Taylor et al v. TESCO Corporation (US)
Filing
293
MEMORANDUM AND ORDER granting 201 MOTION to Sever Steadfast Insurance Company and Zurich Insurance Company and Insurance Claims, denying without prejudice 189 MOTION to Dismiss. (Signed by Judge Ewing Werlein, Jr) Parties notified.(kcarr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KEITH TAYLOR and BARBARA
TAYLOR, INDIVIDUALLY AND ON
BEHALF OF THEIR TWO MINOR
CHILDREN, DAVID A. TAYLOR and
DARYEL TAYLOR,
Plaintiffs,
TESCO CORPORATION (US), TESCO
CORPORATION, PRIDE
INTERNATIONAL, INC., and
MEXICO DRILLING LIMITED, LLC,
Defendants.
PRIDE INTERNATIONAL, INC. and
MEXICO DRILLING LIMITED, LLC,
Third-Party Plaintiffs,
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CIVIL ACTION NO
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v.
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TESCO CORPORATION (US), TESCO
TESCO CORPORATION, INSURANCE
COMPANY OF THE STATE OF
PENNSYLVANIA, ILLINOIS NATIONAL
INSURANCE COMPANY, STEADFAST
INSURANCE COMPANY, and
ZURICH INSURANCE COMPANY,
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Third-Party Defendants.
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MEMORANDUM AND ORDER
The following motions now come on for consideration: Insurance
Company of the State of Pennsylvania's
National
Insurance Company's
("ICSOP") and Illinois
("INIC") Third-Party Defendants1
Motion to Dismiss (Document No. 189) , and Third-Party Defendants
Steadfast Insurance Company's
("SteadfastU)and Zurich Insurance
Company's ("Zurich") Motion to Sever Insurance Claims (Document
No. 201) , to both of which Pride International, Inc. and Mexico
Drilling Limited, LLC ("Third-Party Plaintiffs") have filed their
opposition.
After carefully considering the motions, responses,
the additional facts and arguments presented by counsel in the
hearing held on September 24, 2012, and the applicable law, the
Court concludes that Third-Party Plaintiffs' cross-action and
third-party action filed at Document No. 138 should be severed and
separately docketed.
I. Backsround
This case arises out of injuries sustained by Plaintiff Keith
Taylor when working in proximity to a top-drive on a fixed oil
platform in the Bay of Campeche off the coast of Mexico on January
1, 2009.' The case was filed in the Eastern District of Louisiana,
which transferred it to this Court "for the convenience of the
parties and witnesses, and in the interest of justice," pursuant to
28 U.S.C.
§
1404 (a). 2
Before the transfer was ordered, Third-Party
Plaintiffs cross-claimed against Tesco Corporation (US) ("Tesco
Document No. 185-2 (4th Am. Cmplt.) at 3.
See the
Memorandum and Order signed September 8, 2011, for a more detailed
description of the background. Document No. 188.
Document No. 142.
(US) ) and Tesco Corporation ("Tesco" for indemnity under terms of
"
)
an alleged purchase agreement between those parties (which at the
hearing Tescors counsel identified as a 2008 agreement), and filed
third-party claims against the Third-Party Defendant insurance
companies that issued policies to Tesco, asserting that Third-Party
Plaintiffs are additional insureds.
ICSOP is providing a defense
to Third-Party Plaintiffs under a reservation of rights in the
underlying case filed by the Taylors. INIC1spolicy is for excess
coverage behind ICSOP. Steadfast, which is a subsidiary of Zurich,
issued a policy to Tesco and is not providing a defense to ThirdParty Plaintiffs, while Zurich, which issued no policy, is sued
merely as the parent company of Steadfast. ICSOP and INIC move to
dismiss the Third-Party Plaintiffs' claims against them pursuant to
Federal Rules 12 (b)(1) and 12 (b)(6). 3
Steadfast and Zurich move to
sever the Third-Party Plaintiffs' claims pursuant to Federal Rule
14 (a)(4). 4
The Tesco Defendants did not
file a motion but
suggested through their counsel at the hearing that they favor some
alternative so that the third-party action will not "muck up" their
defense of Taylor's product liability claims against them.5
Document No. 189.
