The opinion
July 18, 2022
In the United States District Court
Nathan Ochsner, Clerk
for the Southern District of Texas
GALVESTON DIVISION
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No. 3:19-cv-313
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FLEET OPERATORS, INC., ET AL., PLAINTIFFS,
v.
NAUTILUS INSURANCE COMPANY, ET AL., DEFENDANTS.
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MEMORANDUM OPINION AND ORDER
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JEFFREY VINCENT BROWN, UNITED STATES DISTRICT JUDGE:
Before the court is Fieldwood Energy, LLC’s motion for summary
judgment. Dkt. 62. Having considered the arguments, the summary-
judgment evidence, and the applicable law, the court grants the motion.
I. Background
Raylin Boudreaux alleges he was injured when he fell from a crane’s
personnel basket while employed by Mistras Group, Inc., f/k/a The Nacher
Corporation (henceforth “Nacher”), as an x-ray technician aboard the M/V
Piper, an offshore utility vessel. The Piper was owned by ADS Marine, LLC,
and operated by Fleet Operators, Inc. Dkts. 1-1 (Boudreaux Complaint); 7 at
5. Kilgore Marine Services, LLC, under a Brokerage Agreement with Fleet,
Dkt. 7-2, acted as Fleet’s agent for obtaining charters or similar work
contracts for Fleet’s vessels, Dkt. 62 at 6. At the time Boudreaux was injured,
the Piper had been chartered to Fieldwood through Kilgore. Dkts. 7 at 6; see
generally 7-1 (Master Time Charter Agreement). Boudreaux sued and
eventually settled with ADS, Fleet, Fieldwood, and Island Operating
Company, the crane operator. Dkt. 57 at 4.
In this action, plaintiffs ADS, Fleet, and Zurich American Insurance
Company—as Fleet’s subrogee—seek indemnification from Certain
Underwriters at Lloyd’s of London (“the Underwriters”) and Fieldwood, the
Underwriters’ insured. Dkts. 7 at 6–8; 57 at 5. The plaintiffs contend ADS
and Fleet are owed defense and indemnity obligations under two contracts:
(1) a liability insurance policy that Underwriters issued to Fieldwood under
policy No. B0507A17EL01780 (“the Policy”), and (2) a master time charter
(“MTC”) between Fieldwood and Kilgore. Dkts. 7 at 6–8; 57 at 5–6. The
Underwriters agree in the Policy to defend Fieldwood as their named
insured.1 The MTC2 obligates Fieldwood to name the “Owner Group” as
additional insureds. Dkts. 7 at 8; 45-1 at 8.
Fieldwood now moves for summary judgment on the plaintiffs’
indemnity claims. It argues that the Brokerage Agreement between Fleet and
Kilgore obligates Fleet to defend Fieldwood from any and all claims for
personal injury, regardless of the negligence or fault of Fieldwood, as long as
those claims arose from the work or services to be performed under the
Brokerage Agreement. Dkt. 62 at 8.
II. Legal Standard
Summary judgment is proper when “there is no genuine dispute as to
any material fact and the movant is entitled to a judgment as a matter of law.”
Fed. R. Civ. P. 56(a). The court must view the evidence in the light most
favorable to the nonmovant. Coleman v. Hous. Indep. Sch. Dist., 113 F.3d
528, 533 (5th Cir. 1997). The movant bears the burden of presenting the basis
for the motion and the elements of the causes of action on which the
1 The Policy states that “additional insured” means any person or entity to
whom Fieldwood is obligated by an “insured contract” to provide insurance
afforded by the Policy with respect to bodily injury or property damage arising out
of operations conducted by Fieldwood but only to the extent required by any
indemnity given by Fieldwood in the insured contract to the additional insured.
Dkt. 7 at 8.
2 The Policy defines an “insured contract” as “[a]ny written contract or
agreement entered into by [Fieldwood] where [Fieldwood] assumes the tort
liability of another party to pay for ‘Bodily Injury’ or ‘Property Damage’ to which
this Policy applies to a ‘Third Party.’” Dkt. 7 at 8.
nonmovant will be unable to establish a genuine dispute of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to
the nonmovant to offer specific facts showing a genuine dispute for trial. See
Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586–87 (1986). “A dispute about a material fact is ‘genuine’ if the
evidence is such that a reasonable jury could return a verdict for the
nonmoving party.” Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 956 (5th
Cir. 1993) (citation omitted).
