Texaco Trading v. Laine Const Co Inc ( 2002 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-31259
In Re: In the Matter of the complaint: T.L. JAMES & COMPANY INC.,
as owner of the Crane Barge ALROAR, praying for Exoneration from or
Limitation of Liability; T.L. JAMES & COMPANY INC., as owner of the
Crane Barge BILL JOHNSON, praying for Exoneration from or
Limitation of Liability
Petitioners
TEXACO TRADING AND TRANSPORTATION, INC.; TEXACO PIPELINE
INCORPORATED; TEXACO INC.; EQUILON PIPELINE CO., LLC; EQUILON
ENTERPRISES, LLC
Plaintiffs - Appellants
VERSUS
LAINE CONSTRUCTION COMPANY INC.; ET AL
Defendants
T.L. JAMES & COMPANY INC.
Defendant - Appellee
T.L. JAMES & COMPANY INC., as owner of the Crane Barge ALROAR
Petitioner - Appellee
VERSUS
LAINE CONSTRUCTION COMPANY INC.; ET AL
Claimants
TEXACO PIPELINE INC.; TEXACO INC.
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Claimants - Appellants
EQUILON PIPELINE COMPANY, LLC, successor-in-interest to Texaco
Pipeline, Inc.; EQUILON ENTERPRISES, LLC, successor-in-interest to
Texaco Trading and Transportation Inc. and Texaco Inc.
Movants - Appellants
T.L. JAMES & COMPANY INC., as owner of the Crane Barge BILL JOHNSON
Petitioner - Appellee
VERSUS
LAINE CONSTRUCTION COMPANY INC.; ET AL
Claimants
TEXACO PIPELINE INC; TEXACO INC.; EQUILON PIPELINE COMPANY, LLC, as
successor-in-interest to Texaco Pipeline Inc. and Texaco Inc.
Claimants-Appellants
Appeal from the United States District Court
For the Eastern District of Louisiana
(98-CV-2683-D)
February 25, 2002
Before EMILIO M. GARZA, PARKER and DENNIS, Circuit Judges.
PER CURIAM:*
Texaco Pipeline Incorporated1 (hereinafter “Texaco Pipeline”)
and Texaco Inc. (collectively hereinafter “Texaco Plaintiffs”)
appeal the district court’s: (1) dismissal of their motion for
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1
Equilon Pipeline Company LLC is the successor-in-interest to
Texaco Pipeline Incorporated.
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partial summary judgment; (2) dismissal of their declaratory
judgment action; and (3) grant of summary judgment dismissing their
contract claims. For the reasons that follow, we reverse the
district court’s ruling: (1) dismissing the Texaco Plaintiffs’
motion for partial summary judgment; (2) dismissing the Texaco
Plaintiffs’ declaratory judgment action; and (3) granting summary
judgment dismissing the Texaco Plaintiffs’ contract claims. We
remand this case to the district court for further proceedings
consistent with this opinion.
BACKGROUND
In February of 1997, Laine Construction Company, Inc.
(hereinafter “Laine”) and Texaco Trading and Transportation, Inc.2
(hereinafter “Texaco Trading”) entered into a written agreement
(hereinafter “Master Contract”) whereby Laine would perform certain
services in connection with Texaco Trading’s construction of a 24-
inch crude oil pipeline (hereinafter “Poseidon Pipeline”) running
through Lake Barre, Louisiana. Laine and Texaco Trading were the
only signatories to the Master Contract. In March of 1997, T.L.
James and Company, Inc. (hereinafter “T.L. James”) entered into a
written agreement (hereinafter “Subcontract”) with Laine to perform
a portion of Laine’s obligations under the Master Contract.
Specifically, T.L. James agreed to install navigation marker signs
and perform pipe ditch excavation and backfill. T.L. James and
Laine were the only signatories to the Subcontract. In addition to
the terms of the Subcontract, T.L. James also accepted all of the
terms of the Master Contract between Laine and Texaco Trading with
respect to the work to be performed under the Subcontract. On or
2
Equilon Enterprises LLC is the successor-in-interest to Texaco
Trading and Transportation Inc. Texaco Inc. is a part-owner of
Equilon Enterprises LLC.
