One Beacon Ins. Co. v. CROWLEY MARINE SERVICES

REVISED AUGUST 19, 2011

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit

FILED
No. 10-20417 July 28, 2011

Lyle W. Cayce
Clerk
ONE BEACON INSURANCE COMPANY

Plaintiff – Cross Appellee
v.

CROWLEY MARINE SERVICES, INC.,

Defendant-Third Party Plaintiff – Appellee Cross-Appellant

v.

TUBAL-CAIN MARINE SERVICES, INC.,

Third Party Defendant – Appellant Cross-Appellee

Appeals from the United States District Court
for the Southern District of Texas

Before KING, WIENER, and CLEMENT, Circuit Judges.
KING, Circuit Judge:
This suit arises out of a dispute between a ship repair contractor, barge
owner, and insurance company over the terms of a ship repair service contract
and a maritime insurance policy. The contractor appeals from the district
court’s ruling that the contractor breached its contractual obligation to procure
insurance coverage for the barge owner and that it was contractually obligated
 No. 10-20417

to defend and indemnify the barge owner against damages ensuing from a
workplace injury that occurred while the barge was being repaired. The barge
owner cross-appeals from the district court’s ruling that it was not entitled to
additional insured coverage under the contractor’s insurance policy. We affirm
the judgment of the district court in all respects.
I. FACTUAL AND PROCEDURAL BACKGROUND
Crowley Marine Services, Inc. (“Crowley”) owns and operates a large fleet
of vessels, including tugs, tankers, and specialty offshore work barges. Tubal-
Cain Marine Services, Inc. (“Tubal-Cain”) performs ship repair work at its
fabrication and dry dock facility in Port Arthur, Texas. In March 2007, Crowley
hired Tubal-Cain to perform work on one of Crowley’s vessels, the MWB 403
Barge. Tubal-Cain in turn hired Rio Marine, Inc. as a subcontractor to perform
lighting and electrical work on the barge. On or about April 23, 2007, Marcus
Parker, an employee of Rio Marine, allegedly sustained severe and disabling
injuries caused by an electrical shock and a resulting fall that he suffered while
performing repairs to the barge. Parker filed suit against Tubal-Cain and
Crowley in Texas state court, alleging that their negligence caused his injuries.
Crowley subsequently made a formal demand for defense and indemnity
from Tubal-Cain for any liability or expense incurred as a result of Parker’s suit,
and sought defense and coverage from One Beacon Insurance Company (“One
Beacon”) as an additional insured under the Maritime Comprehensive Liability
Policy that One Beacon issued to Tubal-Cain (the “Policy”). One Beacon denied
coverage for Crowley and subsequently filed a declaratory judgment action in the
District Court for the Southern District of Texas—the action giving rise to this
appeal—seeking a declaration that Crowley was not entitled to coverage as an
additional insured under the Policy. In its complaint, One Beacon asserted that
it never received a request from Tubal-Cain to add Crowley as an additional
insured on the Policy, and that there was no “insured contract” between Tubal-

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Cain and Crowley that would entitle Crowley to coverage under the Policy’s
terms.
Crowley filed a third-party complaint against Tubal-Cain in the
declaratory judgment action. Crowley alleged that the terms and conditions
referred to in the repair service order (“RSO”) which Crowley issued in
connection with the repair work for the barge required Tubal-Cain to defend and
indemnify Crowley against any claim brought by Tubal-Cain employees and
contractors against Crowley relating to the work performed under the RSO.
Crowley also alleged that the terms and conditions required Tubal-Cain to carry
various insurance policies naming Crowley as an additional insured. In the
alternative, Crowley asserted a claim against Tubal-Cain for fraud and negligent
misrepresentation, alleging that Tubal-Cain falsely led Crowley to believe that
it had obtained the requested insurance coverage.
The parties agreed to try the case to the district court by written
submission. The district court found in favor of Crowley on its claim against
Tubal-Cain for contractual defense and indemnity and its claim that Tubal-Cain
breached its contractual obligation to obtain insurance coverage.1 One Beacon
Ins. Co. v. Crowley Marine Servs., Inc., No. H-08-2059, 2010 WL 1463451, at *14
(S.D. Tex. Apr. 12, 2010). The district court further held that Crowley did not
qualify as an additional insured under Tubal-Cain’s policy and entered judgment
in favor of One Beacon on its declaratory judgment claim. Id. Tubal-Cain
appeals from the judgment, and Crowley cross-appeals.
II. DISCUSSION
“The standard of review for a bench trial is well established: findings of
fact are reviewed for clear error and legal issues are reviewed de novo.” Water
Craft Mgmt. LLC v. Mercury Marine, 457 F.3d 484, 488 (5th Cir. 2006) (citation

1
The district court also dismissed with prejudice Crowley’s fraud and negligent
misrepresentation claims. Crowley does not challenge this ruling on appeal.

