Justin Parker and Gregory Gumpert v. Zurich American Insurance Company, The Shaw Group, Inc. and Gregory Beasley ( 2019 )

NOT DESIGNATED FOR PUBLICATION
STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
1 2018 CA 0903
JUSTIN PARKER AND GREGORY GUMPERT
VERSUS
ZURICH AMERICAN INSURANCE COMPANY, THE SHAW GROUP, INC.
AND GREGORY BEASLEY
Judgment rendered AUG 2 7 2039
On Appeal from the
Twenty -Second Judicial District Court
In and for the Parish of St. Tammany
State of Louisiana
No. 2006- 15075, Div. " D"
The Honorable Peter Garcia, Judge Presiding
Richard S. Vale Attorneys for Plaintiffs/ Appellees
Eric E. Pope Zurich American Insurance Company
Brett W. Tweedel and The Shaw Group, Inc.
Metairie, LA
Brett E. Kinchen Attorneys for Third Party Defendant
Stephen F. Butterfield HKA Enterprises, Inc.
Benjamin H. Dampf
Baton Rouge, LA
BEFORE: McDONALD, CRAIN, AND HOLDRIDGE, JJ.
111lieD-,
HOLDRIDGE, J.
In this contract dispute, HKA Enterprises, Inc., appeals a summary judgment
granted in favor of The Shaw Group, Inc., and Zurich American Insurance
Company on their indemnity, attorney' s fees, and breach of contract claims. We
reverse and remand.
BACKGROUND
Some of the facts forming the basis of this appeal were discussed by this
court in a prior appeal. Parker v. Zurich, 2016- 0442 ( La. App. 1 Cir. 12/ 22/ 16),
2016 WL 7407383. On October 12, 2005, Justin Parker was driving an
International truck, owned by The Shaw Group, Inc., on Interstate 12 in Baton
Rouge, Louisiana. Gregory Gumpert was a guest passenger in the truck. The truck
driven by Mr. Parker was rear- ended, and a lawsuit seeking personal injury
damages was filed by Mr. Parker and Mr. Gumpert on October 10, 2006. In the
petition, the plaintiffs appear to allege that a truck owned by The Shaw Group,
Inc., and operated by Gregory Beasley, rear-ended another truck owned by The
Shaw Group, Inc., pushing that vehicle into Mr. Parker' s truck.
The underlying lawsuit was filed against The Shaw Group, Inc., and its
insurer, Zurich American Insurance Company ( collectively referred to as " Shaw"),
and Mr. Beasley. The plaintiffs alleged that Shaw owned the truck Mr. Beasley
was driving, that Mr. Beasley was an agent or employee of Shaw, and that he was
on a mission for Shaw at the time of the accident, making Shaw liable for Mr.
Beasley' s negligence under the doctrine of respondeat superior. They also
claimed that Shaw negligently entrusted the vehicle to Mr. Beasley. Shaw denied
liability for the accident, but admitted that Mr. Beasley was in the course and scope
of his employment for Shaw and that he had permission to operate the Shaw
vehicle at the time of the accident.
2
Shaw settled the claims of Mr. Gumpert, and on April 4, 2009, Mr.
Gumpert' s lawsuit against Shaw was dismissed with prejudice. Thereafter, on
October 18, 2011, Shaw filed a third party demand against HKA Power Services,
LLC ( HKA Power), in which it asserted that Mr. Beasley was an employee of
HKA Power performing services for Shaw pursuant to a labor service agreement
for the provision of supplemental labor at the time of the accident. Shaw
maintained that it was entitled to a defense and indemnity with respect to the
claims of Mr. Gumpert and Mr. Parker because: ( 1) at the time of the accident,
there was a Master Supplemental Labor Services Agreement between HKA Power
and Energy Delivery Systems ( EDS), a wholly owned subsidiary of Shaw, in
which HKA Power agreed to provide supplemental labor to EDS and its affiliated
entities ( sometimes referred to herein as the " 2003 Master Agreement" or " the
agreement"); (
2) at the time of the accident, Mr. Beasley was an employee of HKA
Power providing supplemental labor pursuant to that contract; ( 3) the 2003 Master
Agreement obligated HKA Power to fully defend, indemnify, and hold harmless
EDS and all affiliated companies from any claims, demands, causes of action of
any kind, losses, damages, costs, and expenses arising from injuries caused in part
by the negligence of HKA Power' s employees; and ( 4) the 2003 Master
Agreement obligated HKA Power to add EDS and its affiliates as additional
insureds on all commercial general liability and automobile liability policies
covering the acts of HKA Power' s employees. Shaw sought to recover all costs of
the underlying lawsuit, including attorney' s fees, and all sums expended to settle
Mr. Gumpert' s personal injury claim.
In an amended third party demand filed in 2012, Shaw added HKA
Enterprises, Inc. ( HKA Enterprises) as a defendant, alleging that HKA Enterprises
is the parent company and/or successor entity to HKA Power. Shaw reiterated all
3
of the allegations of the original third party demand against HKA Enterprises,
seeking indemnification for all claims asserted by Mr. Parker and Mr. Gumpert
pursuant to the 2003 Master Agreement, as well as attorney' s fees.
