HAMILTON v. TARGA TRANSPORT LLC et al
Filing
28
MEMORANDUM AND ORDER (Signed by Judge Nancy F Atlas) Parties notified.(sashabranner, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
October 12, 2017
David J. Bradley, Clerk
CHARLES HAMILTON,
Plaintiff,
§
§
§
v.
§ CIVIL ACTION NO. 4:16-CV-02614
§
TARGA TRANSPORT LLC and
§
TARGA RESOURCES LLC,
§
Defendants/Third Party Plaintiffs, §
§
v.
§
§
TPC GROUP LLC, a/k/a/ TPC
§
GROUP INC.,
§
Third Party Defendant.
§
MEMORANDUM AND ORDER
In this maritime personal injury case, the parties have filed cross-motions for
summary judgment. Third-Party Defendant TPC Group LLC a/k/a TPC Group
Inc. (“TPC”) filed a Motion for Summary Judgment [Doc. # 21] (the “TPC
Motion”) with respect to the claims asserted by Defendants and Third-Party
Plaintiffs, Targa Transport LLC (“Targa Transport”) and Targa Resources LLC
(collectively, “Targa”). Targa responded [Doc. # 22] and TPC has filed a Reply
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[Doc. # 23].1 Also pending is a Motion for Partial Summary Judgment (the “Targa
Motion”) [Doc. # 25] with respect to the same claims. TPC filed a timely response
[Doc. # 26], to which Targa replied [Doc. # 27].
The motions are now ripe for decision. Having considered the parties’
briefing, the applicable legal authorities, and all matters of record, the Court
concludes that the TPC Motion should be denied and that the Targa Motion should
be granted in part and denied in part.
I.
BACKGROUND
A.
Procedural Background
Plaintiff Charles Hamilton filed his original complaint (the “Original
Complaint”) in this case on August 29, 2016. Original Complaint [Doc. #1]. In
the Original Complaint, Plaintiff alleged that Targa and TPC were negligent and
grossly negligent in connection with an accident he suffered during his
employment on a barge. Each of Targa and TPC moved to dismiss the Original
1
TPC filed its Reply one day after the Court’s established deadline for doing so. As
a result, the Targa Entities filed an Objection to TPC’s Reply Brief in Support of
Motion for Summary Judgment (the “Objection”) [Doc. # 24], requesting that the
Court either decline to consider the Reply or grant the Targa Entities the
opportunity to file a sur reply. The Court does not condone TPC’s failure to
adhere to the Court’s filing deadlines. However, there are no adverse
consequences of TPC’s tardiness in this instance and Targa is not entitled to the
unnecessary relief it seeks in the Objection. The Objection is overruled.
2
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Complaint. See Targa’s Motion to Dismiss for Failure to State a Claim [Doc. # 4];
TPC’s Motion to Dismiss [Doc. # 6] (collectively, the “Motions to Dismiss”).
On January 19, 2017, the Court issued a Memorandum and Order [Doc. #10]
granting the Motions to Dismiss, but granted Plaintiff leave to re-plead his claims
against Targa.
On February 2, 2017, Plaintiff filed an Amended Complaint
[Doc. # 12] against Targa, alleging that Targa’s failure to take certain
precautionary measures constituted vessel negligence pursuant to 33 U.S.C. §
905(b) and that such alleged negligence was the cause of the same accident and
personal injury that were the subject of the Original Complaint.
On February 24, 2017, Targa filed a Third-Party Complaint against TPC (the
“Third-Party Complaint”) [Doc. # 17]. Targa alleges in the Third-Party Complaint
that TPC is contractually obligated, pursuant to the terms of a time charter
agreement between TPC and Targa Transport, to provide Targa with “defense,
indemnity and insurance cover” in connection with the claims that Plaintiff has
asserted in the Amended Complaint.
Subsequently, the TPC Motion and the Targa Motion were filed. In each
case, the moving party seeks summary judgment on the question of TPC’s
obligation to indemnify and defend Targa against Plaintiff’s claims in the
Amended Complaint.
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B.
Factual Background
On January 24, 2015, the barge CHEROKEE (the “Barge”), which is owned
by one of the Targa entities, was docked at a facility owned by TPC. While the
Barge was docked, Plaintiff, a tankerman employed by non-party SGS North
America, was “performing his tankerman duties and loading [the Barge] up with
liquid C4.” Amended Complaint, ¶ 9. Plaintiff alleges that as he “was coming
down the stairs from the digital gauging station on the [Barge] to the deck, he
slipped and fell due to frost on the deck,” which resulted in “severe injuries to his
body, including his head, neck and back.” Id. at ¶¶ 10, 12. Plaintiff alleges further
that his injuries were a result of Targa’s failure to provide a safe place to work,
including Targa’s failure to ensure that the Barge had proper “non-skid and
precautionary measures” in place. Id. at ¶¶ 16-17.