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about May 16, 1997, a few weeks after the T.L. James Crane Barge
ALROAR completed a trench for the Poseidon Pipeline, Texaco
Pipeline’s 16-inch crude oil pipeline (hereinafter “Existing
Pipeline”), in the immediate vicinity of the trenching work
performed by the ALROAR, ruptured causing approximately 6,500
barrels of oil to spill into Lake Barre.
The Texaco Plaintiffs and Texaco Trading filed suit in
district court against Laine and T.L. James asserting a total of
seven causes of action for: (1) contractual indemnity; (2)
statutory remedies under the Oil Pollution Act of 19903
(hereinafter “OPA”); (3) indemnity-contribution-subrogation; (4)
negligence; (5) quasi-contract; (6) unseaworthiness; and (7)
declaratory judgment. T.L. James filed two separate limitation of
liability actions, one each, in its capacity as owner of the Crane
Barges ALROAR and BILL JOHNSON. The district court consolidated
these actions with the plaintiffs’ suit. Laine was dismissed from
the suit and the district court then: (1) granted T.L. James’s
motion for summary judgment dismissing all claims by Texaco
Trading; (2) granted T.L. James’s motion for partial summary
judgment dismissing all contract related claims; (3) granted in
part T.L. James’s motion for summary judgment dismissing Texaco
Inc.’s claims for contractual indemnity, unseaworthiness,
negligence, relief under the OPA, and declaratory judgment but
deferred ruling on the indemnity-contribution-subrogation claim and
quasi-contract claim; and (4) denied as moot, Texaco Trading and
the Texaco Plaintiffs’ motion for partial summary judgment seeking
a ruling that the Limitation of Liability Act4 does not apply to
3
33 U.S.C.A. §§ 2701-2761 (West 2001).
4
46 U.S.C.A. app. §§ 181-196 (West Supp. 2001).
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their indemnity and breach of contract claims.
The district court’s rulings dismissing the Texaco Plaintiffs’
contract claims were limited to questions of contract
interpretation based on the contract documents themselves and no
factual determinations on the merits of the claims were made.
Although all of the plaintiffs asserted claims for relief under the
OPA and for negligence, the district court found that only Texaco
Pipeline, as owner of the Existing Pipeline, has viable causes of
action against T.L. James under the OPA and for negligence. On
appeal, the Texaco Plaintiffs5 assert that the district court erred
in: (1) finding their motion for summary judgment moot; (2)
granting summary judgment against them on their contract claims;
and (3) holding that they were not entitled to maintain a
declaratory judgment action.
STANDARDS OF REVIEW
We review a district court’s grant of summary judgment de
novo. See Taita Chem. Co., Ltd. v. Westlake Styrene Corp., 246
F.3d 377, 385 (5th Cir. 2001). Summary judgment is appropriate “if
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
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.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-26,
106 S. Ct. 2548, 2552-55, 91 L. Ed. 2d 265 (1986). The
interpretation of contract terms is a question of law and is also
reviewed de novo. See Liberty Mut. Ins. Co. v. Pine Bluff Sand &
Gravel Co., Inc., 89 F.3d 243, 246 (5th Cir. 1996). We review a
5
Texaco Trading is not a party in this appeal and the district
court’s deferred rulings are not before this court on appeal.
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district court’s declaratory judgment decision for abuse of
discretion. See Torch, Inc. v. LeBlanc, 947 F.2d 193, 194 (5th
Cir. 1991) (citation omitted).
ANALYSIS
The Texaco Plaintiffs assert that the district court erred in:
(1) granting summary judgment on their contract claims in favor of
T.L. James; (2) holding that they were not entitled to maintain a
declaratory judgment action; and (3) holding that their motion for
summary judgment was moot because they had no enforceable contract
rights. We review each of these arguments separately.