The court “may not make credibility determinations or weigh the
evidence” in ruling on a summary-judgment motion. Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). But when the nonmoving
party has failed “to address or respond to a fact raised by the moving party
and supported by evidence,” then the fact is undisputed. Broad. Music, Inc.
v. Bentley, No. SA-16-CV-394-XR, 2017 WL 782932, at *2 (W.D. Tex. Feb.
28, 2017). “Such undisputed facts may form the basis for summary
judgment.” Id. The court may grant summary judgment on any ground
supported by the record, even if the ground is not raised by the movant.
United States v. Hous. Pipeline Co., 37 F.3d 224, 227 (5th Cir. 1994).
III. Analysis
In support of its argument that it owes the plaintiffs no contractual
duty of defense and indemnity, Fieldwood contends that the Brokerage
Agreement obligates Fleet: (1) to assume any obligations Kilgore assumed as
part of any time charter, and (2) “to protect, defend, and indemnify and save
harmless Broker Group for, from and against any and all claims, demands,
causes of action and liabilities of every kind and character, whether to person
or property . . . without limit and without regard to the cause
or . . . negligence . . . of Broker Group.” Dkt. 62-1 at 2–3.
The Brokerage Agreement defines the “Broker Group” as including
Kilgore and “any Charterer or customer for whom work is to be performed.”
Id. at 1. The MTC between Kilgore and Fieldwood designates Kilgore as
“Owner” and Fieldwood as “Charterer.” Dkt. 62-2 at 1. Both agreements—the
Brokerage Agreement and the MTC—are maritime contracts interpreted
under general maritime law. Dkts. 44 (Notice of Agreed Choice of Law); 62
at 12. Accordingly, Fieldwood argues it is part of the Broker Group and
therefore entitled to defense and indemnification from Fleet, including from
the third-party complaint Fleet and its subcontractor, ADS, filed against
Fieldwood. Dkt. 62 at 10–11.3
The plaintiffs respond that the MTC—not the Brokerage Agreement—
governs the parties’ indemnity obligations, and to the extent the two conflict,
the MTC has priority. Dkt. 65 at 1–2. Specifically, the plaintiffs argue: (1) the
Brokerage Agreement does not clearly express Fieldwood’s right to
indemnity for contractual liabilities; (2) even if the Brokerage Agreement
purports to give Fieldwood the relief it wants, it must yield to the MTC; and
(3) the MTC obligates Fieldwood to defend and indemnify Fleet and ADS for
Boudreaux’s claims. Id. at 3–7. The court addresses each argument in turn.
A. Brokerage Agreement
The plaintiffs argue the Brokerage Agreement articulates Fieldwood’s
right to indemnity for personal-injury claims but not for contractual
liabilities. Dkt. 65 at 3. The plaintiffs contend that their suit against
Fieldwood for a defense against and indemnity for Boudreaux’s claims
3 The litigants agreed to a realignment of the parties to more simply reflect
their relative claims and positions. Fleet, ADS, and Zurich American—now
designated as the plaintiffs—contend they are owed defense and indemnity costs
and have also asserted declaratory-judgment and breach-of-contract claims. The
now-designated defendants—Nautilus, Nacher, Fieldwood, and Underwriters—
maintain they owe no duties to defend and indemnify and also contest the breach-
of-contract claims. Dkt. 39.
against them was just such a claim, while Fieldwood’s arises under a
contractual liability. Dkt. 65 at 3.
