Hines v. Energy XXI Services, LLC et al
Filing
128
MEMORANDUM OPINION AND ORDER - Granting 119 Fourth MOTION for Summary Judgment for Order of Recognition and Reimbursement of Lien, DENYING as moot 127 Ex Parte MOTION for Leave to File Sur-Reply to Intervenors' Motion for Summary Judgment. (Signed by Judge Gray H Miller) Parties notified.(sanderson, 4)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JERMAINE HINES,
Plaintiff,
v.
ENERGY XXI SERVICES, LLC, et al
Defendants.
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October 01, 2019
David J. Bradley, Clerk
CIVIL ACTION H-17-1505
MEMORANDUM OPINION AND ORDER
Pending before the court is intervenors Fab-Con, Inc. (“Fab-Con”) and Signal Mutual
Indemnity Association, Ltd.’s (“Signal”) (collectively, “Intervenors”) motion for summary
judgment. Dkt. 119. After considering the motion, response, reply, record evidence, and the
applicable law, the court finds that Intervenors’ motion should be GRANTED.
I. BACKGROUND
This case involves injuries plaintiff Jermaine Hines (“Hines”) alleges he incurred on
August 26, 2016 while working aboard an oil rig in the Gulf of Mexico off the Louisiana coast.
Dkt. 119-1.1 Hines was an employee of Fab-Con at the time. Dkt. 119-1. In connection with
Hines’s injuries and pursuant to the Longshore and Harbor Workers’ Compensation Act
(“LHWCA”), Fab-Con and its group self-insurer, Signal, paid to and on behalf of Hines indemnity
benefits totaling $157,981.18 and medical benefits totaling $67,125.17. Dkt. 119-3 at 2.
Defendants Energy XXI Services, LLC and its affiliates (collectively, “Energy XXI”) own
the rig where Hines was allegedly injured. Dkt. 119-1. Fab-Con and Energy XXI entered into a
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Hines does not dispute the veracity of Intervenors’ statement of facts (Dkt. 119-1).
Dkt. 122 at 3.
Master Services Agreement (“MSA”) on September 23, 2008, which obligated Fab-Con to
indemnify and defend Energy XXI against injury claims brought by Fab-Con employees and waive
subrogation rights in favor of Energy XXI. Dkt. 119-5 at 2.
Hines sued Energy XXI, Industrial & Oilfield Services, Inc. (“IOS”), Sirius Technologies,
LLC (“Sirius”), and Wood Group PSN (“Wood”) (collectively, “Defendants”) for damages arising
from Defendants’ alleged negligence. Dkt. 1, 46, 62. In connection with Hines’ claims, Energy XXI
tendered defense and indemnity to Fab-Con, which accepted the tender and undertook the defense
and indemnity of Energy XXI. Dkt. 119-6 at 2. Hines settled with Energy XXI and IOS, and the
court granted summary judgment in favor of Sirius and Wood. Dkt. 99, 104, 105.
On July 15, 2019, the court granted Intervenors’ request to file a complaint asserting a lien
under the LHWCA against Hines’s recovery from this litigation, including any settlement funds.
Dkt. 108, 109. Intervenors moved for summary judgment on August 28, 2019. Dkt. 119. Hines
argues Fab-Con waived its right to a LHWCA lien when it agreed to waive subrogation in the MSA.
Dkt. 122. Intervenors assert that the subrogation waiver is void under the Louisiana Oilfield
Anti-Indemnity Act (“LOAIA”) because Energy XXI tendered indemnity and defense to Fab-Con.
Dkt. 119.
II. LEGAL STANDARD
A court shall grant summary judgment when a “movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “[A] fact is genuinely in dispute only if a reasonable jury could return a verdict for
the nonmoving party.” Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006). The
moving party bears the initial burden of demonstrating the absence of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548 (1986). If the moving party meets
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its burden, the burden shifts to the non-moving party to set forth specific facts showing a genuine
issue for trial. Fed. R. Civ. P. 56(e). The court must view the evidence in the light most favorable
to the non-movant and draw all justifiable inferences in favor of the non-movant.
Envtl.
Conservation Org. v. City of Dallas, 529 F.3d 519, 524 (5th Cir. 2008). But, the court need not “sift
through the record in search of evidence to support the nonmovant’s opposition to summary
judgment.” Carr v. Air Line Pilots Ass’n, 866 F.3d 597, 601 (5th Cir. 2017).