Document No. 201.
The Court is unsure whether "muck up" is intended as a new
jurisprudential term of art or just a colloquialism, but gets the
drift of counsel's argument.
Tesco appeared to agree that a
severance would prevent such a deleterious muck up.
11.
Motion to Sever
Under Rule 14 (a)(4), ' [alny party may move to strike the
third-party claim, to sever it, or to try it separately." FED. R.
CIV. P. 14(a) (4).
"When considering a request to sever the
impleader claim and for its separate trial, the court typically is
concerned with the effect the additional parties and claims will
have on the adjudication of the main action-in particular, whether
continued joinder will serve to complicate the litigation unduly or
will prejudice the other parties in any substantial way."
ALAN WRIGHTET
AL.
, 6 FEDERAL
PRACTICE
AND
CHARLES
PROCEDURE 1460 at 534 (3d ed.
§
2010).
Third-party Plaintiffs allege that they furnished Tesco with
"written Terms
and
Conditions"
governing
their
relationship
("~esco/~ride
Contract"), which in paragraph 16 bound Tesco to
"protect,
indemnify
and
hold
harmless
the
Buyer
and
its
subsidiaries" from certain claims and losses, which applies to any
liability Third-Party Plaintiffs may be adjudged to have to Taylor;
and which further, in paragraph 22, binds Tesco to carry certain
insurance policies and to include "Buyer Group as an additional
In
insured with respect to all operations and work here~nder."~
addition to their claim for contractual indemnity and contribution
against the Tesco parties, Third-Party Plaintiffs allege that as
Document No. 138.
additional insureds under policies issued to Tesco by ICSOP, INIC,
and Steadfast, that the insurance companies owe to Third-Party
Plaintiffs the duties to defend and to i n d e m n i f ~ . ~
The cross-claims on the indemnity clause of the ~ e s c o / ~ r i d e
Contract and the related third-party claims against the insurance
companies are quite separate and distinct from Taylor's tort and
products liability claims.
Taylor is a Mississippi resident who
was injured while working on an oil platform offshore Mexico.
alleges
that
the
top
drive
motor
manufactured,
He
marketed,
distributed, sold and/or serviced by Tesco (US) and/or Tesco was
unreasonably dangerous due to negligence, poor product design,
and/or fabrication defects, and that the Tesco Defendants failed to
provide adequate warning and breached its warranty of fitness.
Plaintiffs allege that the Pride Defendants e . ,
Third-Party
Plaintiffs) assumed a duty for safety on the rig and knew of or
should have known about the defective top drive engine but failed
to exercise safety precautions necessary to prevent injuries to
workers.
Taylor further alleges that the Pride Defendants failed
to provide a reasonably fit and safe workplace and failed to
provide
Keith
Taylor
with
adequate
supervision, and/or oversight.
training,
instruction,
Plaintiffs in the underlying
e
lawsuit allege nothing about the 2008 ~ e s c o / ~ r i dContract, allege
no claim based on such an agreement, and never mention any
Id.
- at
15.
insurance policies obtained by Tesco pursuant to the ~ e s c o / ~ r i d e
Contract, all of which Third-Party Plaintiffs separately injected
into the case with their cross-action and third-party claims.
Third-Party Plaintiffs' claims arise out of a different set of
facts and have a completely different set of complexities than the
underlying personal injury action. Hence, when the Court conducted
a hearing this week on whether to dismiss or sever the claims
raised in the third-party action, Plaintiff's counsel chose not to
appear, evidencing Plaintiff's obvious disinterest in secondary or
collateral indemnity and insurance arrangements among Defendants if
he is able to establish liability against the Tesco Defendants
and/or the Pride Defendants.