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and internal quotation marks omitted). A factual finding is “clearly erroneous”
when “ ‘although there is evidence to support it, the reviewing court on the
entire evidence is left with the definite and firm conviction that a mistake has
been committed.’ ” Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)
(quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)).
A. The Contract Between Crowley and Tubal-Cain
Crowley and Tubal-Cain do not dispute that they reached an agreement
for repair services for Crowley’s barge; instead, they dispute whether they had
a written agreement obligating Tubal-Cain to defend, indemnify, and obtain
insurance for Crowley.
The existence of a maritime contract involves questions of fact. Ham
Marine, Inc. v. Dresser Indus., Inc., 72 F.3d 454, 458–59 (5th Cir. 1995). The
interpretation of contract terms is a matter of law that we review de novo. Id.
at 459. A contract for the repair of a vessel is a maritime contract, governed by
general maritime law. Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d
401, 412 (5th Cir. 1982). General maritime law “stems from the maritime
jurisprudence of the federal courts,” and is “an amalgam of traditional common
law rules, modifications of those rules, and newly created rules” drawn from
state and federal sources. 1 Thomas J. Schoenbaum, Admiralty & Mar. Law
§ 5-1 (4th ed. 2004) (quoting E. River S.S. Corp. v. Transamerica Delaval, Inc.,
476 U.S. 858, 864–65 (1986)); cf. Har-Win, Inc. v. Consol. Grain & Barge Co., 794
F.2d 985, 987 (5th Cir. 1986) (applying general principles of contract law as
adopted by general maritime law, rather than state law, to the interpretation of
maritime contracts).
Except where noted, the district court’s factual findings pertaining to the
parties’ agreement for repairs to the barge are not in dispute on appeal. In
March 2007, Crowley Port Engineer Ricky Bastian met with John Durio, Tubal-
Cain’s Production Superintendent, and Eddie Van Huis, Tubal-Cain’s President,

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to discuss repair work to the barge. The repair work commenced soon
thereafter. Crowley had previously contracted with Tubal-Cain eight times in
the preceding year for minor work to other Crowley vessels, and Crowley
contracted with Tubal-Cain for fifteen additional jobs following the job at issue
here.
For each of these projects, Crowley issued an RSO to Tubal-Cain. Each
RSO outlined the contemplated scope of the repairs and assigned a project
number to the repair job, but contained no pricing terms and was not signed by
either party. Following the March 2007 meeting, and in conformity with its
standard practice, Crowley issued and mailed to Tubal-Cain an RSO, number
9501229, dated April 2, 2010. The RSO at issue in this case, as well as each RSO
that Crowley issued to Tubal-Cain in connection with the prior and subsequent
repair service jobs, contained the following notice prominently displayed on the
first page:
THIS IS A CONFIRMATION. DO NOT DUPLICATE.
THIS RSO IS ISSUED IN ACCORDANCE WITH THE PURCHASE
ORDER TERMS & CONDITIONS ON WWW.CROWLEY.COM /
DOCUMENTS & FORMS, UNLESS OTHERWISE AGREED TO IN
WRITING.
THE ABOVE REPAIR SERVICE ORDER (RSO) NUMBER MUST
APPEAR ON ALL BILLING INVOICES. FAILURE TO COMPLY
WILL RESULT IN INVOICES BEING RETURNED.
The terms and conditions referred to in the RSO were located on a subpage
of Crowley’s website. The terms and conditions could not be accessed by typing
“www.crowley.com / documents & forms” into a web browser. The district court
found that “www.crowley.com / documents & forms” was not intended to be a
web address indicating the exact location of the page containing the terms and
conditions, but merely provided directions to assist in locating the terms and
conditions on Crowley’s website. To access the terms and conditions, a
contractor would have had to take the following steps: (1) go to Crowley’s home

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page, “http://www.crowley.com”; (2) click on a link on the menu bar titled
“Documents & Forms”; (3) select “Vendor Relations” from a drop-down menu;
and (4) select “Purchase Order Terms and Conditions.” The terms and
conditions were displayed in approximately four-point font. Based on testimony
by Daniel Mock, the Crowley employee responsible for placing the terms and
conditions on Crowley’s website, the district court found that neither the location
nor the content of Crowley’s terms and conditions changed during the course of
Crowley’s working relationship with Tubal-Cain.2
Crowley’s terms and conditions require contractors to defend and
indemnify Crowley for any claim that may be brought against Crowley
arising out of any injury (including death) or damage to any persons
or property in any manner, caused or occasioned by any defect in the
goods or services or any act, omission, fault, negligence or default of
any person, firm, corporation or other entity . . . even if the same be,
or is alleged to be, due to the sole active negligence of [Crowley] or
anyone acting on its behalf.
Further, the terms and conditions mandate that contractors procure, at their
own expense, certain insurance policies including a commercial general liability
policy with limits of not less than $1 million for any one occurrence, with no
watercraft exclusion, and covering the work being conducted in accordance with
the RSO. The insurance policy was to be endorsed to name Crowley, “as [an]
additional insured[] and . . . endorsed to waive all rights of subrogation against
Crowley an[d] the Property,” in this case, Crowley’s barge.
The parties do not dispute that Crowley did not specifically discuss the
terms and conditions with Tubal-Cain and did not furnish to Tubal-Cain a hard
copy of the indemnity or insurance requirements set forth in the terms and
conditions. Tubal-Cain’s President, Eddie Van Huis, who received and reviewed
the RSO, testified that he never visited Crowley’s website nor investigated the