The Barge was docked at TPC’s facility on the date of Plaintiff’s accident
pursuant to a time charter agreement (the “Time Charter”).2 As between TPC and
Targa, there is no dispute that Plaintiff suffered his accident while loading Cargo
(as defined in the Time Charter) into the Barge. Section 13.1(a) of the Time
2
The initial parties to the Time Charter, which was effective as of March 1, 2009,
were Targa Midstream Services Limited Partnership and Texas Petrochemicals
LLC. Time Charter [Doc. # 25-2], at ECF 4. As a result of a series of
assignments and entity mergers, the details of which are not relevant here, Targa
Transport and TPC are the current parties to the Time Charter, with Targa
Transport as “Owner” and TPC as “Charterer.”
4
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Charter addresses TPC’s indemnification obligations to Targa relating to the
loading of Cargo into the Barge, and states:
CHARTERER AGREES TO DEFEND, INDEMNIFY AND
HOLD OWNER, ITS PAST, PRESENT, AND FUTURE
SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS,
SERVANTS,
EMPLOYEES,
AFFILIATES,
AND
CONTRACTORS (INCLUDING ALL VESSELS) AND THEIR
RESPECTIVE INSURERS (COLLECTIVELY, THE OWNER
INDEMNIFIED PARTIES) HARMLESS AGAINST ALL
CLAIMS FOR DAMAGES FOR PERSONAL INJURY, DEATH,
PROPERTY DAMAGE, AIR OR WATER POLLUTION,
FINES, PENALTIES OR ASSESSMENTS ARISING OUT OF
OR CONNECTED TO THE LOADING, UNLOADING OR
DISCHARGE OF CARGO WHETHER SUCH CLAIM IS IN
TORT, CONTRACT, OR STRICT LIABILITY OF ANY SORT.
Time Charter [Doc. # 25-2], §13.1(a), at ECF 12.
II.
SUMMARY JUDGMENT STANDARD
Rule 56 of the Federal Rules of Civil Procedure mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a
party who fails to make a sufficient showing of the existence of an element
essential to the party’s case, and on which that party will bear the burden at trial.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37
F.3d 1069, 1075 (5th Cir. 1994) (en banc); see also Baton Rouge Oil and Chem.
Workers Union v. ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir. 2002). “The
court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
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law.” FED. R. CIV. P. 56(a); see Celotex Corp., 477 U.S. at 322–23; Weaver v.
CCA Indus., Inc., 529 F.3d 335, 339 (5th Cir. 2008). “An issue is material if its
resolution could affect the outcome of the action. A dispute as to a material fact is
genuine if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” DIRECT TV Inc. v. Robson, 420 F.3d 532, 536 (5th Cir. 2006)
(internal citations and quotation marks omitted).
“Contract interpretation, including the question of whether a contract is
ambiguous, is a question of law.” East v. Premier, Inc., 98 F. App’x 317, 319 (5th
Cir. 2004). See McLane Foodservice, Inc. v. Table Rock Restaurants, L.L.C., 736
F.3d 375, 377 (5th Cir. 2013); Instone Travel Tech Marine & Offshore v.
International Shipping Partners, Inc., 334 F.3d 423, 428 (5th Cir. 2003).
III.
ANALYSIS
There is no dispute between the parties that the Time Charter is the operative
agreement governing TPC’s and Targa’s respective rights and obligations in this
case.
Rather, the parties’ disagreement pertains to a single issue of contract
interpretation: does the Time Charter require TPC to defend and indemnify Targa
for Targa’s own alleged negligence that resulted in Plaintiff’s accident? For the
following reasons, the Court concludes that it does.
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A.
Legal Standard for Indemnifying an Indemnitee for Its Own
Negligence Under General Maritime Law
The governing law of the Time Charter is “the General Maritime Law of the
United States and, to the extent of matters not provided therein, the laws of the
State of Texas.” Time Charter [Doc. # 25-2], at ECF 19. The parties agree that,
pursuant to Section 17.1 of the Time Charter, general maritime law governs this
dispute. “[U]nder general maritime law, indemnification for an indemnitee’s own
negligence must be ‘clearly and unequivocally expressed.’” East v. Premier, Inc.,
98 F. App’x 317, 319 (5th Cir. 2004) (quoting Seal Offshore, Inc. v. American
Standard, Inc., 736 F.2d 1078, 1081 (5th Cir. 1984). In adopting the “clearly and
unequivocally” test, general maritime law has rejected the “express negligence
test,” “which requires an indemnity provision to expressly state whether a party is
to be indemnified for its own negligence.”3 Id. (citing Theriot v. Bay Drilling
Corp., 783 F.2d 527, 540-41 (5th Cir. 1986). “A duty to indemnify in a given
situation will exist if the parties’ intention for a particular indemnification can
reasonably be inferred from the language of a contract, even in the absence of an
express provision.” Id. (citing Corbitt v. Diamond M. Drilling Co., 654 F.2d 329,
333 (5th Cir. 1981)); see also Int’l Marine, L.L.C. v. Integrity Fisheries, Inc., 860
3
As such, TPC’s numerous citations in its briefing to cases involving the “express
negligence test” under Texas state law are not relevant to the dispute currently
before the Court.
