Chevron Oronite Company, LLC v. Jacobs Field Svcs

Case: 19-30088 Document: 00515314002 Page: 1 Date Filed: 02/18/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 19-30088
FILED
February 18, 2020
Lyle W. Cayce
Clerk
CHEVRON ORONITE COMPANY, L.L.C.,
Successor in Interest to Chevron Chemical Company,
Plaintiff–Appellee,
versus
JACOBS FIELD SERVICES NORTH AMERICA, INCORPORATED,
Successor in Interest to J.E. Merit Constructors, Incorporated,
Defendant–Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before JOLLY, SMITH, and COSTA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Wayne Bourgeois contracted mesothelioma after he was exposed to
asbestos while working at, among other places, the oil refinery of Chevron Oro-
nite Company, L.L.C. (“Chevron”). Bourgeois sued Chevron and several other
defendants in state court, and Chevron settled with Bourgeois for $550,000.
Chevron sought contractual indemnity from Jacobs Field Services North
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America, Inc. (“Jacobs”). The district court, after granting partial summary
judgment and holding a bench trial on stipulated facts, determined that Chev-
ron was entitled to the full value of the settlement as well as about $256,000
in attorney’s fees and costs. Jacobs appeals, and we affirm.
I.
On September 7, 2016, Bourgeois filed an ex parte petition to perpetuate
deposition testimony under Louisiana Code of Civil Procedure Article 1430.1.
Bourgeois had been diagnosed with mesothelioma and was concerned that he
might not survive long enough to give his testimony in the ordinary course of
litigation. Bourgeois indicated that he would give notice of his deposition to
the expected adverse parties, and the state court granted his petition.
Bourgeois was deposed on November 30, 2016. Chevron was represented
at the deposition, but Jacobs wasn’t. Bourgeois testified that he’d worked at
Chevron’s refinery in Belle Chasse, Louisiana, for several employers, including
J.E. Merit. Social Security records show that Bourgeois worked for Jacobs (J.E.
Merit’s successor in interest) from 1989 to 1994.
On March 9, 2017, Bourgeois sued Chevron and about two dozen others
(but not Jacobs) for exposure to asbestos. Bourgeois alleged, inter alia, that he
had contracted mesothelioma because he was exposed to asbestos during his
employment as a welder. Against the “Premises Defendants,” including Chev-
ron, Bourgeois asserted negligence and strict liability claims.
On June 30, 2017, Bourgeois was again deposed. As before, Chevron was
represented at the deposition, but Jacobs wasn’t. That deposition was supple-
mentary to his first one, and no further testimony was developed as to Bour-
geois’s work for J.E. Merit at the Belle Chasse facility.
In July 2017, Chevron discovered a contract (K-2485) with J.E. Merit for
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work at the Belle Chasse facility that required J.E. Merit to defend and indem-
nify Chevron. Based on that contract, Chevron sent an initial tender letter to
Jacobs on July 24, 2017, demanding that Jacobs defend and indemnify Chev-
ron in the Bourgeois case. But that contract was for certain warehouse services
and wasn’t relevant to Bourgeois’s employment as a welder.
Over the following weeks, Chevron’s counsel followed up several times—
with Jacobs’s general counsel and its outside counsel—seeking a response to
its tender letter. Jacobs responded only sporadically to those messages.
Accordingly, Chevron subpoenaed documents pertaining to Jacobs’s work at
the Belle Chasse facility, requesting a response to its tender letter. Jacobs
finally rejected Chevron’s initial tender on September 19, 2017. Bourgeois died
from his illness the next day.
On October 31, 2017, Jacobs produced documents responsive to Chev-
ron’s subpoena, including four contracts—K-2251, K-2542, K-2961, and
K-3414—between Chevron and J.E. Merit. Those contracts covered welding
work between February 17, 1989, and February 16, 1993, which included the
eighteen-to-twenty-four-month period during which Bourgeois worked at the
Belle Chasse refinery.
K-2542, K-2961, and K-3414 contained the following provision requiring
Jacobs to indemnify Chevron:
[Jacobs] shall indemnify and save harmless [Chevron] from and
against any and all loss, damage, injury, liability to or death of any
person (including an employee of [Jacobs] or indemnitee) or for loss
of or damage to property or for loss or damage arising from liens,
attachments or patent infringement, including claims and reason-
able attorneys’ fees relating to any of the foregoing, caused in
whole or in part by any act or omission by [Jacobs], its employees
or agents, in any way connected with this Agreement or [Jacobs’s]
performance hereunder whether or not an indemnitee was or is
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claimed to be concurrently or contributorily negligent, and regard-
less of whether liability without fault is imposed or sought to be
imposed on, one or more of the indemnitees. The foregoing indem-
nification . . . shall not apply where such loss, damage, injury, lia-
bility, death or claim is the result of the sole negligence or willful
misconduct of an indemnitee.
K-2251’s indemnity provision differs only in that it excludes the word “sole”
before “negligence.”
On November 7, 2017, Chevron reasserted its tender demand, this time
based on the proper contracts. Chevron also updated Jacobs on the status of
the Bourgeois suit:
In light of settlement of the underlying suit being imminent
and likely to occur as early as next week, please contact me
immediately if Jacobs has changed its position on provid-
ing a defense and indemnity to Chevron. As stated in our
previous correspondence, if Jacobs does not acknowledge its re-
sponsibilities, Chevron may proceed against Jacobs for all costs of
defense and settlement.
Jacobs continued to deny Chevron’s requests for defense and indemnity. Nev-
ertheless, Chevron kept Jacobs apprised of the status of the settlement nego-
tiations and offered it an opportunity to participate in those discussions.
Jacobs still denied Chevron’s demands while reserving all rights and defenses.
On January 24, 2018, after months of negotiations, Chevron settled with
Bourgeois for $550,000, which was within the $500,000 to $600,000 range that
Chevron had twice communicated to Jacobs. Jacobs didn’t participate in the
negotiations and hadn’t commented on the estimated settlement range.
On March 2, 2018, Chevron sued Jacobs under K-2251, K-2542, K-2961,
and K-3414’s indemnity provisions. Chevron sought, inter alia, damages “for
the cost of settlement and defense in the Bourgeois lawsuit” as well as “attor-
ney’s fees and all costs of these proceedings. . . .” Jacobs denied liability.