Third-Party Plaintiffs claim that they are additional named
insureds under policies issued to Tesco, but their claim is more
complex than that of a typical additional named insured asserting
contract
a claim under an insurance policy. Here, the ~ e s c o / ~ r i d e
requires that Plaintiffs be carried as an additional insured only
"with respect to all operations and work hereunder," which, as the
parties point out, implies that ultimately it must be determined-if Taylor wins a judgment against the Pride Defendants--whether the
liability is "with respect to all operations and work" done under
Contract.
the 2008 ~ e s c o / ~ r i d e
The insurance companies also
contend that they have no duty to defend, although ICSOP states it
is providing a defense to Pride Defendants under a reservation of
rights.' In more straightforward cases between a named insured and
his insurer, disputes on the duty to defend are often decided on
cross-motions for summary judgment in an action separate from the
underlying lawsuit. See, e.g., Northfield Ins. Co. v. Lovins Home
Care, Inc., 363 F.3d 523 (5th Cir. 2004) ("The duty to defend is
determined by consulting the latest amended pleading.
. . .
In
contrast, the duty to indemnify is not based on the third party's
allegations, but upon the actual facts that underlie the cause of
action and result in liability.") (citations and quotation marks
omitted). Also, a claim on the duty to indemnify ordinarily must
await resolution of
the underlying
lawsuit and
is typically
dismissed without prejudice as not ripe if the underlying case has
not been adjudicated.
Here, as observed above, an even more
complicated claim is made, for it is not the insured who asserts
that the insurers owe a duty to defend, but rather putative
additional insureds whose coverage evidently depends on whether any
liability
in
the
underlying
case was
"with respect
to
all
operations and work" done under the ~ e s c o / ~ r i dContract.
e
Further, a conflicts of law question may be present which
possibly
requires
the
application
of
different
law
in
the
ICSOP conceded at the hearing that it could cease to provide
that defense at any time. Moreover, the fact that it defends the
Pride Defendants under a reservation of rights implies a genuine
controversy, which poses a substantive obstacle to dismissing
summarily Third-Party Plaintiffs1 action against ICSOP at the
initial pleading stage.
contract/insurance policies case than in Taylor's underlying case.
Third-Party Plaintiffs argue that because the case was filed in
Louisiana, Louisiana law applies and that Louisiana permits direct
actions against insurance companies.
Because the case was first
filed in Louisiana, the Court does look to Louisiana law in a
conflicts-of-lawanalysis to determine what law governs. See Piper
Aircraft Co. v. Reyno, 102 S. Ct. 252, 259 n.8 (1981) ([]
'A
court
ordinarily must apply the choice-of-lawrules of the State in which
it sits.
U.S.C.
However, where a case is transferred pursuant to 28
1404 (a), it must apply the choice-of-law rules of the
State from which the case was transferred." (citations omitted)).
Louisiana law evidently provides that an issue on conventional
obligations is governed by the law of the State whose policies
would be most seriously impaired if its law were not applied to
that issue.
See LA. CIV. CODE ANN. art. 3537 (2011). During the
Court's hearing, counsel demonstrated that all three insurance
policies
were
issued
by
the
insurance
companies
to
Corporation at its designated address in Houston, Texas.
Tesco
Houston
is also the principal place of business of Tesco (U.S.).
addition, Third-Party Plaintiffs who
claim
to
be
In
additional
insureds under the policies, have their principal place of business
in Houston.
Third-Party Plaintiffs were unable to cite a single
point of contact between these insurance contracts and Louisiana,
and they point to no policy of Louisiana law that would be impaired
by applying Texas law to these contracts. Indeed, given the facts
that the insurance companies issued and mailed the insurance
policies to the insured at the insured's Texas office, that the
principals to the Tesco/Pri.de Contract each has its principal place
of business or its American office located in Houston, and that
neither the ~ e s c o / ~ r i dContract nor any of the insurance policies
e
has any point of contact with Louisiana, it follows that Texas law
would be more seriously impaired if its law were not applied to the
indemnity contract and insurance policies.
