Tetra Technologies, Inc. v. Continental Insurance , 814 F.3d 733 ( 2016 )

Case: 15-30446 Document: 00513393655 Page: 1 Date Filed: 02/24/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 24, 2016
No. 15-30446 Lyle W. Cayce
Clerk
TETRA TECHNOLOGIES, INCORPORATED; MARITECH RESOURCES,
INCORPORATED,
Plaintiffs - Appellees
v.
CONTINENTAL INSURANCE COMPANY,
Defendant - Appellant
Appeals from the United States District Court
for the Eastern District of Louisiana
Before STEWART, Chief Judge, and REAVLEY, and DAVIS, Circuit Judges.
PER CURIAM:
Defendant-Appellant Continental Insurance Co. (“Continental”) appeals
the district court’s final judgment in favor of Plaintiffs-Appellees Tetra
Technologies, Inc. (“Tetra”) and Maritech Resources, Inc. (“Maritech”),
requiring Continental and its co-defendant insured, Vertex Services (“Vertex”),
to indemnify them. 1 For the reasons set out below, we affirm in part, reverse
in part, and remand.
1Although Vertex is a co-defendant with Continental, and the outcome concerns both
Continental and Vertex, only Continental filed the motions for summary judgment and
brought both appeals.
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I. Background
This dispute arises from injuries sustained by a platform worker,
Abraham Mayorga, employed by Vertex. Mayorga sued Tetra and Maritech
(hereinafter collectively “Tetra” unless separately identified) for personal
injury, and Tetra sought indemnity from Vertex and its insurer, Continental,
pursuant to certain agreements and an insurance policy. On cross motions for
summary judgment, the district court concluded that Tetra is entitled to
indemnity from Continental and Vertex. Continental appeals.
A. Facts
Tetra and Vertex entered into a Master Service Agreement (the “MSA”),
under which Vertex’s employees would perform work for Tetra. The MSA
required Vertex to indemnify Tetra for injuries sustained by Vertex’s
employees while working for Tetra. Pursuant to the MSA, Vertex was also
required to list Tetra as an additional insured under its general liability
insurance policy issued by Continental (the “Policy”).
Tetra entered into an agreement (the “Salvage Plan”) with Maritech to
salvage a decommissioned oil production platform located at Eugene Island
129 (“EI129”). Tetra retained Vertex to perform at least some aspects of the
salvage operation. Mayorga served as a rigger for the project, working from a
Tetra-owned barge, the D/B Arapaho. On May 22, 2011, Mayorga was
assigned to assist in removing a bridge connecting two sections of the EI129
platform. In his complaint, Mayorga alleged that he was injured when the
bridge collapsed, causing him and other workers on it to fall 70–80 feet into
the Gulf of Mexico. Mayorga filed suit against Tetra, alleging that it had been
negligent in performing the salvage operation.
B. Procedural History
Tetra filed this indemnity action against Vertex and Continental. Tetra
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and Continental filed cross motions for summary judgment. Continental
asserted that it was not required to indemnify Tetra, because (1) the Outer
Continental Shelf Lands Act (“OCSLA”) made Louisiana law applicable as
surrogate federal law; (2) the indemnity agreement was void under the
Louisiana Oilfield Indemnity Act (“LOIA”); and (3) in any event, Tetra’s claims
were excluded under Exclusion d of the Policy. Tetra argued that neither LOIA
nor the Policy precluded recovery against Continental or Vertex. On the initial
cross motions for summary judgment, the district court found that Continental
and Vertex are required to indemnify Tetra because LOIA did not apply and
that Exclusion d did not preclude coverage. Continental appealed, but that
appeal was dismissed for lack of jurisdiction.
On remand, the parties entered stipulations as to the two issues that
prevented resolution of the prior appeal. Tetra also claimed that it was entitled
to additional attorneys’ fees, while Continental re-urged its motion for
summary judgment. The district court denied both Tetra’s motion for
additional fees (which Tetra does not appeal) and Continental’s re-urged
motion for summary judgment, entering a final judgment against Continental
and Vertex. Continental appeals the grant of summary judgment in favor of
Tetra and the denial of its own motion for summary judgment.
