayette, Louisiana, this 9th day of July 2018
____________________________________
PATRICK J. HANNA
UNITED STATES MAGISTRATE JUDGE
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