In August 2018, Chevron and Jacobs moved for summary judgment. In
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October 2018, the district court issued an order mostly granting Chevron’s
motion and mostly denying Jacobs’s. The district court made four rulings:
(1) To prevail on its indemnity claim, Chevron had to prove only that it was
potentially, rather than actually, liable to Bourgeois; (2) at least one of con-
tracts K-2542, K-2961, and K-3414 applied during the time when Bourgeois
worked at the Belle Chasse refinery 1; (3) Chevron had shown that it was poten-
tially liable to Bourgeois; and (4) Chevron was entitled to recover attorney’s
fees and “ordinary litigation costs” related to its litigation of both Bourgeois
and this case.
Those findings left only three issues for trial: (1) “the reasonableness of
the settlement of the Bourgeois suit”; (2) the “particular amount of fees”; and
(3) “the reasonableness of the amount of attorney’s fees incurred in defending
and settling the Bourgeois suit and in prosecuting the instant action.” Accord-
ingly, the parties agreed that the court would decide the case based on stipu-
lated facts and briefs filed by the parties.
On January 23, 2019, the district court issued its Findings of Fact and
Conclusions of Law. The court made three rulings that cut in Chevron’s favor:
(1) Jacobs bore the burden of proof to establish that Chevron’s settlement of
the Bourgeois case was unreasonable; (2) Jacobs was liable to indemnify Chev-
ron for the full $550,000 value of the settlement because it hadn’t met that
burden; and (3) Jacobs was liable for $107,613.18 in attorney’s fees and costs
for the Bourgeois case and $148,256.16 in attorney’s fees and costs for the
indemnity suit. 2
On appeal, Jacobs challenges the summary judgment and some trial
1 The district court didn’t consider K-2251 at summary judgment.
2 The court also imposed post-judgment interest on the total fees and costs.
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decisions. 3 Jacobs avers that the district court erred at summary judgment
when it held that (1) Chevron only had to prove its potential liability in the
Bourgeois suit, (2) Chevron had established that it was potentially liable, and
(3) the contracts at issue entitled Chevron to indemnity, attorney’s fees, and
litigation costs for both Bourgeois and this case. As for the trial rulings, Jacobs
contends that the court erred when it ruled that Jacobs (1) bore the burden to
prove that the Bourgeois settlement was unreasonable and (2) had failed to
make that showing. 4 We consider each contention in turn.
II.
We first evaluate whether, for indemnity, Chevron had to prove actual,
rather than potential, liability. Because the district court granted summary
judgment on that issue—and because the governing standard of liability is a
question of law—our review is de novo. See Liberty Mut. Ins. Co. v. Pine Bluff
Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 1996).
Sitting in diversity, we are obligated to “apply the substantive law of the
forum state.” Meador v. Apple, Inc., 911 F.3d 260, 264 (5th Cir. 2018), cert.
denied, 139 S. Ct. 2649 (2019). “To determine Louisiana law, we look to the
final decisions of the Louisiana Supreme Court.” In re Katrina Canal Breaches
Litig., 495 F.3d 191, 206 (5th Cir. 2007). Absent such a decision, “we make an
3We may review those summary judgment orders, because “an appeal from a final
judgment sufficiently preserves all prior orders intertwined with th[at] final judgment.”
Sindhi v. Raina, 905 F.3d 327, 331 (5th Cir. 2018).
4 Jacobs also raises a limited argument as to Chevron’s attorney’s fees and costs. It
acknowledges that if Chevron prevails on the other issues, Chevron is entitled to at least
some fees and costs. Nevertheless, it suggests that it “should not be required to reimburse
Chevron for fees and costs incurred even before Chevron notified [Jacobs] of its alleged
indemnity obligation.” But Jacobs’s briefing on that issue amounts to only half a page and
cites no authority. Nor does it offer any facts to suggest that the rates charged, hours spent,
or costs incurred by Chevron’s counsel were unreasonable. “Inadequately briefed issues are
deemed abandoned.” United States v. Charles, 469 F.3d 402, 408 (5th Cir. 2006).
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Erie guess, which requires us to employ Louisiana’s civilian methodology,
whereby we first examine primary sources of law: the constitution, codes, and
statutes.” Apache Deepwater, L.L.C. v. W&T Offshore, Inc., 930 F.3d 647, 654
(5th Cir. 2019) (quotation marks omitted). “Jurisprudence, even when it rises
to the level of jurisprudence constante, is a secondary law source in Louisiana.” 5
“As a general rule, one seeking indemnity for a settlement must show
actual liability to recover.” Sullivan v. Franicevich, 899 So. 2d 602, 609 (La.
App. 4th Cir.), cert. denied, 902 So. 2d 1051 (La. 2005). “An exception to the
rule is that the indemnitee need show only potential, rather than actual, lia-
bility . . . where the claim is based on a written contract. . . .” Vaughn v.
Franklin, 785 So. 2d 79, 87 (La. App. 1st Cir.), cert. denied, 798 So. 2d 969 (La.
2001). An indemnitee also need show only potential liability if “the defendant
tenders the defense of the action to the indemnitor.” Fontenot v. Mesa Petrol.
Co., 791 F.2d 1207, 1216–17 (5th Cir. 1986). Those propositions are supported
by the overwhelming weight of Louisiana 6 and Fifth Circuit 7 authority.
Related cases also recognize that an “indemnitee’s unilateral acts, albeit
reasonable and undertaken in good faith, cannot bind the indemnitor; notice
and an opportunity to defend are the indispensable due process satisfying ele-
ments.” Parfait v. Jahncke Serv., Inc., 484 F.2d 296, 304 (5th Cir. 1973). But
even under that standard, an indemnitee can avoid having to prove actual
5 Prytania Park Hotel, Ltd. v. Gen. Star Indem. Co., 179 F.3d 169, 175 (5th Cir. 1999)
(footnote omitted). Therefore, though decisions of Louisiana’s intermediate appellate courts
are persuasive authority, they don’t strictly bind us. See Apache Deepwater, 930 F.3d at 654.
