United States Court of Appeals
Fifth Circuit
IN THE UNITED STATES COURT OF APPEALS FILED
FOR THE FIFTH CIRCUIT April 10, 2006
_____________________ Charles R. Fulbruge III
Clerk
No. 05-30614
____________________
ST. PAUL SURPLUS LINES INSURANCE COMPANY,
Plaintiff-Appellant,
v.
HALLIBURTON ENERGY SERVICES, INC.,
Defendant-Appellee.
__________________
Appeal from the United States District Court
For the Eastern District of Louisiana
__________________
Before HIGGINBOTHAM, DAVIS and STEWART, Circuit Judges.
W. EUGENE DAVIS, Circuit Judge:
This case presents the legal issue whether the undertaking
of Halliburton Energy Services, Inc. (“Halliburton”) to indemnify
the well owner LLOG Exploration Company (“LLOG”) in this case
included an obligation by Halliburton to reimburse LLOG for sums
LLOG was required to pay under a separate contract to a third
party, R&B Falcon Drilling USA, Inc. (“Falcon”). Based on our
case law and the language of the indemnity provisions included in
the relevant contracts, we answer this question in the
affirmative and reverse the judgment of the district court.
I.
1
LLOG develops and operates oil and gas properties, and was
provided contractual liability insurance coverage for operation
of its wells by St. Paul. In March of 2001, LLOG contracted with
Falcon to provide a drill barge to drill an LLOG well off the
coast of Venice, Louisiana. The contract between LLOG and Falcon
(“Drilling Contract”) provided that LLOG would hold Falcon
harmless inter alia for any personal injury claims asserted
against Falcon by LLOG’s employees or invitees. The Drilling
Contract also required that LLOG provide a number of services
usually provided by third parties required to drill the well.
Relatedly, LLOG and Halliburton entered into a Master Service
Contract (“Service Contract”) for the performance of some of
those services. The LLOG/Halliburton Service Contract required
Halliburton to indemnify LLOG and its invitees, which included
Falcon, against claims by Halliburton employees.1
Gilbert Goldman, a Halliburton engineer and LLOG invitee,
was injured at the well site onboard the Falcon barge when it
capsized in March of 2001. Goldman sued LLOG and Falcon to
recover damages for those injuries, and Falcon demanded that LLOG
defend and indemnify Falcon for this claim pursuant to the
Drilling Contract. LLOG initially rejected Falcon’s demand and
also requested that Halliburton defend and indemnify LLOG against
1
The Service Contract was accompanied by a Rider executed by the
parties which modified portions of its indemnity provisions.
2
Goldman’s claims pursuant to the indemnity provisions of the
Service Contract. Halliburton expressed some doubt about the
scope of the indemnity provision, but in two separate letters in
September and October of 2001, Halliburton counsel reaffirmed
that Halliburton would “undertake the defense of LLOG in
accordance with the agreement terms,” and that it would “defend
and indemnify LLOG in this lawsuit as per the contract.”
In January of 2002, Falcon instituted a limitation of
liability proceeding in the Eastern District of Louisiana, and
included a contractual indemnity claim against LLOG and St. Paul.
Halliburton answered on behalf of LLOG, denying responsibility on
Falcon’s contractual indemnity claim.
Falcon settled Goldman’s claims in January 2003 for
$550,000, and sought reimbursement from LLOG and St. Paul under
the indemnity provisions of the Drilling Contract. St.Paul and
LLOG withdrew their earlier denial of liability and reimbursed
Falcon the $550,000 paid to Goldman.2 After LLOG and St. Paul
2
LLOG initially rejected Falcon’s demand for indemnity on the
grounds that the Drilling Contract failed the “express negligence
test,” which provided that a party cannot be indemnified for its
own negligence when the indemnity contract does not so provide
expressly. Although LLOG and St. Paul initially refused to
reimburse Falcon, they relented after this court concluded that the
express negligence test would not operate to preclude claims
asserted against Falcon based upon Falcon’s negligence in East v.
Premier, Inc., a case involving an identical contract between
Falcon and LLOG. See 98 Fed. Appx. 317, 2004 WL 1114441 (5th Cir.
May 12, 2004).