The plaintiffs rely on Corbitt v. Diamond M. Drilling Co., 654 F.2d 329
(5th Cir. Unit A 1981), for the proposition that for a maritime contract “to
create a right of indemnity for independent contractual liabilities[,] . . . it
must clearly express such a purpose.” Id. at 334. Specifically, contract
language that provides defense and indemnity for personal-injury or
property damage does not include defense and indemnity for contractual
claims. Id. In the absence of explicit language to the contrary, it is
unreasonable to assume that the indemnitor intended to take on “such an
unusual and surprising obligation.” Id. at 333. The provision at issue in
Corbitt provided for indemnity “against all claims, suits, liabilities and
expenses on account of injury or death of persons . . . or damage of property
arising out of or in connection with performance of this [Purchase] Order.”
Id. at 331.
Fieldwood counters that the provision in the Brokerage Agreement
satisfies the Corbitt requirement for language that “clearly express[es] such
a purpose.” Corbitt, 654 F.2d at 334. Fieldwood adds that given the language
used, it cannot be accused of seeking to impose liability that was not within
the parties’ expressed intentions. Id. at 332. Article 5 of the Brokerage
Agreement states as follows:
[Fleet] agrees to protect, defend, and indemnify and save
harmless Broker Group for, from and against [1] any and all
claims, demands, causes of action and liabilities of every kind
and character, whether to person or property (including, but not
limited to personal injury, death, property damage or loss,
economic damages, costs of litigation and attorneys’ fees),
without limit and without regard to the cause or causes thereof
or the alleged, actual, passive, primary and/or secondary
negligence, breach of warranty or contract, fault or
unseaworthiness of Broker Group and/or any other person or
entity, and [2] whether brought or presented by [Fleet] or by an
employee, servant, and/or agent of [Fleet], and/or any
contractor, sub-contractor, invitee, vendor or client of [Fleet]
and/or their employees, servants or, agents, arising directly or
indirectly out of, incident to, and/or connected with (i) [3] the
work and/or services to be performed under this agreement,
and/or (ii) [Fleet’s] failure to honor any of the obligations set
forth in Section 2(B) of this agreement.
Dkt. 62-1 at 3 (emphasis and bracketed numbering added).
The undisputed facts concerning Fleet’s complaint against Fieldwood
(in which Fleet asserted its claim for contractual defense and indemnity
against Fieldwood for the personal-injury claims of Boudreaux) satisfy all
three of the bracketed numbers above in Article 5. The complaint comprises
[1] a claim or demand against Fieldwood for Fieldwood’s alleged breach of
the indemnity provisions of the MTC) [2] brought or presented by Fleet
arising directly or indirectly out of, incident to and/or connected with [3] the
work or services to be performed under the Brokerage Agreement. Moreover,
it is uncontested that Fieldwood was a member of the Broker Group, that the
Piper was working for Fieldwood at the time of Boudreaux’s accident, and
that the Piper was working and performing services by virtue of the
Brokerage Agreement.
This court is guided by the Fifth Circuit’s instructions when
interpreting contractual provisions:
Federal courts sitting in admiralty adhere to the axiom that a
contract should be interpreted so as to give meaning to all of its
terms – presuming that every provision was intended to
accomplish some purpose, and that none are deemed
superfluous.
Foster Wheeler Energy Corp. v. An Ning Jiang MV, 383 F.3d 349, 354 (5th
Cir. 2004). “[A]n interpretation that gives a reasonable and effective
meaning to all terms of a contract is preferable to one that leaves a portion
of the writing useless or inexplicable.” Id. at 358 (quoting Hartford Fire Ins.
Co. v. Orient Overseas Containers Lines, 230 F.3d 549, 558 (2d Cir. 2000)).
Applying this guidance to the Brokerage Agreement, the language of Article
5 clearly evinces an intention for Fleet’s indemnity obligations to the Broker
Group to include both contractual indemnity and tort-based claims such as
personal injury and property damage. A contrary interpretation would leave
important and clear language from Article 5—such as the breach of warranty
or contract language—as “useless or inexplicable.”
What remains to be seen, however, is whether the Brokerage
Agreement retains its priority when combined with the indemnity language
from the MTC.