2
Crowley has since redesigned its website.

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RSO’s reference to the online terms and conditions, believing that it was
unnecessary to do so. Van Huis testified that, typically, when a contract came
in, he would review it with, among other professionals, Tubal-Cain’s CPA and
corporate attorney. He did not follow this procedure with Crowley’s RSOs
because he believed that they were merely confirmations of the parties’ oral
agreements, and not contracts in and of themselves.
At the conclusion of its work on the barge, and in accordance with his
routine practice, Van Huis prepared an invoice for the repair work on Crowley’s
barge. The invoice, which included the project number on Crowley’s RSO,
provided that Tubal-Cain “reserves the right to review any and all purchase
orders prior to their acceptance.” The district court found that every invoice that
Tubal-Cain submitted to Crowley contained this reservations of rights. At no
time in connection with the repair job to Crowley’s barge or any prior or
subsequent repair jobs did Tubal-Cain object to any of Crowley’s terms and
conditions. The invoice for the work on Crowley’s barge was issued to Crowley,
where it was approved, signed by Crowley’s port engineer, and paid.
The district court concluded that the March 2007 oral agreement,
Crowley’s RSO, and Tubal-Cain’s subsequent invoice together constituted one
written contract between Tubal-Cain and Crowley for the repair service job in
question. The district court found that the RSOs that Crowley had issued to
Tubal-Cain for this and all prior repair service jobs contained identical notice
provisions that “plainly and conspicuously” incorporated the terms and
conditions on Crowley’s website. The district court further found that the
parties established a course of dealing from which the court could infer that
those terms and conditions were implied in every contract. The district court
held that by accepting the RSO and issuing an invoice for payment without
exercising its right to object to the terms and conditions, Tubal-Cain ratified
their course of dealing and assented to these terms. Furthermore, although the

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terms were on a subpage of Crowley’s website and in the equivalent of four-point
font, the district court held that the terms were “sufficiently legible and
accessible” that enforcement of the online terms was not unconscionable.
Accordingly, the district court concluded that Tubal-Cain was bound by
Crowley’s terms and conditions and therefore required to defend and indemnify
Crowley for claims arising out of the work specified in the RSO and to procure
insurance coverage for Crowley.
1. Course of dealing
On appeal, Tubal-Cain argues that the parties entered into a binding oral
agreement regarding the scope and price of the repair work in March 2007, and
that Crowley’s subsequently-issued RSO was merely a confirmation of that oral
agreement. Because the oral agreement was silent with regard to defense,
indemnity, and insurance requirements, Tubal-Cain contends that the RSO did
not and could not confirm more than what the parties orally agreed to. Further,
Tubal-Cain asserts that the RSO was sent to Tubal-Cain after work began on the
barge, and therefore Tubal-Cain had no opportunity to review and assent to the
terms prior to beginning performance.
“[O]ral contracts are generally regarded as valid by maritime law.”
Kossick v. United Fruit Co., 365 U.S. 731, 734 (1961); see also Fuesting v.
Lafayette Parish Bayou Vermilion Dist., 470 F.3d 576, 580 (5th Cir. 2006) (“Oral
contracts . . . are valid in admiralty.”). Under general maritime law, terms and
conditions contained in subsequently-issued purchase orders may supplement
an oral agreement if there is evidence of a prior course of dealing between the
parties from which a court may infer that the parties were aware of and
consented to those additional contractual terms. See Campbell v. Sonat Offshore
Drilling, Inc., 979 F.2d 1115, 1120 (5th Cir. 1992), superseded by statute on other
grounds; see also Restatement (Second) of Contracts § 223(1) (1981) (defining
“course of dealing” as “a sequence of previous conduct between the parties to an