3
agreed to reimburse Falcon, St. Paul made demand under the terms
of the LLOG/Halliburton Service Contract for Halliburton to pay
the settlement sum on behalf of LLOG to Falcon. Halliburton
rejected that demand, asserting that the Service Contract did not
obligate Halliburton to indemnify LLOG against Falcon’s
contractual claims. St. Paul then filed suit against Halliburton
seeking reimbursement of the $550,000 settlement on the basis
that Halliburton was contractually obligated to indemnify LLOG
and LLOG’s invitees, including Falcon, for sums paid on account
of injuries to Halliburton employees.3
Both Halliburton and St. Paul filed motions for summary
judgment. The District Court granted the motion filed by
Halliburton and denied St. Paul’s motion. The District Court
observed that the Service Contract did not expressly require
Halliburton to indemnify LLOG against third party contract
liability. Because Halliburton did not expressly agree to
indemnify LLOG for contractual claims, the District Court
concluded that Halliburton was not responsible for the defense or
indemnity obligations assumed by LLOG in its separate contracts
with third parties. This appeal followed.
3
St. Paul also argues that Halliburton is estopped from
withholding reimbursement due to its representations and action in
defending LLOG in the litigation. Because we conclude that
Halliburton is obligated to indemnify LLOG under the Service
Contract, we need not address the estoppel claim.
4
II.
The parties agree that the interpretation of the contract at
issue in this case is governed by general maritime law. A
district court’s grant or denial of summary judgment is reviewed
de novo, applying the same standard as the district court. See
Gowesky v. Singing River Hospital System, 321 F.3d 503, 507 (5th
Cir. 2003). Summary judgment is appropriate if “there is no
genuine issue as to any material fact and that the moving party
is entitled to a judgment as a matter of law.” FED. R. CIV. PRO.
56.
III.
The contractual relationship between LLOG and Halliburton is
governed by two documents: (1) the Service Contract, and (2) the
Service Contract Rider. The Service Contract begins by defining
the parties:
THIS CONTRACT, made and entered into on the above date
by and between LLOG EXPLORATION COMPANY (hereinafter
referred to as “LLOG”) and HALLIBURTON COMPANY, its
divisions HALLIBURTON SERVICE and HALLIBURTON RESERVOIR
SERVICES, and its subsidiaries HALLIBURTON LOGGING
SERVICE, INC., and OTIS ENGINEERING COMPANY
(hereinafter referred to as “Contractor”).
The indemnity provision, however, begins by stating that the
references to LLOG in that section shall include certain other
parties. Paragraph 4(a) provides:
5
For the purposes of this Section any reference to LLOG
shall include LLOG and any or all co-lessees of LLOG
who wholly or partially bear the cost of operations
hereunder and any or all agents, directors, officers,
employees or invitees of LLOG or such co-lessees, or
any or all of such parties.
Although Paragraph 4(a) was not modified by the Rider, the
remainder of the indemnity provision was replaced with revised
and additional language. Paragraph 4 of the Rider provides, in
pertinent part:
Section 4. IMDEMNITY, paragraphs (b) and (c) shall be
amended and paragraphs (d), (e), (f), (g), (h) and (i)
added to read:
(b) Contractor shall be responsible, and LLOG shall
never be liable, for property damage or personal injury
to or death of Contractor’s employees or the employees
of Contractor’s subcontractors and Contractor agrees to
indemnify and hold LLOG harmless against any and all
such claims, demands or suits which may be brought
against LLOG by any such party, or the legal
representative or successor of any such employee, in
anywise arising out of or incident to the work to be
performed under this contract by Contractor, or
Contractor’s subcontractors, irrespective of whether
such claims, demands, or suits are based on the
relationship of master and servant, third party, or
otherwise, the unseaworthiness or unairworthiness of
vessels or craft, or the negligence or strict
liability, in whole or in part, of LLOG.
St. Paul and LLOG argue that this provision obligates Halliburton
to indemnify LLOG for sums LLOG paid pursuant to its contractual
indemnity obligations to Falcon. According to St. Paul, this is
required because LLOG’s payment was occasioned by (1) the injury
to Goldman, a Halliburton employee, and (2) LLOG’s required
payment to an LLOG invitee within the meaning of Paragraph 4(a).
