Petition for Writ of Certiorari — Chevron Chemical Co. v. Liberty Mutual Insurance
Supreme Court brief1973
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IN THE
Supreme Court of the United States
OCTOBER TERM, 1973
No. 79-139
CHEVRON CHEMICAL COMPANY:-
ORONITE DIVISION,
Petitioner,
versus
LIBERTY MUTUAL INSURANCE COMPANY,
MECHANICAL CONTRACTING ENGINEERS, INC.
AND MR. WILLIAM F. COLE,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
SG RRR Rs WHOIS MEA CROTIG A Shy ea aL SPU Ri RR PLAST FE AREY II RELAIS IE OE EO
sh
LLOYD C. MELANCON
Counsel for Petitioner
720 Hibernia Bank Building
New Orleans, Louisiana 70112
504 523-5116
MESSRS. McLOUGHLIN, BARRANGER,
PROVOSTY AND MELANCON
Of Counsel
Hse
Page
MMR, |< - - <2 5 2 acs ncn c cc senecseesecoanseeeees 2
Opinions Below .............-------. 5 sees reer tees 3
Questions Presented for Review ...........-.-----:: 3
matement of the Case ............-..---5-- eee eeeees 3
Reasons Relied on for Granting the Writ of
NR ras Se as i cee wake «eRe ae eee 5
Onc cua ae aied oN GS Be bane HOE 13
te ak ang Web ences new nea ee 14
IN 6c ner k aw ndn> wvwaeenevenst snes seanseeees la
I. Louisiana Civil Code Article 1901 .......... la
eo 8 Sl ee errs roe la
i ee ccc sc ened ohare eines la
IV. U.S.C.A. Title 28, Section 1254(1) .......... 2a
V. US.C.A. Title 28, Section 1332 .............. 3a
VI. July 30, 1971, Findings of Fact ............ 4a
VII. Opinion with Respect to Indemnity Issues . .13a
VIII. Opinion on Judgment Notwithstanding
ES bes ahem rou digee sex oie 27a
IX. Judgment - U. S. District Court .......... 35a
X. Opinion of the U. S. Court of Appeals,
ee Oe a alt hewn oe 39a
XI. Judgment - U. S. Court of Appeals ........ 55a
XII. Order of U. S. Court of Appeals Denying
eB ree 57a
SAAD 2S AA HNEL ARSE SAGAS a AG EA VERA Me PE SEIT LIED PIB ALE IEE EG EERE BALE AE pal pasa WILT. VGA BE EP v
ii
CASES CITED
Page
Arnold versus Stupp Corp., 205 So.2d 797 (1967). 12, 13
B & G Electric Co. versus G. E. Bass & Co., Inc.,
252 F.2d 698 (1956), cert. den. 357 U.S. 931 10
Chaney versus The Travelers Insurance Com-
pany, 249 So.2d 181 (1971) .........0.000........ ll
Chesapeake and Ohio Ry. Co. versus Bailey Pro-
duction Corp., 163 F.Supp. 666 (1958) .......... 10
Cole versus Chevron Chemical Company, 427 F.2d
eR OPA re eda NT AO 5 Aine he RAMs 4
Cole versus Chevron Chemical Company, 334 F.
SC TE CU ce ec ee ee rs es on oe 2
Despaux versus California Co., 286 F.Supp. 558
CSRS . Sa ar ee nee Ona eae UE 12
General Electric Co. versus Cuban American
Nickel Co., 396 F.2d 89 (1958) .................. 12
General Talking Pictures Corporation versus
Western Electric Company, Inc., et al., 304
MU era etn ee a ene ee eeeas 2
Goett versus Union Carbide Corp., 361 U.S. 340
__. IRBLAT eaat ane roy Why aes ORO Seo ap ne Ciatie a? aie TRE Ne A 2
Gonzales versus Pennsylvania RR Co. versus
Imparato Stevedoring Corp., 183 F.Supp. 779
ERM Be PN get eh pO se i Bi Pome Malina, i met Seale peal he 10
Gorsalitz versus Olin Mathieson Chemical Corp.,
(5 Cir., No. 30631, September 28, 1971) .......... 12
Halliburton Company versus Norton Drilling
Company, 302 F.2d 431 (1962) ..................
x , streets : oe . ees . coop ascot piniles Book ee eS
NN et CS ELE LIEBE NCEA BEAT ELIE OIE HOD LA IR. SB I ete Vie BY * Shyer es
iii
CASES CITED (Continued)
Page
Humble Oil and Refining Co. versus Naquin, 414
ee OU oo arta cu ca nce meen ee 11, 12
Jennings versus Ralston Purina Co., 201 So.2d
I = eA ate US a meinen o5 11, 12, 13
Jewelers Mutual Ins. Co. versus Balough, 272
wut sea ee akan cae aneie as ll
Keystone Tankship Corporation versus Willa-
mette Iron & Steel Company, 222 F.Supp. 320
De rc rate aN a ie SAN peat ce RE TS Eo 9, 11
L. L. Bogle d/b/a Oil Field Maintenance Com-
pany and Travelers Insurance Company
versus The California Company, 369 F.2d 699
Se Ree Care ngua At le Pit, Ale wln! Sie et ne Seale ee 9
Ludwig Mowinckels Rederi versus Commercial
Stevedoring Co., 256 F.2d 227 (1958) ............ 10
Mills versus Fidelity & Casualty Co., 226 F.Supp.
786, at 790 aff'd per curiam 338 F.2d 341
Ie AN ULE rae ee Ones ane pa re 12
Pure Oil Co. versus Geotechnical Corp., 129 F.
ee I dee eka eee wenas: 10
Ryan Stevedoring Co., Inc. versus Pan-Atlantic
SS Corp., 360 US. 196 (3061) .................. 10
Seneca versus California Oil Company, et al.,
ee I: Te CHD «oo osc oer sew eens: 9, 11
The Tungus versus Skovgaard, 358 U.S. 588 (1959) .... 2
U.S. versus Tieger, 138 F.Supp. 709 (1954) .......... 9
SO Se Se ras Sl Te oranda Le eet
ete OO EE Ta
iv
CASES CITED (Continued)
U.S. Fidelity & Guaranty Co. versus Wilson, 41
W2d SID (1980) 0... eee eee tence nes
U.S. Steel Corporation versus Emerson-Comstock
Co., Inc., 141 F.Supp. 143 (1956) ........--.----. 10
Union Pacific Railroad Co. versus Bridal Veil
Lumber Co., 219 F.2d 825 (1955) ...........-.--. 10
United Gas Corp. versus Guillory, 206 F.2d 49
No loinc sna Rlen Gee Wen eaese eee sesh 12
White versus The California Company, et al., 250
F.Supp. 586 (1966) ......-.-.---.-sse eee 9, 10, 11
STATUTES
Louisiana Civil Code Art. 1901 ...........---..e50ees
LSA-R.S. 23:1032 and 1061 ..........-----sseeee cess
U.S.C.A. Title 28, Section 1254(1) ..........------+55:
U.S.C.A. Title 28, Section 1332 .........----..+++e0:
SUPREME COURT OF THE UNITED STATES
October Term, 1973
No.
CHEVRON CHEMICAL COMPANY -
ORONITE DIVISION,
Petitioner,
versus
LIBERTY MUTUAL INSURANCE COMPANY,
MECHANICAL CONTRACTING ENGINEERS, INC.
AND MR. WILLIAM F. COLE,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
TO THE HONORABLE THE CHIEF JUSTICE AND
THE ASSOCIATE JUSTICES OF THE SUPREME
COURT OF THE UNITED STATES:
Your petitioner, Chevron Chemical Company - Oro-
nite Division, respectfully prays that a writ of certiora-
ri be issued out of and under the seal of this Court
to review the April 23, 1973 judgment by the United
States Court of Appeals for the Fifth Circuit in No. 72-
1025 entitled “WILLIAM F. COLE, Plaintiff-Appellant,
versus CHEVRON CHEMICAL COMPANY - ORON-
ITE DIVISION, Defendant-Appellee, MECHANICAL
CONTRACTING ENGINEERS, INC., and LIBERTY
POY ERIE ARR AR 1898 IRR STE CONVEY NRNIFL OO SSRN ASLO
ee AREAS BRE BACHE:
SESS AED Bi ist Sete a RSA ILE ERA PEE READ AD YE ASA,
ae
Rt ie
Aton Sh
MUTUAL INSURANCE COMPANY, Third-Party De-
fendants-Appellees-Appellants”, Opinion April 23, 1973,
5 Cir. 1973, F.2d ___, which affirmed in part and
reversed in part the July 30, 1971 findings of fact, the
October 7 and December 20, 1971 opinions and January
4, 1972 judgment by the District Court of the United
States for the Eastern District of Louisiana, New Or-
leans Division, in Civil Action No. 68-1943C entitled
“WILLIAM F, COLE versus CHEVRON CHEMICAL
COMPANY - ORONITE DIVISION,” which are in part
reported as Cole versus Chevron Chemical Company,
334 F.Supp. 263 (1971).
JURISDICTION
The opinion of the United States Court of Appeals
for the Fifth Circuit was rendered April 23, 1973. A
petition for rehearing en banc was filed by petitioner
on June 6, 1973 and was denied in a per curiam opinion
on June 19, 1973. A motion was made for the stay of
mandate pending the filing of this petition for certiora-
ri and was granted on July 5, 1973 to and including
August 5, 1973.