Shaw amended its third party demand against HKA Enterprises to
alternatively assert it was entitled to virile share contribution for the payment of
settlement proceeds to Mr. Gumpert and for all sums paid for property damages.
On September 26, 2013, Shaw again amended its third party demand to assert a
breach of contract claim against HKA Enterprises. Therein, Shaw alleged that
HKA Enterprises is the parent company and/ or successor entity to HKA Power,
and that Shaw acquired EDS on November 21, 2003. Shaw' s breach of contract
claim was based on Paragraph 8. 1 of the 2003 Master Agreement which required
HKA Power to have commercial general and automobile liability insurance in
effect during the term of the agreement, and Paragraph 8. 2 of that agreement
requiring that all insurance be endorsed to add EDS and its affiliates as additional
insureds. Shaw alleged that HKA Enterprises failed to add EDS as an additional
insured on its insurance policies in breach of the 2003 Master Agreement, entitling
Shaw to recover from HKA Enterprises damages resulting from that breach,
including: ( 1) any and all expenses incurred in this matter, including court costs
and fees; ( 2) all amounts paid to any party as a result of this accident; ( 3)
attorney' s fees incurred in connection with defending the plaintiffs' claims, and ( 4)
all attorney' s fees incurred by Shaw in seeking to enforce the obligations owed by
HKA Enterprises pursuant to the 2003 Master Agreement.
In answers to the third party demands, HKA Enterprises alleged that HKA
Power was dissolved in July of 2005, and admitted that HKA Enterprises had taken
over the activities of HKA Power " to a certain extent," which was not known at
that time. In an amended petition, Mr. Parker added HKA Enterprises as a
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defendant, alleging that HKA Enterprises is the parent and/or successor entity to
HKA Power and that HKA Enterprises is liable for the negligence of its employee,
Mr. Beasley. Mr. Beasley, who never was served with a copy of the petition, was
dismissed from the lawsuit on April 2, 2013.
On March 17, 2014, Shaw filed a motion for partial summary judgment in
which it sought a judgment decreeing that it is owed a defense and indemnity from
HKA Enterprises as stipulated in the 2003 Master Agreement, or alternatively, that
HKA Enterprises breached the 2003 Master Agreement by failing to obtain the
required insurance. In its supporting memorandum, Shaw argued that HKA
Enterprises assumed control of HKA Power in July of 2005, and despite the
change in ownership, Shaw and HKA Enterprises continued to operate in
accordance with the terms of the 2003 Master Agreement during and after the
accident in question.
In support of the motion, Shaw attached to its memorandum the affidavit of
Steve Allison, the vice president of Shaw' s Corporate Risk Management
department, who attested that Shaw' s records showed that: ( 1) HKA Power is a
provider of supplemental labor; ( 2) on November 14, 2003, HKA Power and EDS
entered into the 2003 Master Agreement; ( 3) on October 12, 2005, an EDS vehicle
being operated by Mr. Beasley was involved in the subject accident; ( 4) EDS was a
wholly owned subsidiary of Shaw on the date of the accident; ( 5) at the time of the
accident, Mr. Beasley was an employee of HKA Power and was performing work
for EDS pursuant to the 2003 Master Agreement; ( 6) pursuant to Article 9, Section
1 of the 2003 Master Agreement, HKA Power was operating as an independent
contractor at the time of the accident; and ( 7) pursuant to Article 11, Section 1 of
the 2003 Master Agreement, HKA Power agreed to indemnify and defend EDS
from any claims based on the negligence of the employees of HKA Power.
5
The 2003 Master Agreement filed in support of Shaw' s motion was executed
by HKA Power and EDS on November 14, 2003, to be in effect for a term of two
years.
HKA Power, a company providing supplemental labor, and EDS, an energy
delivery service, entered into the agreement to enable EDS and its subsidiaries to
obtain supplemental labor from HKA Power on an as -needed basis. Pursuant to
the agreement, HKA Power agreed to provide qualified " Assigned Employees" to
EDS. Article 9, Section 1 of the agreement sets forth an independent contractor
relationship between HKA Power and EDS, specifically providing that HKA
Power employees, including its assigned employees, would not be considered EDS
employees for any purpose whatsoever. Article 11. 1 contains an indemnity
provision, which reads as follows:
HKA Power] agrees to indemnify, defend and hold EDS, its
directors, officers, employees, agents, representatives, insurers,
contractors [ excluding HKA Power] and
subsidiary, affiliated
companies and their respective directors, officers, employees, agents,
representatives, insurers and contractors [
excluding [ HKA Power])
collectively, the " Indemnified Parties") harmless from and against all
claims, demands, causes of action of every kind and character, losses,
damages, costs and expenses ( including attorneys' fees and other costs
of investigation and defense), including any arising from any injury of
or death to persons, damage to or destruction of property ... whether
contractual, in tort, or as a matter of strict liability or liability imposed
by statute, regulations, or ordinances, arising out of, in whole or in
part, ( i) a determination by any court of competent jurisdiction that
any Assigned Employee is an employee of EDS, ( ii) the breach or
alleged breach by [ HKA Power] of any provision of this Agreement
iii) any violation or alleged violation of law by [ HKA Power], its
employees ( including
the Assigned Employees), agents or third
parties over which it has control ....The indemnity provided in this
Article applies even though any such claim, demand, cause of action,
loss, damage, cost or expense may be attributable to the joint,
concurrent or contributory negligence of any Indemnified Party.