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agreement which is fairly to be regarded as establishing a common basis of
understanding for interpreting their expressions and other conduct”); id. at
§ 223(2) (“Unless otherwise agreed, a course of dealing between the parties gives
meaning to or supplements or qualifies their agreement.”). In construing
maritime contracts, we have held that “[w]here parties share a history of
business dealings and standardized provisions have become part of those
dealings, such familiar provisions within purchase orders issued after
performance are binding where they are accepted without objection.” Campbell,
979 F.2d at 1120.
This principle has been applied in the context of the ship repair industry,
where it is “not unusual” for parties to enter into an oral agreement for repair
work, and for the ship repair contractor to send a purchase order or invoice
containing terms and conditions after the repair work has begun or is completed.
B & B Schiffahrts GmbH & Co. v. Am. Diesel & Ship Repairs, Inc., 136 F. Supp.
2d 590, 592, 594–95 (E.D. La. 2001); see also M/V Am. Queen v. San Diego
Marine Constr. Co.,708 F.2d 1483, 1489 (9th Cir. 1983) (“In giving effect to
exculpatory clauses, courts have recognized that it is a practice in the ship repair
industry to do repair work before sending an invoice containing the contract for
repairs.”); Hudson Waterways Corp. v. Coastal Marine Serv., Inc., 436 F. Supp.
597, 604 (E.D. Tex. 1977) (“[T]he custom in ship repair industry is to first do the
repair work, and then send out the invoice which contains on it the contract.”).
For instance, in Hudson Waterways Corp., the District Court for the
Eastern District of Texas concluded that limitation of liability terms contained
in a ship repair contract were binding despite the fact that “the written
document which constitute[d] the contract for repair was not sent to the Plaintiff
until some time after the repair work was completed.” 436 F. Supp. at 604. The
court noted:

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Between 1970 and 1975, the Defendant did 102 separate repair jobs
for the Plaintiff. For each of these jobs, the invoice and contract
were sent to the Plaintiff after the work was completed, and it
contained the . . . clause which the Plaintiff now contends is void.
The Court believes this is sufficient to put the Plaintiff on full notice
that this clause was implied in every repair contract.
Id. at 604–05; see also Coastal Iron Works, Inc. v. Petty Ray Geophysical, 783
F.2d 577, 582–83 (5th Cir. 1986) (party had notice that ship repair contract
contained a limitation of liability clause where the clause appeared in previous
repair contracts and party never repudiated the clause nor instructed its agents
not to sign contracts in the future containing the clause); Alcoa S.S. Co. v.
Charles Ferran & Co., 383 F.2d 46, 54–55 (5th Cir. 1967) (limitation of liability
clause contained in ship repair contractor’s invoice, sent after repair work was
completed, was binding on ship owner who admitted that it was aware of the
clause from prior invoices received from the contractor and that such clauses
were standard in the industry).
Tubal-Cain disputes the district court’s findings that the RSO’s terms and
conditions constituted part of a written agreement between the parties as a
result of their course of dealing with respect to the RSO process, and that Tubal-
Cain ratified their course of dealing by submitting an invoice for the work on the
barge without objecting to the terms and conditions. See New Moon Shipping
Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24, 31 (2d Cir. 1997) (“An inference
of the parties’ common knowledge or understanding that is based upon a prior
course of dealings is [a] question of fact.”). Tubal-Cain claims that the prior
working history between the parties does not support an inference that they
intended the terms and conditions referred to in the RSO to be implied in every
contract, noting that there had been only eight jobs for minor repair work to
Crowley’s vessels prior to the contract for repairs to the barge, and those jobs
were completed within only six months of the job in question. However, courts
have found a course of dealing between parties to a maritime contract based on

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a party’s receipt of as few as three or four bills of lading containing the same
limitation of liability terms, see Royal Ins. Co. v. Sea-Land Serv. Inc., 50 F.3d
723, 727 (9th Cir. 1995), and upon a party’s approval of only nine invoices
containing identical limitation of liability clauses, see Lykes Bros. S.S. Co. v.
Waukesha Bearings Corp., 502 F. Supp. 1163, 1172–73 (E.D. La. 1980). Thus,
the parties’ relatively brief relationship prior to the repair job to the barge is not,
without more, a basis for finding that the district court erred.
2. Incorporation by reference of Crowley’s online terms and conditions
Tubal-Cain next disputes the district court’s finding that the RSO was
sufficient to put Tubal-Cain on notice of Crowley’s insurance and indemnity
terms. Tubal-Cain contends that, because it lacked notice of those terms, the
district court erred in concluding that Tubal-Cain was aware of and assented to
them. Regarding the indemnity term in particular, Tubal-Cain correctly states
that indemnity terms which, like the one at issue here, purport to indemnify a
party for damages caused by its own negligence, must be “specific and
conspicuous” to be enforceable under maritime law. Orduna S.A. v. Zen-Noh
Grain Corp., 913 F.2d 1149, 1153 (5th Cir. 1990) (quoting Restatement (Second)
of Contracts § 195 cmt. b (1981)); see also Theriot v. Bay Drilling Corp., 783 F.2d
527, 540 (5th Cir. 1986) (“Long-established general principles of interpreting
indemnity agreements [in maritime contracts] require that indemnification for
an indemnitee’s own negligence be clearly and unequivocally expressed.” (citation
and internal quotation marks omitted)).
Tubal-Cain argues that the language of the RSO itself did not provide any
notice to Tubal-Cain that it would be required to indemnify or procure insurance
coverage for Crowley, much less provide “specific and conspicuous” notice as
required to render the indemnity term enforceable. Tubal-Cain contends that our
decision Orduna S.A. v. Zen-Noh Grain Corp. is controlling on this point. In
Orduna, Zen-Noh sought to enforce an indemnity clause incorporated by