A. Contractual Indemnity Claims
The district court held that the beneficiaries clause in the
Subcontract between Laine and T.L. James did not create a right of
contractual indemnity for the Texaco Plaintiffs. The district
court reasoned that the beneficiaries clause in the Subcontract was
a restrictive clause that limited any parent companies, affiliates
and subsidiaries of Texaco Trading to asserting only those rights
determined to be owed to Texaco Trading under the Subcontract. The
district court further reasoned that because Texaco Trading
suffered no damages as a result of the oil spill and did not have
a right of contractual indemnity, neither Texaco Inc. or Texaco
Pipeline had the right to assert independent claims for direct
damages.
The Texaco Plaintiffs maintain that the district court’s
holding is in error because they are third-party beneficiaries of
the Subcontract and T.L. James agreed to be bound by the terms of
the Subcontract which were designed to protect them from the type
of damage that resulted from the rupture of the Existing Pipeline.
The Texaco Plaintiffs argue that notwithstanding an absence of
damages on the part of Texaco Trading, under both maritime law and
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Louisiana law, they are entitled, as expressly named and intended
third-party beneficiaries under the terms of the Subcontract, to
independently assert indemnity claims for damages resulting from
T.L. James’s breach of its contractual commitments and demand
performance from T.L. James.
T.L. James contends that the Master Contract and Subcontract
are governed by maritime law and that the objectively determined
intent of the parties is the relevant guide to determining whether
the Texaco Plaintiffs are third-party beneficiaries who can assert
independent claims for damages. Specifically, T.L. James argues
that the parties intended to restrict any parent or subsidiary
companies from asserting independent claims when Texaco Trading had
no right to assert a claim. Furthermore, T.L. James contends that
maritime law requires strict construction of the indemnity
provisions of Exhibit 3 to the Subcontract which clearly express
that T.L. James is not obligated to indemnify anyone because Texaco
Trading, Texaco Inc. and Texaco Pipeline’s negligence was alleged
to be responsible for the oil spill in its Answer to their Second
Amended Complaint.
The Master Contract provides that the agreement is to be
“governed by and interpreted in accordance with the General
Maritime Laws of the United States, and where not applicable, the
laws of the State of Louisiana shall apply.” In the instant case,
the Master Contract and Subcontract are maritime contracts because
they “did not merely touch incidentally on a vessel,” but
specifically required the use of a vessel in a navigable waterway
to install navigation marker signs and perform pipe ditch
excavation and backfill. See Dupre v. Penrod Drilling Corp., 993
F.2d 474, 477 (5th Cir. 1993).
Section 1 of the Subcontract contains T.L. James’s agreement
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to the terms of the Subcontract and the Master Contract with
respect to the work to be performed thereunder. Section 1 also
states that except as otherwise provided in the Subcontract, it is
the intent and purpose of the parties to have T.L. James assume the
“obligations, indemnities and liabilities of CONTRACTOR [Laine]
with regard to the work to be done . . . [t]hereunder, that
CONTRACTOR [Laine] has with respect to COMPANY [Texaco Trading].”
Section 9(a) of the Subcontract, reads in relevant part as follows:
“Subject to the other provisions of this section, and to the
maximum extent permitted by applicable law SUBCONTRACTOR [T.L.
James] shall abide by the terms of the Liability-Indemnity
provisions as set forth in Exhibit 3.”6 The only reasonable
interpretation is that the parties intended to have T.L. James
assume only the obligations, indemnities and liabilities that Laine
had with Texaco Trading except as otherwise provided in the
Subcontract.