Jurisdiction to review this case upon writ of certiora-
ri is authorized and created by U.S.C.A. Title 28, Sec-
tion 1254(1). See: General Talking Pictures Corpora-
tion versus Western Electric Company, Inc., et al.,
304 U.S. 175 (1937); The Tungus versus Skovgaard, 358
U.S. 588 (1959); and, Goett versus Union Carbide Corp.,
361 U.S. 340 (1960)
Pee fm a
ee eee PA MECTS OAT : Brciwey zie.
ee Fa TAS BRACE ENT SARE PTI FLITE LON SRE Ty Gm PSE
3
OPINIONS BELOW
The findings, opinions and judgment, by the District
Court of the United States, as well as the judgment,
opinion and denial of the petition for rehearing en banc
by the United States Court of Appeals for the Fifth
Circuit are printed in the Appendix.
QUESTIONS PRESENTED FOR REVIEW
Whether as a matter of law, the Trial Court correctly
awarded to petitioner the stipulated legal fees and
costs incurred arising out of the conventional indemni-
ty and insurance agreements among the parties, which
judgment was reversed by the United States Court of
Appeals for the Fifth Circuit.
STATEMENT OF THE CASE
Respondent, Mr. William F. Cole, a laborer-welder,
sued petitioner, Chevron Chemical Company - Oronite
Division (hereinafter called Chevchem), in the District
Court of the United States under the provisons of
USCA. Title 28, Section 1332, for injuries allegedly
sustained in a February 16, 1968 slip-and-fall incident
on its premises, while in the course and scope of his
employment by and under the control, direction and
supervision of respondent, Mechanical Contracting
Engineers, Inc. (hereinafter called Mechanical). In
response to the complaint, Chevchem was compelled
and forced to assert a third-party complaint over a-
gainst Mechanical and its insurer, respondent Liberty
Mutual Insurance Company (hereinafter called Liberty
prtapians 4 —
FLEE ART ED ORE NOI hy II Rl nt ie grat
so abate Ki fen
WU SIN te SOIT
ia 3
4
Mutual), on the basis of contractual indemnity and in-
surance agreements among the parties pertinent to the
work being performed by Mr. Cole at the time of his
alleged accident.
Upon completion of delayed discovery, motions to
dismiss and/or for summary judgment with support-
ing affidavits were filed in the Trial Court by Chev-
chem against Mr. Cole under the application and pro-
visions of LSA-R.S. 23:1032 and 1061, to the extent that
at all times pertinent he was as a matter of law a
statutory employee and could not maintain a tort ac-
tion against Chevchem in its principal/subcontractor
relationship with Mechanical. The Trial Court on Octo-
ber 23, 1969, after earlier argument, granted a limited
judgment to Chevchem in this multiparty action, dis-
missing the complaint, from which an earlier appeal
was taken by Mr. Cole.
The United States Court of Appeals for the Fifth Cir-
cuit in accordance with the provisions of Local Rule
18 placed the appeal on the summary calendar and
the panel concluded “... that this case is of the char-
acter that does not justify oral argument, . . .”. In re-
versing the summary judgment and remanding be-
cause “... material factual issues remain to be tried
...”, that Appellate Court observed that the ee
ture of Chevron’s operations at its Oronite Division
Plant is not clear.” Cole versus Chevron Chemical
Company, 427 F.2d 390 (1970) at pages 392-394.
Thereafter, the factual issues raised by Mr. Cole in
the complaint against Chevchem were tried by a jury
Se a 2 ee — —
— TS TDI PERS Oe oe ORES KASS SS +
5
and those arising out of Chevchem’s third-party com-
plaint against Mechanical and Liberty Mutual, were
subsequently tried independently by the District Court
of the United States without a jury. In the face of an
adverse decision by the jury, the Trial Court granted
Chevchem’s motion for judgment notwithstanding the
verdict and in the non-jury trial awarded it the stipu-
lated legal fees and costs against Mechanical and
Liberty Mutual on the contractual indemnity and in-
surance demands in the third-party complaint, from
which appeals were taken by Mr. Cole, Mechanical
and Liberty Mutual.
The United States Court of Appeals for the Fifth Cir-
cuit on April 23, 1973 affirmed the judgment notwith-
standing the verdict granted Chevchem, but reversed
the award to it of the stipulated legal fees and costs.
A petition for rehearing en banc was timely filed, but
promptly denied in a June 19, 1973 opinion.
REASONS RELIED ON FOR GRANTING
THE WRIT OF CERTIORARI
It is the contention and position of Chevchem that
the United States Court of Appeals for the Fifth Circuit
has in the April 23, 1973 opinion decided an important
question of law which is now in conflict with the appli-
cable laws of the State of Louisiana.
In pages 12, 13, 14, 15 and 16 of the printed April
23, 1973 opinion, the United States Court of Appeals
for the Fifth Circuit concludes that the pertinent in-
demnity agreement between Chevchem and Mechani-
ESN vg seen ee teeny
SPFENES Eo PAPEL EE a PERG . ves
cal, which was insured by Liberty Mutual, did not af-
ford coverage for the stipulated legal fees and costs
incurred by Chevchem in defense of the meritless
claims advanced by plaintiff-appellant.
Initially, as an employee of the independent contrac-
tor Mechanical, Mr. Cole sued Chevchem for damages
allegedly sustained in the course and scope of his work
as a result of a February 16, 1968 accident. At the
time thereof, Mechanical was performing services in
furtherance of a written indemnity agreement with
Chevchem, which was insured by Liberty Mutual.
On November 12, 1968, Chevchem was served with
the complaint and promptly formally proffered its de-
fense and indemnity to Mechanical and Liberty Mu-
tual, requesting prompt acknowledgement and accept-
ance of the tenders. The allotted time passed without
affirmative action on the part of Mechanical and
Liberty Mutual, thereby compelling and forcing Chev-
chem to defend itself against the claims of Mr. Cole.
A third-party complaint was asserted in the respon-
sive pleadings filed by petitioner and in the Trial Court
as well as on appeal, it was determined that Mr. Cole’s
claims were without merit. However, while the Trial
Court awarded Chevchem the stipulated legal fees and
costs in the defense of Mr. Cole’s meritless claims, the
United States Court of Appeals for the Fifth Circuit
reversed that portion of the judgment. It is the con-
tention of Chevchem that as a matter of law it is en-
titled to recover this amount from Mechanical and
Libetty Mutual, predicated on the pertinent portions
REPRE WIA Ie PET ANTAL ERS ed SLED ES SY ee LS ES rs
7
of the agreement with this independent contractor,
which reads as follows:
“11 Independent Contractor: CONTRAC-
TOR shall be an independent contractor, main-
taining complete control over CONTRAC-
TOR’S men and operations.
8. CONTRACTOR’S _UNDERSTANDING: It
is understood and agreed that CONTRACTOR,
as the result of careful examination, is satis-
fied as to the nature and location of the work,
the conformation and structure of the ground,
the character, quality and quantity of the ma-
terials to be used, the character of equipment
and facilities needed preliminary to and during
the prosecution of the work, the general, and
local conditions, and all other matters which
can in any way affect the work under this con-
tract...
15 Safety Measures: CONTRACTOR shall
take all reasonable precautions to protect the
work, workmen and the public; and shall pro-
vide, where reasonably necessary, barriers,
guards, temporary bridges, lights and watch-
men...
41. Inspection: ... CONTRACTOR shall pro-
vide safe and proper facilities therefor. CON-
TRACTOR shall at all times during working
hours keep a competent man in the immediate
vicinity of the work to receive communications
from COMPANY and to supervise the work.
BER ge Poe CR TERE eS
5 Wied nae ok
pane bik As is be al atts
(Rithogdas Bier uepeeuatuabet
eureka
SWS I Seer te anes “or
5.1 General Liability: CONTRACTOR shall
indemnify and save COMPANY harmless from
and against any and all loss, damage, injury,
liability and claims thereof for injuries to or
death of persons, and all loss or damage to
property of others, resulting directly or indi-
rectly from CONTRACTOR’S performance of
this contract.” (Emphasis added.)