III. ANALYSIS
The parties agree that Intervenors paid compensation and medical benefits to and on behalf
of Hines in accordance with the LHWCA. Dkt. 119-1; 122 at 3. The LHWCA is a worker’s
compensation statute that affords injured employees “quick, certain compensation from their
employers regardless of fault.” Chenevert v. Travelers Indem. Co., 746 F.3d 581, 585 (5th Cir.
2014) In exchange, employers are generally absolved from any further liability, but the injured
worker may still seek recourse against third parties who may have caused the injury. Id. Employers
and insurers that pay benefits to an injured employee under the LHWCA obtain a “subrogation right
to be reimbursed from the worker’s net recovery from a third party for the full amount of
compensation benefits already paid.” Id. These liens attach to a judgment or settlement. Jacques
v. Kalmar Indus., AB, 8 F.3d 272, 274 (5th Cir. 1993). However “[w]hen a party has waived its right
to subrogation, it loses its lien on a plaintiff’s recovery.” Sims v. Envtl., Safety & Health Consulting
Servs., Inc., No. 13-1694, 2014 WL 6633248 *6 (S.D. Tex. Nov. 21, 2014) (citing Allen v. Texaco,
Inc., 510 F.2d 977, 978 (5th Cir. 1975)).
Hines concedes that Intervenors are entitled to a paid compensation lien under the LHWCA
but for the waiver of subrogation in the MSA. Dkt. 122 at 3-4. Intervenors also acknowledge their
waiver of subrogation rights, but argue that LOAIA voids the waiver under the present facts.
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Dkt. 119-2 at 3. Hines agrees LOAIA is applicable to the MSA, but the facts here do not warrant
voiding the waiver of subrogation. Dkt. 122 at 4-7.
LOAIA is a Louisiana statute that invalidates certain oilfield indemnity agreements and
“waivers of subrogation . . . which would frustrate or circumvent the prohibitions of [LOAIA].”
LA. STAT. ANN. § 9:2780. The Louisiana Supreme Court explained LOAIA “arose out of a concern
about the unequal bargaining power of oil companies and contractors and was an attempt to avoid
adhesionary contracts under which contractors would have no choice but to agree to indemnify the
oil company.” Fontenot v. Chevron U.S.A. Inc., 676 So. 2d 557, 561-63 (La. 1996). The Fontenot
court reasoned that “voiding a waiver of subrogation clause only achieves the purpose of the
Anti-Indemnity Act when such a clause is sought to be enforced in conjunction with the enforcement
of an indemnification clause,” because enforcing the two clauses together would “shift liability from
a tortfeasor oil company back to the oilfield service contractor.” Id. at 565; see also Hudson v.
Forest Oil Corp, 372 F.3d 742, 747 (5th Cir. 2004) (“[T]he most important aspect of Fontenot is that
‘voiding a waiver of subrogation clause only achieves the purpose of [LOAIA] when such a clause
is sought to be enforced in conjunction with the enforcement of an indemnification clause.’”)
(quoting Fontenot, 676 So. 2d at 565).
Intervenors’ summary judgment evidence establishes that Energy XXI tendered defense and
indemnity to Fab-Con, thereby invoking its rights to indemnification under the MSA. Dkt. 119-6.
Hines now seeks to enforce the MSA’s waiver of subrogation against Intervenors, but has offered
no evidence to refute Fab-Con’s defense and indemnity of Energy XXI. Because the evidence
shows Energy XXI enforced the indemnification clause, enforcing the waiver of subrogation would
violate LOAIA as construed by the Louisiana Supreme Court. See Fontenot, 676 So. 2d at 565. The
waiver of subrogation is therefore void under LOAIA, and Intervenors are entitled to the LHWCA
compensation lien they seek. Intervenors’ motion for summary judgment is GRANTED.
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IV. CONCLUSION
The waiver of subrogation in the MSA is void and, Intervenors are entitled to a LHWCA
paid compensation lien in the amount of $225,106.35.
Accordingly, the court GRANTS
Intervenors’ motion for summary judgment (Dkt. 119), and Hines’s motion for leave to file surreply
to reply to opposition to motion for summary judgment (Dkt. 127) is DENIED AS MOOT.
Signed at Houston, Texas on October 1, 2019.
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Gray H. Miller
Senior United States District Judge
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