B. Controlling Contract
Fleet next argues that even if the Brokerage Agreement gives
Fieldwood the relief it seeks, the Brokerage Agreement “must yield” to the
MTC. Dkt. 65 at 6. In Fleet’s eyes, because Fleet and Fieldwood contracted
through Kilgore, the parties to the Brokerage Agreement—Fleet and
Kilgore—anticipated the existence of a time charter and that the terms of any
time charter executed by Kilgore as agent for Fleet would control. Id. In
support, Fleet cites language from the Brokerage Agreement itself:
It is understood that in consideration of procuring work for the
Operator’s vessel, Charterer may require that a Master Time
Charter or similar charter be in place between Broker [Kilgore]
and Charterer [Fieldwood], and that the charter of Operator’s
[Fleet’s] vessel will be controlled by the Time Charter.
Dkt. 62-1 at 2.
The MTC provides that “[t]his Agreement shall govern the respective
rights and duties of Owner and Charterer with respect to the charter of
Owner’s vessel(s) by Charterer.” Dkt. 62-2 at 2. Additionally, the MTC
contains the following merger clause:
This Agreement and the applicable Short Form comprises the full
and complete agreement of the Parties hereto with respect to the
matters set forth herein and supersedes and cancels all prior
communications, understandings and agreements between the
Parties whether written or oral, expressed or implied.
Dkt. 62-2 at 16.
In response, Fieldwood argues that in paragraph 2(B) of the Brokerage
Agreement, Fleet has expressly assumed whatever indemnity obligations
Kilgore promised to Fieldwood in the MTC. Specifically, Fieldwood points to
language in the agreement stating that Fleet has further agreed to defend and
indemnify Kilgore from Fieldwood’s indemnity demands, “without limit and
. . . without regard to the . . . alleged breach of warranty or contract . . . of
Broker Group.” Dkt. 62-1 at 1–2. Fieldwood also argues that the merger
clause, rather than bestowing any priority to the MTC over the Brokerage
Agreement, merely confirms that all prior communications, understandings,
and agreements between the “Parties” to the MTC are superseded and
merged into the MTC, thereby rendering inadmissible any parole evidence.
The MTC does not state that it has priority over “any other agreement,” just
prior agreements between the “Parties.” Dkt. 66 at 10.
Fieldwood reasons that “Parties” is a defined term in the MTC to mean
only Fieldwood and Kilgore. Dkt. 62-2 at 1. Fleet is neither a party nor
referred to by name in the MTC. Rather, Fleet is a purported third-party
beneficiary of Fieldwood’s indemnity obligations to the “Owner Group.”
Similarly, Fieldwood is not a party to the Brokerage Agreement, but does
undisputedly qualify as a member of Broker Group, and thus is a third-party
beneficiary of Fleet’s indemnity obligations. Dkt. 66 at 11.
Additionally, and contrary to Fleet’s assertions, the language of the
Brokerage Agreement “does not expressly state that the defense and
indemnity obligations in [the MTC] pre-empt or prime the obligations of [the
Brokerage Agreement] or that [Broker Agreement]’s language regarding
defense and indemnity applies only when [the MTC] does not.” Knox v. Bisso
Marine, LLC, No. CV 16-13350, 2017 WL 2098876 (E.D. La. May 15, 2017),
at *3. Because the court finds that the Brokerage Agreement does not
expressly yield priority and authority to the MTC, it does not reach Fleet’s
argument that the language of the MTC obligates only Fieldwood to defend
and indemnify Fleet and ADS for Boudreaux’s claims.
Consequently, the court holds that in accordance with Article 5 of the
Brokerage Agreement, Fleet has agreed to defend and indemnify Fieldwood
from Fieldwood’s alleged breach-of-contract claims (alleged failure to
indemnify Fleet and ADS under the MTC), and therefore Fleet’s claims
against Fieldwood have been released and waived as a matter of law. Fleet is
obligated to defend and indemnify Fieldwood from the breach-of-contract
claims asserted against Fieldwood by Fleet’s subcontractors, like ADS.
* * *
For all these reasons, the court grants Fieldwood’s motion for
summary judgment. Dkt. 62. The plaintiffs’ claims against Fieldwood are
dismissed.
Signed on Galveston Island this 18th day of July, 2022.
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JEFFREY VINCENT BROWN
UNITED STATES DISTRICT JUDGE