6 See, e.g., Tabor v. Anco Insulations, Inc., 999 So. 2d 258, 265 (La. App. 3d Cir. 2008),
cert. denied, 6 So. 3d 770 (La. 2009); Rovira v. LaGoDa, Inc., 551 So. 2d 790, 795 (La. App.
5th Cir. 1989), cert. denied, 556 So. 2d 36 (La. 1990).
7 See, e.g., Coleman v. Sch. Bd. of Richland Par., 418 F.3d 511, 525 n.57 (5th Cir.
2005); Exxon Corp. v. St. Paul Fire & Marine Ins. Co., 129 F.3d 781, 785 (5th Cir. 1997); Terra
Res., Inc. v. Lake Charles Dredging & Towing Inc., 695 F.2d 828, 832 (5th Cir. 1983); Wis.
Barge Line, Inc. v. Barge Chem 300, 546 F.2d 1125, 1127 (5th Cir. 1977).
7
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liability by giving the indemnitor, before a settlement is finalized, the choice of
“(1) approving the settlement or (2) taking over the defense of the case. . . .”
Burke v. Ripp, 619 F.2d 354, 357 (5th Cir. 1980). A formal tender isn’t re-
quired: “If it can be shown that the indemnitor was afforded substantially the
same protection that the above choice affords, then the indemnitee will have
to show only potential liability.” Bodenheimer v. New Orleans Pub. Belt,
845 So. 2d 1279, 1289 (La. App. 4th Cir.), order stricken in part on other
grounds, 860 So. 2d 534 (La. 2003).
Because Chevron’s claim is predicated on written contracts, it fits
squarely within an exception to the “actual liability” rule. Moreover, even
though it made a mistake in its first tender to Jacobs, Chevron still tendered
its defense, based on the proper contracts, more than two months before set-
tling Bourgeois. It also kept Jacobs apprised of the settlement discussions,
including the likely settlement amounts, and offered Jacobs an opportunity to
participate in the process. But Jacobs refused to take over the defense, de-
clined to participate in settlement negotiations, and didn’t lodge any objections
to the settlement amount. In short, Chevron has easily met its burden to
establish potential liability as the governing rule.
Nevertheless, Jacobs contends that Chevron should have been required
to prove actual liability. Relying on Parfait and its progeny, Jacobs maintains
that Chevron didn’t afford it sufficient notice or a reasonable opportunity to
defend against Bourgeois’s claim because Chevron didn’t provide notice to
Jacobs, before Bourgeois’s death, of (1) either of his depositions, (2) his
underlying lawsuit, or (3) his expert’s deposition. Those failures to notify,
Jacobs suggests, deprived it of the opportunity to cross-examine critical
testimony related to Chevron’s potential liability.
But Jacobs’ theory misapprehends the standard that those cases
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establish. Chevron needn’t have given Jacobs an opportunity to participate in
every aspect of the underlying lawsuit—such a rule would be unworkable given
that Jacobs wasn’t a party to the Bourgeois suit. Instead, all that’s required is
an offer by the indemnitee, before settlement, for the indemnitor either to
approve the settlement or to take over the defense. See id.; Burke, 619 F.2d
at 357. Because that standard was easily satisfied, the district court didn’t err
in setting potential liability as the operative standard.
III.
We turn next to whether Chevron established, as a matter of law, that it
was potentially liable to Bourgeois. Because the district court examined sub-
mitted evidence when considering the motions for summary judgment, our
inquiry has two components. Though we review the summary judgment
de novo, we assess the district court’s evidentiary rulings under the “manifest
error” standard. See Lyles v. Medtronic Sofamor Danek, USA, Inc., 871 F.3d
305, 311 (5th Cir. 2017). “Manifest error is one that is plain and indisputable,
and that amounts to a complete disregard of the controlling law.” Williams v.
Manitowoc Cranes, L.L.C., 898 F.3d 607, 615 (5th Cir. 2018). “[T]his court may
affirm . . . on any grounds supported by the record.” Palmer v. Waxahachie
Indep. Sch. Dist., 579 F.3d 502, 506 (5th Cir. 2009). And we apply federal pro-
cedural law, such as the Federal Rules of Civil Procedure and Evidence, when
sitting in diversity. See Washington v. Dep’t of Transp., 8 F.3d 296, 300 (5th
Cir. 1993).
To establish potential liability, the indemnitor need only show “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 rea-
sonable apprehension of liability.” Fontenot, 791 F.2d at 1218. The showing
required isn’t particularly onerous, and the indemnitee needn’t go so far as to
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prove the case against itself.
At issue is the district court’s consideration of two depositions taken in
Bourgeois: Bourgeois’s and Kenneth S. Garza’s (his expert). Federal Rule of
Civil Procedure 32 governs when a deposition may be used “[a]t a hearing or
trial.” 8 Under Rule 32, a deposition may be used against a party if (1) “the
party was present or represented at the taking of the deposition or had reason-
able notice of it,” (2) it would also be admissible under the Federal Rules of
Evidence if the deponent were present and testifying, and (3) it meets one of
seven enumerated criteria. 9 Our sister circuits have interpreted Rule 32 as
creating an exception to the prohibition, in the Federal Rules of Evidence, of
introducing hearsay. See Fletcher v. Tomlinson, 895 F.3d 1010, 1020 & n.9
(8th Cir. 2018) (collecting cases).
Depositions to perpetuate testimony are also subject to Federal Rule of
Civil Procedure 27. “A deposition to perpetuate testimony may be used under
Rule 32(a) in any later-filed district-court action involving the same subject
matter if the deposition . . . would be admissible in evidence in the courts of
the state where it was taken.” FED. R. CIV. P. 27(a)(4). In Louisiana, such a
deposition may be used in a later related action subject to the requirements of
Article 1450 of Louisiana’s Code of Civil Procedure. See LA. CODE CIV. PROC.
ANN. art. 1432. “For a deposition taken to perpetuate testimony to be admis-
sible under [Article 1450] where the witness is unavailable at trial, the party
8 FED. R. CIV. P. 32(a)(1). On summary judgment, evidence, to be considered, need not
be offered in a form admissible at trial; it need only be capable of being “presented in a form
that would be admissible in evidence.” FED. R. CIV. P. 56(c)(2).