II. DISCUSSION
This court “review[s] the district court’s judgment on cross motions for
summary judgment de novo, addressing each party’s motion independently,
viewing the evidence and inferences in the light most favorable to the
nonmoving party.” 2
Because the dispute in this case stems from events that occurred in the
2 Morgan v. Plano Ind. Sch. Dist., 589 F.3d 740, 745 (5th Cir. 2009).
3
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Gulf of Mexico above the outer Continental Shelf (“OCS”), OCSLA applies. 3
Under OCSLA, federal law generally applies to such disputes and state law is
applied “only as federal law and then only when not inconsistent with
applicable federal law.” 4 When there are “gaps in the federal law,” 5 OCSLA
adopts the law of the adjacent state, here Louisiana, as surrogate federal law
“[t]o the extent that [the adjacent state’s law is] applicable and not inconsistent
with [OCSLA] or with other Federal laws and regulations.” 6
OCSLA is important to this dispute because Continental contends that
LOIA applies as surrogate federal law and voids the MSA’s indemnity
agreement. LOIA renders void, under certain conditions relating generally to
the petroleum industry, any agreement that purports to indemnify a party for
damages resulting from death or bodily injury caused by the indemnitee’s own
negligence or fault. 7 If LOIA voids the indemnity agreement, then Tetra is not
entitled to indemnity from Continental or Vertex. If LOIA does not void the
indemnity agreement, however, then we must determine whether the
Continental Policy itself excludes coverage.
Accordingly, we must address three issues: (1) whether OCSLA requires
the court to adopt Louisiana law as surrogate federal law; (2) if (or assuming,
as did the district court) Louisiana law must be adopted as surrogate federal
law, whether LOIA voids the indemnity agreement here; and (3) if LOIA does
not void the indemnity agreement, whether the Policy excludes coverage.
3 See Rodrigue v. Aetna Cas. & Sur. Co., 395 U.S. 352, 355–56 (1969) (“The purpose of
the [OCSLA] was to define a body of law applicable to the seabed, the subsoil, and the fixed
structures such as those . . . on the outer Continental Shelf.”).
4 Id.5 Id. at 356.
6 43 U.S.C. § 1333(a)(1), (a)(2)(A); see also Rodrigue, 395 U.S. at 356–57; Fruge ex rel.
Fruge v. Parker Drilling Co., 337 F.3d 558, 560 (5th Cir. 2003) (“[T]he law applicable is federal
law, supplemented by state law of the adjacent state.” (internal quotation marks omitted)).
7 La. Rev. Stat. Ann. § 9:2780(A).
4
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A. The Summary Judgment Record Is Inadequate To
Determine Whether OCSLA Requires The Adoption Of
Louisiana Law As Surrogate Federal Law.
1. Applicable Law
“Under Union Texas Petroleum Corp. v. PLT Engineering, Inc. [(“PLT”)],
three requirements must be met for state law to apply as surrogate federal law
under the OCSLA.” 8 First, “[t]he controversy must arise on a situs covered by
OCSLA (i.e., the subsoil, seabed, or artificial structures permanently or
temporarily attached thereto).” 9 Second, “[f]ederal maritime law must not
apply of its own force.” 10 Third, “[t]he state law must not be inconsistent with
Federal law.” 11
2. We Cannot Determine Whether There Is an OCSLA
Situs.
Under the first requirement of the PLT test, “the controversy at issue
must arise on an OCSLA situs, namely the seabed, subsoil, and fixed
structures of the outer Continental Shelf.” 12 When dealing with contractual
disputes, this circuit applies a focus-of-the-contract test to determine whether
a controversy arises on an OCSLA situs. 13 Under the focus-of-the-contract test,
“a contractual indemnity claim (or any other contractual dispute) arises on an
OCSLA situs if a majority of the performance called for under the contract is
to be performed on stationary platforms or other OCSLA situses enumerated
in 43 U.S.C. § 1333(a)(2)(A).” 14
8 ACE Am. Ins. Co. v. M-I, L.L.C., 699 F.3d 826, 830 (5th Cir. 2012).
9 PLT, 895 F.2d 1043, 1047 (5th Cir. 1990).
10 Id.11 Id.12 ACE Am. Ins. Co., 699 F.3d at 830.
13 Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778, 787 (5th Cir. 2009)
(en banc).
14 Id. at 787–88.
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As this court has discussed, “it is a common practice for companies
contracting for work in the oilfield to enter into contracts in two stages,” first
signing a blanket contract and then “issu[ing] work orders for the performance
of specific work.” 15 Here, Tetra and Vertex followed this common practice: first
entering into the MSA, which functions as a “blanket agreement” between the
parties, and then Tetra issuing specific work orders for the completion of
particular tasks. In a situation “where the contract consists of two parts, a
blanket contract followed by later work order, the two must be interpreted
together.” 16 But generally, “in determining situs in a contract case such as
this, courts should ordinarily look to the location where the work is to be
performed pursuant to the specific work order rather than the long term
blanket contract.” 17
Continental argues that the evidence in the record—namely the MSA,
the Salvage Plan, and Mayorga’s deposition testimony—establishes that the
controversy arose on an OCSLA situs. Continental also asserts that the “entire
goal” of the work Tetra hired Vertex to perform was the deconstruction,
decommissioning, and salvaging of parts of the platform on the OCS. Tetra
counters that there is no record evidence as to where the majority of Vertex’s
work for Tetra was to be performed but contends that most of the work was to
be performed on lift barges and material barges—not on an OCS platform.