Under maritime law, third-party beneficiary status is
determined by looking to the intent of the parties. “A promise
must be made directly for the benefit of a third party to support
a claim by that third party under the contract.” Atl. & Gulf
Stevedores, Inc. v. Revelle Shipping Agency, Inc., 750 F.2d 457,
6
Pursuant to Section 9(a), the indemnity provisions of Exhibit
3 apply subject to the provisions of Section 9. Section 9(g)
provides for indemnity in the event of environmental pollution and
Section 9(k) extends T.L. James’s indemnity obligations to apply in
the event of a breach of any provision of the Subcontract. Because
the provisions of Exhibit 3 apply subject to the provisions of
Section 9 and we find that the provisions in Section 9 and
elsewhere throughout the Subcontract, exclusive of Exhibit 3,
indicate that the Texaco Plaintiffs are intended beneficiaries
entitled to assert a claim for indemnity, T.L. James’s argument
that the Texaco Plaintiffs’ claims are barred by an allegation of
negligence fails.
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459 n.3 (5th Cir. 1985). See also RESTATEMENT (SECOND) OF CONTRACTS §
302(1)(b) (1981)(“Unless otherwise agreed between promisor and
promisee, a beneficiary of a promise is an intended beneficiary if
recognition of a right to performance in the beneficiary is
appropriate to effectuate the intention of the parties and . . .
the circumstances indicate that the promisee intends to give the
beneficiary the benefit of the promised performance.”).
The Texaco Plaintiffs contend that the beneficiaries clause in
Section 19 of the Subcontract gives them, as the parent and
subsidiary companies of Texaco Trading, the right to independently
assert an indemnity claim for damages under the Subcontract.7
Although reliance on boilerplate beneficiary provisions, in and of
themselves, is often misplaced when attempting to demonstrate that
the parties contemplated and intended to confer the right sought to
be exercised by the third party, examination of the entire
Subcontract reveals that Texaco Inc. and Texaco Pipeline are
intended beneficiaries.
In Section 9(g) of the Subcontract, T.L. James agreed to
“exercise due diligence at all times and to conduct its operations
in a manner that will prevent environmental pollution . . . and
shall, at its own expense, clean up any pollution caused by it in
the performance of the work.” This language does not restrict T.L.
James’s obligations to those that Laine had with respect to Texaco
Trading. Rather, the language in Section 9(g) serves to broaden
T.L. James’s obligations to include “any pollution caused by it in
7
The beneficiaries clause, Section 19 of the Subcontract, reads
as follows: “Beneficiaries of the rights granted to COMPANY [Texaco
Trading] and CONTRACTOR [Laine] hereunder, include their parent
companies, affiliates, subsidiaries and coventurers, if any, and
all of their directors, officers, employees and agents.”
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the performance of the work.”
In Section 9(k) of the Subcontract, T.L. James agreed to
indemnify Laine and Texaco Trading and “hold them harmless from any
and all loss, damage, penalties, costs, expenses and attorney’s
fees suffered or incurred on account of any breach of the aforesaid
obligations and covenants, and any other provisions or covenants of
this subcontract.” The second paragraph of Section 15 of the
Subcontract reads as follows: “Subcontractor [T.L. James] shall
exercise extreme care at all time to avoid damage or injury to
existing facilities of Company [Texaco Trading], or others,
including, but not limited to, pipelines, sewers, water or gas
mains, electric or telephone installations and fiber optics
cables.” Pursuant to Section 15, T.L. James was obligated to
exercise extreme care to avoid damage or injury to existing
facilities owned not just by Texaco Trading, but also existing
facilities owned by others. The Existing Pipeline owned by Texaco
Pipeline is precisely the type of existing facility contemplated by
the parties and provided for in Section 15.
“A promise in a contract creates a duty in the promisor to any
intended beneficiary to perform the promise, and the intended
beneficiary may enforce the duty.” RESTATEMENT (SECOND) OF CONTRACTS §
304 (1981).
[R]ecognition of a duty to the beneficiary means
that the beneficiary has available for his own
benefit the usual remedies for breach of contract.
An action by the beneficiary is commonly a
convenient way to enforce the right of the promisee
as well as to redress any injury to the beneficiary.
Id. cmt. d.