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F.3d 754, 759 (5th Cir. 2017) (“an indemnity contract covers losses within the
contemplation of the parties but not those 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,’”) (quoting Corbitt v.
Diamond M. Drilling Co., 654 F.2d 329, 333 (5th Cir. 1981)).
B.
Section 13.1(a) of the Time Charter Provides Indemnity for
Negligence Claims
TPC’s first argument that it is not required to defend and indemnify Targa in
this case is that the “claim in tort, contract or strict liability of any sort” language in
Section 13.1(a) of the Time Charter, does not cover negligence-based claims, such
as the claims asserted by Plaintiff in the Amended Complaint. In support of its
assertion, TPC contends that the absence of the term “negligence” (or any variation
thereof) in Section 13.1(a), while such term is specifically included in Sections
13.1(b)-(d)4 of the Time Charter, evidences the parties’ intent to exclude the
concept of negligence from Section 13.1(a). TPC argues further that the same
intent to exclude negligence from Section 13.1(a) is shown by the parties’ grouping
the terms “tort,” “contract,” and “strict liability” together in that section. The
Court does not find either of these arguments persuasive.
4
Section 13.1(d) is reproduced in full on pages 18-19 below.
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Of Section 13.1’s four subparagraphs, TPC correctly notes that only Section
13.1(a) does not explicitly use the term negligence. In Section 13.1(b), Targa’s
indemnity to TPC for claims arising out of or related to the transportation of
Cargo” is limited to the “extent of the negligence or willful misconduct of
Owner.”5 Time Charter [Doc. # 25-2], at ECF 12. In Section 13.1(c), TPC’s
indemnity to Targa for the same set of claims (i.e., those arising from or related to
the transportation of Cargo) is similarly limited to the “extent of Charterer’s
negligence, willful misconduct, or statutory liability.” Id. Therefore, the parties
used the term “negligence” in Sections 13.1(b) and (c) as a means to limit the
scope of those respective indemnities to a few specific causes of action.
By its plain language, however, Section 13.1(a) is significantly more
inclusive in scope than the indemnities in Sections 13.1(b) and (c). The indemnity
in Section 13.1(a) is not limited by the same “to the extent” language that appears
in Sections 13.1(b) and (c), and instead uses the more encompassing phrase
“whether such claim is in tort, contract or strict liability of any sort.”6
5
Section 13.1(b) also states that “[t]his indemnity shall not apply to the extent of
Charterer’s negligence or willful misconduct.” As discussed in Section 3C, infra,
this language is persuasive evidence that the parties intended that TPC would
indemnify Targa for Targa’s own negligence for claims arising from or connected
to the loading of Cargo into the Barge.
6
Compare Section 13.1(a) (covering “all claims . . . whether such claim is in tort,
contract or strict liability of any sort”); Section 13.1(b) (covering “all claims . . . to
the extent of the negligence or willful misconduct of owner and/or its tow, master
(continued…)
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Moreover, instead of limiting Section 13.1(a) to a few specific causes of
action, the parties expressly agreed that Section 13.1(a) would apply to three broad
categories of causes of action: those in tort, contract and strict liability. It is
beyond question that one of those broad categories, tort, includes negligence. See
Atl. Sounding Co. v. Townsend, 557 U.S. 404, 421 (2009) (“[t]he general maritime
law has recognized the tort of negligence for more than a century”) (quoting
Norfolk Shipbuilding & Drydock Corp. v. Garris, 532 U.S. 811, 820 (2001); Rose
v. Sherman, No. 5:12-CV-239-C, 2015 WL 13261882, at *5 (N.D. Tex. Apr. 16,
2015), aff’d, 676 F. App’x 258 (5th Cir. 2017) (“Instead, negligence is a tort under
state law . . .”). As the concept of negligence is already included within Section
13.1(a)’s broad scope, the absence of its specific mention is best understood as the
parties’ attempt to avoid unnecessary or duplicative language, not as evidence of
the parties’ intent to exclude negligence from Section 13.1(a)’s wide purview.7
(continued…)
or crew.”); Section 13.1(c) (covering “all claims . . . to the extent of Charterer’s
negligence, willful misconduct, or statutory liability.”). Time Charter [Doc. # 252], at ECF 12.