Tetra’s specific work order to Vertex that resulted in Mayorga’s
assignment to the job is absent from the record. However, the absence of a
specific work order is not fatal to Continental’s assertion that the controversy
arose on an OCSLA situs. 18 Here, the primary non-contractual evidence was
15Grand Isle, 589 F.3d at 787 n.6 (citing Davis & Sons v. Gulf Oil Corp., 919 F.2d 313,
315–17 (5th Cir. 1990)).
16 Grand Isle, 589 F.3d at 787 n.6 (internal quotation marks omitted).
17 Id.18 See ACE Am. Ins. Co., 699 F.3d at 831 (noting that service tickets and time sheets
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Mayorga’s deposition testimony. In his deposition, Mayorga testified that he
worked as a rigger for Vertex and that he had been on the barge where the
accident occurred for two years. Much of Mayorga’s work-specific testimony
focused on his actions the night of the accident and does reveal that Mayorga
worked extensively on the fixed platform. However, as the district court
concluded, it is difficult to extrapolate Mayorga’s testimony to determine the
scope of the entire work order.
Continental also points to the MSA to show that the controversy arose
on an OCSLA situs. However, the terms of the MSA provide little guidance in
helping to determine where the majority of the work was to be performed under
the contract. Instead, the MSA merely states that Tetra may “obtain certain
services [from Vertex], including but not limited to, inspection, maintenance,
fabrication, surveying, diving, repair and/or other general oilfield services.”
Thus, the MSA does not show that Vertex’s work was to be performed on the
platform.
Finally, Continental argues that the Salvage Plan is “especially
relevant” in determining where the majority of the work was to be completed.
First, the Salvage Plan is captioned “Bridge and Bridge Support Salvages,
Eugene Island 129 Complex.” Next, the work described in the Salvage Plan
does largely relate to the EI129 platform. For example, a barge was to be set
up at the EI129 Complex and attached to the EI129 platform, and the removed
bridges were, of course, on the EI129 Complex and platform. Based on these
descriptions of the work and the plan itself, Continental contends that every
portion of the work to be completed was located at, adjacent to, or on the
platform on the outer Continental Shelf.
The problem with Continental’s argument is that the Salvage Plan
could provide evidence of the location where work was to be performed).
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explains the work that Tetra was to perform for Maritech. As the district court
observed, the Salvage Plan contains no information related to what services
Tetra retained Vertex to perform. While Mayorga was injured deconstructing
a bridge platform on the EI129 complex, it does not follow that the majority of
Vertex’s work was performed in that location. Rather, that one “snapshot” does
not explain what the entire work order might have contemplated. In fact, the
Salvage Plan itself (which relates to the work Tetra would perform for
Maritech) also describes a number of tasks that would be performed on the
barge—not on the platform.
Viewing Mayorga’s deposition testimony, the MSA, and the Salvage Plan
together does suggest that much of Tetra’s work was to be performed on the
EI129 platform. The relevant question, however, is where a majority of
Vertex’s performance was to occur under the contract, as the district court
explained. 19 The record does not definitively answer that question. Though
Continental contends that “Tetra hired Vertex employees to perform the
Salvage Plan,” there are a number of aspects of that Salvage Plan that were
not to be performed on the EI129 platform. Further, the MSA provides no
guidance, and Mayorga’s testimony and allegations do not establish the scope
of the services for which Tetra retained Vertex. In sum, we conclude that
neither party is entitled to judgment as to PLT’s first prong: whether the
controversy arose on an OCSLA situs.
3. We Cannot Determine Whether Federal Maritime Law
Applies.