In support of its breach of contract claim, Shaw relied on Articles 8. 1 and
8. 2 of the 2003 Master Agreement, entitled " Insurance." Article 8. 1 provides that
during the term of the agreement, HKA Power shall maintain, with respect to all
assigned employees, commercial general liability insurance against claims for
0
damages resulting from personal injury " at each site" and automobile liability
insurance against claims for damages resulting from bodily injury that may arise
from the operation of any owned, hired, or non -owned automobiles with minimum
limits of $ 1, 000, 000. 00 for each accident. Article 8. 2 provides that "[ a] ll
insurance, except workers' compensation, shall be endorsed to add as an additional
insured EDS, its affiliates, and, as requested by EDS, such other contractors of
EDS with whom any Assigned Employee may work."
In support of its motion for summary judgment, Shaw also offered HKA
Enterprises' responses to Shaw' s request for answers to interrogatories and
production of documents. In the responses, HKA Enterprises asserted that Mr.
Beasley was an employee of HKA Enterprises, working for EDS, and driving a
Shaw/EDS owned vehicle with the permission of Shaw/EDS at the time of the
accident. HKA Enterprises admitted that it had no evidence that it, HKA Power, or
any of its affiliates maintained a policy of insurance naming Shaw, EDS, or any of
their affiliated entities as additional insureds to any policy of insurance. When
asked to explain the relationship between HKA Enterprises and HKA Power, HKA
Enterprises stated that HKA Power was an individual limited liability company
that originally provided temporary staff to EDS, a division of Duke Energy, and
that when HKA Power was closed in July of 2005, its existing staff was carried
over to HKA Enterprises. Documents filed in support of the motion and by HKA
Enterprises in response to discovery requests included Mr. Beasley' s employee
payment history from 2000 through early 2012 containing references to " Energy
Delivery Services," a spreadsheet showing that Mr. Beasley was deployed on
September 25, 2005, as a lineman/ serviceman and assigned a bucket truck, and a
Shaw accident report of Mr. Beasley' s accident listing " Energy Delivery Services"
as its subsidiary.
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In opposition to the motion, HKA Enterprises argued that the 2003 Master
Agreement executed between HKA Power and EDS is not binding on the parties in
this case. It submitted that there is a genuine issue of material fact as to whether
that agreement can be enforced by Shaw against HKA Enterprises, when, at the
time of the accident, HKA Power and EDS were no longer in existence. HKA
Enterprises further pointed out that Shaw' s motion assumed that the 2003 Master
Agreement is binding on the subsequent entities, but Shaw offered no evidence in
support of that position. In support of its opposition, HKA Enterprises filed the
affidavit of Gary Davis, its Senior Account Executive and Director of Contracts,
who attested that he reviewed all of HKA Enterprises' records, which included the
2003 Master Agreement and that HKA Enterprises had no records of any
additional contracts entered into with EDS.
Secondly, HKA Enterprises argued that even if the 2003 Master Agreement
is binding on the parties, Shaw' s motion should be denied because of EDS' failure
to adhere to the terms of that agreement. Specifically, HKA Enterprises pointed to
the absence of any work orders describing the work to be performed by Mr.
Beasley and written authorization to operate the vehicle in question as required by
Article 1. 2 of the 2003 Master Agreement. In his affidavit, Mr. Davis attested that
HKA Enterprises has no records of a work order being issued by EDS and no
records or documentation from EDS authorizing Mr. Beasley to operate the truck
at the time of the accident as required by the 2003 Master Agreement. HKA
Enterprises also claimed that the deposition testimony of Steven Allison, of which
it did not yet have a transcript, created a genuine issue of material fact as to
whether HKA Enterprises breached the 2003 Master Agreement by failing to
obtain the requisite insurance.
N.
Finally, HKA Enterprises argued that even if the court were to find that the
2003 Master Agreement required HKA Enterprises to indemnify Shaw in some
circumstances, it did not require HKA Enterprises to pay any costs accrued in the
defense of or in the resolution of Mr. Gumpert' s settlement, which occurred prior
to HKA Enterprises' entry into the litigation. HKA Enterprises relied on a
provision of the indemnity agreement giving EDS the right to have a representative
present for any settlement of any matter giving rise to an indemnification objection
under Article 11. 2 of the 2003 Master Agreement.
In response, Shaw filed additional documentation in support of its claim that
the 2003 Master Agreement is binding on HKA Enterprises and Shaw. It offered
business filing documents from the South Carolina Secretary of State showing that
HKA Enterprises was incorporated on July 30, 2002; HKA Power was formed on
September 6, 2002, and that HKA Power merged into HKA Enterprises on July 20,
2005, dissolving HKA Power as of that date. It also offered the deposition
testimony of Mr. Allison, the vice- president of Shaw' s risk management
department during the pertinent time period. According to Shaw, Mr. Allison' s
testimony did not create a genuine issue of material fact as to whether HKA
Enterprises breached the 2003 Master Agreement.