It is undisputed that Mechanical and Liberty Mu-
tual knew at the time of the execution of the contract
and the issuance of insurance coverage therefor that
the contemplated work to be performed by individuals,
such as Mr. Cole, was a hazardous occupation,
for which insurance protection was needed and ob-
tained. Moreover, from time to time it was known that
these laborers were injured in the course and scope
of their duties, resulting in claims being made and
litigation instituted thereon. Surely, Mechanical and
Liberty Mutual must have been aware that on the filing
of such lawsuits, lawyers had to be employed, together
with costs and expenses being incurred in the defense
of such claims.
Mechanical agreed, as an independent contractor,
to protect Chevchem for such claims as were made
by Mr. Cole. Furthermore, the controlling language
in the contract does not limit the indemnity of Chev-
chem by Mechanical as insured by Liberty Mutual to
any claim successfully prosecuted by a workman, Sim-
ply stated, the wording used in the agreement unequiv-
ocally states “ ... any and all loss, damage, injury,
liability and claims ...” (Emphasis added.)
9
Beyond question, the filing of the complaint by Mr.
Cole constituted a claim within the conditions and
terms of the agreement between Chevchem and Me-
chanical, which was insured by Liberty Mutual. See:
L. L. Bogle d/b/a Oil Field Maintenance Company and
Travelers Insurance Company versus The California
Company, 369 F.2d 699 (1966) affirming White versus
The California Company, et al., 250 F.Supp. 586 (1966);
Seneca versus California Oil Company, et al., 244
F.Supp. 350 (1964); Keystone Tankship Corporation
versus Williamette Iron & Steel Company, 222 F.Supp.
320 (1963); and U.S. versus Tieger, 138 F.Supp. 709
(1954). This specific intent and meaning of the agree-
ment at the time of its execution must be deduced
from the entire contract, the subject matter and the
purposes thereof, together with all of the surrounding
circumstances. U.S. Fidelity & Guaranty Co. versus
Wilson, 41 F.2d 319 (1930); White, supra; and, Seneca,
supra.
It cannot be denied that a logical and proper inter-
pretation of the language used in the agreement re-
quires a conclusion and finding that the parties fully
meant to obligate and require Mechanical and Liberty
Mutual, to defend Chevchem against all claims, meri-
torious or otherwise. In this connection the complaint
on its face indicated a substantial potential lability,
the defense of which required the services of highly
competent legal counsel and the incurrence of costs
and expenses in connection therewith. Under indemni-
ty agreements similar to, but not as incisive as the
agreement here at issue, the Courts have held that
the principal could recover from the independent con-
PE EEE OLE TTL EEE LE ROT IE
10
tractor legal fees, costs and expenses in defending such
a meritless claim.'
The fact that liability was or was not established
against Chevchem, can have no significance. In in-
stances such as what is now before the Court where
the indemnitor and its insurer by inaction failed to
undertake their commitments, as a matter of law, the
indemnitee was held entitled to protect itself by em-
ploying lawyers and incurring costs and expenses.’
The rights of Chevchem, as specified in the agreement
and insurance policy, supersede any civil, maritime
or common law theory.*
Herein, we are not concerned with the doctrine of
implied warranty of workmanlike services, in which
indemnity over is granted on the showing a breach
of contract. The sole issue before the Court is not
the liabilities and rights of the parties under an im-
plied warranty of workmanlike services as involved
in Ryan Stevedoring Co., Inc. versus Pan-Atlantic SS
Corp., 350 U.S. 124 (1961), but the liabilities and rights
of the parties on a proper construction and interpreta-
tion of a written indemnity agreement and policy of
‘Ludwig Mowinckels Rederi versus Commercial Stevedoring Co.,
256 F.2d 227 (1958); and, Pure Oil Co. versus Geotechnical
Corp., 129 F.Supp. 194 (1955).
2White, supra; Gonzales versus Pennsylvania RR Co. versus Im-
parato Stevedoring Corp., 183 F.Supp. 779 (1960); and, Chesa-
peake and Ohio Ry. Co. versus Bailey Production Corp., 163
F.Supp. 666 (1958).
3U. S. Steel Corporation versus Emerson-Comstock Co., Inc., 141
F.Supp. 143 (1956); and, B & G Electric Co. versus G. E. Bass
& Co., Inc., 252 F.2d 698 (1956), cert. den. 357 U.S. 931.
aUnion Pacific Railroad Co. versus Bridal Veil Lumber Co., 219
F.2d 825 (1955).
SEES Sea NCES , ee:
: FES LLLP PI ALLE ELIE AD SE SPLITS IA TES Ee a oS
11
insurance issued thereon. Keystone, supra; White, su-
pra; and, Seneca, supra.
The realistic application and meaning of the perti-
nent provisions of the agreement and insurance policy
for the work undertaken dictate that the circumstances
surrounding the alleged accident is the exact and pre-
cise reason for their existence. Liberty Mutual collect-
ed premiums therefor, yet contrary to its representa-
tions has repeatedly and unconscionably refused
to honor its commitment and obligations. This is the
true issue in the case and the insurance policy must
be read in the light of practical business demands and
risks.®
Additionally and of paramount importance is the fact
that the April 23, 1973 opinion by the United States
Court of Appeals for the Fifth Circuit is in conflict
with other more controlling law of the State of Louisi-
ana as decided in Jennings versus Ralston Purina Co.,
201 So.2d 168 (1967); and, Chaney versus The Travelers
Insurance Company, 249 So.2d 181 (1971), the latter
rendered by the Supreme Court of Louisiana. The Trial
Court in interpreting the indemnity agreement be-
tween Chevchem and Mechanical and upholding its va-
lidity, beginning at page 264, stated as follows:
“Since Chevron and Mechanical had a con-
tractual indemnity agreement, the cases deal-
ing with the obligation of implied indemnity in
the absence of contract are inapplicable. Com-
pare Humble Oil and Refining Co. v. Naquin,
SJewelers Mutual Ins. Co. versus Balough, 272 F.2d 889 (1959).
12
5 Cir. 1969, 414 F.2d 912; Halliburton Company
v. Norton Drilling Company, 5 Cir. 1962, 302
F.2d 431; General Electric Co. v. Cuban Ameri-
can Nickel Co., 5 Cir. 1958, 396 F.2d 89; United
Gas Corp. v. Guillory, 5 Cir. 1953, 206 F.2d 49.
“It was not claimed in the pleadings or the
pre-trial order that the written indemnity a-
greement did not accurately reflect the under-
standings between Chevron and Mechanical,
or that it was ambiguous, and its interpretation
must therefore be determined as a matter of
law, based on the language used therein by the
parties. Mills v. Fidelity & Casualty Co., 226
F.Supp. 786, at 790 aff’d per curiam, 5 Cir. 1964,
338 F.2d 341; and Arnold v. Stupp Corp., La.
App. 1967, 205 So.2d 797 at 804.
“Louisiana courts, whose opinions we are
obliged to follow in this diversity case, have
held that a contract of indemnity will not be
construed to indemnify against a loss resulting
solely from the indemnitee’s own negligent
acts unless that intention is expressed in un-
equivocal terms. Arnold v. Stupp Corp., La.
App. 1968, 205 So.2d 797. Compare Jennings v.
Ralston Purina Co., La. App. 1967, 201 So.2d
168, which the court distinguished in Arnold.
See also Gorsalitz v. Olin Mathieson Chemical
Corp., 5 Cir. F.2d __. (Sept. 28, 1971,
#30631); compare the discussion by this court
in Despaux v. California Co., E.D. La. 1968, 286
F.Supp. 558. Louisiana, like most states, has
indicated a tendency to construe indemnity a-
—* te *
che EIR ae
PRUE 0 PELLET AT LR DEEL LLMEDS ELIE LEE EE IAI PLN EINE ERE GEM LEG BAS. a ec
13
greements narrowly, particularly where, as
here, they were drafted by the indemnitee.
Jennings, supra, at 175; Arnold, supra, at 799.
“But the mandate that an agreement is to be
read narrowly does not mean it is to be disre-
garded. The agreement must be given effect,
according to the intention of the parties, for the
contract is the law between them. Louisiana
Civil Code Art. 1901.”
CONCLUSION
It is respectfully submitted that a Writ of Certiorari
should be granted to review and reverse that part of
the April 23, 1973 decision by the United States Court
of Appeals for the Fifth Circuit which denied the award
by the Trial Court to Chevchem for the stipulated legal
fees and costs incurred arising out of the conventional
indemnity and insurance agreements among the par-
ties, because that Court has decided an important ques-
tion of law which is now in conflict with the applicable
laws of the State of Louisiana.