Under PLT’s second requirement, in order for the OCSLA choice of law
provision to apply, “[f]ederal maritime law must not apply of its own force.” 20
19 Grand Isle, 589 F.3d at 787.
20 PLT, 895 F.2d at 1047.
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“Determining whether maritime law applies of its own force involves a two-
step inquiry—first, an examination of the historical treatment of contracts of
that type in the jurisprudence and second, a six-factor ‘fact-specific’ inquiry
into the nature of the contract.” 21 The court “must analyze whether the
particular work order . . . is maritime in nature.” 22 This court
consider[s] six factors in characterizing the contract: 1) what does
the specific work order in effect at the time of injury provide? 2)
what work did the crew assigned under the work order actually
do? 3) was the crew assigned to work aboard a vessel in navigable
waters; 4) to what extent did the work being done relate to the
mission of that vessel? 5) what was the principal work of the
injured worker? and 6) what work was the injured worker actually
doing at the time of injury? 23
Continental argues that PLT’s second prong is met because the work at
issue involved decommissioning, deconstructing, or salvaging a fixed platform
used for oil and gas exploration on the OCS. Such contracts are not “historically
treated” as maritime contracts, and maritime law thus generally would not
apply of its own force. 24 The flaw in Continental’s argument, as was the case
under PLT’s first prong, is the paucity of summary judgment evidence. There
is little evidence to guide an analysis of “whether the particular work order”
was maritime—and of course, the work order itself is absent from the record.
Continental points out that work primarily performed on a fixed
platform is not maritime in nature. While true, Continental’s overstates what
21 ACE Am. Ins. Co., 699 F.3d at 831.
22 Id. at 832.
23 Davis & Sons, Inc., 919 F.2d at 316.
24 See Hufnagel v. Omega Serv. Indus., Inc., 182 F.3d 340, 352 (5th Cir. 1999)
(“Construction work on fixed offshore platforms bears no significant relation to traditional
maritime activity.”); see also ACE Am. Ins. Co., 699 F.3d at 832 (holding that maritime law
did not apply of its own force where “the relevant contract . . . was performed on a stationary
platform”); Grand Isle, 589 F.3d at 789 (agreeing with the district court’s conclusion that
contract, “which called for maintenance work on a stationary platform located on the OCS,”
was not a maritime contract).
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can be gleaned from the Salvage Plan. That agreement between Tetra and
Maritech does relate in large part to a fixed platform. However, there are
aspects of the Salvage Plan that would not be performed on the EI129 platform.
Moreover, the critical question is the nature of the contract between
Tetra and Vertex. There appears to be no evidence that Tetra hired Vertex
solely to perform the Salvage Plan for Maritech, nor any evidence that Vertex’s
performance related to only, or even mostly, platform-specific tasks. Because
the scope of the work Vertex performed for Tetra is unclear, we may not say
whether the “particular work order” was maritime or non-maritime in nature.
The only Davis factor for which there is clear record evidence is the
sixth—the work the injured worker was actually doing at the time of injury.
Here, Mayorga was assisting in removing a bridge connecting two platforms at
the EI129 complex. The evidence is insufficient or inconclusive as to the other
five factors.
As to the first two factors—the nature of the specific work order and the
actual work done by the crew—the evidence is inconclusive as to whether the
contract was non-maritime. Continental relies on the Salvage Plan, Mayorga’s
deposition testimony, and the complaints filed in the underlying lawsuit, but
those sources do not describe the nature of the entire work order. They merely
show the work that Mayorga and others were performing at the time.
Continental faces a similar problem with the third, fourth, and fifth
factors—the relationship to a navigable vessel, the nature of the actual work,
and the injured worker’s primary work. Continental concedes that Mayorga
partially worked on the D/B Arapaho but contends that his actual work was
not related to a vessel in navigation. Again, there is little evidence as to the
total scope of Mayorga’s duties.
In sum, we conclude that the evidence is insufficient to determine
whether federal maritime law does not apply of its own force. Accordingly,
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neither party is entitled to summary judgment on PLT’s second prong.
4. LOIA Is Consistent with Federal Law.
Finally, under PLT’s third prong, “[t]he state law must not be
inconsistent with Federal law.” 25 Nothing in LOIA is inconsistent with federal
law, 26 and Tetra does not argue otherwise. 27 Thus, we conclude that PLT’s
third prong is satisfied.
5. In Sum, We Must Remand On The OCSLA Issue.
Because the summary judgment evidence is insufficient to determine the
first two PLT prongs, neither party is entitled to summary judgment as to
whether LOIA must be adopted as surrogate federal law under OCSLA. That
was not a problem under the district court’s analysis because it concluded that
if Louisiana law did apply, LOIA would not void the indemnity agreement
under these circumstances, and if Louisiana law did not apply, the Policy
would not exclude coverage. Because the outcome would be the same either
way under the district court’s interpretation, it was unnecessary for it to
resolve the OCSLA issue. Because, as explained below, we conclude below that
LOIA would void the indemnity agreement but the Policy itself would not
exclude coverage, we remand for the district court to determine the now
dispositive issue of whether Louisiana law must be adopted as surrogate
federal law.