9 FED. R. CIV. P. 32(a)(1). One of the enumerated exceptions allows for using depo-
sitions when the deponent is unavailable on account of death. See FED. R. CIV. P. 32(a)(4)(A).
And depositions from earlier proceedings may be used in later ones if (1) the later action
involves “the same subject matter between the same parties” or (2) the use is permitted by
the Federal Rules of Evidence. FED. R. CIV. P. 32(a)(8).
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against whom it is being used or with similar interests to that party must have
been given the opportunity to cross-examine the witness.” Trascher v. Territo,
89 So. 3d 357, 368 (La. 2012).
In addition to uses permitted by Rule 32, “[a] deposition previously taken
may also be used as allowed by the Federal Rules of Evidence.” 10 Those rules
generally exclude hearsay, including former deposition testimony. See FED. R.
EVID. 802. But out-of-court statements aren’t hearsay if not offered to prove
the truth of the matter asserted. 11
Jacobs maintains that the district court erred in ruling that Chevron had
established that it was potentially liable to Bourgeois. Jacobs’s position has
two components. First, it contends that the district court improperly consid-
ered Bourgeois’s and Garza’s inadmissible testimony because Jacobs wasn’t
present at, and didn’t receive notice of, either deposition. Second, because no
other evidence besides the depositions established that Chevron had a “reason-
able apprehension of liability,” 12 Chevron couldn’t have established its poten-
tial liability as a matter of law.
Though the district court’s basis for its ruling is a bit muddled, consider-
ing the deposition testimony as summary judgment evidence didn’t amount to
10 7 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 32.63 (3d ed. 2019); see
also id. § 32.02 (“To some extent, the Rules of Evidence expand the admissibility of deposi-
tions beyond areas that are governed by Rule 32, or regulate admissibility with greater
detail.”).
11 See, e.g., United States v. Reed, 908 F.3d 102, 120 (5th Cir. 2018), cert. denied,
139 S. Ct. 2655, and cert. denied, 139 S. Ct. 2658 (2019) (“Ordinarily, a statement is not hear-
say if it is offered to prove the statement’s effect on the listener.”); see also Trascher, 89 So. 3d
at 364 (“[W]hen an extrajudicial declaration or statement is offered for a purpose other than
to establish the truth of the assertion, its evidentiary value is not dependent upon the credi-
bility of the out-of-court asserter and the declaration or statement falls outside the scope of
the hearsay exclusionary rule.”).
12 Jacobs doesn’t contend that Bourgeois’s claim against Chevron was frivolous or that
the settlement with Bourgeois was tainted by fraud or collusion.
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a “plain” or “indisputable” error or “a complete disregard of the controlling
law.” Williams, 898 F.3d at 615. Neither Bourgeois’s nor Garza’s deposition
is offered to prove the truth of the matters asserted in it—i.e., that Bourgeois
was actually exposed to asbestos at Belle Chasse or that exposure to asbestos
caused his mesothelioma. 13 The evidence is being offered only to show that
Chevron settled the Bourgeois case under a reasonable apprehension of liabil-
ity. Whether the specific details of Bourgeois’s and Garza’s testimony are true
is irrelevant—what matters is what effect hearing that testimony had on Chev-
ron. “[A] statement is not hearsay if it is offered to prove the statement’s effect
on the listener.” Reed, 908 F.3d at 120. Because the depositions would have
been admissible at trial for that purpose, the district court didn’t err in consid-
ering them at summary judgment. 14 In light of those depositions, it’s clear that
Chevron was potentially liable to Bourgeois.
IV.
We now consider whether the contracts’ indemnity provisions entitle
Chevron to indemnity as well as attorney’s fees and ordinary litigation costs in
both the Bourgeois suit and the indemnity case against Jacobs. Contractual
interpretations are questions of law that we review de novo. Hurt v. Fed. Nat’l
Mortg. Ass’n & Home Securitization Tr. 1 (In re Homeowners Mortg. & Equity,
Inc.), 354 F.3d 372, 375 (5th Cir. 2003). “We look to state law to provide the
13Chevron raised that theory in its summary judgment briefing, but the district court
didn’t address it.
14 Even if the deposition were not admissible evidence in this case, “[a] court may take
judicial notice of the record in prior related proceedings, and draw reasonable inferences
therefrom.” Wilson v. Huffman (In re Missionary Baptist Found. of Am.), 712 F.2d 206, 211
(5th Cir. 1983). Since the Bourgeois deposition is admissible as evidence in this case, we need
not decide whether a district court in an indemnity action may take judicial notice of the
entire record of an underlying case (whether admissible under the rules of evidence in the
indemnity action or not) for the limited purpose of establishing potential liability.
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rules of contract interpretation.” Clardy Mfg. Co. v. Marine Midland Bus.
Loans Inc., 88 F.3d 347, 352 (5th Cir. 1996). In Louisiana, the Civil Code pro-
vides those rules.
“Interpretation of a contract is the determination of the common intent
of the parties.” LA. CIV. CODE ANN. art. 2045. “When the words of a contract
are clear and explicit and lead to no absurd consequences, no further inter-
pretation may be made in search of the parties’ intent.” Id. art. 2046. “The
words of a contract must be given their generally prevailing meaning.” Id. art.
2047. And “[w]ords susceptible of different meanings must be interpreted as
having the meaning that best conforms to the object of the contract.” Id. art.