7
Section 13.1(d), a damages limitation provision within the Time Charter’s
indemnity section, also uses the term “negligence.” Under Section 13.1(d), for
claims between TPC and Targa Transport that do not involve third parties, the
liability of an indemnitor to an indemnitee is limited to exclude certain types of
damages, such as consequential or punitive damages. Time Charter [Doc. # 25-2],
at ECF 12-13. Those limitations apply to an indemnitor even if “such damages are
caused by the negligence” of the indemnitor. Id. TPC fails to explain
persuasively how the use of the term “negligence” to clarify the scope of damages
(continued…)
10
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TPC also asserts that application of the maxim noscitur a sociis (a word is
known by the company it keeps) to the phrase “tort, contract or strict liability of
any sort,” establishes that in the context of Section 13.1(a), the word “tort” only
refers to “liabilities without fault.” Reply [Doc. #23], at ECF 2-5. This argument
lacks merit. Even assuming the validity of TPC’s questionable underlying premise
that contractual liability, like strict liability, is a “species of liability that require[s]
no wrongdoing to trigger liability,” id. at 4, TPC’s assertion nevertheless fails
because it would render the term “tort” in Section 13.1(a) meaningless. TPC does
not explain how if the term “tort” is only understood to mean “liabilities without
fault,” the term differs in any meaningful way from “strict liability.”8 TPC’s
(continued…)
an indemnitor may be liable for is evidence that the parties intended to exclude the
concept of negligence from Section 13.1(a), which as discussed above, plainly
includes such concept by the phrase “claims in tort.” TPC’s argument is
particularly unavailing in this instance because Section 13.1(d) and its clarification
that an indemnitor’s liability for damages will be limited, even if those damages
results from its negligence, applies to Section 13.1(a). The fact that the parties did
not carve out Section 13.1(a) from the negligence clarification in Section 13.1(d),
which carve out would be appropriate if Section 13.1(a) did not extend to
negligence-based claims as TPC suggests, only further supports the conclusion
that a claim for negligence is within Section 13.1(a)’s scope.
8
Black’s Law Dictionary defines “strict liability” as “[l]iability that does not
depend on proof of negligence or intent to do harm but that is based instead on a
duty to compensate the harms proximately caused by the activity or behavior
subject to the liability rule.” BLACK’S LAW DICTIONARY (10th ed. 2014). Perhaps
equally significant, in its definition of “tort,” Black’s Law Dictionary notes that:
(continued…)
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proffered interpretation of “tort” would, at a minimum, render the term superfluous
in Section 13.1(a). The Court accordingly rejects TPC’s argument. See Chembulk
Trading LLC v. Chemex Ltd., 393 F.3d 550, 555 (5th Cir. 2004) (“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.”) (citing Foster Wheeler Energy Corp. v. An Ning Jiang MV, 383 F.3d
349, 354 (5th Cir. 2004); Capozziello v. Brasileiro, 443 F.2d 1155, 1159 (2d Cir.
1971)). Negligence claims are included in the indemnity provision of Section
13.1(a).9
(continued…)
Tortious conduct is typically one of four types: (1) a culpable or
intentional act resulting in harm; (2) an act involving culpable and
unlawful conduct causing unintentional harm; (3) a culpable act of
inadvertence involving an unreasonable risk of harm; and (4) a
nonculpable act resulting in accidental harm for which, because of
the hazards involved, the law imposes strict or absolute liability
despite the absence of fault. Id.
If, as TPC argues, the term “tort” in Section 13.1(a) only refers to liability without
fault (i.e., liability stemming from a non-culpable act), the only type of tort that
would not be eliminated from the definition in Black’s Law Dictionary would be
those in category (4): strict or absolute liability torts. Claims for such torts,
however, are already provided for by the “or strict liability of any sort” language
in Section 13.1(a).
9
An additional consequence of accepting TPC’s interpretation of “tort, contract, or
strict liability of any sort” would be that Targa would not have an indemnification
claim against TPC for any negligent or intentional act by TPC. TPC cites no
summary judgment evidence, authority or other provision of the Time Charter that
would support such a narrow and limiting view of Section 13.1(a). TPC’s
argument is particularly unpersuasive given that the indemnity in Section 13.1(a)
(continued…)
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C.
The Time Charter Clearly and Unequivocally Provides that TPC
Is Required to Indemnify Targa for Targa’s Own Negligence in
Connection with Plaintiff’s Personal Injury Claim
Plaintiff’s claims against Targa allege negligence in connection with the
loading of Cargo into the Barge that resulted in personal injury. Because the
indemnity in Section 13.1(a) covers negligence claims, Plaintiff’s claims plainly
fall within its scope. The key inquiry then is whether the Time Charter “clearly
and unequivocally” provides for TPC to defend and indemnify Targa for Targa’s
own alleged negligence that precipitated Plaintiff’s claims.