MESSRS. McLOUGHLIN, BARRANGER,
PROVOSTY AND MELANCON
Of Counsel
PEELS ERSTE PELL NY GD MS Gs
14
PROOF OF SERVICE
lt is hereby certified that three copies of the above
and foregoing petition were served by the writer de-
positing the same in a United States mail box with first
class postage prepaid thereon addressed as follows:
George J. Kambur, Esq., of Messrs. Kambur and Drury,
809 North Broad Street, 207 G.J. Kambur Building, New
Orleans, Louisiana 70119; Clark A. Richard, Esq., 208
Southern Savings Building, New Orleans, Louisiana
70112; and John V. Baus, Esq., of Messrs. Jones, Walk-
er, Waechter, Poitevent, Carrere and Denegre, 225 Ba-
re@nne Street, New Orleans, Louisiana 70112, on this
day of Juiy, 1973.
SBS RE AE ANB LOR IOI OGLE MMI CRIT Reta ATL Vat NERA, LACIE Ct ET SS OAS dE
la
APPENDIX I
Art. 1901. Binding effect of agreements between parties
Art. 1901. Agreements legally entered into have the
effect of laws on those who have formed them.
They can not be revoked, unless by mutual consent
of the parties, or for causes acknowledged by law.
They must be performed with good faith.
APPENDIX Il
§ 1032. Exclusiveness of rights and remedies; employer’s
liability to prosecution under other laws
The rights and remedies herein granted to an em-
ployee or his dependent on account of a personal in-
jury for which he is entitled to compensation under
this Chapter shall be exclusive of all other rights and
remedies of such employee, his personal representa-
tives, dependents, or relations.
Nothing in this Chapter shall affect the liability of
the employer to a fine or penalty under any other
statute.
APPENDIX III
§ 1061. Principal contractors; liability
Where any person (in this section referred to as
principal) undertakes to execute any work, which is a
part of his trade, business, or occupation or which he
had contracted to perform, and contracts with any
2a
person (in this section referred to as contractor) for the
execution by or under the contractor of the whole or
any part of the work undertaken by the principal, the
principal shall be liable to pay to any employee em-
ployed in the execution of the worker to his depend-
ént, any compensation under this Chapter which he
would have been liable to pay if the employee had been
immediately employed by him; and where compen-
sation is claimed from, or proceedings are taken a-
gainst, the principal, then, in the application of this
Chapter reference to the principal shall be substituted
for reference to the employer, except that the amount
of compensation shall be calculated with reference to
the earnings of the employee under the employer by
whom he is immediately employed.
_ Where the principal is liable to pay compensation
under this Section, he shall be entitled to indemnity
from any person who independently of this Section
would have been liable to pay compensation to the em-
ployee or his dependent, and shall have a cause of ac-
tion therefor.
APPENDIX IV
§ 1254. Courts of appeals; certiorari; appeal; certified
questions
(1) By writ of certiorari granted upon the petition
of any party to any civil or criminal case, before or
after rendition of judgment or decree;
RAR BEV ALM DR RES ML WARE LEA RI EARNS RG BRIS AE TINE TREN NA PI EP PET EE
PP RST
3a
APPENDIX V
§ 1332. Diversity of citizenship; amount in controversy;
costs
(a) The district courts shall have original jurisdic-
tion of all civil actions where the matter in controversy
exceeds the sum or value of $10,000, exclusive of in-
terest and costs, and is between —
(1) citizens of different States;
(2) citizens of a State, and foreign states
or citizens or subjects thereof; and
(3) citizens of different States and in which
foreign states or citizens or subjects thereof
are additional parties.
(b) Except when express provision therefor is other-
wise made in a statute of the United States, where the
plaintiff who files the case originally in the Federal
courts is finally adjudged to be entitled to recover less
than the sum or value of $10,000, computed without re-
gard to any setoff or counterclaim to which the de-
fendant may be adjudged to be entitled, and exclusive
of interest and costs, the district court may deny costs
to the plaintiff and, in addition, may impose costs on
the plaintiff.
(c) For the purposes of this section and section 1441
of this title, a corporation shall be deemed a citizen
of any State by which it has been incorporated and of
the State where it has its principal place of business:
Provided further, That in any direct action against
the insurer of a policy or contract of liability insur-
ance, whether incorporated or unincorporated, to which
action the insured is not joined as a party-defendant,
such insurer shall be deemed a citizen of the State of
So i TRNAS HL NTO TFE NE OE PLE PRY US (8 Nel WT A eT TORN RRC Ne ete SAPO TAN PW Seah,
rs
;
2
3
4
:
i
- Be seated, please.
ee sae _ BE ALDARA 8
which the insured is a citizen, as well as of any State
by which the insurer has been incorporated and of the
State where it has its principal place of business.
(d) The word “States”, as used in this section, in-
cludes the Territories, the District of Columbia, and the
Commonwealth of Puerto Rico, June 25, 1948, c. 646,
62 Stat. 930; July 26, 1956, c. 740, 70 Stat. 658; July 25,
1958, Pub.L. 85-554, § 2, 72 Stat. 415; Aug. 14, 1964, Pub.
L. 88-439, § 1, 78 Stat. 445.
APPENDIX VI
Filed: Aug. 2, 1971
IN THE
DISTRICT COURT OF THE UNITED STATES
EASTERN DISTRICT OF LOUISIANA
NEW ORLEANS DIVISION
CIVIL ACTION
NUMBER 68-1943
SECTION C
WILLIAM F. COLE,
Plaintiff,
versus
CHEVRON CHEMICAL COMPANY -
ORONITE DIVISION,
Defendant.
July 30, 1971, FINDINGS OF FACT
* «x x =
{2] THE COURT:
5a
THE COURT:
All right, gentlemen, I am now going to make my
findings of fact, which will be typed up and made avail-
able to you, and I think I am going to reserve judg-
ment on the legal implications of some of these facts
until I can review the additional supplemental briefs
and think about it a little bit more.
The record shows and, of course, I find as a fact,
the answers to the interrogatories propounded to the
jury herein after the trial on the merits which shows
that the jury found that the injury to Mr. Cole resulted
proximately from the negligence of Chevron, that it
did not result from the contributory negligence of Mr.
Cole, and that the total amount of damages was
$67,500.00.
Two, on September 1, 1967, pursuant to contract
C-773, dated November 24, 1967, Chevron Chemical
Company, whom I will refer to merely as Chevron,
[3] and Mechanical Contracting Engineers, Incorpor-
ated, agreed that Mechanical Contracting would do
certain work on the premises of Chevron.
Three, one of the conditions of this contract was “5.1,
General Liability: Contractor shall indemnify and hold
company harmless from and against any and all loss,
damage, injury, liability, and claims thereof for in-
juries to or death of persons and all loss or damage
to property of others, resulting directly or indirectly
from contractor’s performance of his contract.”
And, of course, the remainder of the contract is in
evidence.
Four, on February 16, 1968, at the time that Mr. Cole
alleges that he was injured, Mechanical was engaged
6a
on Chevron’s premises in the performance of contract
C-773, and Mr. Cole was working for Mechanical on
Chevron’s premises. He was then working under the
control and direction and supervision of Mechanical,
which was an independent contractor.
Five, thereafter on November 12, 1968, Mr. Cole filed
suit against Chevron. He served the plaintiff's com-
plaint and summons.
[4] Six, on November 15, 1968, Chevron tendered the
defense of this action to which Mechanical and its in-
surer, Liberty Mutual, had asked for indemnities alleg-
ing the applicability of 5.1 and the other provisions
of the contract.
Seven, Mechanical in turn on November 22, 1968, ten-
dered the defense of indemnity to Chevron.
Eight, thereafter both Mechanical and Liberty Mv-
tual declined to offer indemnity or to undertake the
defense, and Chevron was then compelled to defend
itself in this action.
Nine, that as a result of the necessity for defense,
Chevron incurred $6,195.00 in attorney’s fees and at-
torney’s costs. The amount was reasonably incurred.
Ten, the trial of the plaintiff's case against Chevron
was severed from Chevron’s indemnity against Me-
chanical and Liberty Mutual. Neither Chevron nor Me-
chanical and Liberty Mutual requested a jury trial of
this third party complaint, although the Court inquired
whether they desired a jury trial of the third party
complaint and the defense thereto, consequently to a-
void confusing the jury. When the parties indicated
7a
they preferred this action to be [5] tried through the
Court, the Court did not permit Mechanical or Liberty
Mutual to participate in the trial of the Cole case, and
Liberty Mutual and Mechanical were not permitted
through counsel to make objections to evidence, cross
examine witnesses, present additional evidence or oth-
erwise participate in the trial.
Eleven, third party defendants were denied the right
to have Mr. Franklin present in the trial because of
the possibilities he would be called as a witness and
because he was not a representative of one of the par-
ties present during the Cole trial.