2048. In other words, “a contract must be interpreted in a common-sense
fashion, according to the words of the contract their common and usual
significance.” 15
The contracts at issue—K-2542, K-2961, and K-3414—contained the fol-
lowing indemnity provision:
[Jacobs] shall indemnify and save harmless [Chevron] from and
against any and all loss, damage, injury, liability to or death of any
person (including an employee of [Jacobs] or indemnitee) or for loss
of or damage to property or for loss or damage arising from liens,
attachments or patent infringement, including claims and reason-
able attorneys’ fees relating to any of the foregoing, caused in whole
or in part by any act or omission by [Jacobs], its employees or
agents, in any way connected with this Agreement or [Jacobs’s] per-
formance hereunder whether or not an indemnitee was or is
claimed to be concurrently or contributorily negligent, and regard-
less of whether liability without fault is imposed or sought to be
imposed on, one or more of the indemnitees. The foregoing indem-
nification . . . shall not apply where such loss, damage, injury,
Prejean v. Guillory, 38 So. 3d 274, 279 (La. 2010) (quotation marks omitted); see also
15
Soverign Ins. Co. v. Tex. Pipe Line Co., 488 So. 2d 982, 984 (La. 1986) (“The general rules
which govern the interpretation of other contracts apply in construing a contract of
indemnity.”).
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liability, death or claim is the result of the sole negligence or willful
misconduct of an indemnitee.
(Emphasis added.) The district court found that that provision unambiguously
entitles Chevron to (1) indemnity in the Bourgeois suit and (2) attorney’s fees
and “ordinary litigation costs” in Bourgeois and the indemnity case against
Jacobs. The district court did not err in reaching that conclusion.
A.
The contracts’ plain language requires Jacobs to indemnify Chevron for
the Bourgeois settlement. Settling Bourgeois caused Chevron to bear a
$550,000 loss that is connected to Jacobs’s contractual performance (i.e., its
welding work). Jacobs’s indemnity obligation applies regardless of whether
Chevron was negligent or strictly liable, and it is undisputed that Bourgeois’s
mesothelioma wasn’t caused solely by Chevron—he sued more than two dozen
defendants, all of which allegedly exposed him to asbestos.
To avoid that seemingly inevitable conclusion, Jacobs posits that the
clause precluding indemnity—“where such loss, damage, injury, liability,
death or claim is the result of the sole negligence or willful misconduct of an
indemnitee”—is ambiguous. In Jacobs’s view, that provision could mean two
different things: “(1) [I]t could preclude indemnity for claims resulting solely
from Chevron’s ‘negligence or willful misconduct,’ or (2) it could preclude
indemnity claims resulting from Chevron’s ‘sole negligence’ or from Chevron’s
‘willful misconduct.’”
The district court erred, Jacobs avers, because it decided as a matter of
law, and without considering extrinsic evidence of the parties’ intent, that
Chevron was entitled to indemnity. To support its position, Jacobs identifies
one allegation in Bourgeois’s complaint that it suggests alleges that Chevron
committed willful misconduct. Specifically, Jacobs seizes on Bourgeois’s
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assertion that Chevron (as one of the Premises Defendants) “willfully withheld
from workers in their facilities, including Wayne Bourgeois, . . . the dangers to
the health of persons exposed to asbestos dust.”
In two respects, that mischaracterizes the nature of Bourgeois’s com-
plaint. First, Jacobs selectively leaves out an important part of its quotation.
Bourgeois’s complaint states, in full, that the “Premises defendants failed to
inform workers in their facilities and/or willfully withheld from workers in
their facilities, including Wayne Bourgeois, of [sic] the dangers to the health of
persons exposed to asbestos dust.” (Emphasis added.) And second, the com-
plaint explicitly refers to its allegations as “acts of negligence” and “negligent
acts.” When read in its entirety, the Bourgeois’s complaint sounds in negli-
gence and strict liability, not in some theory of intentional tort.
The contracts’ indemnity provisions make it plain that Jacobs’s duty to
indemnify isn’t released under those circumstances. And because the record
doesn’t contain other evidence that Chevron committed willful misconduct, the
purported ambiguity Jacobs identifies isn’t material. Chevron would be enti-
tled to indemnity under either interpretation.
B.
The analysis for attorney’s fees and costs has three components:
(1) whether attorney’s fees are recoverable, (2) whether litigation costs are
recoverable, and (3) if they are, whether they are recoverable for both Bour-
geois and the instant suit. We consider each in turn.
1.
The contracts state that Jacobs’s indemnity obligation includes “claims
and reasonable attorneys’ fees relating to any of the foregoing.” But the parties
disagree as to what “the foregoing” refers. Jacobs suggests that it refers only
15
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to the clause immediately preceding it: “for loss or damage arising from liens,
attachments or patent infringement.” Under that theory, Chevron wouldn’t be
entitled to attorney’s fees. Chevron counters that “the foregoing” modifies
“each of the connected clauses preceding the comma before that phrase,”
including (1) “from and against any and all loss, damage, injury, liability to or
death of any person”; (2) “for loss of or damage to property”; and (3) “for loss or
damage arising from liens, attachments or patent infringement.”
Chevron’s position best comports with the contracts’ text and structure.
Grammatically, the clause “including claims and reasonable attorneys’ fees
relating to any of the foregoing” modifies each of the three action-defining
clauses preceding it. Those three clauses aren’t set off from each other by
commas or other punctuation that would limit what the attorney’s-fee clause
modifies. To accept Jacobs’s position, we would have to reject our common-
sense interpretation for one that implausibly reads “any of the foregoing” to
refer to only the clause immediately preceding it despite the presence of two
other logically related clauses. Louisiana law forbids us from doing so. 16
2.
Whether the contracts permit Chevron to recover its litigation costs is a
closer question. 17 Although the contract doesn’t directly speak to whether
those costs are recoverable, the better reading is that “from and against any
16See, e.g., Prejean, 38 So. 3d at 279 (“[A] contract must be interpreted in a common-
sense fashion, according to the words of the contract their common and usual significance.”
(quotation marks omitted)).
17 The district court found that “ordinary costs” were recoverable but “extraordinary
costs” (e.g., expert witness fees) were not. We needn’t address whether “extraordinary costs”
would have been recoverable under the contract, because Chevron hasn’t filed a cross-appeal.
See Art Midwest Inc. v. Atl. Ltd. P’ship XII, 742 F.3d 206, 211 (5th Cir. 2014) (“This circuit
follows the general rule that, in the absence of a cross-appeal, an appellate court has no juris-
diction to modify a judgment so as to enlarge the rights of the appellee or diminish the rights
of the appellant.” (alteration omitted)).