Although the Existing Pipeline which ruptured was not the
subject of the work contracted for in the Subcontract and the
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Texaco Plaintiffs were not signatories to either the Master
Contract or Subcontract, Section 15 created a duty for T.L. James
to exercise extreme care to avoid damaging the Existing Pipeline.
Section 9(g) of the Subcontract created a duty for T.L. James to
clean up, at its own expense, any pollution caused by it in the
performance of the trenching work. Section 9(k) of the
Subcontract, unquestionably created a right of indemnity in Texaco
Trading and Laine for breach of the provisions of the Subcontract
by T.L. James and Section 19 extends to the Texaco Plaintiffs, the
rights granted to Texaco Trading.
Inclusion in the Subcontract of the provisions in Sections
9(g), 9(k), 15 and 19 indicate that the parties were cognizant of
the potential dangers to existing facilities in the area where the
trenching work was to be performed and intended for T.L. James’s
obligations not to be limited only to those that Laine had with
Texaco Trading but extend for the benefit of other parties as well.
The Texaco Plaintiffs were not merely incidental beneficiaries of
the Subcontract but intended beneficiaries and are therefore
entitled to assert a claim for performance by T.L. James for breach
of the provisions of the Subcontract. Upon a showing of proof of
cause in fact and breach of T.L. James’s duty to exercise extreme
care, the Texaco Plaintiffs shall be entitled to indemnification,
including clean up costs.
B. Declaratory Judgment
The Texaco Plaintiffs sought a declaration: (1) of their
contractual rights; (2) that T.L. James was responsible for the oil
spill and the resulting damages; and (3) that Texaco Inc. and
Texaco Pipeline are third-party beneficiaries under the
Subcontract. After dismissing all of the Texaco Plaintiffs’
contract claims, the district court dismissed their declaratory
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judgment claim upon a finding that the Texaco Plaintiffs had no
viable claims against T.L. James which could form the basis of a
declaratory judgment. We have found that the Texaco Plaintiffs’
are intended third-party beneficiaries and as such are entitled to
assert independent contractual indemnity claims. Accordingly, we
find that the district court abused its discretion in dismissing
the Texaco Plaintiffs’ declaratory judgment claim.
C. Summary Judgment
The district court denied as moot, the Texaco Plaintiffs’
motion for partial summary judgment after dismissing all of their
contract claims. Because the Texaco Plaintiffs are entitled to
assert independent contractual indemnity claims, we reverse the
district court’s denial of the Texaco Plaintiffs’ motion for
partial summary judgment and remand to the district court for
further consideration but in doing so, we express no opinion of the
merits of such claims.
CONCLUSION
For the reasons discussed above, the district court’s
dismissal of the Texaco Plaintiffs’ motion for partial summary
judgment and declaratory judgment action and the grant of summary
judgment dismissing the Texaco Plaintiffs’ contract claims are
reversed and remanded for further proceedings consistent herewith.
REVERSED AND REMANDED.
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EMILIO M. GARZA, Circuit Judge, dissenting:
In this case, Texaco Pipeline and Texaco Inc. seek
indemnification for damages suffered and attorneys’ fees incurred
on account of T.L. James’s alleged breach of its subcontract with
Laine Co. The majority seems to assume that simply because Texaco
Pipeline and Texaco Inc. may enjoy third-party beneficiary status
under the subcontract with respect to one or more of T.L. James’s
heightened duties of care, they are necessarily entitled to seek
indemnification for breach of those duties. Because I believe
Texaco Inc. and Texaco Pipeline are not intended third-party
beneficiaries of indemnification rights under the subcontract, I
respectfully dissent.
Simply stated, the background facts of this case are as
follows: Texaco Trading, as a member of the Poseidon Oil Pipeline
Co. LLC, was charged with managing the construction of a new oil
pipeline (“the Poseidon Pipeline”). Texaco Trading entered into a
contract with Laine Co. (“the Master Contract”) to perform most of
the work involved in constructing the new pipeline. Texaco Trading
and Laine Co. were the only signatories to the Master Contract.