In his deposition, Mr. Allison acknowledged that among his duties for Shaw
was to ensure that the entities with whom Shaw contracted were insured and that
Shaw' s subcontractors met Shaw' s insurance standards. He stated that every
contract of $500, 000.00 or more had to be approved by Risk Management before it
was signed, and that he was involved in Shaw' s acquisition of EDS, which at the
time was part of Duke Energy. Shaw purchased the stock of EDS, and while Mr.
Allison could not recall the specific date of the purchase, he indicated that it was
E
around November 21, 2003. On January 12, 2004, EDS changed the name of the
corporation to Shaw/EDS.
Mr. Allison stated that following Shaw' s purchase of EDS, Shaw requested
the subcontracts EDS had and the insurance certificates associated with those
subcontracts to make sure that all insurance certificates were in compliance with
Article 8. 5 of the 2003 Master Agreement. He also stated that each time the
insurance was set to expire on that existing certificate, Shaw would have requested
a new insurance certificate. Mr. Allison stated that EDS had original documents at
its North Carolina office, and sent him electronic files, for which he created a file
under Shaw' s Power Division; however, Mr. Allison did not know what happened
to these documents. He assumed that all of the documents Shaw had pertaining to
Shaw' s acquisition of EDS in what he recollected as 2003 were transferred to Pike
4
Electric, which purchased Shaw/ EDS in 2008.
Mr. Allison noted that he reviewed documents in connection with the
underlying personal injury claim, the petition, and the 2003 Master Agreement. He
stated that other than the 2003 Master Agreement, he was unaware of any other
EDS/ HKA documents. Mr. Allison acknowledged that Mr. Beasley' s payment
history indicated that he was an employee of HKA Enterprises. Mr. Allison
admitted that he was unaware of any contract having been executed between
Shaw/EDS and HKA Enterprises.
During the deposition, Mr. Allison' s attention was directed to Article 16. 3 of
the 2003 Master Agreement, which states that HKA Power shall not assign this
agreement or subcontract any of its obligation under the agreement without the
prior written consent of EDS. Mr. Allison acknowledged that if there was a
written consent from EDS to HKA Power or HKA Enterprises authorizing an
assignment of the 2003 Master Agreement, Shaw' s legal department would have
such a document. He admitted that if such a consent existed, he would not have
seen it and he knew nothing about the continuing relationship between Shaw/EDS
and HKA Enterprises. However, he did offer his opinion that the 2003 Master
Agreement was in effect on the date of the accident, and stated that he had no
reason to believe that contract would not have been in effect based on his record
search and investigation.
Mr. Allison was asked a series of questions regarding whether he was aware
of the existence of any written documents required by various provisions of the
2003 Master Agreement, including work orders, purchase orders, and written
authorization for Mr. Beasley to operate the vehicle involved in the accident. Mr.
Allison was unable to say if any such documents existed, but added if they existed,
the documents would be in the possession of Pike Electric.
Attached to Mr. Allison' s deposition is a document showing that EDS
amended its articles of incorporation to change its name to Shaw Energy Delivery
Services, Inc. on January 12, 2004. The document states that the amendment was
adopted by EDS' sole shareholder and that the amendment did not provide for an
exchange, reclassification, or cancellation of issued shares.
HKA Enterprises filed a supplemental memorandum focusing on Mr.
Allison' s admissions that he did not know if EDS issued a purchase order
pertaining specifically to Mr. Beasley or ever authorized in writing the operation
by Mr. Beasley of any Shaw or EDS vehicle. According to HKA Enterprises, Mr.
Allison' s testimony highlights issues of fact as to whether EDS ever provided
written documentation required by the contract to HKA Power. HKA Enterprises
also pointed to Mr. Allison' s acknowledgment that when Shaw acquired EDS, it
would have looked to verify that insurance was in existence as specified in the
11
contract as creating an issue of fact as to whether HKA Enterprises breached the
2003 Master Agreement.
On June 10, 2014, following a hearing, the trial court signed a judgment
granting Shaw' s motion in part and denying it in part. The trial court ruled that
HKA Enterprises owed Shaw a defense and indemnity obligation with respect to
the claims asserted by Mr. Parker and that HKA Enterprises breached the 2003
Master Agreement for failing to maintain insurance coverage and failing to add
Shaw/EDS as an additional insured as required by that agreement. Shaw' s motion
for a defense and indemnity from HKA Enterprises for the claims asserted by Mr.
Gumpert was denied. HKA Enterprises' applications for supervisory writs to
review the grant of summary judgment were denied by this court and the Louisiana
Supreme Court.