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reference into a berth application against Orduna, a ship owner whose vessel was
damaged during an accident involving a grain elevator owned by Zen-Noh.
Orduna’s agent had signed the berth application, certifying that Orduna was “in
compliance with and subject to all applicable tariffs, rules, and regulations of
Zen-Noh Grain Corporation, The South Louisiana Port Commission, and the
Federal Grain Inspection Service, copies of which have been received and read.”
913 F.2d at 1153 & n.3. The relevant indemnity clause was contained in a dock
tariff. Id. at 1153.
On appeal, we noted that “[b]efore 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.” Id. We upheld the
district court’s finding that Orduna never received nor consented to the
indemnity clause because “[n]o excerpts of the pertinent texts of the[] documents
[containing Zen-Noh’s terms and conditions] or even a list of the documents
appeared on the berth application;” “the berth application did not identify by
either date or number the specific dock tariff that purported to exculpate
Zen-Noh from its own negligence;” and Orduna had never received a copy of the
relevant dock tariff when applying for the berth. Id. at 1153-54. We therefore
affirmed the district court’s holding that the indemnity clause was unenforceable.
Tubal-Cain notes that—like Zen-Noh in Orduna—Crowley did not furnish
the relevant provisions in hard copy, and they were not contained in the text of
the RSO itself; thus, Tubal-Cain contends that it never received or consented to
the terms and conditions. Tubal-Cain observes that in Campbell, where we
enforced certain indemnity and insurance provisions referred to in a purchase
order, the relevant provisions were expressly included on the reverse of the
purchase order itself. Campbell, 979 F.2d at 1118. Tubal-Cain argues that here,
in contrast, the terms and conditions were “hidden” on Crowley’s website in four-
point font and, like the reference to the dock tariff in the berth application in

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Orduna, the reference to the terms and conditions on the RSO failed effectively
to identify the location of the indemnity and insurance provisions on Crowley’s
website. Accordingly, Tubal-Cain contends that it lacked reasonably conspicuous
notice of the terms, and we therefore cannot infer that Tubal-Cain intended to be
bound by them.
Under general contract principles, where a contract expressly refers to and
incorporates another instrument in specific terms which show a clear intent to
incorporate that instrument into the contract, both instruments are to be
construed together. See 11 Williston on Contracts § 30:25 (4th ed. 1999)
(hereafter “Williston”) (“Where a writing refers to another document, that other
document, or the portion to which reference is made, becomes constructively a
part of the writing, and in that respect the two form a single instrument.”). The
incorporation by reference doctrine applies to maritime contracts as well. See,
e.g., New Moon Shipping Co., 121 F.3d at 30; Cargill, Inc. v. Kopalnia Rydultowy
Motor Vessel, 304 F. App’x 278, 281–82 (5th Cir. 2008) (per curiam) (rejecting an
argument that an indemnity clause that was incorporated by reference into a
berth application was not enforceable because the provision was not included in
the text of the berth application itself). Under both general contract principles
and admiralty law, a separate document will become part of the contract where
the contract makes “clear reference to the document and describes it in such
terms that its identity may be ascertained beyond doubt.” 11 Williston at § 30:25;
see also New Moon Shipping Co., 121 F.3d at 30. Terms incorporated by
reference will be valid so long as it is “clear that the parties to the agreement had
knowledge of and assented to the incorporated terms.” 11 Williston at § 30:25.
Notice of incorporated terms is reasonable where, under the particular facts of
the case, “[a] reasonably prudent person should have seen” them. Coastal Iron
Works, 783 F.2d at 582.