Third party defendants were refused permission and
indeed were advised that they could properly have
counsel present in the courtroom to hear and observe
what went on, they were advised that such counsel
would not be permitted to participate actively in the
trial.
All right, now, I am going to state generally a few
of my legal observations and reserve my final conclu-
sions thereon.
I suppose that in fairness to the parties I ought to
give a little discursive treatment of this [6] case. My
conclusions will not in any way be clear unless I state
the premises on which they are based.
I think the evidence from which the jury found lia-
bility, ie, negligence on the part of Chevron was
sketchy at best. I have some doubt that were I the
2a Bem PRS
ee
5 tg Bly a ates EN i IR al NN Wc A allah lle Sil AA ine ace moe
é
4
= . i : maui
8a
trier of fact I would have found such negligence without
in any way, however, prejudicing the new trial motion,
I will say that I think at this time there was evidence
from which the jury might have concluded what they
did and that the evidence is not so sketchy that I ought
to substitute my judgment for theirs.
Put another way, I think the verdict is likely not
in accordance with what I perceived to be the prepon-
derance of the evidence but not so remote that no rea-
sonable man could reach that conclusion.
Well, obviously, I start with somewhat mixed mo-
tives about the verdict. I will try to make those ex-
plicit. But if we accept the verdict as it is, then there
can be no doubt that the jury did find that Chevron
was negligent.
[7] Now, there are only a limited number of kinds
of negligence that Chevron could have been guilty of.
I suppose we are trying to be exhaustive, these would
include failure to clean the pipes thoroughly before
they were cut, failure to clean the area thoroughly
before it was worked on, and failure of the firewatch
to clean up the spill after it happened. I don’t know
of any other alleged negligence really that was possibly
embraced in the testimony on the main demand, and
I don’t know of any that was referred to in the third-
party complaint, but if Chevron’s negligence was any
one or all of these, it seems to me that there must
have been some act by Mechanical that directly or
indirectly contributed to the injury.
9a
If Chevron’s negligence was failure to clean the pipes
properly, then undoubtedly the time when something
spilled was when it was cut by a welder for Mechanical.
And if that be so, then that welder knew very well
whether the firewatch cleaned up because it was the
firewatcher’s duty to say, stop work and clean, so he
knew then and there the firewatch didn’t clean it and
then and there knew the firewatch [8] didn’t see it.
I take it he could not resolve himself completely from
responsibility by shrugging his shoulders and saying,
oh, well, he didn’t notice it, ha, ha, and go about his
work.
The second possibility is that Chevron didn’t clean
the area completely, and there is some testimony by
Mr. Cole today that there was a lot of grease around
everywhere.
Mr. Rippe testified the area was pretty clean, but
let’s assume that it was not sufficiently clean. Mechan-
ical had been working there for several days. I think
if the area was greasy and hazardous, even if the haz-
ard was, as Mr. Cole’s testimony today indicates, pres-
ent only when this catwalk was removed, Mechanical
had some duty to notice what was going on, and I don’t
think it ean be said that it was the firewatcher’s re-
sponsibility to peer under a catwalk or certainly not
his sole responsibility. Taken from a standpoint most
favorable to Mechanical, Mr. Cole’s testimony would
lead to the belief that there was a pool, a gallon of
oil under the catwalk, not visible until the catwalk was
removed. But who removed the catwalk? [9] Me-
chanical. Who was in the position to see it first? Per-
ce ee a
6 ip PATRI Sele, ENS SCL ae NE 9 ANE ERLE A 6
NMG REG I ee OE OY
10a
haps not Mr. Cole but certainly Mr. Walters, because
it was on his side of the pipe.
' And the third possibility we have already mentioned
of negligence is that of the firewatcher’s failure
to clean, failure to clean either a spill or greasy con-
dition that pre-existed Mechanical’s entrance on the
scene or one that occurred subsequently. And, as I
have indicated, I think in either event Mechanical’s
performance of its operations under the contract like-
ly contributed directly or indirectly to the events on
which their suit is based.
I think the real problem, of course, that counsel try-
ing the case today have is that they, perhaps even
more than the Court, feel, well, there wasn’t anv evi-
dence really that there was any oil there and, there-
fore, the jury should not have held anybody liable. But
that’s what the jury did. And you gentlemen had a
chance to try your case and your claim to that same
jury and have them make whatever findings they chose
to make, consistent, inconsistent, or otherwise.
We all know that if judges and juries always de-
cided cases exactly the same way, we would have no
[10] need for both of them or we could dispense with
one or the other. The only reason we have juries is
they do decide cases differently from judges, and we
have certain rules that govern their deviance. If they
deviate so much, we can say, it’s inflamed by passion,
throw it out, start all over, it differs so much no rea-
sonable man could do that, throw it out and start all
over, there isn’t enough evidence to go to the jury to
lla
give a judgment that notwithstanding the verdict, don’t
even give a new trial. These are the perimeters of
the limits that have to be set to the jury sometimes,
but within those limits juries do deviate from what
judges think, and obviously they deviate from what
lawyers say in argument, they don’t concur.
Now, I will reserve final conclusion after further
study as to what judgment, if any, ought to be entered
based on these findings.
If you gentlemen are moved by my remarks to cite
me something that you think I have grossly overlooked,
why, whether I have overlooked without being gross
about it, why, I will read it.
I have not gone back and reread everything in the
case, but I have read rather carefully, and [11] more
than once, both the Chevron brief and the Mechanical
brief filed with respect to the hearing today.
Anything further at this time, gentlemen?
MR. MELANCON:
No, your Honor.
MR. BAUS:
No, your Honor.
THE COURT:
Okay.
Thank you very much, gentlemen.
ONS ARR
12a
MR. BAUS:
’ If the Court pleases, apparently to the degree that
I guess we feel you are inviting further briefs I think —
THE COURT:
’ You can have this off the record.
MR. BAUS:
Off the record.
(Whereupon, a discussion was had of the record,
after which time the following proceedings were had:)
THE COURT:
Court will stand at recess.
(Whereupon, court adjourned.)
l3a
APPENDIX VII ,
Filed: Oct. 8, 1971
IN THE
DISTRICT COURT OF THE UNITED STATES
EASTERN DISTRICT OF LOUISIANA
NEW ORLEANS DIVISION
CIVIL ACTION
NUMBER 68-1943
SECTION C
WILLIAM F. COLE,
Plaintiff,
versus
CHEVRON CHEMICAL COMPANY -
ORONITE DIVISION, y
Defendant.
OPINION WITH RESPECT TO INDEMNITY ISSUES
RUBIN, District Judge:
This diversity case requires a review of Louisiana
law to determine the effect to be given a contractual
indemnity agreement.
Mechanical contracted with Chevron to do welding
and cutting work in connection with the construction
of an addition to Chevron’s plant. Cole, a Mechanical
employee, was injured on the job. Precluded from su-
Ailey oe a RE a et LR, Pet
l4a
ing Mechanical in tort by the Louisiana Workmen's
Compensation Law, Cole sued Chevron. Chevron then
filed a third party complaint against Mechanical.
In a trial to a jury, Cole prevailed against Chevron
and the jury awarded him $67,500. This verdict is now
under attack by post trial motions. Chevron and Me-
chanical had, however, agreed to submit their litiga-
tion to the court.
I. THE CONTRACT AND THE VERDICT
Chevron’s rights with regard to Mechanical are fixed
by their contract. This provides in part:
5.1 General Liability: CONTRACTOR shall
indemnify and save COMPANY harmless from
and against any and all loss, damage, injury,
liability and claims thereof for injuries to or
death of persons, and all loss or damage to
property of others, resulting directly or indi-
rectly from CONTRACTOR’S performance of
this contract.
Cole’s testimony was that he hurt himself when he
slipped in a pool of oil, comprised of both “old” and
“new” oil. This testimony was confirmed by his fel-
low worker, Walters. They both testified that Cole and
Walters were carrying an iron grating; Cole, following
Walters, stepped over a pipe, and Cole slipped in a
pool of oil. These two witnesses, whose version was
obviously accepted by the jury, offered the only evi-
15a
dence concerning the cause of the incident and the
kind of oil allegedly involved.
The evidence indicated that the “new” oil spilled
when Mechanical’s welders cut pipes containing this
oil, but the “old” oil was presumably left from
Chevron’s earlier operations. Cole’s theory, which the
jury accepted, was that it was Chevron’s duty to clean
oil from the work area before Mechanical’s work
began, and the duty of Chevron’s firewatcher to clean
spilled new oil. The jury found that Chevron was negli-
gent and Cole was not contributorily negligent.
Since the jury apparently accepted Cole’s account,
it must have concluded that some of the oil was “new”
oil, spilled during Mechanical’s operations. If this was
so, it was the duty of Mechanical’s personnel to call
the spill to Chevron’s attention.