Thereafter, on January 21, 2015, Shaw filed another motion for partial
summary judgment, asking the court to set the damages HKA Enterprises owed in
defense costs from the date the lawsuit was filed on October 10, 2006, through
November 30, 2014, as well as damages for breach of contract. Specifically, Shaw
sought to recover $ 79, 025. 82 it claimed was incurred in attorney' s fees and costs in
connection with defending itself in the underlying lawsuit and in pursuing its third
party demand. Shaw also sought to recover $ 65, 000. 00, the amount Shaw paid to
Mr. Gumpert to settle his personal injury claim, for HKA Enterprises' breach of
the 2003 Master Agreement.
In support of its second motion, Shaw relied on the 2003 Master
Agreement' s indemnity provision to recoup attorney' s fees and costs it incurred in
defending the underlying litigation from HKA Enterprises. Shaw also relied on
Article 16. 4 of the 2003 Master Agreement in support of its claim that it was
entitled to recoup attorney' s fees and costs incurred in connection with the third
12
party demand Shaw filed to enforce HKA Enterprises' obligations under that
agreement. Article 16. 4 of the 2003 Master Agreement states that "[ i] f the
enforcement of the obligations of [ HKA Power] hereunder are referred to any
attorney by EDS, then [ HKA Power] agrees to pay EDS' s reasonable attorneys'
fees and court costs in addition to any other relief which may be obtained."
In further support of the motion, Shaw also offered the affidavit of its
attorney, Brett Tweedel, who attested that he charged $ 150. 00 per hour for legal
work performed in the case and that his firm billed $ 79, 025. 82 in expenses as of
November 30, 2014. Shaw also offered documents detailing costs incurred in
connection with this matter from May 16, 2014, through October 28, 2014 in the
amount of $20, 010. 82, and an itemized, detailed account of the work performed by
its attorneys from October 25, 2006, through November 26, 2014, in the amount of
591015. 00.
In opposition to Shaw' s motion, HKA Enterprises asserted that since Shaw' s
previous motion for partial summary judgment was granted, HKA Enterprises
discovered significant new evidence held by Pike Electric, which purchased EDS
from Shaw in 2008. HKA Enterprises offered a " Master Employee Services and
Staffing Agreement" ( sometimes referred to as the " 2008 Agreement") executed
by HKA Enterprises and The Shaw Group, Inc. on February 12, 2008. HKA
Enterprises insisted that the 2008 Agreement, executed four years before it was
added as a party to this litigation, is the contract defining the rights and obligations
of HKA Enterprises and Shaw in this case. HKA Enterprises pointed out that the
2008 Agreement specifically states that it supersedes any work agreement executed
by and between Shaw and HKA Enterprises relating to the work or services to be
performed by HKA Enterprises with Shaw, and that the 2008 Agreement has a
significantly different indemnity provision than the 2003 Master Agreement.
13
According to HKA Enterprises, under the wording of the 2008 Agreement' s
indemnity provision, it would not owe indemnity and defense costs because there
are facts suggesting Mr. Beasley was driving a Shaw vehicle at the time of the
accident. HKA Enterprises also urged that Shaw' s attempt to collect defense costs
and indemnity before there had been a judicial determination that Shaw is liable to
the plaintiffs in the underlying lawsuit is premature. HKA Enterprises offered the
affidavit of Mr. Davis, who attested that he signed the 2008 Agreement as the
authorized representative for HKA Enterprises.
On April 1, 2015, the trial court signed a judgment granting Shaw' s motion
for partial summary judgment on its breach of contract claim, awarding Shaw
damages in the amount of $65, 000. 00. The court also granted Shaw' s motion for
partial summary judgment with respect to attorney' s fees and costs owed by HKA
Enterprises, but ruled that the exact amount owed for the period of October 10,
2006 through November 30, 2014, would be determined at a later date.
On July 20, 2015, Shaw filed a motion to set attorney' s fees and costs owed
by HKA Enterprises, to amend the April 1, 2015 judgment to reflect the exact
amount of attorney' s fees and costs, and to designate the June 10, 2014, and the
April 1, 2015, judgments as final judgments. In opposition to the motion, HKA
Enterprises insisted that it should not be held liable for any costs or attorney' s fees
incurred prior to February 2, 2012, the date on which HKA Enterprises was
notified of this lawsuit. Additionally, HKA Enterprises insisted that Shaw is not
entitled to recover attorney' s fees incurred in prosecuting the third party demand,
citing Article 13. 6 of the 2003 Master Agreement, which governs the arbitration
process, and provides that the losing party in an arbitration or court proceeding in
aid of an arbitration process must reimburse the other party for reasonable costs,
14
expenses, and charges incurred by the prevailing party, provided, however, that
each party shall bear its own attorney' s fees and expenses.
In reply, Shaw posited that HKA Enterprises' opposition failed to address
the reasonableness of its attorney' s fee demand. It further pointed out that in the
eight months that had passed since the trial court left open a determination of the
exact amount owed by HKA Enterprises in order to allow HKA Enterprises an
opportunity to traverse the reasonableness of Shaw' s attorney' s fees and costs,
HKA Enterprises did absolutely nothing. As a consequence, Shaw argued, it must
be assumed that HKA Enterprises did not object to the amount of the attorney' s
fees and costs incurred by Shaw and instead agreed that those amounts are
reasonable.