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and all loss” includes litigation costs. A contractual right to indemnity under
Louisiana law is best understood to require the indemnitor to place the indem-
nitee in the position he would have occupied but for the actions giving rise to
the underlying claim. See Nassif v. Sunrise Homes, Inc., 739 So. 2d 183, 185
(La. 1999) (“Indemnity in its most basic sense means reimbursement.”). Such
a rule would give “effect to the very nature of indemnity, which is to make the
[indemnitee] whole.” E.C. Ernst, Inc. v. Manhattan Constr. Co., 551 F.2d 1026,
1037 (5th Cir.), opinion modified on reh’g, 559 F.2d 268 (5th Cir. 1977).
That reasoning comports with our approach in federal maritime cases,
in which “[t]he duty to indemnify and hold harmless includes costs and
attorney’s fees.” 18 Moreover, Naquin v. Louisiana Power & Light Co., 951 So.
2d 228 (La. App. 1st Cir. 2006), cert. denied, 949 So. 2d 441 (La. 2007),
reinforces our conclusion. In Naquin, the contract required the indemnitor to
hold the indemnitee “free and harmless with respect to any and all claims for
loss.” Id. at 231 (emphasis omitted). Interpreting that broad language, which
also didn’t expressly provide for the recovery of litigation costs, the court found
that costs were recoverable because “costs are inherent in the defense of or
pursuit of any and all claims.” 19
3.
Finally, we must determine whether the contracts entitle Chevron to
18 Lirette v. Popich Bros. Water Transp., Inc., 699 F.2d 725, 728 n.11 (5th Cir. 1983)
(collecting cases standing for that proposition). We have, in the past, used indemnification
principles from federal maritime cases when interpreting Louisiana indemnity law. See
Molett v. Penrod Drilling Co. (Molett I), 826 F.2d 1419, 1429 (5th Cir. 1987) (“While the
decisions on which we rely were not based on Louisiana law, their logic is unassailable, and
counsel have cited no Louisiana decisions to the contrary. We therefore apply their princi-
ples.”), abrogated on other grounds by Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock
Co., 513 U.S. 527 (1995).
19Naquin, 951 So. 2d at 232–33. “[T]he trial court may render judgment for costs
against any party as it may consider equitable.” Id. at 233.
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recover its attorney’s fees and costs for prosecuting both Bourgeois and this
case. “It is the general law of indemnity that although an indemnitee may
recover from its indemnitors costs and expenses incurred in the defense of a
claim against the principal, . . . the indemnitee may not recover those costs and
expenses incurred simply establishing the indemnitees [sic] right to indemnifi-
cation from the indemnitors.” State v. Laconco, Inc., 430 So. 2d 1376, 1385 (La.
App. 1st Cir. 1983) (citing Signal Oil & Gas Co. v. Barge W-701, 654 F.2d 1164,
1178 (5th Cir. Unit A Sept. 1981)). When the contract so specifies, however,
attorney’s fees and costs may also be recovered for the follow-on indemnity
action. See Wuertz v. Tobias, 512 So. 2d 1209, 1212 (La. App. 5th Cir. 1987).
Though the contracts don’t specifically state as much, Chevron is entitled
to recover attorney’s fees and costs associated with both Bourgeois and this
case. As we discussed above, the contracts’ broad language—i.e., that Jacobs
would indemnify Chevron “from and against any and all loss”—is best read to
require that Jacobs place Chevron in the position it would have occupied but
for Bourgeois’s claim. Absent recovery of its fees and costs in both the Bour-
geois suit and this indemnity action, Chevron won’t be made whole as the
contracts contemplate.
Naquin again buttresses our reasoning. Recall that the indemnity pro-
vision there required the indemnitor to hold the indemnitee “free and harmless
with respect to any and all claims for loss.” Naquin, 951 So. 2d at 231
(emphasis omitted). Though that contract didn’t explicitly define which fees
and costs were recoverable, the court still found that the parties intended their
indemnity provision to permit recovery of “damages, costs and attorney fees in
the underlying tort claim as well as the indemnity claim.” Id. at 232.
V.
We next confront whether the district court erred when it determined
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that Jacobs bore the burden of proof at trial to establish that Chevron’s settle-
ment with Bourgeois was unreasonable. “[A] district court’s allocation of the
burden of proof is a question of law subject to de novo appellate review.” First
Tenn. Bank Nat’l Ass’n v. Barreto, 268 F.3d 319, 326 (6th Cir. 2001); see also
Patel v. Ashcroft, 104 F. App’x 966, 969 (5th Cir. 2004) (per curiam). “The
question of who sustains the burden of proof is substantive and in a diversity
case is therefore controlled by state law.” Benavides v. Mut. Life Ins. Co.,
516 F.2d 393, 400 (5th Cir. 1975). Because the Louisiana Supreme Court
hasn’t addressed the issue, the district court necessarily made an Erie guess.
“We do the same, de novo, on review.” Gross v. GGNSC Southaven, L.L.C.,
817 F.3d 169, 176 (5th Cir. 2016) (italicization added).
For indemnity to be proper, the settlement amount must be reasonable.
See Terra, 695 F.2d at 832 n.8. But Louisiana law isn’t clear about which party
in an indemnity action bears the burden of proof on that issue. To our knowl-
edge, the caselaw provides only the following discussion:
Under equitable principles of indemnity, in order for a settling
indemnitee to support his indemnity claim he must prove actual
liability to the original plaintiff and that the amount paid in set-
tlement was reasonable. To avoid having to prove actual liability,
the indemnitee should offer the indemnitor before any settlement
is concluded the choice of (1) approving the settlement or (2) taking
over the indemnitee’s defense. If the indemnitor refuses to take
either course, then the indemnitee will only be required to show
potential liability to the original plaintiff to support his claim for
indemnity.
Morris v. Schlumberger, Ltd., 445 So. 2d 1242, 1246 (La. App. 3d Cir.), cert.
denied, 449 So. 2d 1345 (La. 1984). But neither Morris—which interpreted
federal maritime law, not Louisiana contract law—nor later-decided cases
citing its discussion squarely govern this case. 20 And, theoretically, Morris’s
20 Morris’s discussion was quoted in Walters v. A-Way Tank Serv., Inc., 802 So. 2d 1, 5
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analysis could support assigning the burden of proof to either party. 21 In other
words, Louisiana caselaw provides us little to go on.