Cole was working under Mechanical’s direction and
supervision. Mechanical had an express contractual
obligation to keep “a competent man in the immediate
vicinity of the work to receive communications from
[Chevron] and to supervise the work.” The facts the
jury accepted must be based on the theory that the
accident was caused “directly or indirectly” by Me-
chanical as well as by Chevron’s negligence.
The jury verdict establishes that Chevron was
at fault, and Chevron is bound by that finding. But
the conclusion that negligence on Chevron’s part was
a proximate cause of Cole’s injury does not exclude
fib watt Te whe)
l6a
‘the possibility that the injury resulted at least indi-
rectly from Mechanical’s performance of the contract.
Under the agreement, “negligence” or “fault” on
Mechanical’s part is not the sole condition that creates
a duty to indemnify. Indemnity is due whenever
Chevron sustains loss or damage resulting directly or
indirectly from Mechanical’s performance of its con-
tract, whether or not Mechanical has in fact been “neg-
ligent.”
Il. INTERPRETATION OF THE CONTRACT
Since Chevron and Mechanical had a contractual in-
demnity agreement, the cases dealing with the obliga-
tion of implied indemnity in the absence of contract
are inapplicable. Compare Humble Oil and Refining
Co. v. Naquin, 5 Cir. 1969, 414 F.2d 912; Halliburton
Company vy. Norton Drilling Company, 5 Cir. 1962, 302
F F.2d 431; General Electric Co. v. Cuban American
Nickel Co., 5 Cir. 1958, 396 F.2d 89; United Gas Corp.
i -v. Guillory, 5 Cir. 1953, 206 F.2d 49.
It was not claimed in the pleadings or the pre-trial
order that the written indemnity agreement did not
accurately reflect the understandings between
Chevron and Mechanical, or that it was ambiguous,
and its interpretation must therefore be determined
as a matter of law, based on the language used therein
by the parties. Mills v. Fidelity & Casualty Co., 226
F.Supp. 786, at 790 aff'd per curiam, 5 Cir. 1964, 338
F.2d 341; and Arnold v. Stupp. Corp., La. App. 1967,
205 So.2d 797 at 804.
ARORA IMC REP ered npn RONAN NIECE RR
17a
Louisiana courts, whose opinions we are obliged to
follow in this diversity case, have held that a contract
of indemnity will not be construed to indemnify against
a loss resulting solely from the indemnitee’s own negli-
gent acts unless that intention is expressed in un-
equivocal terms. Arnold v. Stupp Corp., La.App. 1968,
205 So.2d 797. Compare Jennings v. Ralston Purina Co.,
La. App. 1967, 201 So.2d 168, which the court distin-
guished in Arnold. See also Gorsalitz v. Olin Mathieson
Chemical Corp., 5 Cir. 1970, 429 F.2d 1033, 1049, (negli-
gence solely that of company), and Dickerson v. Con-
tinental Oil Co., 5 Cir. __. F.2d (Sept. 28, 1971,
# 30631); compare the discussion by this court in
Despaux v. California Co., E.D. La. 1968, 286 F.Supp.
558. Louisiana, like most states, has indicated a ten-
dency to construe indemnity agreements narrowly,
particularly where, as here, they were drafted by the
indemnitee. Jennings, supra, at 175; Arnold, supra, at
799.
But the mandate that an agreement is to be read
narrowly does not mean it is to be disregarded. The:
agreement must be given effect according to the in-
tention of the parties, for the contract is the law be-
tween them. Louisiana Civil Code Art. 1901.
III. LOUISIANA LAW IN ABSENCE OF
CONTRACTUAL INDEMNITY — “PURE” TORT
SITUATIONS
In order to ascertain what the parties intended by
their agreement, it will be helpful to compare their
respective rights and duties in the absence of a con-
pro wn as ee wore oe , ee ° 9 NE et ar ae Dal ea
bie ae
18a
tractual indemnity agreement under the basic prin-
ciples of Louisiana tort and quasi-contract law.
ob RO PENA RE x
' The injured person may recover from an alleged
: tortfeasor if he proves that his injury resulted from
: the tortfeasor’s negligence in whole or in part. If the
negligence of some other person, not joined as a de-
fendant, is shown to be the sole cause of the injury,
then the plaintiff cannot recover. But in the case of
joint tortfeasors, either of them may be case in judg-
ment for the full damages; hence a defendant who
is obliged to pay for the full amount of the injuries
resulting from his fault concurrent with the negligence
of a third person may claim contribution from the third
person, and recover a virile portion of the damage
to the plaintiff. La. C.C. 2103, 2104, 2324; 2 Williston
} on Contracts § 345 (3d ed. 1959); Note, Contribution
Among Joint Tortfeasors, 43 Tul. L. Rev. 153 (1968).
Like other states, Louisiana defines the doctrine of
contribution as the right of a tortfeasor cast in judg-
ment for an injury only partly his fault to recoup part
of his loss from the other person who is also at fault.
Where, however, the defendant is held vicariously
liable and his fault is not actual but only technical
or constructive, he has a quasi-contractual claim for
indemnity from the third person whose sole fault ac-
} tually caused the injury. Appalachian Corp. v. Brook-
lyn Cooperage Co., 1922, 151 La. 41, 91 So. 539; Mar-
quette Cas. Co. v. Brown, 1958, 235 La. 245, 103 So.2d
269, 273; Northwestern Mutual Fire Ass’n v. Allain,
1954, 226 La. 788, 77 So.2d 395, 399; Accord, Humble
dake BAW RT oe
Birtacriin Sabin
bate
19a
Oil, supra at 914; Halliburton, supra at 437; General
Electric Co., supra at 90; United Gas, supra at 53.
Implied indemnity then is the right to recoup a loss
in full because someone else has in fact caused the
loss. The costs of defense of the main demand and
of pursuing the claim against the third person, how-
ever, are not embraced either in indemnity or contribu-
tion.
Prior to 1960, the defendant in the principal demand,
if sued alone, could not enforce contribution or indem-
nity in the principal action. If case resulted in judg-
ment against him, he was required to file a separate
action against the alleged joint tortfeasor. See Kahn
v. Urania Lumber Co., La. App. 1958, 103 So.2d 476;
La. C.C. art. 2103 as amended by La. Acts 1960, No.
30, § 1. To avoid this multiplicity of actions, addi-
tional legal expense, possible inconsistent results, and
other hardships, Art. 2103 of the Louisiana Civil Code
was amended to permit the defendant to bring a third
party demand against the alleged co-debtor. This
change in Louisiana’s rules had both procedural and
substantive aspects. See LSA-CCP Arts. 1111 et seq;
LSA-CC Art. 2103, and explanatory notes thereto.
IV. LOUISIANA LAW WHERE THE PERSON
AGAINST WHOM INDEMNITY OR CONTRIBUTION
IS SOUGHT IS THE WORKMEN’S COMPENSATION
EMPLOYER
Where the plaintiff in a tort action is an employee
of a contractor doing business with a principal, the
liability of the statutory employer is limited to work-
SMM EGE COLA MAPLE AROS EGA I LEAD COLLIE IN ANG ha OS OT,
20a
men’s compensation by the Louisiana Workmen’s
Compensation Act whether or not the injury results
from the employer’s negligence. LSA-R.S. 23:1032. See
generally, comment, The Right of a Third Party to
Contribution or Indemnity from a La. Workmen’s
Comp. Employer, 38 Tul. L. Rev. 536 (1964). This has
been interpreted to preclude a claim by the principal
for contribution by the contractor (the statutory em-
ployer) when the contractor’s fault is a joint cause
“or is even the predominant cause of the damages.”
Smith v. Kelly Labor Service, La. App. 1970, 239 So.24
685; McLaughlin v. Braswell, La. App. 1968, 207 So.2d
158; Hebert v. Blankenship, La. App. 1966, 187 So.2d
798. Nor is it certain that quasi contractual indemnity
could be obtained where the principal’s fault is merely
vicarious. See Humble, supra at 914; Halliburton, su-
pra at 434; General Electric, supra at 100-102, cf.
Hebert, supra at 803.
V. REDISTRIBUTION OF RISKS BY CONTRACT
In the usual tort situation, there is no prior relation-
ship between the potential tort defendant and his pro-
spective indemnitor. Hence they have no opportunity
to alter the distribution of risks. But where a principai
employs a contractor, the contract between them may
embrace not only the work to be done and the price
to be paid, but also the risk of tort claims that may
arise. See 2 Williston on Contracts, + 345 (3d ed. 1959),
1 Harper and James, The Law of Torts, + 10.2, at
723 (1956). By contract either party may relieve the
other from the duty of contribution or from the duty
of indemnity. And either may undertake a duty to con-
2la
tribute or indemnify where none would otherwise exist,,
In Louisiana the validity of an agreement by an em-,
ployer to indemnify against tort claims by his own
employees has been recognized even though the Work-.
men’s Compensation Act would provide an absolute
shield in the absence of such a contract. See Hebert.
v. Blankenship, La. App. 1966, 187 So.2d 798.