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We see no reason to deviate from these principles where, as here, the terms
to be incorporated are contained on a party’s website. We note that contracts
formed in whole or in part over the internet present relatively new considerations
for the courts, and will continue to challenge the courts as the internet plays an
increasingly important role in commerce. However, “[w]hile new commerce on
the Internet has exposed courts to many new situations, it has not fundamentally
changed the principles of contract.” Register.com, Inc. v. Verio, Inc., 356 F.3d
393, 403 (2d Cir. 2004); see also Specht v. Netscape Commc’ns Corp., 306 F.3d 17,
31 (2d Cir. 2002) (traditional contract principles applicable to “the world of paper
transactions” regarding the enforceability of contract terms against a party on
notice of the existence of those terms “apply equally to the emergent world” of
online contracting); Feldman v. Google, Inc., 513 F. Supp. 2d 229, 236 (E.D. Pa.
2007) (applying “traditional principles of contract law” to determine
enforceability of terms and conditions governing a “clickwrap” agreement);
Barnett v. Network Solutions, Inc., 38 S.W. 3d 200, 204 (Tex. Ct. App.—Eastland
2001, pet. denied) (holding that a party with notice of and opportunity to review
contract terms is bound by those terms even where party has not read them, and
“[t]he same rule applies to contracts which appear in an electronic format”).
We note that other courts, applying traditional contract principles in the
non-admiralty context, have expressly or implicitly rejected the very argument
that Tubal-Cain makes here, recognizing, for instance, that “internet provisions
clearly incorporated by reference [into a purchase order], readily available on the
identified internet site, and plainly and clearly set forth therein,” are binding
even where the party has not read them. Pentecostal Temple Church v.
Streaming Faith, LLC, No. 08-554, 2008 WL 4279842, at *5 (W.D. Pa. Sept. 16,
2008); see also Schwartz v. Comcast Corp., 256 F. App’x 515, 520 (3d Cir. 2007)
(a customer on notice of contract terms available on the internet website is bound
by those terms); Spartech CMD, LLC v. Int’l Auto. Components Grp. N. Am., Inc.,

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No. 08-13234, 2009 WL 440905, at *5 (E.D. Mich. Feb. 23, 2009) (rejecting
argument that arbitration clause was invalid because it was contained in terms
and conditions that party never received, where terms and conditions were
contained on party’s website and incorporated by reference into a purchase
order); cf. Oceanconnect.com, Inc. v. Chemoil Corp., No. H-07-1053, 2008 WL
194360, at *2–5 (S.D. Tex. Jan. 23, 2008) (arbitration clause enforceable under
Texas law and UCC where terms and conditions were incorporated by reference
in party’s order confirmation and available for review on party’s website, and
where there was a course of dealing between the parties). We are persuaded that
under admiralty law—which generally follows the common law of contracts in
resolving maritime contract disputes—maritime contracts may validly
incorporate terms from a website in the same manner that they may incorporate
by reference terms from paper documents, and therefore reject Tubal-Cain’s
argument that the terms and conditions at issue here are unenforceable solely
because they were never set down and delivered in paper format.
The chief consideration when determining the validity of contractual
terms—in contracts with or without a nexus to the internet—is whether the party
to be bound had reasonable notice of the terms at issue and whether the party
manifested assent to those terms. See, e.g., Feldman, 513 F. Supp. 2d at 236–37.
We can imagine situations involving online terms and conditions where,
analogous to Orduna, the terms and conditions were not unambiguously
incorporated into the parties’ agreement or where there was insufficient notice
of the location of the terms and conditions such that a reasonable person would
not be expected to find them. See, e.g., Trujillo v. Apple Computer, Inc., 578 F.
Supp. 2d 979, 989–95 (N.D. Ill. 2008) (arbitration clause unenforceable where
consumer had no reason to know that the terms and conditions containing the
clause could be found on vendor’s website, the terms and conditions could be
found only by using the website’s search bar, and the version of the terms and

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conditions available on the website was out of date). Under the facts of this case,
however, we agree with the district court that Crowley’s online terms and
conditions were clearly incorporated into the RSO and that Tubal-Cain had
adequate notice of and opportunity to review them.
Here, Crowley’s intent to incorporate the terms and conditions is clear from
the explicit incorporating language prominently placed on the face of the RSO in
all capital letters. And, unlike in Orduna, the RSO clearly referred to a
particular document—Crowley’s website—containing these terms and conditions.
And in this case, unlike in Orduna, Tubal-Cain had access to the terms and
conditions, which were at all times available to Tubal-Cain on Crowley’s website.
It is undisputed that neither the content nor the location of the terms and
conditions changed during the relevant time period. The district court found that
Crowley’s website was easily navigated, and that a reasonable person would have
been able to find the terms and conditions, findings that Tubal-Cain does not
adequately challenge. Further, the district court found that Van Huis, whose
duties at Tubal-Cain included reviewing the RSOs, was “internet savvy.”
Moreover, Van Huis testified that he understood the notice provision on the RSO
and admitted that he could have accessed the terms and conditions on the
website at any time. Finally, the district court did not clearly err in concluding
that both parties were commercial entities with sophisticated procedures in place
for reviewing contracts, even if Tubal-Cain did not implement those procedures
in this case. Consistent with these findings, the district court found that Van
Huis had actual notice of and access to the terms and conditions, even if he
believed that he did not have to read them.
Although Crowley undoubtedly could have provided clearer directions to
the location of the terms and conditions on the website, we agree with the district
court that notice of the terms and conditions was reasonable under the particular
facts of this case. Cf. Jimenez v. Peninsular & Oriental Steam Navigation Co.,