Two Fifth Circuit maritime indemnity cases—Parfait and Wisconsin
Barge—offer the options. In Parfait, 484 F.2d at 305, we held that the indem-
nitee bore “the burden of showing that the settlement was reasonable in
amount.” Contrastingly, Wisconsin Barge, 546 F.2d at 1129–30, held that once
the indemnitee establishes potential liability, “the burden shifts to the [indem-
nitor] to show that the amount of the settlement was unreasonable.” Both
rules have been cited by courts in this circuit, sometimes when applying state
law and sometimes when applying federal maritime law. 22 Both rules can
claim some support from relevant treatises, 23 and other jurisdictions have allo-
cated the burden of proof on this issue to both parties. 24 But neither Parfait
(La. App. 3d Cir. 2000), and Edwards v. Doug Ruedlinger, Inc., 9 So. 3d 279, 281–82 (La. App.
4th Cir.), cert. denied, 9 So. 3d 165 (La. 2009). But Walters, 802 So. 2d at 7, held that actual,
rather than potential, liability was the governing rule. And Edwards, 9 So. 3d at 280, consid-
ered indemnity by operation of law, as distinguished from contractual indemnity.
21 Although Edwards does cite Morris’s discussion to suggest that establishing poten-
tial liability also means that a settlement was at least presumptively reasonable, it does so
in a conclusory manner with no reasoning. Edwards, 9 So. 3d at 282.
22 Compare Molett I, 826 F.2d at 1429 (applying Parfait, albeit in an actual-liability
rather than a potential-liability case) and Conoco Inc. v. Boh Bros. Constr. Co., 191 F.R.D.
107, 114 (W.D. La. 1998) (applying Parfait in a potential liability case), with Chevron Oronite
Co. v. Cajun Co., No. CV 16-10594, 2017 WL 3438340, at *7 n.75 (E.D. La. Aug. 10, 2017)
(applying Wisconsin Barge) and Gilbert v. Offshore Prod. & Salvage, Inc., No. CIV.A. 95-122,
1997 WL 149959, at *12 (E.D. La. Mar. 21, 1997) (same).
23 Compare Romualdo P. Eclavea, Burden of Proof; Evidence, 41 AM. JUR. 2D INDEM-
NITY § 36 (2019) (“Where a claim against an indemnitee has been settled, the burden falls on
the indemnitee to prove that the settlement was reasonable.”) with Allan D. Windt, Settle-
ments Entered into by Insured with Injured Party, 2 INSURANCE CLAIMS AND DISPUTES § 6:29
(6th ed. 2019) (“The burden should, in general, be on the insurer, since its breach of contract
gave rise to the insured’s unauthorized settlement, to prove that the settlement amount was
unreasonable.”).
24Compare Hapag-Lloyd A.G. v. G&P Trucking, Inc., No. CV 2:07-2751-JFA, 2009 WL
10711761, at *5 (D.S.C. Feb. 3, 2009) (allocating burden to indemnitee), Pennant Serv. Co. v.
True Oil Co., 249 P.3d 698, 704–05 (Wyo. 2011) (same), Valloric v. Dravo Corp., 357 S.E.2d
207, 214 (W. Va. 1987) (same), Ferrer v. Cty. of Wayne, No. 308921, 2014 WL 4854294, at *8
20
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nor Wisconsin Barge engaged in detailed reasoning on the issue, and neither
rule has been cited by a Louisiana court applying Louisiana law.
Unsurprisingly, both Chevron and Jacobs would like to see the other side
bear the burden of proof. Jacobs avers that the Parfait line of cases should
control because the baseline rule in Louisiana civil cases is that the plaintiff
bears the burden of proof as to each element of his claim. 25 Wisconsin Barge,
Jacobs suggests, runs afoul of that command because it shifts the burden with-
out requiring that the indemnitee establish a prima facie case of reasonable-
ness. Chevron counters that the district court properly relied on Wisconsin
Barge because Chevron took several steps to apprise Jacobs of the settlement
negotiations, and Jacobs didn’t object to the settlement amount despite having
the opportunity to do so.
We agree with the district court that the Louisiana Supreme Court
would adopt Wisconsin Barge’s rule. Wisconsin Barge is consistent with what
little Louisiana caselaw there is, and it sensibly allocates the burden of proof
in contractual indemnity cases where potential liability is the governing stan-
dard. Such a rule appropriately incentivizes indemnitors with sufficient
notice—whether by being party to a contract or after receiving a tender of
(Mich. Ct. App. Sept. 30, 2014) (same), and Cty. of Del. v. J.P. Mascaro & Sons, Inc., 830 A.2d
587, 593 (Pa. Super. Ct. 2003) (same), with S. Cal. Gas Co. v. Syntellect, Inc., 534 F. App’x
637, 639 (9th Cir. 2013) (placing burden on indemnitor), Oceaneering Int’l, Inc. v. Cross Logis-
tics, Inc., No. CIV.A. H-11-3447, 2014 WL 2462810, at *28 (S.D. Tex. June 2, 2014) (same),
Berkley Reg’l Ins. Co. v. Weir Bros., No. 13 CIV. 3227, 2013 WL 6020785, at *13 (S.D.N.Y.
Nov. 6, 2013) (same), Tidyman’s Mgmt. Servs. Inc. v. Davis, 330 P.3d 1139, 1154 (Mont. 2014)
(same), Deminsky v. Arlington Plastics Mach., 657 N.W.2d 411, 428 (Wis. 2003) (same),
Cambridge Mut. Fire Ins. Co. v. Perry, 692 A.2d 1388, 1391 (Me. 1997) (same), and Old
Republic Sur. Co. v. Eshaghpour, No. M1999-01918-COA-R3-CV, 2001 WL 1523364, at *3
(Tenn. Ct. App. Nov. 30, 2001) (same).
25See Lasha v. Olin Corp., 625 So. 2d 1002, 1005 (La. 1993) (“In Louisiana . . . civil
actions, the plaintiff, in general, has the burden of proving every essential element of his
case.”).