In support of Targa’s argument that that the Time Charter clearly and
unequivocally provides for TPC to defend and indemnify it for its own negligence,
Targa cites the Fifth Circuit’s decision in East v. Premier, Inc. 98 F. App’x 317
(5th Cir. 2004). In East, the Fifth Circuit analyzed whether a contract without an
explicit provision requiring the indemnitor to indemnify the indemnitee for the
indemnitee’s own negligence satisfied the “clearly and unequivocally” test. The
Fifth Circuit concluded that the liability provisions of the underlying agreement,
read collectively, provided for such an indemnity.
(continued…)
is broader than the indemnities in Sections 13.1(b) and (c), both of which cover
claims for negligence and willful misconduct, a species of intentional wrongdoing.
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The agreement language that the Fifth Circuit found passed muster was a
synthesis of two different but related liability provisions in the agreement. That
language was that the indemnitor “shall be responsible for all . . . causes of action
of every kind . . . arising in connection herewith . . . of . . . [indemnitor]’s invitees
on account of bodily injury . . . without regard to cause.” East, 98 F. App’x at 321.
The Fifth Circuit went on to explain that the synthesized language satisfied the
“clearly and unequivocally” test because “the phrase ‘responsible for . . . all causes
of action . . . arising in connection [with] . . . [indemnitor]’s invitees on account of
bodily injury’ addresses the concern of what specific type of cause of action is to
be covered, such as injury due to negligence,” and the phrase “without regard to
cause,” a key phrase in the decision,10 “addresses the concern of identifying whom
the previous language is to apply; here, neither the [indemnitor], nor the
[indemnitee].” Id.
Targa’s reliance on East in this case is persuasive. In East, the clear and
unequivocal test was satisfied by use of the phrase “without regard to cause.”
Targa identifies additional language in the Time Charter that, when viewed in its
totality, is functionally equivalent to the “without regard to cause” language in
10
See id. at 321 (“The question we must answer then is whether the phrase without
regard to cause satisfies the clear and unequivocal test.”) (internal quotation marks
omitted).
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East.11 Targa first points to language in Section 5 of the Time Charter, which
states in relevant part that: “The Cargo shall be loaded and unloaded into the
Barges at the expense, risk and peril of Charterer.” The Fifth Circuit has held, in
the context of a time charter agreement, that language requiring the charterer to
perform all cargo handling at its “risk and expense” “acts as an indemnification
clause between the owner and the time charterer.” Robinson v. Orient Marine Co.,
Ltd., 505 F.3d 364, 366 (5th Cir. 2007). The Time Charter at issue here uses the
more robust language of “expense, risk and peril.”
Although there is no case law that supports the conclusion that the standalone phrase “expense, risk and peril” in Section 5 of the Time Charter satisfies the
clear and unequivocal test, that language in context is persuasive evidence of the
11
In the Response [Doc. # 22] and in the Targa Motion [Doc. # 25], Targa also
asserts that the phrase “whether such claim is in tort, contract or strict liability of
any sort” in Section 13.1(a) of the Time Charter serves the “same role as the
‘without cause’ language in East.” Response [Doc. # 22], at EFC 8; Targa Motion
[Doc. # 25], at ECF 9. Specifically, Targa argues that “whether such claim”
language “address[es] the concern of what specific type of cause of action is to be
covered by the indemnity obligation.” Id.
That argument, however, is off the mark. The Fifth Circuit held in East, as
discussed above, the language “responsible for . . . all causes of action . . . arising
in connection [with] . . . [indemnitor]’s invitees on account of bodily injury”
addressed the type of cause of action to be covered. The “without regard to cause”
language in East addressed the materially different issue of whether a party’s
responsibility for causing or bringing about the underlying incident resulting in a
plaintiff’s claim affects that same party’s right to indemnification. Consequently,
Targa’s argument in this regard lacks merit.
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parties’ agreement about the allocation of risk on claims stemming from loading
Cargo into the Barge. As discussed above, Section 13.1(a) already provides Targa
with a broad indemnity from TPC for claims arising out of or connected to loading
Cargo into the Barge. The phrase “expense, risk and peril” in Section 5 must mean
something more than a simple indemnity from TPC to Targa Transport with
respect to loading Cargo, or that language would be superfluous as merely
redundant of Section 13.1(a). When the Time Charter is considered as a whole, the
phrase “expense, risk and peril” in Section 5 is most reasonably interpreted as
emphasizing the parties’ understanding that TPC would bear all risks arising out of
or connected to the loading of Cargo into the Barge, including the risk of Targa’s
own negligence. Such an interpretation gives content to the phrase “expense, risk
and peril” without rendering another provision of the Time Charter surplusage.