Paragraph 5.1 of the contract between Chevron and
Mechanical then is an attempt to allocate the risk of
certain kinds of loss that may arise during the course
of its performance. Such a loss might arise when a,
third person, unrelated to either party is injured; when
an employee of Chevron is injured; when an employee
of Mechanical is injured and sues Chevron; or when
property damage is sustained by Chevron.
As applied to all of these situations, and particularly
the situation where an injured person sues Chevron,
this provision must have been intended to alter in some
way the rules governing risk distribution that would
otherwise be applied. So our effort must be to deter-
mine in what way the parties intended to alter these
rules.
Contractual provisions containing similar terms ,
have been involved in three cases, two decided by Lou-
isiana’s Appellate Courts, and one decided by the Fifth ,
Circuit Court of Appeals, applying Louisiana law. Gor-
salitz v. Olin Mathieson Chemical Corp., 5 Cir. 1970,
429 F.2d 1033; Arnold v. Stupp Corp., La. App. 1967,”
205 So.2d 797; Jennings v. Ralston Purina Co., La. App...
1967, 201 So.2d 168. Compare, Dickerson v. Continental,
;
3
:
3
esc siin dasaatis teaNasadomnids's est Js
PAE hd IOI Foon 5 RAT So TaD ITE we Ten Be SPT tai AE itt Te A IE So MME TEAR Sa AS I SO: BE OL REI, IS
22a
Oil Co., 5 Cir. F.2d , (Sept. 28, 1971, No. 30631).
The words used in the contract involved here are set
forth below, and beside them are the provisions inter-
preted in the other three cases.
Cole
“Contractor shall indemnify and save Company
harmless from and against any and all loss ... re-
sulting directly or indirectly from Contractor’s per-
formance of this contract.” (Emphasis supplied)
Jennings
“Contractor shall protect, indemnify and hold harm-
less Company from any loss ... directly or indirectly
arising or growing out of the performance of this Con-
tract. ...” (Emphasis supplied) 201 So.2d 174
Arnold
[Contractor] “agrees to defend, indemnify and save
harmless [Company] against any and all liability ...
arising out of, caused by, or resulting from ... any
business transaction with or work done for [Company]
by [Contractors].” (Emphasis supplied) 205 So.2d at
798-99.
Gorsalitz
“Contractor shall indemnify Owner against: (a) any
claim, demand, suit, loss or liability ... arising out of
work performed hereunder . . . occasioned by acts or
Lae RES
23a
omissions, whether or not negligent, of Contractor’s
officers, employees, agents or subcontractors.” (Em-
phasis supplied) 429 F.2d at 1048-1049.
In Jennings, supra an employee of a building contrac-
tor sued the principal in tort for injuries he received
as a result of negligence by the principal’s employees.
The principal impleaded the contractor as a third party
defendant asserting the indemnity provision of their
contract. Not only did the indemnity provision contain
the general language that the contractor would “hold
company harmless ... for any ... injury sustained
by any person resulting from the performance of this
contract,” but it went on to require that the contractor
obtain liability insurance to protect the company from
claims by “contractor’s workmen.” 201 So.2d at 174.
Finding that the principal was solely negligent, the
court then required indemnification by the contractor-
employer, holding that the phrase “any . . . injury
arising out of the performance of the contract” includ-
ed all injuries, whether or not the damage resulted
from the principal’s negligence. As a result of this de-
cision, it is established that indemnification for one’s
own negligence is available in Louisiana, even though
words specifically assuming liability for the party’s
own “negligence” or “fault” are absent from the con-
tract.
Six months after Jennings, another Louisiana Court
of Appeals decided Arnold, supra under substantiallv
similar facts. Again the principal was solely negligent,
and the contract provided indemnification for “any
and all liability ... caused by or resulting from any
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24a
business transaction or work done for [the principal]
by the [contractor].” 205 So.2d at 797. The court held
that this language was not sufficiently clear and un-
equivocal to shift the risk of liability for the principal’s
sole negligence. Jennings was distinguished on the bas-
is of its contractual provision requiring the contractor
to obtain insurance to protect the principal against
claims by the contractor’s workmen. 205 So.2d at 803.
In Gorsalitz, supra, as here, the injured person was
an employee of the defendant in the third party com-
plaint from whom indemnification was being sought.
The jury there had found the principal defendant negli-
gent in 15 different respects. Hence it was clear that
its liability was predicated directly on its own negli-
gence. The court considered that the indemnity agree-
ment did not shift liability for this kind of negligence
to the indemnitor because a reasonable construction
of the contract was that the contractor intended to in-
demnify the principal only for negligent acts of the
contractor’s employees, 429 F.2d at 1049. After compar-
ing the indemnity agreement in Jennings with the one
involved in Gorsalitz, the Court of Appeals found that
the agreement in Jennings “demonstrates a clear and
unequivocal intent . . . as compared to the contrary
intent in this case, to indemnify the indemnitee against
his own negligence.” 429 F.2d at 1050.
VI. APPLYING THE CONTRACT TO THE COLE
CLAIM
All of these cases then involve the question of indem-
nity for a tort caused by the indemnitee’s sole fault.
25a
And all of them discuss the contract provisions
in terms of “fault” or “negligence” whether or not
these words are employed. As indicated by the discus-
sion in Part I, Chevron here seeks indemnity for dam-
ages that I conclude were caused “directly or indi-
rectly” by Mechanical. If it is necessary to go further
and decide whether this implies joint fault, then I con-
clude that Mechanical was jointly negligent.
Pretermitting the question whether the contract be-
tween Chevron and Mechanical affords indemnity for
injuries sustained as a result of Chevron’s sole negli-
gence, the only remaining scope that could be afforded
it would be: (1) To provide indemnity for Chevron
when an accident was caused in part by Mechanical;
(2) To provide contribution for Chevron when an acci-
dent was caused by both jointly; (3) To provide costs
of defense in both of these situations and in the situa-
tion where Chevron is exonerated. Since the contract
speaks in terms of indemnity, not contribution, it ap-
pears not to require merely a division of risk. Since
this contract, unlike insurance policies, does not con-
tain a separate obligation to defend, it appears not
to contemplate merely the costs of litigation. Should
Chevron’s motion be granted and its Section 6, LSA-
R.S. 23:1061, defense be upheld, however, the language
would appear to embrace costs of defense.
As to the one remaining situation, which is here pre-
sented directly, a judgment predicated directly or in-
directly on Mechanical’s acts, it appears that the lan-
guage of the indemnity agreement must have been in-
tended to afford protection to Chevron, else the agree-
ey
Dek ee a ate ARES in eae
Petbtatiesirsttcita sec cceoindsves seubates
26a
ment would cover nothing save possibly the costs of
defense. Obviously if the agreement is broad enough
to cover Chevron’s sole fault, then it reaches the pres-
ent case as well.
The parties have stipulated that the damage suffered
by Chevron amounted to $6,915.00 in addition to any
sum for which it may be obligated to Cole.
For these reasons the claim for indemnity by Chev-
ron against Mechanical will be granted. Counsel for
Chevron will prepare an appropriate form or order,
to remain interlocutory until the motions still pending
on the main demand are disposed of.
/s/ ALVIN B. RUBIN
UNITED STATES
DISTRICT JUDGE
New Orleans, Louisiana
October 7, 1971
27a
APPENDIX VIII
Filed: Dec. 21, 1971
IN THE
DISTRICT COURT OF THE UNITED STATES
EASTERN DISTRICT OF LOUISIANA
NEW ORLEANS DIVISION
CIVIL ACTION
NUMBER 68-1943
SECTION C
WILLIAM F. COLE,
Plaintiff,
versus
CHEVRON CHEMICAL COMPANY -
ORONITE DIVISION,
Defendant.
OPINION ON JUDGMENT NOTWITHSTANDING
THE VERDICT
RUBIN, District Judge:
The motion to have the judgment entered on
the jury’s verdict set aside and to have judgment en-
tered in accordance with the defendant’s motion for
a directed verdict, commonly called a motion for judg-
ment notwithstanding the verdict, raises a question
that has proved particularly troublesome to this court
with respect the scope of Section 6 of the Louisiana
Workmen’s Compensation Law. The Louisiana Work-
28a
men’s Compensation Law provides the exclusive rem-
edy of any employee subject to its provisions against
all persons who are liable under the law. LSA-RS.