On November 18, 2015, the trial court signed a judgment granting Shaw' s
motion to set attorney' s fees and costs and amending the April 1, 2015 judgment to
award Shaw $ 79,025. 25 in attorney' s fees and costs, plus interest, from October
101 2006, through November 30, 2014. The court further granted Shaw' s motion
to designate the June 10, 2014, and the April 1, 2015 judgments as final judgments.
On December 23, 2015, the parties filed a joint motion to dismiss Mr.
Parker' s claims against Shaw with prejudice, which was granted by the trial court
on January 4, 2016. Mr. Parker also dismissed his lawsuit with respect to HKA
Enterprises.
Thereafter, HKA Enterprises filed an appeal contesting the June 10, 2014,
April 1, 2015, and November 18, 2015 judgments. This court dismissed the
appeal, finding that none of the three judgments rendered by the trial court were
final appealable judgments. Parker v. Zurich, supra. The matter was remanded
to the trial court for further proceedings.
15
Following remand, on August 16, 2017, Shaw filed a motion for summary
judgment seeking to recover attorney' s fees and costs from December 1, 2014,
through the present day in the amount of $30, 334. 59 and the $ 33, 100. 00 payment
made to Mr. Parker to settle his personal injury lawsuit, in addition to the amounts
previously awarded by the trial court in the earlier judgments. In support of the
motion, Shaw attached the following documents to its memorandum: ( 1) the 2003
Master Agreement; ( 2) the affidavit of Mark Walling, the corporate risk manager
for Chicago Bridge and Iron, which acquired The Shaw Group on February 13,
2013, attesting that on December 14, 2015, Mr. Parker was paid $ 33, 100. 00 on
behalf of Shaw and Chicago Bridge and Iron in full and final settlement of all
claims against them; and ( 3) the affidavit of Brett Tweedel, Shaw' s attorney, who
attested that he charged $ 150. 00 per hour for legal work performed in this matter
and that his firm billed $ 30, 334. 59 in expenses as of November 30, 2014; and ( 4) a
detailed fee schedule and itemization of attorney' s fees incurred by Shaw from
December 2, 2014, through July 28, 2017, in the amount of $28, 903. 50, as well as
a detailed statement of costs incurred in this matter from December 9, 20149
through August 2, 2017, in the amount of $1, 401. 09. Shaw maintained that as with
its previous motions for summary judgment, there is no genuine issue of material
fact in dispute and Shaw is entitled to summary judgment on all claims asserted in
the third party demand.
In opposition to the motion, HKA Enterprises argued that Shaw could not
establish that the 2003 Master Agreement applied to HKA Enterprises because it
was not a party to that agreement. It argued that Shaw was not entitled to summary
judgment on any of its claims because: ( 1) there is no privity of contract between
Shaw and HKA Enterprises as the 2003 Master Agreement was executed between
EDS and HKA Power and neither Shaw nor HKA Enterprises were parties to that
16
agreement; ( 2)
Shaw failed to produce any evidence showing that HKA Power
assigned the 2003 Master Agreement to HKA Enterprises before the subject
accident; ( 3) even if the 2003 Master Agreement applies in this case, Shaw' s claim
is barred by the doctrine of laches and estoppel; ( 4) there are material issues of fact
as to whether Shaw complied with the requirements of the 2003 Master
Agreement, referencing the absence of a work order from EDS to HKA Enterprises
or Mr. Beasley to perform services for EDS and the absence of a written agreement
giving Mr. Beasley authority to operate a Shaw vehicle as required by various
sections of the 2003 Master Agreement; ( 5) even if Shaw is entitled to indemnity,
the court must determine if the attorney' s fees being sought are reasonable; and ( 6)
the attorney' s fees sought by Shaw are not recoverable because Shaw did not
submit proof that the bills had in fact been paid.
In support of its opposition, HKA Enterprises attached the following
documents thereto: ( 1) Shaw' s responses to HKA Enterprises' third set of
interrogatories in which Shaw acknowledged that it acquired EDS on or about
November 21, 2003; ( 2) Shaw' s responses to HKA Enterprises' request for
production of documents, admitting that it was unable to locate any documents
titled " Purchase Order" or " Work Order" and that Shaw was unable to locate any
responsive documents authorizing Mr. Beasley to operate the vehicle in which the
October 12, 2005 accident occurred, given the fact that Shaw/EDS was sold in
2008 and all records relating to Shaw/ EDS were transferred to the new owner,
along with other documents containing employment related references to Beasley
and Shaw accident reports; ( 3) various documents submitted by Shaw to HKA
Enterprises supplementing its response to requests for production of documents
showing that HKA Enterprises billed EDS for Mr. Beasley' s services on October
191 2005 for the period ending October 5, 2005, along with a Shaw/EDS
17
disbursement voucher paying that invoice; ( 4) the affidavit of Mr. Davis relative to
the 2008 Agreement and HKA Enterprises' lack of knowledge or notice regarding
the October 12, 2005 accident involving Mr. Beasley, and ( 5) the 2008 Agreement
executed by HKA Enterprises and The Shaw Group, Inc.