Laine Co. then subcontracted a portion of its work obligations to
T.L. James.8 Under the terms of the subcontract, T.L. James
assumed the “obligations, indemnities and liabilities” that Laine
Co. owed to Texaco Trading under the Master Contract with regard to
8
T.L. James assumed the tasks of installing navigation marker
signs and performing pipe ditch excavation and backfill.
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the work to be done. T.L. James also assumed additional
obligations to Laine Co., Texaco Trading, and other parties under
the subcontract. Laine Co. and T.L. James were the only
signatories to the subcontract.
Shortly after T.L. James completed a trench for the
Poseidon Pipeline, a nearby crude oil pipeline owned by Texaco
Pipeline, a subsidiary of Texaco Trading, ruptured, causing a
substantial oil spill. As a result, Texaco Pipeline and Texaco
Inc., the parent company of Texaco Trading, incurred significant
clean-up costs and were named in several lawsuits asserting damages
as a result of the spill. Texaco Pipeline and Texaco Inc. now seek
indemnification from T.L. James on account of T.L. James’s alleged
breach of its duties under the subcontract with Laine Co.
The only way that Texaco Pipeline and Texaco Inc. can
succeed on an indemnification claim vis-a-vis the subcontract is if
they are both intended third-party beneficiaries of the
subcontract’s indemnification provisions. Under maritime law,
“third-party beneficiary status is determined by looking to the
intent of the parties.” Maj. Op. at 8. The mere fact that a
particular contract right may benefit a third party is not
sufficient to establish the intent necessary to confer beneficiary
status. “A promise must be made directly for the benefit of a
third party to support a claim by that third party under the
contract.” Atl. & Gulf Stevedores, Inc. v. Revelle Shipping
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Agency, Inc., 750 F.2d 457, 459 n.3 (5th Cir. 1985).
The majority implicitly concludes that Texaco Pipeline
and Texaco Inc. are intended third-party beneficiaries of the
subcontract’s indemnification provisions based on a combination of
three factors. First, the majority notes that Laine Co. and T.L.
James, when drafting the subcontract, clearly contemplated the
risks of environmental pollution and damage to existing facilities.
Specifically, the majority focuses on two of the subcontract’s
provisions under which T.L. James is held to a heightened standard
of care when performing the excavation and backfill work.9 One of
these two provisions expressly names Texaco Trading as a third
party benefitted by the provision. Second, the majority notes that
Section 19, the subcontract’s beneficiaries clause, lists as
beneficiaries of Texaco Trading’s rights under the subcontract its
9
The majority focuses on Sections 9(g) and 15 of the subcontract.
Section 9(g) provides:
SUBCONTRACTOR shall exercise due diligence at all times
and to conduct its operations in a manner that will
prevent environmental pollution. . . . SUBCONTRACTOR
agrees to . . . take all reasonable measures to prevent
pollution and shall, at its own expense, clean up any
pollution caused by it in the performance of the work[.]
Section 15 reads:
SUBCONTRACTOR shall exercise extreme care at all time
[sic] to avoid damage or injury to existing facilities of
COMPANY, or others, including, but not limited to,
pipelines, sewers, water or gas mains, electric or
telephone installations and fiber optics cables.
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parent company and subsidiaries.10 Third, the majority notes that
Section 9(k) of the subcontract broadly states that T.L. James
shall indemnify Texaco Trading for “any and all loss, damage,
penalties, costs, expenses and attorneys’ fees suffered or incurred
on account of any breach [of the subcontract’s provisions].” The
majority reads these provisions of the subcontract together to
conclude that Laine Co. and T.L. James intended to extend for the
benefit of Texaco Pipeline and Texaco Inc. not only T.L. James’s
heightened duties of care, but also its obligation to indemnify
Texaco Trading.