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974 F.2d 221, 224 (1st Cir. 1992) (in deciding whether maritime passenger ticket
provided sufficient notice of incorporated terms and conditions, “the standard is
one of reasonableness, not perfection” (citation and internal quotation marks
omitted)). We therefore find no reason to disturb the district court’s holding that
the terms and conditions were effectively incorporated into the RSO.
We also agree with the district court that the indemnity term in particular
was sufficiently clear and conspicuous to be enforceable. It is not disputed that
the text of the indemnity provision itself “expressly and specifically manifested”
an intent to indemnify Crowley from the consequences of its own negligence.
Branch v. Fid. & Cas. Co. of N.Y., 783 F.2d 1289, 1294 (5th Cir. 1986). And
whereas in Orduna we found a similar indemnity provision to be unenforceable
because we were not “firmly convinced that the exculpatory provision reflect[ed]
the intention of the parties” because notice of the provision was not “specific and
conspicuous,” Orduna S.A., 913 F.2d at 1153, Orduna is distinguishable from the
facts here. The indemnity term in Orduna was deemed unenforceable because
the berth application that comprised the contract between the parties did not
make clear that it was subject to terms and conditions contained in the separate
dock tariff, it further failed to identify the particular dock tariff that contained
those terms and conditions, and the dock tariff was never made available to the
party to be bound. As discussed above, these problems are not present in this
case. Nor does Crowley’s use of a small font “call into question the non-drafting
party’s consent” under these circumstances. Brown v. Pac. Life Ins. Co., 462 F.3d
384, 397 (5th Cir. 2006). The font size could be enlarged on a computer screen,
and the paragraph containing the indemnity provision was clearly labeled in bold
text.
We hold that the district court did not err in concluding that the RSO terms
and conditions supplemented the oral agreement between the parties because
notice of the terms and conditions was clearly and conspicuously displayed in

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every RSO that Crowley sent to Tubal-Cain, the terms and conditions were at all
times reasonably accessible and available to Tubal-Cain, and Tubal-Cain
manifested assent by accepting the RSOs without objection to the terms and
conditions. Under ordinary contract principles, Tubal-Cain is therefore bound by
those terms and conditions, even if neither Van Huis nor anyone else at Tubal-
Cain ever visited Crowley’s website in order to familiarize himself with those
terms and conditions. As the district court correctly stated, “[t]he fact that a
party chooses not to review a contract, or terms and conditions, when they had
the opportunity does not negate the fact that they are bound by those Terms and
Conditions.” One Beacon Ins. Co., 2010 WL 1463451, at *5; see also Am. Heritage
Life Ins. Co. v. Lang, 321 F.3d 533, 538 (5th Cir. 2003) (“It is a widely accepted
principle of contracts that one who signs or accepts a written instrument will
normally be bound in accordance with its written terms.” (citation and internal
quotation marks omitted)); Restatement (Second) of Contracts § 23 cmt. b
(“[W]here an offer is contained in a writing [a party] may, without reading the
writing, manifest assent to it and bind himself without knowing its terms. . . .
[A]n offeror or offeree who should be aware of [the terms of a writing] may be
bound in accordance with them if he manifests assent.”). Tubal-Cain may not
avoid contractual terms by pleading ignorance of their existence, if the contract
is clear on its face that such terms were intended to be incorporated, Tubal-Cain
had knowledge of and an opportunity to review those terms, and manifested
assent thereto. Cf. 11 Williston at § 30:25. We therefore affirm the district
court’s holding that there was a written agreement between Tubal-Cain and
Crowley which obligated Tubal-Cain to defend, indemnify, and procure insurance
for Crowley.
B. One Beacon’s Insurance Policy
Crowley contends that it was entitled to coverage as an additional insured
under the One Beacon policy issued to Tubal-Cain. The parties do not dispute

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that Texas law controls the interpretation of the Policy. See N. Am. Specialty Ins.
Co. v. Debis Fin. Servs., Inc., 513 F.3d 466, 470 (5th Cir. 2007) (“Absent a specific
and controlling federal rule, cases involving marine insurance contracts are
governed by state law.” (citing Elevating Boats, Inc. v. Gulf Coast Marine, Inc.,
766 F.2d 195, 198 (5th Cir. 1985)). Insurance policies are contracts, and thus “are
controlled by rules of interpretation and construction which are applicable to
contracts generally.” Nat’l Union Fire Ins. Co. of Pittsburgh v. CBI Indus., Inc.,
907 S.W.2d 517, 520 (Tex. 1995) (citations omitted). “The primary concern of a
court in construing a written contract is to ascertain the true intent of the parties
as expressed in the instrument.” Id. (citation omitted). When interpreting
contract language, courts must strive to give meaning to “every sentence, clause,
and word to avoid rendering any portion inoperative.” Balandran v. Safeco Ins.
Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998).
Section IV of the Policy, entitled “Who is an Insured,” provides a list of
persons and entities covered by the Policy. The Policy includes an endorsement,
entitled “Additional Insured and Waiver of Subrogation Endorsement (Specific),”
that modifies Section IV as follows:
1. Section IV of the policy (Who is an Insured) is amended to
include the persons(s) or organization(s) shown below as an Insured
hereunder to the extent that you are obligated by an “insured
contract” to include them as Additional Insured, but only with
respect to “your work.”
2. We waive any right of recovery we may have against such
Additional Insured as shown below because of payments we make for
“bodily injury” or “property damage” arising out of “your work” done
with that Additional Insured, but only to the extent of such
obligation under the “insured contract”. The waiver applies only to
the person(s) or organization(s) shown below:
The space below the endorsement states only
NAME AND ADDRESS
TO BE ADVISED