On December 20, 2017, the trial court signed a judgment granting Shaw' s
motion for summary judgment with respect to all claims asserted by Shaw in the
third party demand. The judgment decreed that HKA Enterprises owed Shaw
damages in the following amounts: ( 1) $ 79, 025. 25 plus interest for attorney' s fees
and costs incurred from October 10, 2006 through November 30, 2014; ( 2)
30,334. 59 plus interest for attorney' s fees and costs incurred since December 1,
2014; ( 3) $ 33, 100. 00 plus interest for the settlement payment to Mr. Parker; and
4) $ 65, 000. 00 plus interest for all breach of contract claims asserted in the third
party demand.
HKA Enterprises filed a motion for a new trial on the merits and to correct
deficiencies in the December 20, 2017 judgment with respect to the decretal
language. The trial court denied the motion on the merits, but granted the motion
to amend the judgment' s decretal language and the calculation of interest. In a
judgment signed by the trial court on April 12, 2018, the court awarded the same
sums identified above, but expanded the language to decree the dates on which
judicial interest would run on the individual awards and to make clear that the
65, 000. 00 breach of contract damage award was for HKA Enterprises' failure to
add Shaw as additional insured under its policies of insurance.'
HKA Enterprises appealed, asserting that the trial court erred in granting
summary judgment on Shaw' s claims for defense, indemnity, and attorney' s fees.
The trial court designated the judgment as a final judgment that is immediately appealable.
Because the judgment disposed of all claims asserted by Shaw in the third party demand, and the
underlying lawsuit was settled and dismissed, there was no need for the trial court to designate
the judgment as final in order for it to be an appealable judgment.
18
Specifically, HKA Enterprises challenges the use of the summary procedure and
the trial court' s rulings in: ( 1) granting contractual indemnity under the 2003
Master Agreement when neither Shaw nor HKA Enterprises were in privity of
contract; ( 2) finding Shaw proved that EDS gave its prior written approval to HKA
Power to assign the 2003 Master Agreement to HKA Enterprises; ( 3) ruling that
the subsequent 2008 Agreement between Shaw and HKA Enterprises was not a
novation of the 2003 Master Agreement; ( 4) ruling that HKA Enterprises breached
the 2003 Master Agreement; ( 5) finding that Shaw had complied with its
obligations under the 2003 Master Agreement; ( 6) ruling that the defense of laches
did not bar Shaw' s claims; ( 7) awarding Shaw damages for breach of contract; and
8) awarding Shaw attorney' s fees.
DISCUSSION
A motion for summary judgment is a procedural device used to avoid a full-
scale trial when there is no genuine issue of material fact. Jones v. Anderson,
11t
2016- 1361 ( La. App. Cir. 6/ 29/ 17), 224 So. 3d 413, 417. A motion for
summary judgment shall be granted if the motion, memorandum, and supporting
documents show there is no genuine issue as to material fact and that the mover is
entitled to judgment as a matter of law. La. C. C. P. art. 966A(3).
This court reviews the evidence on the motion for summary judgment de
novo under the same criteria that govern the trial court' s determination of whether
summary judgment is appropriate. Jones, 224 So. 3d at 417. This court must ask
the same questions a trial court does in determining whether summary judgment is
appropriate: whether there is any genuine issue of material fact, and whether the
mover is entitled to judgment as a matter of law. Because it is the substantive law
that determines materiality, whether a particular fact in dispute is material must be
determined in light of the substantive law applicable to the case. Id.19
APPLICABILITY OF THE 2003 MASTER AGREEMENT
The purpose of an indemnity agreement is to allocate risk inherent in a
certain activity between the parties to the contract. McKinney v. South Central
1St
Bell Telephone Company, 590 So. 2d 1220, 1222 ( La. App. Cir. 1991), writ
denied, 592 So. 2d 1302 ( La. 1992). A contract of indemnity forms the law
between the parties and must be interpreted according to its own terms and
conditions. Id. The general rules governing the interpretation of contracts apply in
construing a contract of indemnity. Naquin v. Louisiana Power & Light
Company, 2005- 2104 ( La. App. 1 St Cir. 11/ 17/ 06), 951 So. 2d 228, 231, writ
denied, 2006- 2979 ( La. 3/ 9/ 07), 949 So. 2d 441. The determination of the parties'
intent is the foremost requirement in the interpretation and construction of a
contract. Liem v. Austin Power, Inc., 569 So. 2d 601, 608 ( La. App. 2nd Cir.
1990).
