Bourg v. Chevron USA Inc ( 1996 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-30933
Summary Calendar
_____________________
REYNOLD P. BOURG, SR., ETC.,
Plaintiff,
versus
CHEVRON U.S.A. INC., ET AL.,
Defendants.
______________________
CHEVRON U.S.A. INC.,
Third Party Plaintiff-Appellee,
versus
McCALL ENTERPRISES INCORPORATED, ET AL.,
Third Party Defendants,
McCALL ENTERPRISES INCORPORATED; NORWICH UNION FIRE
INSURANCE SOCIETY LIMITED; ZURICH RE (U.K.); HANSA MARINE
INSURANCE CO. U.K. LTD.; VESTA U.K. INSURANCE CO. LTD.; LEGAL &
GENERAL ASSURANCE SOCIETY LIMITED,
Third Party Defendants-Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
(CA-93-0472)
_________________________________________________________________
June 21, 1996
Before DAVIS, BARKSDALE, and DeMOSS, Circuit Judges.
PER CURIAM:*
McCall Enterprises, Inc., and its underwriters (collectively
"McCall") contest being required to indemnify Chevron U.S.A. Inc.
for defense costs and the amount paid by Chevron to settle a
personal injury claim brought against it by an employee of a
subcontractor of Chevron who allegedly was injured when boarding
McCall's vessel, which was under time charter to Chevron. We
AFFIRM.
I.
In 1990, Chevron and McCall entered into a time charter;
McCall was to provide vessels for transporting persons and property
to and from Chevron's oil and gas platforms in the Gulf of Mexico.
The time charter provided that McCall would defend and indemnify
Chevron from liability for personal injury "arising out of or in
anyway directly or indirectly connected with the performance of
service" under the time charter, including "transportation of
passengers" and "loading or unloading of passengers". As required
by the time charter, McCall named Chevron as an additional assured
on its liability insurance policies.
In March 1992, Reynold Bourg, a welder employed by a Chevron
subcontractor, allegedly was injured when he transferred, via swing
rope, from a Chevron platform to a McCall vessel operating pursuant
*
Pursuant to Local Rule 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this opinion should not be published and is not precedent except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 Local Rule 47.5.4.
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to the time charter. Bourg filed suit against McCall and Chevron,
claiming that their negligence caused his injuries. Chevron filed
a third party complaint against McCall, seeking defense and
indemnity pursuant to the time charter.
The district court granted Chevron's motion for summary
judgment on the third party complaint, holding that the time
charter indemnity provision unambiguously obligated McCall to
defend and indemnify Chevron. One week before trial, Chevron
settled with Bourg for $75,000, and moved for approval of the
settlement. (Following trial of Bourg's action, judgment was
entered for McCall.) The district court approved the settlement,
holding that Chevron was potentially liable to Bourg in an amount
far in excess of the settlement.
II.
McCall contends that Bourg's claim against Chevron was not
within the scope of the indemnification clause and, alternatively,
that the district court erred by ordering reimbursement of the
settlement amount based on Chevron's potential, rather than actual,
liability. Of course, we review the summary judgment de novo,
applying the same standard as the district court. E.g., Douglass
v. United Services Automobile Ass'n, 79 F.3d 1415, 1429 (5th Cir.
1996) (en banc). Summary judgment "shall be rendered forthwith if
the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
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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).
A.
The indemnity provision provides:
[McCall] hereby agrees to fully indemnify and
hold [Chevron] forever harmless, and to
undertake to defend [Chevron] of and from any
and all liabilities, losses, damages, and
costs, of whatsoever nature or kind, for
personal injury or death, ... arising out of
or in any way directly or indirectly connected
with the performance of service under this
agreement or the ownership, maintenance,
management, operation, transportation of
passengers, ... loading or unloading of
passengers or navigation of the vessel, and
whether or not caused or contributed to by the
negligence, strict liability or fault of
[Chevron], or of any person or party for whose
acts [Chevron] is or may be liable.
(Emphasis added.)
McCall contends that Bourg's claim against Chevron is not covered
because the indemnity provision does not specify that
indemnification for personal injury extends to injuries to
employees of third parties, nor does it state with sufficient
specificity that injuries occurring when the vessel is serving as
nothing more than an "inert locale" are within its scope.
A charter agreement for a vessel is a maritime contract, to be
construed according to maritime law. See Fontenot v. Mesa
Petroleum Co., 791 F.2d 1207, 1214 (5th Cir. 1986). Under federal
maritime law,
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a contract of indemnity should be construed to
cover all losses, damages, or liabilities
which reasonably appear to have been within
the contemplation of the parties, but it
should not be read to impose liability for
those losses or liabilities which are neither
expressly within its terms nor of such a
character that it can be reasonably inferred
that the parties intended to include them
within the indemnity coverage.