25 PLT, 895 F.2d at 1047.
26 See Grand Isle, 589 F.3d at 789 (agreeing with district court’s conclusion that this
court “has specifically held that nothing in LOIA is inconsistent with federal law” (internal
quotation marks and citation omitted)).
27 See Strong v. B.P. Expl. & Prod., Inc., 440 F.3d 665, 668 (5th Cir. 2006) (“By not
contesting [plaintiff’s] arguments that [PLT’s second and third requirements] are satisfied,
B.P. implicitly concedes that those conditions have been met.”).
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B. LOIA Would Void the Indemnity Agreement.
1. Applicable Law
If OCSLA requires the adoption of Louisiana law as surrogate federal
law, the next question is whether LOIA applies to this dispute. LOIA provides,
in relevant part:
A. The legislature finds that an inequity is foisted on certain
contractors and their employees by the defense or indemnity
provisions, either or both, contained in some agreements
pertaining to wells for oil, gas, or water, or drilling for minerals
which occur in a solid, liquid, gaseous, or other state, to the extent
those provisions apply to death or bodily injury to persons. It is the
intent of the legislature by this Section to declare null and void and
against public policy of the state of Louisiana any provision in any
agreement which requires defense and/or indemnification, for
death or bodily injury to persons, where there is negligence or fault
(strict liability) on the part of the indemnitee, or an agent or
employee of the indemnitee, or an independent contractor who is
directly responsible to the indemnitee.
B. Any provision contained in, collateral to, or affecting an
agreement pertaining to a well for oil, gas, or water, or drilling for
minerals which occur in a solid, liquid, gaseous, or other state, is
void and unenforceable to the extent that it purports to or does
provide for defense or indemnity, or either, to the indemnitee
against loss or liability for damages arising out of or resulting from
death or bodily injury to persons, which is caused by or results
from the sole or concurrent negligence or fault (strict liability) of
the indemnitee, or an agent, employee, or an independent
contractor who is directly responsible to the indemnitee.
C. The term “agreement,” as it pertains to a well for oil, gas, or
water, or drilling for minerals which occur in a solid, liquid,
gaseous, or other state, as used in this Section, means any
agreement or understanding, written or oral, concerning any
operations related to the exploration, development, production, or
transportation of oil, gas, or water, or drilling for minerals which
occur in a solid, liquid, gaseous, or other state, including but not
limited to drilling, deepening, reworking, repairing, improving,
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testing, treating, perforating, acidizing, logging, conditioning,
altering, plugging, or otherwise rendering services in or in
connection with any well . . . .
...
G. Any provision in any agreement arising out of the operations,
services, or activities listed in Subsection C of this Section of the
Louisiana Revised Statutes of 1950 which requires waivers of
subrogation, additional named insured endorsements, or any other
form of insurance protection which would frustrate or circumvent
the prohibitions of this Section, shall be null and void and of no
force and effect. 28
Thus, if LOIA applies, it will void not only Vertex’s indemnity obligation but
also Continental’s insurance obligation under the Policy to Tetra as an
additional named insured.
This court has adopted a two-part test to determine if LOIA applies.
“First, there must be an agreement that ‘pertains to’ an oil, gas or water well.
If the contract does not pertain to a well, the inquiry ends.” 29 In determining
whether an agreement pertains to a well, “[t]he decisive factor in most cases
has been the functional nexus between an agreement and a well or wells.” 30
If the agreement “has the required nexus to a well,” the court examines
“the contract’s involvement with operations related to the exploration,
development, production, or transportation of oil, gas, or water.” 31 Thus, “if
(but only if) the agreement (1) pertains to a well and (2) is related to
exploration, development, production, or transportation of oil, gas, or water,
will the Act invalidate any indemnity provision contained in or collateral to
that agreement.” 32 This inquiry “requires a fact intensive case by case
28 La. Rev. Stat. Ann. § 9:2780 (emphasis added).
29 Transcon. Gas Pipe Line Corp. v. Transp. Ins. Co., 953 F.2d 985, 991 (5th Cir. 1992).
30 Verdine v. Ensco Offshore Co., 255 F.3d 246, 252 (5th Cir. 2001).
31 Transcon. Gas, 953 F.2d at 991 (internal quotation marks omitted).
32 Id.13
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analysis.” 33
2. Analysis
Although the inquiry is usually fact intensive, the question before us
here is one of law. The district court seems to have concluded that the salvage
of a fully decommissioned production platform does not have the “required
nexus to a well” because the well is not in use. Thus, the question before us is
whether salvaging a decommissioned platform has a sufficient nexus to a well
for LOIA to apply.