Agreements to indemnify are strictly construed and the party seeking to
enforce such an agreement bears the burden of proof. Id.Because Shaw' s claims for indemnity, attorney' s fees, and breach of
contract damages are all based on the 2003 Master Agreement, Shaw' s initial
burden on the motion for summary judgment was to demonstrate that, as a matter
of law, the 2003 Master Agreement was a binding and enforceable contract
between Shaw and HKA Enterprises on October 12, 2005, the date of the accident
in the underlying litigation. The undisputed evidence on the motion for summary
judgment established that:
1) HKA Power and HKA Enterprises were formed as separate entities
in 2002;
2) On November 14, 2003, HKA Power and EDS executed the 2003
Master Agreement, pursuant to which, HKA Power agreed to
provide supplemental labor on an " as -needed" basis to EDS, its
subsidiaries, and other affiliated entities; the agreement was
effective for a term of 2 years;
20
3) On November 21, 2003, Shaw acquired EDS by purchasing EDS'
stock;
4) When Shaw acquired EDS, EDS was a division of Duke Energy;
on January 12, 2004, EDS amended its articles of incorporation to
change its name to Shaw Energy Delivery Services;
5) On July 20, 2005, HKA Power merged into HKA Enterprises and
was dissolved as of that date; and
6) On October 12, 2005, Mr. Beasley was a HKA Enterprises
employee who was
driving a Shaw/EDS vehicle with the
permission of Shaw/EDS when the accident occurred.
HKA Power and EDS were the parties who executed the 2003 Master
Agreement. Prior to the accident, HKA Power had been dissolved when it merged
with HKA Enterprises, and EDS had been purchased by Shaw. Because neither
HKA Power nor EDS was in existence at the time of the underlying accident, Shaw
was required to prove at a minimum that the 2003 Master Agreement imposed
indemnity and insurance obligations on HKA Power' s successor, HKA
Enterprises. Although the ultimate issue of whether Shaw, a non-party to the
original contract, can enforce the contract against HKA Enterprises, also a non-
party to the contract, may involve a question of law', there are a number of factual
determinations which must be made to resolve this issue. Crucial to this
determination is the relationship between the parties to the 2003 Master
Agreement, HKA Power and EDS, and the parties in this litigation, HKA
Enterprises and Shaw.
Shaw made no attempt to explain the details regarding the acquisition of
HKA Power by HKA Enterprises in its motion for summary judgment. Nor did
2 We note that the 2003 Master Agreement states, in Article 16. 7, that the agreement " shall be
governed by, and construed in accordance with, the laws of the State of North Carolina,
excluding any conflict of laws rules." Shaw did not establish whether HKA Enterprises was
bound by the 2003 Master Agreement under North Carolina law as a result of its merger with
HKA Power. In granting the motion for summary judgment, the trial court failed to make a
threshold determination as to whether North Carolina or Louisiana law regarding theories such
as successor liability or assignment of contracts apply in this case.
21
Shaw offer evidence showing that under the applicable law, HKA Power assigned
its contracts to HKA Enterprises. We note that there is a specific provision of the
2003 Master Agreement, Article 16. 4, which prohibits HKA Power from assigning
the agreement or any of its obligations thereunder without the written consent of
EDS; Shaw produced no evidence of such written consent.
Instead of demonstrating that HKA Enterprises assumed the contractual
indemnity and insurance obligations imposed on HKA Power, Shaw merely argued
that HKA Enterprises and Shaw continued to operate pursuant to the terms of the
2003 Master Agreement after the dissolution of the original parties to the contract.
Shaw offered no evidence to support its assertion that the parties to the 2003
Master Agreement intended for all of the terms of the 2003 Master Agreement to
apply to any subsequent entities. In short, Shaw failed to show that there were no
factual questions as to whether HKA Enterprises is bound by the specific
indemnity and insurance obligations imposed on HKA Power in the 2005 merger
of those entities.
Additionally, Shaw failed to offer sufficient details of its acquisition of EDS.
Shaw claimed that on the date of the accident, EDS was a wholly owned subsidiary
of Shaw such that indemnity agreement confected between HKA Power and EDS
would inure to Shaw' s benefit. Again, missing from the evidence in support of
Shaw' s motion is proof that EDS transferred all of its rights under the 2003 Master
Agreement to Shaw as part of Shaw' s acquisition of EDS or evidence of any
continued relationship between Shaw and EDS following the acquisition.
Moreover, HKA Power agreed to indemnify EDS and its subsidiaries and affiliated
companies from certain claims. Shaw did not offer sufficient evidence establishing
that on the date the 2003 Master Agreement was confected, Shaw was a subsidiary
22
or affiliated company of EDS, or that HKA Power agreed to indemnify any entity
which would later purchase EDS.
In light of the existence of numerous factual issues concerning the
relationships between HKA Power and HKA Enterprises, between Shaw and EDS,
and between HKA Enterprises and Shaw, and the absence of evidence defining
those relationships, we conclude that the trial court erred in ruling that the 2003
Master Agreement is binding and enforceable as to HKA Enterprises and Shaw as
a matter of law. Because the judgments appealed from are based on this erroneous
predicate ruling, we reverse the December 20, 2017 judgment granting Shaw' s
motion for summary judgment with respect to all claims asserted by Shaw in the
third party demand against HKA Enterprises and the April 12, 2018 judgment
correcting deficiencies in the December 20, 2017 judgment.
CONCLUSION
For the foregoing reasons, the December 20, 2017 and April 12, 2018
judgments are reversed. This matter is remanded to the trial court for proceedings
consistent with this opinion. All costs of this appeal are assessed to appellees,
Zurich American Insurance Company and The Shaw Group, Inc.
REVERSED AND REMANDED.
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