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defense or an invitation to approve a settlement 26—either to take over the
defense of the underlying action or to participate in the settlement process. At
the same time, however, Wisconsin Barge still protects indemnitors from un-
scrupulous indemnitees who might settle claims for indiscreetly high amounts
under the assumption that they could fall back on indemnification.
VI.
Finally, we turn to whether Jacobs established that Chevron’s settle-
ment with Bourgeois was unreasonable. Because reasonableness was a factual
finding, we review for clear error. See Seahawk Liquidating Tr. v. Certain
Underwriters at Lloyds London, 810 F.3d 986, 990 (5th Cir. 2016). “[O]ur court
may not find clear error if the district court’s finding is plausible in light of the
record as a whole, even if this court would have weighed the evidence
differently.” Id.
“[A] decision on whether a settlement amount is reasonable involves an
overall evaluation of the extent of financial exposure the settling party faces if
the party does not settle.” Molett v. Penrod Drilling Co. (Molett II), 919 F.2d
1000, 1006 (5th Cir. 1990) (cleaned up). “The risk of exposure is the probable
amount of a judgment if the original plaintiff were to prevail at trial, balanced
against the possibility that the original defendant would have prevailed.” 27
Relevant too is whether the indemnitee tendered its defense to the indemnitor,
whether it kept the indemnitor informed of the settlement negotiations, and
whether the indemnitor had an opportunity to approve the settlement. See
LeRay v. Shell Oil Co., 493 So. 2d 249, 253 (La. App. 3d Cir. 1986); Morris,
26 See Fontenot, 791 F.2d at 1216–17. Absent such notice, actual, rather than poten-
tial, liability would be the operative standard. See id. at 1216.
27Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1094 (1st Cir. 1989); see also
Kan. City S. Ry. Co. v. Pilgrim’s Pride Corp., Civil Action No. 06-0003, 2010 WL 1293340,
at *9 (W.D. La. Mar. 29, 2010) (applying Louisiana law).
22
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445 So. 2d at 1246. “The reasonableness inquiry is usually fact intensive and
can be legally complex.” Molett II, 919 F.2d at 1006.
Jacobs avers that Chevron’s settled the Bourgeois case for an unreason-
ably high amount because Chevron would have been only partially liable for
Bourgeois’s injuries under controlling Louisiana law. In Jacob’s estimation,
Chevron’s pro-rata share of both wrongful death and survival damages would
have been $241,000. 28 Based on that—and because Chevron “offered no evi-
dence of Bourgeois’ medical records, no testimony from his health care provid-
ers, no evidence of his medical expenses or other economic loss, and no testi-
mony from his family”—Jacobs maintains that the settlement amount was
unreasonable.
But Jacobs can’t establish clear error just by showing that it had cal-
culated Chevron’s potential liability to be a lower amount. Jacobs’s trial brief
informed the district court of cases in which wrongful death awards were as
much as $2.5 million for a surviving spouse and $750,000 for adult children.29
And, Jacobs didn’t object to the district court’s taking judicial notice of other
recent survival awards in Orleans Parish, which were matters of public record,
28 That calculation was based on wrongful death for Bourgeois’s spouse and three
adult children, as well as survival damages. To arrive at that figure, Jacobs relied principally
on Roberts v. Owens-Corning Fiberglas Corp., 878 So. 2d 631 (La. App. 1st Cir.), cert. denied,
888 So. 2d 863 (La. 2004), and Oddo v. Asbestos Corp., Ltd., 173 So. 3d 1192 (La. App. 4th
Cir.), cert. denied, 180 So. 3d 308 (La. 2015). In Roberts, 878 So. 2d at 643, the plaintiffs
received a $3,500,000 survival-damage award and a $250,000 wrongful death award to each
adult child. In Oddo, 173 So. 3d at 1199, the widow received a $900,000 wrongful death
award.
29 See Zimko v. Am. Cyanamid, 905 So. 2d 465, 474 (La. App. 4th Cir. 2005), cert.
denied, 925 So. 2d 538 (La. 2006) ($2.5 million to widow of 55-year-old decedent); Williams v.
Placid Oil Co., 224 So. 3d 1101, 1114 (La. App. 3d Cir.), cert. denied, 229 So. 3d 929 (La. 2017)
($750,000 to each adult child of 59-year-old deceased mother). We note that the wrongful
death award in Zimko was reduced by 50% on appeal. See Zimko, 905 So. 2d at 493. But the
court reduced that award only because it found that one of the defendants, who was on the
hook for a share of the damages, wasn’t liable. Id. In other words, the reduction wasn’t
related to any infirmity with the reasonableness of the damage amount.
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of between $7.55 million and $12 million. 30 A quick back-of-the-envelope
calculation 31—using the $2.5 million, $750,000, and $7.55 million figures,
respectively—yields a $567,500 estimate for Chevron’s share of the damages.
Using the $12 million figure for survival damages, Chevron’s share of the total
damages would be $790,000. Based on that, the district court plausibly could
have concluded that $550,000 was well within the reasonable range of settle-
ment. We are, therefore, duty-bound to affirm.
Moreover, Jacobs’s position also completely ignores Chevron’s actions
related to the settlement. Chevron tendered its defense to Jacobs more than
two months before a settlement was finalized, kept Jacobs apprised of the set-
tlement negotiations even though it refused Chevron’s tender, and offered
Jacobs a chance to participate in those discussions. Chevron twice informed
Jacobs that it believed that it could settle the Bourgeois action for between
$500,000 and $600,000. Nevertheless, Jacobs declined to participate and never
objected to the settlement amount, despite being informed that “Chevron may
proceed against Jacobs for all costs of defense and settlement.” We decline
Jacobs’s invitation to play Monday-morning quarterback when it refused to
step on the field with time still left on clock.
* * * *
The district court committed no reversible error. The judgment is
AFFIRMED.
30The district court also took judicial notice of a $12 million combined wrongful death
and survival damages verdict for a decedent who was 89 years old, almost twenty-five years
older than Bourgeois was when he died.
31 For this calculation, we use the same method for which Jacobs advocated in the
district court. That method prorated a 1/25th share of wrongful death damages and a 1/20
share of survival damages to Chevron.
24