Continental contends that this court’s decision in Verdine, which
considered the extent of LOIA’s nexus to a well requirement, shows the district
court’s error. There, Ensco agreed to provide a fixed platform rig to Amerada
Hess Corporation for use on wells located off the Louisiana coast. 34 Specifically,
before the platform rig could be used, it required “extensive refurbishment
work,” which Ensco retained Centin to perform at its onshore fabrication
yard. 35 The court observed that “[c]ourts have not addressed whether an
agreement for work on a dismantled drilling platform pertains to a well.” 36
The court first noted that at the time Centin’s employees worked on the
platform, it sat idle in a fabrication yard and “was not participating in in-field
exploration, production, or transportation of oil or gas.” 37 Such facts made it
“difficult to find a sufficient geographical and functional nexus between the
[platform] and a well or wells.” 38 However, “while [the platform] was not
involved in exploration or production activities at the time Centin performed
its contract obligations, the platform was designated for use on particular
33 Verdine, 255 F.3d at 251.
34 255 F.3d at 248–49.
35 Id.
36 Id. at 252–54.
37 Id. at 253.
38 Id.
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wells.” 39 In other words, the platform had been used on active wells before and
would again be used on active wells following refurbishment. Refusing “to
interpret the legislature’s requirement that an agreement pertain to a well in
such a restrictive manner that we overlook agreements to which the Act was
intended to apply,” the court found the requisite nexus to a well because the
services “were performed on a structure intended for use in the exploration and
production of oil and gas.” 40
Continental argues that under Verdine, a platform salvaging operation
has the required nexus to a well. This court has not yet considered the extent
of Verdine’s holding, and Verdine itself does not answer this question. The
Verdine court found it “difficult to find a sufficient geographical and functional
nexus between the [platform] and a well or wells” where the platform was not
being used for in-field exploration, production, or transportation and instead
was sitting idle. 41 Instead, the court concluded that the agreement had a
sufficient nexus to a well once it considered the additional fact that the
“platform was designated for use on particular wells,” namely six particular
wells located off the Louisiana coast. 42 That is, Verdine suggests that the
sufficient nexus to a well arose because the platform was being refurbished for
use in future oil exploration. 43
That does not end our inquiry, however. Continental argues that
salvaging a platform from a decommissioned well necessarily has the required
39 Id. at 254.
40 Id.
41 255 F.3d at 253.
42 Id. at 253–54.
43 See Labove v. Candy Fleet, L.L.C., No. 11-1405, 2012 WL 3043168, at *6 (E.D. La.
July 20, 2012) (characterizing Verdine as “holding that a contract for repairs on a dismantled
fixed oil platform rig pertained to a well because services rendered were performed on a
structure intended for future use in the exploration and production of oil and gas” (emphasis
added)).
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nexus to a well, relying on district court cases that have interpreted Verdine
broadly: Wilcox v. Max Welders, L.L.C., 44 Howell v. Avante Servs., LLC, 45
Teaver v. Seatrax of La. 46
Howell involved an agreement to cut and pull casings from the wellbores
on an oil platform as part of a plan to “plug and abandon” the oil well. 47 The
plaintiff argued that the agreement did not relate to a well because the well
was not functioning at the time of performance. 48 The district court disagreed,
first observing that removing the casings from the wellbore was “collateral to
plugging the well” and covered under a straightforward reading of LOIA. 49
Further, “the purpose of the casings was to assist in oil and gas production.” 50
The district court also rejected the plaintiff’s argument that “where a structure
is no longer involved in or capable of hydrocarbon production, an agreement
for services pertaining to that structure is not an agreement that pertains to a
well.” 51 Instead, applying Verdine, the court held that such a restrictive
reading “would exclude plugging and activities collateral to plugging,” which
LOIA expressly covers. 52 The court also observed that removing the casings
could not be “logically severed from the overall plug and abandonment
operation.” 53 Thus, the district court concluded that the agreement pertained
to a well. 54
Similarly, in Teaver, the plaintiffs argued that the relevant agreement
44 969 F. Supp. 2d 668, 680–83 (E.D. La. 2013).
45 Nos. 12-293 & 12-2448, 2013 WL 1681436, at *3–7 (E.D. La. Apr. 17, 2013).
46 No. 10-1523, 2012 WL 5866042, at *4–5 (E.D. La. Nov. 19, 2012).
47 2013 WL 1681436, at *1, *4.