Interpreting the combination of the “expense, risk and peril” language in
Section 5 with the broad indemnity in Section 13.1(a) as evidence that the Time
Charter clearly and unequivocally requires TPC to indemnify Targa for its own
negligence in this case is also consistent with how the parties structured the other
indemnification provisions in the Time Charter. Whereas Section 13.1(a) pertains
to indemnity “arising out of or connected to the loading, unloading or discharge of
cargo,” Section 13.1(b) addresses the different situation of indemnity for claims
“arising out of or related to the transportation of Cargo.” Section 13.1(b) provides:
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OWNER AGREES TO DEFEND, INDEMNIFY AND HOLD
CHARTERER, ITS PAST, PRESENT, AND FUTURE
SHAREHOLDERS, OFFICERS, DIRECTORS, HARMLESS
AGAINST ALL CLAIMS FOR DAMAGES FOR PERSONAL
INJURY, DEATH, PROPERTY DAMAGE, AIR OR WATER
POLLUTION, FINES, PENALTIES OR ASSESSMENTS
ARISING
OUT
OF
OR
RELATING
TO
THE
TRANSPORTATION OF CARGO, INCLUDING BUT NOT
LIMITED TO THE GOOD WORKING ORDER OF THE
BARGE, TO THE EXTENT OF THE NEGLIGENCE OR
WILFUL MISCONDUCT OF OWNER AND/OR ITS TOW,
MASTER OR CREW.
THIS INDEMNITY SHALL NOT
APPLY TO THE EXTENT OF CHARTERER’S NEGLIGENCE
OR WILLFUL MISCONDUCT.
Time Charter [Doc. # 25-2], § 13.1(b), at ECF 12 (emphasis added).
Section 13.1(c) of the Time Charter also addresses indemnity in the Cargo
transportation context and states:
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
SECTION 13.1(B), CHARTERER AGREES TO DEFEND,
INDEMNIFY AND HOLD THE OWNER INDEMNIFIED
PARTIES HARMLESS AGAINST ALL CLAIMS FOR
DAMAGES FOR PERSONAL INJURY, DEATH, PROPERTY
DAMAGE, AIR OR WATER POLLUTION, FINES,
PENALTIES OR ASSESSMENTS ARISING OUT OF OR
RELATED TO THE TRANSPORTATION OF CARGO TO THE
EXTENT OF CHARTERER’S NEGLIGENCE, WILLFUL
MISCONDUCT, OR STATUTORY LIABILITY.
Id. § 13.1(c), at ECF 12 (emphasis added).
In Sections 13.1(b) and (c), the parties explicitly established that for claims
“arising out of or related to the transportation of cargo,” the indemnitor, regardless
of whether it is the “Owner” or the “Charterer,” is not responsible to defend or
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indemnify the indemnitee for the indemnitee’s own negligence. As such, it is clear
that the possibility of an indemnitee seeking indemnification for its own negligence
was plainly contemplated by the parties to the Time Charter. The parties thus
demonstrated their capability to address that issue and actually reached an
agreement as to how to do so.
The inclusion of an explicit limitation on
indemnification for an indemnitee’s own negligence in Section 13.1(b) and the
absence of such a limitation in the broader indemnity in Section 13.1(a) is
compelling evidence that the parties understood that TPC would indemnify Targa
for Targa’s own negligence for claims, such as a Plaintiff’s claim, that arise out of
or are connected to the loading of Cargo into the Barge.
The parties’ use of the phrase “even if such damages are caused by the
negligence of any party whose liability is limited hereby” in Section 13.1(d) does
not, as TPC asserts, compel a different conclusion. Section 13.1(d) states:
NOTWITHSTANDING ANY OTHER PROVISION IN THIS
CHARTER, NEITHER PARTY SHALL BE RESPONSIBLE OR
LIABLE TO THE OTHER, OR TO ANY INDEMNITEE, FOR
LOST PROFITS OR LOST BUSINESS OPPORTUNITIES, ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAGAMES ARISING OUT OF THIS CHARTER OR ANY
BREACH HEREOF, REGARDLESS OF THE CAUSES OF
SAME, EVEN IF SUCH DAMAGES ARE CAUSED BY THE
NEGLIGENCE OF ANY PARTY WHOSE LIABILITY IS
LIMITED HEREBY OR IN LIABILITY WITHOUT FAULT IS
SOUGHT TO BY IMPOSED UPON ANY PARTY, PROVIDED
HOWEVER, THAT IS ANY INDEMNITEE IS HELD LIABLE
TO A THIRD PARTY FOR ANY DAMAGES THAT ARE
WITHIN THE SCOPE OF ANY INDEMNITY GIVEN BY A
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PARTY UNDER THIS AGREEMENT, THE PARTY
OBLIGATED UNDER THE APPLICABLE INDEMNITY WILL
BE LIABLE FOR SUCH DAMAGES.