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The district court found that, to be an additional insured under the terms
of the additional insured endorsement to the Policy, Crowley had the burden of
establishing both (1) that Tubal-Cain was obligated by an “insured contract” to
include Crowley as an additional insured on the One Beacon policy; and (2) that
Crowley was specifically identified in the endorsement as an additional insured.
See Rep. Waste Servs. of Tex., Ltd. v. Empire Indem. Ins. Co., 98 F. App’x 970, 971
(5th Cir. 2004) (“Under Texas law, additional insureds are strangers to an
insurance policy and must bear the burden of proving additional insured status.”
(citing Rep. Nat’l Bank of Dallas v. Nat’l Bankers Life Ins. Co., 427 S.W.2d 76, 80
(Tex. App.—Dallas 1968, writ ref’d n.r.e.))).
The district court held that the oral agreement, the RSO, and the
subsequent invoice together constituted one entire transaction or agreement
between the parties that satisfied the “insured contract” requirement as defined
by the Policy. But the district court held that the language of the endorsement
unambiguously required that Crowley also be specifically named in the Policy to
qualify as an additional insured. Crowley’s name does not appear on the
endorsement, and Crowley does not dispute that it is not specifically named
anywhere in the Policy as an additional insured. Because Crowley was not
named, the district court held that Crowley was not entitled to additional insured
coverage.
On appeal, Crowley disputes the district court’s holding that Crowley was
required to be specifically named in the additional insured endorsement or in the
Policy to be eligible for coverage. Crowley contends that Section IV of the Policy
(entitled “Who is an Insured”) includes a list of persons, such as Tubal-Cain’s
executive officers, directors, and employees, who qualify as additional insureds
covered by, but who do not have to be specifically named in, the Policy. Crowley
contends that the additional insured endorsement adds to this list another
category of parties that need not be named in the Policy to be eligible for coverage

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as additional insureds: any party that is a party to an “insured contract” with
Tubal-Cain within the meaning of the Policy. Noting that the term “named” does
not appear in the endorsement, Crowley argues that the endorsement provides
blanket additional insured coverage for those parties with an “insured contract”
with Tubal-Cain. Crowley points to evidence that purportedly shows that it was
Tubal-Cain’s intention to procure blanket coverage for its ship repair customers,
as opposed to specific coverage that required new parties to be added to the Policy
as specific named additional insureds. Crowley contends in the alternative that
the Policy is ambiguous on this point, and should therefore be construed in favor
of coverage.
We agree with One Beacon that Crowley’s reading of the endorsement as
providing coverage for any party that has an “insured contract” with Tubal-Cain
renders meaningless other language in the endorsement. Section 1 of the
endorsement reads: “Section IV of the policy (Who is an Insured) is amended to
include the persons(s) or organization(s) shown below as an Insured hereunder to
the extent that you are obligated by an ‘insured contract’ to include them as
Additional Insured . . . .” (emphases added). Moreover, Section 2 also clearly
applies “only to the person(s) or organization(s) shown below.” The language of
the endorsement unambiguously requires an additional insured to be named in
the endorsement. Therefore, we affirm the district court’s holding that
Crowley—which is not named in the Policy—is not an additional insured under
the Policy.3
C. Attorney’s Fees
Crowley seeks a remand for a calculation of attorney’s fees to which it
claims it is entitled. Crowley argued before the district court that it was entitled

3
Because we find that Crowley is not entitled to coverage under the Policy as an
additional insured on this basis, we need not reach One Beacon’s alternative argument that
Crowley did not have an “insured contract” within the meaning of the Policy as required by the
additional insured endorsement.

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 No. 10-20417

to fees for its defense of the underlying personal injury suit and requested an
additional hearing on the issue of attorney’s fees in the event that it prevailed on
its claims. The district court made no ruling regarding attorney’s fees, and we
therefore remand to the district court for a determination of Crowley’s
entitlement, if any, to attorney’s fees in this case.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court,
and REMAND for further proceedings consistent with this opinion. Costs shall
be borne equally by Tubal-Cain and Crowley.

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