48 Id. at *4.
49 Id.50 Id. at *5.
51 Id.52 Id. at *6.
53 Id. at *8.
54 Id. at *6.
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did not pertain to a well because the work related to dismantling a platform
crane and because the well itself had been dry for several years. 55 Observing
that the crane was used “to assist with the plugging and abandoning of the
wells,” the Teaver court found “that the scope of the agreement necessarily
pertains to the wells.” 56 The court rejected the plaintiffs’ argument that the
nexus to a well was negated because the wells were non-producing and the
platform was thus not an in-field production platform. 57 Relying on Verdine,
the court concluded that the “wells had previously produced oil and the
platform had previously been an in-field production platform.” Further,
because the crane was used in plugging the well, it fell within the scope of
LOIA’s broad language. 58
In Wilcox, the district court found that an agreement to, inter alia,
“provide welding services in connection with the decommissioning of oil and
gas platforms” pertained to a well because it was an “agreement to perform an
act that is collateral to plugging the well.” 59 The court observed that the
platforms were part of the well production system, assisted in oil and gas
production, had a geographic nexus to the well, and had a functional nexus
because they provided the “physical structure that housed and protected the
well conductor.” 60 The defendants, however, argued that “[w]here there is no
functional or geographic nexus between a live well and the structure in
question,” LOIA does not apply. 61 Relying heavily on Howell and Verdine, the
Wilcox court rejected this argument. 62 Instead, the court noted that the
55 2012 WL 5866042, at *2.
56 Id. at *4–5.
57 Id. at *5.
58 Id.59 969 F. Supp. 2d at 682–84 (internal quotation marks omitted).
60 Id. at 682.
61 Id.
62 Id.
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platform at issue in Verdine was already decommissioned but was still found
to be related to a well. 63
We conclude that these cases properly interpret LOIA. Each case
involved agreements to perform work in connection with “plugging and
abandoning” the wells at issue. Accepting the argument that LOIA could never
apply to a nonproducing well would have required the district courts to
interpret LOIA in such a manner as to exclude an expressly covered activity. 64
Those district courts were certainly correct to reject such a restrictive view.
Tetra argues that this case is distinguishable because the wells at issue
were decommissioned long before the Salvage Plan came into effect. Tetra
asserts that salvaging a decommissioned platform is not collateral to plugging
or decommissioning the well but is effectively one step further removed. We
reject that argument because it ignores the fact that regulations generally
require the removal of an oil platform in connection with a decommissioning
operation. 65
Based on all the above, we conclude that a contract for salvaging a
platform from a decommissioned oil well has a sufficient nexus to a well under
LOIA. Thus, LOIA would void Vertex’s indemnity obligation as well as
Continental’s obligation to indemnity Tetra as an additional insured.
Consequently, if the district court determines on remand that Louisiana law
must be adopted as surrogate federal law, Tetra will not be entitled to
indemnity from Continental or Vertex. If the district court instead determines
that Louisiana law does not apply, then the outcome depends on whether the
63 Id. at 682–83.
64 See La. Rev. Stat. Ann. § 9:2780(C) (including plugging or “any act collateral
thereto” as activities pertaining to a well).
65 See 30 C.F.R. § 250.1703 (listing general requirements for decommissioning) (“When
your facilities are no longer useful for operations, you must . . . [r]emove all platforms and
other facilities, except as provided in §§ 250.1725(a) and 250.1730. . . .”).
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Policy itself excludes coverage.
C. The Policy Does Not Exclude Coverage.
1. Applicable Law
“Texas courts interpret insurance policies according to the rules of
contract construction.” 66 This court “evaluate[s] the contract based on its plain
meaning, determining what the words of the contract say the parties agreed to
do.” 67 The court “must examine the policy as a whole, seeking to harmonize all
provisions and render none meaningless.” 68
“If policy language is worded so that it can be given a definite or certain
legal meaning, it is not ambiguous,” 69 and the court must “construe [the policy]
as a matter of law and enforce it as written.” 70 “An ambiguity does not
exist . . . simply because the parties interpret a policy differently.” 71 Instead, a
policy is ambiguous “if the contractual language is susceptible to two or more
reasonable interpretations.” 72 Ambiguous policy language—in particular,
exclusionary language—must be construed “strictly against the insurer and
liberally in favor of the insured.” 73 “If the insured’s construction of an
ambiguous exclusionary provision is reasonable, the court must adopt it, even
if it is not the most reasonable position.” 74
66 Likens v. Hartford Life & Accident Ins. Co., 688 F.3d 197, 199 (5th Cir. 2012)
(quoting de Laurentis v. U.S. Auto Ass’n, 162 S.W.3d 714, 721 (Tex. App.—Houston [14th
Dist.] 2005)).
67 Id.68 In re Deepwater Horizon, 470 S.W.3d 452, 464 (Tex. 2015).
69 Am. Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558, 562 (5th Cir.
2010).