Id. § 13.1(c), at ECF 12-13.
TPC argues that Sections 13.1(a) and 13.1(d) are “parallel provisions,” and
that the inclusion of a clarification regarding the effects of negligence in the latter
implies that the parties would have included explicit language about
indemnification for an indemnitee’s own negligence in the former if the parties had
wanted to achieve that result. Reply [Doc. # 23], at ECF 2-3. The Court is
unconvinced.
Section 13.1(d) provides that for indemnity claims between TPC and Targa
where no third party is involved, the types of damages for which an indemnitor is
potentially liable to the indemnitee are limited.12 These limitations apply even if
the underlying damages were the result of the indemnitor’s negligence. Unlike
Sections 13.1(b) and (c), which expressly address indemnification for an
indemnitee’s own negligence, Section 13.1(d) only addresses the consequences of
an indemnitor’s negligence.
Furthermore, unlike Section 13.1(a) (or Sections
13.1(b)-(c)), Section 13.1(d) says nothing about the types of underlying claims for
12
If Section 13.1(d) applies, an indemnitor will not be liable to an indemnitee for
lost profits, lost business opportunities, special, incidental, consequential or
punitive damages. Time Charter [Doc. # 25-2], at ECF 12-13.
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which each party has agreed to indemnify the other. Instead, under a specific set of
facts not relevant here (i.e., a claim for indemnification involving no third party),
Section 13.1(d) merely limits the types of damages an indemnitor may be liable for
in connection with a claim that falls within the scope of Sections 13.1(a)-(c).
Sections 13.1(a) and 13(d) are not “parallel provisions.”
They address
fundamentally different points about the parties’ liability and are conceptually
distinct from one another. As such, the parties’ use of the clarifying phrase “even
if such damages are caused by the negligence of any [indemnitor]” in Section
13.1(d) does not support the reasonable inference that had the parties intended the
indemnity in Section 13.1(a) to cover the indemnitee’s own negligence they would
have included specific language to that effect.
In summary, when read as a whole, the language used by the parties in the
Time Charter satisfies the clear and unequivocal test. See Becker v. Tidewater,
Inc., 586 F.3d 358, 369 (5th Cir. 2009) (“A maritime contract containing an
indemnity agreement . . . should be read as a whole and its words given their plain
meaning unless the provision is ambiguous.”). Although there is no language
explicitly requiring TPC to indemnify Targa for its own negligence, explicit
language is not required in the Fifth Circuit for satisfaction of the maritime law
clear and unequivocal test.
See East, 98 F. App’x at 321–22 (“requiring a
statement that included the phraseology “[TPC] will indemnify [Targa] for its own
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negligence” would in effect be applying the ‘express negligence test,’ which . . .
has not been adopted by general maritime law.”) (citing Theriot, 783 F.2d at 54041). Based on the combination of TPC’s agreement in Section 5 to load Cargo into
the Barge at its “expense, risk and peril,” the broad Cargo-related indemnity TPC
agreed to provide to Targa in Section 13.1(a), and the lack of an explicit carve out
for indemnitee negligence in Section 13.1(a), such as the one the parties included
in Section 13.1(b), the Court concludes that the Time Charter clearly,
unequivocally and unambiguously13 expresses the parties’ agreement that TPC
would defend and indemnify Targa against Plaintiff’s claims in this case, even if
those claims arose from Targa’s own negligence. See Orduna S.A. v. Zen–Noh
13
In connection with its own motion for summary judgment, TPC argued that if the
Time Charter does not fail the clear and unequivocal test as a matter of law, it is
ambiguous regarding the parties’ intent for TPC to indemnify Targa for Targa’s
own negligence. Reply [Doc. # 6-7]. “A contract is ambiguous when its meaning
is uncertain and doubtful or is reasonably susceptible to more than one
interpretation.” East, 98 F. App’x at 319 (citing Reliant Energy Services, Inc. v.
Enron Canada Corp., 349 F.3d 816, 2003 WL 22439846, *3 (5th Cir. 2003);
Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). “If
any ambiguity exists in a contract, ‘a fact issue remains regarding the parties’
intent,’ thus precluding a grant of summary judgment.” Id. (citing Instone Travel
Tech Marine & Offshore v. Int’l Shipping Partners, Inc., 334 F.3d 423, 431 (5th
Cir. 2003)). For the reasons stated above, the Court concludes that on the issue of
whether TPC has agreed to indemnify Targa for its own negligence, the Time
Charter is not reasonably susceptible to more than one interpretation: it clearly and
unequivocally demonstrates that TPC agreed to provide Targa with such an
indemnity. As such, the Court concludes that TPC’s argument that the Time
Charter is ambiguous is without merit.