As a threshold matter, I agree with the majority’s
conclusion that Laine Co. and T.L. James intended Texaco Trading to
be a third-party beneficiary of T.L. James’s heightened duties of
care and indemnification obligations under the subcontract. Where
I part ways with the majority, however, is in determining the
significance Section 19 has for additional third-party
beneficiaries. Specifically, I disagree with the majority’s
apparent conclusion that Section 19 somehow creates third-party
beneficiary rights in Texaco Pipeline and Texaco Inc. in every
instance in which Texaco Trading has a third-party right. On the
10
Section 19 reads:
Beneficiaries of the rights granted to COMPANY [Texaco
Trading] and CONTRACTOR [Laine Co.] hereunder, include
their parent companies, affiliates, subsidiaries and
coventurers, if any, and all of their directors,
officers, employees and agents.
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contrary, Section 19 does not create new beneficiaries of the
rights granted to Texaco Trading, but rather identifies more
specifically those additional third parties already intended to be
benefitted by the subcontract’s individual provisions.
For example, on its face, Section 15’s requirement that
T.L. James exercise extreme care to avoid damage to existing
facilities contemplates the protection of third parties in addition
to Laine Co. and Texaco Trading. Section 15, however, does not
specify those additional parties by name. Any doubt about the
identity of those additional beneficiaries, however, is cleared up
by Section 19. At the very least, the parent and subsidiary of
Texaco Trading, to the extent they own existing facilities in the
vicinity of the excavation site, have a right to enforce this
provision.
In contrast to Section 15, the language of Section 9(k)
makes no suggestion that the parties intended it to protect parties
beyond Laine Co. and Texaco Trading. On the contrary, the
provision states only that T.L. James shall indemnify Laine Co. and
Texaco Trading. The fact that the parties did not extend
indemnification rights to additional third parties makes sense
considering the apparent purpose of the provision. When drafting
the subcontract, Laine Co. logically would want to ensure that it,
and in certain instances Texaco Trading, would be shielded from any
possibility liability resulting from the improper actions of a
subcontractor. Both Laine Co. and Texaco Trading had a stake in
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the proper completion of the construction project. Neither T.L.
James nor Laine Co. had any reason, however, to make T.L. James the
all-risk insurer for others when neither Laine Co. nor Texaco
Trading are exposed to liability themselves. It defies reason to
assume that T.L. James, when subcontracting to perform a relatively
small portion of the construction of the Poseidon Pipeline, would
expose itself to such far-reaching liability.
Despite the clarity of the language set forth in Section
9(k), the majority concludes that Section 19 somehow broadens T.L.
James’s indemnification obligations by naming additional
beneficiaries. Yet, the majority itself concedes that “reliance on
boilerplate beneficiary provisions, in and of themselves, is often
misplaced when attempting to demonstrate that the parties
contemplated and intended to confer the right sought to be
exercised by a third party.” Maj. Op. at 9. Because the
unambiguous language of Section 9(k) includes no suggestion that it
extends Texaco Trading’s indemnification rights for the benefit of
Texaco Pipeline and Texaco Inc., Section 19, a laundry list of
possible beneficiaries, has no bearing on its meaning.11
In sum, I believe Texaco Inc. and Texaco Pipeline are not
intended third-party beneficiaries of indemnification rights under
the subcontract. As a result, I would affirm the district court’s
11
Because Texaco Pipeline and Texaco Inc. are not intended third-party beneficiaries of Section
9(k)’s indemnification provision, we do not need to reach the issue of whether Exhibit 3’s exception
to indemnification applies in this case.
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rulings dismissing Texaco Pipeline’s and Texaco Inc.’s contract
claims, denying as moot their motion for partial summary judgment,
and dismissing their declaratory judgment action.12
12
Texaco Pipeline and Texaco Inc. have only asked this court to
determine whether they are entitled to indemnification under
Section 9(k) of the subcontract. Thus, any arguments they could
have raised for breach of Sections 15 and 9(g) of the subcontract
are deemed waived. See Carmon v. Lubrizol Corp., 17 F.3d 791, 794
(5th Cir. 1994).
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