6
Halliburton does not dispute Falcon’s invitee status, but instead
argues that the indemnity provision does not provide express
notice that Halliburton would be obligated to indemnify LLOG
against indemnity claims owed as a result of LLOG’s contracts.4
The district court granted summary judgment in favor of
Halliburton, relying on our decisions in Foreman v. Exxon Corp.
and Corbitt v. Diamond M. Drilling Co., both of which held that
“express notice is required where a party seeks to shift his
contractual liability to indemnify a third party,” and that
contractual language creating an indemnity obligation “for injury
to or death or illness of persons” gave notice only of claims
based on tortious, not contractual, injuries. Foreman v. Exxon
Corp., 770 F.2d 490, 496-97 (5th Cir. 1985); Corbitt v. Diamond
M. Drilling Co., 654 F.2d 329, 333-34 (5th Cir 1981).5 Because
4
Halliburton also argues that the Service Contract Rider modified
the contract to effectively remove “invitee” from Paragraph 4(a) of
the Service Contract. However, the Service Contract Rider
specifically enumerates which subsections of Paragraph 4 are to be
modified, and leaves 4(a) untouched. The district court refused to
read the Service Contract Rider as impliedly removing a class of
potential indemnities from the Service Contract, and we agree with
that reading.
5
The conclusion that phrases such as “for injury to or death or
illness of persons” is limited to tortious injuries is in apparent
conflict with our decision in Lirette. In that case, we noted that
“[s]ince indemnity is triggered by claims or suits ‘resulting from
injury or damage to [Popich’s] employees,’ the contractual
obligation is operationally prescribed with no distinction being
made between so-called contractual or so-called tortious
liability.” Lirette, 699 F.2d at 728. However, because we
conclude that Halliburton’s indemnity obligation arises from the
inclusion of invitees in the indemnity provision, we need not
resolve this apparent conflict.
7
the Halliburton/LLOG Service Contract required indemnification
for “property damage or personal injury to or death of
[Halliburton’s] employees,” and does not specifically include
liability arising from contract, the district court found that
the Service Contract did not require Halliburton to indemnify
LLOG against Falcon’s claims, despite the fact that Falcon’s
claims were, in turn, based on a personal injury to a Halliburton
employee.
In addition to our decisions in Foreman and Corbitt, we have
addressed the legal issue presented in today’s case on at least
four occasions. See Sumrall v. ENSCO Offshore Co., 291 F.3d 316
(5th Cir. 2002); Campbell v. Sonat Offshore Drilling, Inc., 27
F.3d 185 (5th Cir. 1994); Mills v. Zapata Drilling Co., 722 F.2d
1170 (5th Cir. 1983), overruled on other grounds, Kelly v. Lee's
Old Fashioned Hamburgers, Inc., 908 F.2d 1218 (5th Cir.1990)(per
curiam); Lirette v. Popich Bros. Water Transport, Inc., 699 F.2d
725 (5th Cir. 1983).
In Lirette, Popich Bros. Water Transport, Inc. (“Popich”),
owned and operated a vessel time-chartered to Otto Candies, Inc.
(“Candies”). The contract between Popich and Candies required
that Popich indemnify Candies, as well as its “affiliated
companies and anyone for whom the vessel may be working” against
8
personal injury claims made by Popich employees.6 Candies in
turn time-chartered the vessel to Exxon for transportation
between shore and various drilling platforms. The contract
between Candies and Exxon required that Candies indemnify Exxon
against personal injuries made by either Candies or Popich
employees. Lirette, a Popich employee, was the captain of the
vessel and was injured in an accident. Lirette brought suit
against Exxon and Candies seeking damages for those injuries.
Candies was obligated to indemnify Exxon under the Candies/Exxon
contract, and sought reimbursement of those sums paid to Exxon
from Popich under the Popich/Candies contract.
The language describing the claims covered by the provision
in Lirette is substantially similar to the language in the
indemnity provision in Corbitt. Both refer to “all claims”
resulting from or on account of injury, death, or property
damage. The one significant difference, however, is that the
provision in Lirette expressly included “affiliated companies and
anyone for whom the vessel may be working,” including Exxon, as
6
The charter between Popich and Candies provided:
Owner [Popich] agrees to indemnify and hold Charterer
[Candies], its affiliated companies [Exxon], and anyone
for whom the vessel may be working harmless from any
claims or suits resulting from injury or damage to
Owner's [Popich's] employees, Charterer's [Candies']
employees or third persons or property arising out of, or
in any way connected to the operation of the vessel under
this charter, unless caused by the sole negligence of
Charterer [Candies], its agents or employees.
Lirette, 699 F.2d at 726 n. 4.