On the other hand, a
separately contested choice-of-law issue is pending in Taylor's
underlying
products
liability
and
tort
case, where
parties
variously argue that the law of Louisiana, Texas, or Mexico applies
to Taylor's case. The Court has not yet considered that choice-oflaw dispute but recognizes the possibility, under Louisiana choiceof-law principles, that the law of a different state or nation
could apply to the underlying personal injury case.
This is one
further reason to sever the two cases.
Thus, to avoid undue complications and to simplify the issues
for trial and for pretrial consideration in this litigation, and
for the efficient administration of justice, a severance of the
cross-claim against the Tesco Defendants and third-party claims
against all insurance companies is warranted.
Because the Third-
Party Plaintiffs' claims against the Tesco Defendants and the
insurance companies are inextricably intertwined, Steadfast's and
Zurich's motion to sever will be granted not only as to those
movants, but, in the interest of efficiency and justice, as to all
parties named in Third-Party Plaintiffs' cross-claims and thirdparty action. ICSOPtsand INIC1s motion to dismiss will be denied
without prejudice to its being refiled if and when appropriate in
the severed action.
111.
Order
For the foregoing reasons, it is
ORDERED
that
Third-Party Defendants
Steadfast
Insurance
Company and Zurich Insurance Company's Motion to Sever (~ocument
No.
201)
is GRANTED
and
the
Crossclaimants and
Third-Party
Plaintiffs Pride International, 1 n c . l ~
and Mexico Drilling Limited,
LLC1s crossclaim
Corporation
against
seeking
Tesco
indemnity
~ e s c o / ~ r i d eContract,
and
Corporation
and/or
(US) and
contribution
entitlement
to
certain
Tesco
under
the
insurance
coverage, and their third-party action against Insurance Company of
the State of Pennsylvania, Illinois National Insurance Company,
Steadfast Insurance Company, and Zurich Insurance Company (Document
No. 138, pp.
9-17) is SEVERED from this case and
separately docketed by the Clerk of Court.
shall be
It is further
ORDERED that the Clerk of Court shall assign a new case number
to the severed action, which shall be entitled Pride International,
Inc. and
Mexico
Drillinq
Limited, LLC, Plaintiffs v.
Tesco
Corporation (US), Tesco Corporation, Insurance Company of the State
of Pennsylvania, Illinois National Insurance Company, Steadfast
Insurance Company, and Zurich Insurance Company, Defendants, and
the Clerk shall make a direct assignment of the case to the
undersigned Judge.
It is further
ORDERED that the Clerk shall place in the newly opened case
file, a copy of this Memorandum and Order, the cross-claim and
third-party action identified above at Document No. 138, and the
following additional filings:
Document No.
Document
Defendants Steadfast Insurance Company and
Zurich Insurance Company's Original Answer
169
Answer and Affirmative Defenses of Tesco
Corporation (US) to the Cross-Claim of
Pride International, Inc. and Mexico
Drilling Limited, LLC
Answer and Affirmative Defenses of Tesco
Corporation to the Cross-Claim of Pride
International, Inc. and Mexico Drilling
Limited, LLC
It is further
ORDERED that Insurance Company of the State of Pennsylvania's
and Illinois National Insurance Company's Third-Party Defendants1
Motion to Dismiss (Document No. 189) is DENIED without prejudice,
and because these Third-Party Defendants have not answered, they
shall have twenty-one (21) days after the date of this Order to
move, answer, or otherwise plead.
It is further
ORDERED that all parties in making all future filings in the
severed action shall use the new case number assigned by the Clerk
and new title set out in the second paragraph of this Order.
The Clerk will enter this Order and provide a correct copy to
all parties.
SIGNED at Houston, Texas, on this
day of September, 2012.
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