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Grain Corp., 913 F.2d 1149 (5th Cir. 1990) (“Before enforcing an indemnification
clause for an indemnitee’s own negligence, a court must be firmly convinced that
the exculpatory provision reflects the intention of the parties.”).
D.
TPC’s Obligation to Defend Targa is Governed Solely by Section
13.2 of the Time Charter
Finally, Targa asserts that Section 13.1(a) requires TPC to both “defend” and
“indemnify” Targa for claims covered by Section 13.1(a), and thus TPC is
obligated to assume Targa’s defense on an “ongoing basis,” rather than simply
reimburse Targa at some point in the future for any attorneys’ fees or costs Targa
incurs defending itself against Plaintiff’s claims. Targa Motion [Doc. # 25], at
ECF 12-14. TPC does not contest this point in its briefing.
Section 13.2 of the Time Charter sets forth how the parties agreed to handle
the defense of “Third Person Claims,” such as Plaintiff’s claims against Targa in
this case. Specifically, Section 13.2(c) provides that an indemnitor [TPC], after
receiving notice of a third party claim from an indemnitee, has the “sole and
absolute right” “at its option and at its own expense, to be represented by counsel
of its choice and to control, defend against, negotiate and otherwise deal with any
proceeding, claim, or demand” related to the indemnified loss or liability. Time
Charter [Doc. # 25-2], §13.2, at ECF 13 (emphasis added). If the indemnitor elects
to control the defense, the indemnitee [Targa] “may participate in any such
proceeding with counsel of its choice and at its expense.” Id. If the indemnitor
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does not assume control of the defense of a third party claim and the indemnitee
“defends against or otherwise deals” with such a claim, the indemnitee “may retain
counsel, at the expense of the [i]ndemnitor, and control the defense of such” claim.
Id. at 13-14. Section 13.2 thus addresses under what circumstances the indemnitor
or the indemnitee controls the defense and who bears responsibility for the
reasonable fees and expenses of defense counsel and, as such, is controlling on this
issue. To the extent that Targa is asking the Court to hold that TPC owes it
defense obligations that are beyond or in conflict with what the parties have agreed
to in Section 13.2 of the Time Charter, that request is without merit and is
denied.14 Nevertheless, TPC must inform Targa and the Court through a sealed
14
Furthermore, to the extent that Targa is requesting summary judgment that it is
entitled to be indemnified for the fees and expenses it has incurred in establishing
its right to indemnification under Section 13.1(a) of the Time Charter, that request
is also denied. “Although a general indemnity provision typically includes
recovery of attorneys’ fees incurred in defending against a claim covered by the
indemnity provision, ‘the indemnitee enjoys no right to recover its legal fees
incurred in establishing its right to indemnification.’” Becker, 586 F.3d at 375
(quoting Dow Chem. Co. v. M/V ROBERTA TABOR, 815 F.2d 1037, 1042 (5th
Cir. 1987). As Section 13.1(a) is a general indemnity clause, id., and does not
specifically provide for recovery of attorneys’ fees in enforcing the indemnity
provision, the prohibition barring the recovery of legal fees incurred in
establishing a right to indemnification applies.
In the TPC Motion, TPC also seeks summary judgment that it is not in breach of
the Time Charter’s insurance requirement provisions and that Targa is not an
additional insured under certain of TPC’s insurance policies that relate to the Time
Charter. TPC Motion [Doc. # 21], at ECF 12-17. TPC did not reply to Targa’s
response to these points and did not address them in its response to the Targa
Motion. The issues on the scope of the Time Charter’s insurance requirements
(continued…)
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advisory on or before October 31, 2017, whether TPC will assume Targa’s
defense.
IV.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that TPC’s Motion for Summary Judgment [Doc. # 21] is
DENIED. It is further
ORDERED that Targa’s Motion for Partial Summary Judgment [Doc. # 25]
is GRANTED to the extent that Targa seeks summary judgment that TPC is
obligated to defend and indemnify Targa against Plaintiff’s claims in the Amended
Complaint pursuant to Section 13.1(a) of the Time Charter. In all other respects,
Targa’s Motion for Partial Summary Judgment is DENIED. It is further
ORDERED that TPC shall file a sealed advisory on or before October 31,
2017, indicating whether it will assume Targa’s defense in this case.
SIGNED at Houston, Texas, this 12th day of October, 2017.
NANCY F. ATLAS
SENIOR UNITED STATES DISTRICT JUDGE
(continued…)
(and the scope of the policies TPC obtained pursuant thereto) are moot in light of
the Court’s conclusion that Targa may rely on TPC’s indemnity obligations in the
Time Charter.
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