9
third-party indemnitees. Popich argued that this meant that
Popich might have an indemnity obligation directly to Exxon for
its own liability to Lirette, but that the provision did not
require Popich to indemnify Candies for its own contractual
obligation to Exxon, which arose out of the separate charter
between Candies and Exxon, and not the charter between Popich and
Candies. This court disagreed. We concluded:
Popich was not, as in Corbitt, being subjected to a
liability arising from and imposed by a completely
separate contract between two outsiders. Rather, it
was called upon to make good its contractual obligation
to hold Candies (and Exxon) harmless from claims, suits
or damage “arising out of, or in any way connected
[with] the operation of the vessel under this charter.”
Popich's obligation to reimburse Candies for amounts
due Exxon arose, not because of the separate agreement
Candies had with Exxon, but because of Popich's express
undertaking to make good to Exxon all such losses.
Candies acting as a conduit did not alter that
obligation.
Id. at 728. Because Exxon was a member of the class of
“affiliated companies” named in the indemnity provision, Popich
was obligated to indemnify Exxon, and Popich could not escape its
obligation merely because Candies acted as a “conduit” for
indemnification.
We subsequently applied Lirette’s conduit principle in
Mills, 722 F.2d at 1175, Campbell, 27 F.3d at 187-88, and
Sumrall, 291 F.3d at 320. In particular, Mills addressed a
factual and legal scenario essentially identical to this case,
including the language in the relevant contract provisions
10
identifying invitees as indemnitees and describing the covered
claims. In Mills, CNG Producing Co. hired the Zapata Drilling
Co. to furnish drilling equipment to drill CNG’s wells. CNG also
hired Louisiana Casing Crew and Rental Tool Corp., to furnish
casing services. Zapata and Louisiana did not contract with each
other. Mills, a Louisiana employee, was killed by the negligent
act of a driller employed by Zapata, and his estate brought suit
against Zapata. Zapata filed a third-party action against CNG
seeking indemnity under the terms of its contract, and CNG then
brought its own third-party action against Louisiana, seeking
indemnification against its obligation to indemnify Zapata.
The indemnity provision at issue in Mills was unlike the
provision in Corbitt, and like the provision at issue in this
case, in that it specifically includes CNG’s invitees as
indemnitees.7 Moreover, the language describing the types of
7
The contract between CNG and Louisiana provided:
Contractor [Louisiana] shall be responsible, and CNG
shall never be liable, for personal injury to or death of
any of Contractor's employees or the employees of
Contractor's subcontractors, and Contractor agrees to
indemnify and hold harmless CNG, any or all co-lessees of
CNG who wholly or partially bear the cost of operations
hereunder and any or all agents, directors, officers,
employees, invitees, or servants of CNG or such co-
lessees, against any and all claims, demands or suits
(including, but not limited to, claims, demands or suits
for bodily injury, illness, disease, death or loss of
services, property or wages) which may be brought against
CNG ... by any employee of Contractor, subcontractor of
Contractor, or by any employee of subcontractor of
Contractor, or the legal representative or successor of
any such employee, in anywise arising out of or incident
11
suits, i.e., “irrespective of whether such suits are based on the
relationship of master and servant, third party, or
otherwise...,” is identical to the provision in this case.
Mills, 722 F.2d at 1172-73. The court concluded in Mills, as it
had concluded in Lirette, that Zapata was an invitee of CNG
within the meaning of the indemnity provision, and therefore,
“Louisiana is by contract an indemnitor of CNG and is by
operation of law under the circumstances described in this
opinion an indemnitor of Zapata....” Id. at 1175.
LLOG’s claim for indemnity from Halliburton under the
Service Contract is functionally indistinguishable from CNG’s
claim for indemnity in Mills. Because Halliburton is obligated
to indemnify both LLOG and Falcon for injuries to Halliburton
employees, Halliburton’s obligation to Falcon flows through LLOG
where LLOG has already indemnified Falcon. Halliburton is
therefore required to reimburse LLOG, and its insurer St. Paul,
for the indemnity paid by LLOG to Falcon. Because this case is
controlled by our decisions in Lirette, Mills, Campbell, and
Sumrall, we reverse the judgment of the district court and render
summary judgment in favor of St. Paul.
to the work to be performed under this Contract,
irrespective of whether such suits are based on the
relationship of master and servant, third party, or
otherwise....
Mills, 722 F.2d at 1172-73 (emphasis added).
12
REVERSED and RENDERED.
13