Id. at 1214 (brackets and citation omitted).
The indemnity provision is clear and unambiguous. It contains
no language limiting covered passengers to Chevron employees, nor
does it exclude coverage when the vessel is an "inert locale". To
the contrary, Bourg's claim that he was injured while boarding the
McCall vessel is encompassed by the plain language of the agreement
("loading ... of passengers").
B.
1.
"The general rule requires an indemnitee to show actual
liability on his part to recover against an indemnitor". Fontenot,
791 F.2d at 1216. However, "a defendant need only show potential
(rather than actual) liability to recover indemnity where either
(1) the defendant tenders the defense of the action to the
indemnitor; (2) the claim for indemnity is founded upon a judgment;
(3) the defendant's claim is based on a written contract of
insurance or indemnification". Id. at 1216-17. McCall asserts
that, because Chevron failed to give adequate notice of its
intention to settle with Bourg, equitable indemnity principles
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required Chevron to show actual, rather than potential, liability
in order to be indemnified for the settlement amount. Chevron
counters that it was not required to notify McCall of the
settlement because its claim was based upon a written contract of
indemnity; but that, in any event, it notified McCall of Bourg's
offer and settled only after McCall refused to act.
The cases relied on by McCall concerning equitable
indemnification principles are distinguishable, because they did
not involve claims for indemnity based on written contracts. See,
e.g., Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir. 1987)
(tort-based indemnity claim); Burke v. Ripp, 619 F.2d 354 (5th Cir.
1980) (tort-based indemnity claim); Parfait v. Jahncke Service,
Inc., 484 F.2d 296 (5th Cir. 1973) (claim for indemnity based on
implied warranty of workmanlike performance), cert. denied, 415
U.S. 957 (1974); and Whisenant v. Brewster-Bartle Offshore Co., 446
F.2d 394 (5th Cir. 1971) (claim for indemnity based on implied
warranty of workmanlike performance). In Parfait, our court
distinguished indemnity claims based on written contracts:
The actual-versus-potential liability problem
is unique to cases in which the original
defendant (indemnitee) has settled with the
original plaintiff without giving the third-
party defendant (indemnitor) an opportunity to
approve the amount of the settlement or to
conduct the defense, and in which traditional
indemnity principles are not modified by
express contract between the parties.
Parfait, 484 F.2d at 304; see also Molett, 826 F.2d at 1429 ("if
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the indemnitee's claim is founded on judgment or on a written
contract establishing some other basis for indemnification",
indemnitee is not required to prove actual liability or that
indemnitor was not prejudiced by indemnitee's failure either to
inform indemnitor of settlement negotiations or tender it defense
of suit); Burke, 619 F.2d at 356 (distinguishing "cases where the
claim for indemnity is founded on a judgment or a written
contract"). Accordingly, because Chevron's indemnity claim is
based on a written contract, the claimed inadequacy of its notice
to McCall of its intention to settle does not require that it prove
actual, rather than potential, liability.
2.
In the alternative, McCall contends that Chevron presented
insufficient evidence to establish potential liability. A court
confronted with a valid indemnity agreement "should insure that the
claim was not frivolous, that the settlement was reasonable, that
it was untainted by fraud or collusion, and that the indemnitee
settled under a reasonable apprehension of liability". Fontenot,
791 F.2d at 1218.
Bourg claimed that Chevron was negligent (1) because it
required him to transfer from the platform to the vessel via swing
rope in rough seas, and (2) because Chevron's employee, Theriot,
grabbed Bourg's work vest when Bourg attempted to land on the deck
of the vessel, preventing him from landing properly or from
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swinging back to the platform. Theriot died prior to the trial of
Bourg's action. And, prior to that trial, the district court
denied Chevron's motion in limine, in which it sought to exclude
Theriot's statement to Bourg, shortly before the incident, that
because the seas were rough, they would have used a helicopter,
instead of the vessel, if one were available.
In support of its assertion that Chevron had no potential
liability based on the alleged rough sea conditions, McCall relies
heavily on the jury's finding that McCall was not negligent in
causing Bourg's injury. But, because Chevron made the decision to
settle with Bourg prior to that trial, the jury's verdict absolving
McCall of negligence is not relevant to an evaluation of Chevron's
potential liability. McCall points out, too, that Bourg, in his
first deposition, did not claim that Theriot's grabbing his work
vest contributed to cause his injury, and made such a claim for the
first time in his second deposition. Although that inconsistency
obviously might have some impeachment value and thus impact on a
jury's credibility determination, it is insufficient to negate
Chevron's potential liability.
III.
For the foregoing reasons, the judgment is
AFFIRMED.
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