70 In re Deepwater Horizon, 470 S.W.3d at 464.
71 Am. Home Assurance Co. v. Cat Tech L.L.C., 660 F.3d 216, 220 (5th Cir. 2011).
72 Rentech Steel, 620 F.3d at 562 (internal quotation marks omitted).
73 Id. at 563–64; see also Likens, 688 F.3d at 199.
74 Likens, 688 F.3d at 199.
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2. The Relevant Policy Language
Exclusion d, at issue here, provides:
2. Exclusions
This insurance does not apply to: . . .
d. Any obligation of the insured under a workers compensation,
United States Longshoremen’s and Harbor Workers’
Compensation Act, Jones Act, Death on the High Seas Act, General
Maritime Law, Federal Employers’ Liability Act, disability
benefits or unemployment compensation law or any similar
law. . . .
The district court found that Exclusion d is ambiguous because it is
subject to multiple reasonable interpretations. Specifically, the district court
concluded that Exclusion d is ambiguous because of: (1) the “any similar law”
language; (2) the limiting clause in another provision, Exclusion e; and (3) the
seeming illusoriness of coverage under Continental’s interpretation. We
conclude that Exclusion d is ambiguous because of the “any similar law”
language.
As the district court observed, the inclusion of the phrase “any similar
law” prompts the court to ask how the enumerated laws are similar. Tetra
argues that each of the enumerated laws in Exclusion d contains elements of
employers’ liability, so “any similar law” should be reasonably read to refer to
employers’ liability. We agree that the employer/employee relationship is the
“similar” thread throughout each enumerated law. 75 We also conclude that
Continental’s construction of Exclusion d, which would apply it to a general
tort claim, renders the policy ambiguous.
Continental argues on appeal that the laws contained in Exclusion d are
not merely employers’ liability laws. Specifically, Continental contends that
75Notably, Exclusion d is phrased in a similar manner as most “workers’
compensation” or similar exclusions. See 9 Couch on Ins. § 129:11 (3d ed. 2015).
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the Policy excludes Tetra’s coverage because Mayorga’s complaint for damages
invoked “General Maritime Law,” and Exclusion d explicitly includes the
phrase “General Maritime Law.” Though superficially plausible, that
argument is inadequate. We are required to “examine the policy as a whole,
seeking to harmonize all provisions and render none meaningless.” 76
Continental’s construction fails to account for the phrase “any similar law” in
Exclusion d, while Tetra’s construction does account for it.
This court’s decision in Amerisure Insurance Co. v. Navigators Insurance
Co., while not on all fours, also lends support to Tetra’s argument that “any
similar law” renders Exclusion d ambiguous. 77 In Amerisure, two workers sued
for negligence under the Jones Act, and the insurer argued that the policy did
not apply due to a provision excluding coverage for “[a]ny obligation for which
the insured . . . may be held liable under any workers compensation, disability
benefits or unemployment compensation law or any similar law.” 78 This court
observed that Jones Act claims are not similar to workers’ compensation
claims, because “the former is based on the employer’s negligence while the
latter is not.” 79 Thus, “the operative phrase [in the insurance contract] . . . ,
‘any similar law,’ is ambiguous with respect to the Jones Act claims.” 80 The
logic of Amerisure supports a finding of ambiguity here.
Because we find that Exclusion d’s “any similar law” language suffices
to render the exclusion ambiguous, we need not reach the two alternative or
additional grounds for finding ambiguity, namely the effect of certain limiting
language in Exclusion e, and whether or not Continental’s construction of the
Policy renders coverage illusory. “In light of this ambiguity, the court must
76 In re Deepwater Horizon, 470 S.W.3d at 464.
77 611 F.3d 299 (5th Cir. 2010).
78 Id. at 310.
79 Id. at 310.
80 Id.21
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interpret the [provision] so that it does not exclude coverage.” 81 Accordingly,
we conclude that the Policy does not exclude coverage. Thus, if the district
court determines that Louisiana law does not apply under OCSLA, Tetra will
be entitled to indemnity.
III. CONCLUSION
In sum, we REVERSE with respect to the district court’s interpretation
of LOIA, AFFIRM with respect to the Policy interpretation, and REMAND for
a determination of whether Louisiana law applies as surrogate federal law
under OCSLA. On remand, if the district court concludes that Louisiana law
applies to this dispute, LOIA will void the indemnity agreement, and
Continental and Vertex will be entitled to judgment. If the district court
concludes that Louisiana law does not apply, then Tetra and Maritech will be
entitled to judgment against Continental and Vertex because the Policy does
not exclude coverage.
81 Amerisure Ins. Co., 611 F.3d at 310.
22