23:1032. Section 6, LSA-R.S. 23:1061 makes the compen-
sation law applicable, “where any person (in this sec-
tion referred to as principal) undertakes to execute
any work which is a part of his trade, business or occu-
pation or which he had contracted to perform, and
contracts with any person (in this section referred to
as contractor) for the execution by or under the con-
tractor of the whole or any part of the work under-
taken by the principal... .”
The question of the applicability of Section 6 to the
claim of Mr. Cole was first presented on motion for
summary judgment, which was granted in this court.
As set forth in the opinion of the Court of Appeals,
reversing that judgment, Cole v. Chevron Chemical
Company, 5 Cir. 1970, 427 F.2d 390, 392,
“Chevchem hired MCEI to do general weld-
ing work at the Oronite Division Plant. Cole,
an employee of MCEI, was injured while work-
ing in the course of his employment as a welder
at the plant. He brought this action against
Chevchem for the damages that allegedly re-
sulted from the latter’s negligence. Chevchem
responded that Cole’s exclusive remedy for his
injury was to be found under the Louisiana
workmen’s compensation law since Chevchem
was Cole’s ‘statutory employer,’ and a work-
man cannot maintain a tort action under Lou-
isiana law against his ‘statutory employer.’”
29a
In a previous case, involving a similar situation, the
court had submitted the Section 6 issue to the jury,
phrased as follows: “Was the work for which Shell
contracted with Liberty Welding Company part of
Shell’s regular trade, business or occupation?” The
Fifth Circuit Court of Appeals had held just a
few weeks before, in Arnold v. Shell Oil Company, 5
Cir. 1969, 419 F.2d 43,
“that the test for determining whether an ac-
tivity is part of an employer’s trade or busi-
ness for the purposes of the Louisiana Work-
men’s Compensation Statute is whether the
particular activity is essential to the busi-
ness. The fact that the employer or the in-
dustry as a whole always contracts out the ac-
tivity is not controlling. This business test
clearly carries out the purposes of section
23:1061 — to prevent subversion of the work-
men’s compensation laws by an employer con-
tracting out part of his business. If the test
under this statute were whether the employer
had any employees engaged in similar func-
tions, the employer could easily subvert the
statute by contracting out all of the various
parts of his business. For example, if the em-
ployer were an integrated oil company, he
could contract out all his drilling activity, pipe-
line construction and maintenance, refining,
and petrochemical processing and virtually e-
liminate wokmen’s compensation coverage
leaving the workers to collect from a possibly
insolvent contractor. Under the essential-to-
the-business test, however, all these activities
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30a
would be covered and the purpose of the stat-
ute to interpose the solvecy of the oil com-
pany between the worker and the contractor
would be carried out.” Id. at 50.
The Arnold court therefore held that the district court
erred in refusing to grant Shell’s motion for judgment
notwithstanding the verdict.
The panel that considered Cole concluded “that this
case is of the character that does not justify oral argu-
ment,” and reversed the summary judgment because
“material factual issues remain to be tried. ...” The
court considered that the “picture of Chevron’s opera-
tions at its Oronite Division Plant is not clear.” 427
F.2d at 392-394.
There is a different criterion to be applied between
considering whether to grant a motion for summary
judgment and whether to grant a directed verdict or
motion for judgment n.o.v. Cole reaffirms the legal
standard applied in Arnold. It is not based on a dif-
ferent view of the law but on the thesis that further
information might have been developed at the trial
concerning “whether the particular activity is so re-
lated to the principal employer’s conduct of his trade,
business, or occupation that it should be considered
as an essential part thereof.” 427 F.2d at 394.
Both decisions stress “that the workmen’s compen-
sation law should be liberally construed with a view
to coverage, regardless of whether the contractor’s
employee or the principal is the party asserting cover-
age. E.g., Arnold v. Shell Oil Company, 5 Cir. 1969,
3la
419 F.2d 43, 47; Isthmian SS. Co. of Delaware v. Oli-
vieri, 5 Cir. 1953, 202 F.2d 492, 494; see Thibodaux v.
Sun Oil Co., 40 So.2d 761, 766 (La.Ct.App. 1949), aff'd
918 La. 453, 49 So.2d 852 (1950).” (Emphasis supplied.)
427 F.2d at 393.
In the present case, Chevchem was its own general
contractor in demolishing certain old facilities and e-
recting new ones. MCEI was but a subcontractor.
Hence, as in Owen v. Kaiser Aluminum and Chemical
Corp., 5 Cir. 1969, 417 F.2d 303, it is clear that Section
6 applies. The evidence shows that, differently from
the sugar refiner considered in Moak v. Link-Belt Com-
pany, 4 Cir. 1970, 229 So.2d 395, 412, Chevchem could
not have continued to operate its business indefinitely
without the new process.
Mr. Rippe testified, without contradiction, that Chev-
chem did this same kind of work continuously, as a
matter of course. Mr. Estopinnal testified that this type
of revision of production methods was essential to the
continued welfare of the plant and had been done al-
most continuously since the plant was constructed. He
further testified that the Belle Chasse plant’s expan-
sion had been continuous, dependent only on economic
activity. This testimony was uncontradicted and en-
tirely credible.
The plant covers 35 acres (on a 70 acre tract) and
includes innumerable pipes that carry products and
steam from one point to another for processing and,
ultimately, for packaging. More than 100 tanks have
been added in Mr, Estoppinal’s 26 years with the com-
pany. The company has 35 full time employees en-
32a
gaged in maintenance work including welders and
pipefitters. It is a “matter of choice” whether a par-
ticular job is done by the company’s staff or by an
outside contractor. Some construction work is done by
the company’s staff when the plant’s maintenance
workload permits.
The plant has been enlarged from a $1,000,000 origi-
nal plant to one having a value of $25,000,000, primarily
by Chevchem itself. Chevchem’s engineers prepare
blueprints, then Chevron decides either to do the ex-
pansion work itself or to contract out all or part of
it. In the present case, it was proceeding as if it were
general contractor, and was subcontracting separate
parts of the job.
The Louisiana decisions are difficult to reconcile
completely.' But they appear to follow the pattern in-
dicated by Arnold. The decision of a Louisiana appel-
late court in Gray v. Louisiana Power and Light Com-
pany, 4 Cir. 1971, 247 So.2d 137, indicates that Arnold
and Cole correctly state the legal principles appli-
cable in construing Section 6. There an employee of
a contractor for a utility company was constructing
foundations for towers that were to support electric
transmission lines. In the employee’s suit against the
‘Ball v. Kaiser Aluminum and Chemical Corp., Orleans Cir. 1959,
112 So.2d 741, 745, where it was held that construction of a
new plant by a firm employed as general contractor was not
part of the trade or business of the principal. Cf. Richard v.
National Surety Corp., La. App. 1958, 99 So.2d 831, 832.
(Where an employee or contractor constructing major power
line improvements was, for the purposes of workmen's com-
pensation, an employee of the city that operated the power
plant.)
i.
33a
utility company the district court’s summary judg-
ment upholding the Section 6 defense was affirmed.
The Court indicated that the reasons it did so were:
(a) the work in question was an integral and a neces-
sary part of the regular trade, business and occupation
of the principal and (b) “the charter of LP & L spe-
cifically authorized it to have done this construction
work if it so desired. The work being done was in fur-
therance of its business of producing and transmitting
electric power to the public, as evidenced by the ac-
companving affidavit. Therefore the injured appel-
lant’s sole remedy is in compensation and the motion
for summary judgment is well founded.” 247 So.2d at
141. The identical factors are present here.
In the present case, the issue was submitted to the
jury under instructions that were not objected to in
any significant way by either party. Its verdict should
not be disturbed if there was any substantial evidence
to support it. There is no “substantial evidence which
would support a verdict” when “the evidence and all
legitimate inferences therefrom [are viewed] in the
light most favorable to the party against whom [the]
motion” is made. Baron Tube Co. v. Transport Insur-
ance Co., 5 Cir. 1966, 365 F.2d 858, 861. “Thus, the motion
for judgment n.o.v. may be granted only when, with-
out weighing the evidence, there can be but one reason-
able conclusion as to the proper judgment,” 5A
Moore’s Federal Practice § 50.07, at 2356, and the mo-
tion is proper when there is “a complete absence of
any evidence to warrant submission to the jury.” Cities
Service Oil Co. v. Launey, 5 Cir. 1968, 403 F.2d 537,
539. See Arnold v. Shell Oil Co., 5 Cir., 419 F.2d 43,
where in reversing the district court’s denial of a judg-
34a
ment n.o.v. in a similar situation, the court found the
plaintiff to be a statutory employee “as a matter of
law,” 419 F.2d at 46.
In this case there was no substantial evidence to
support the finding that the work was not part of Chev-
chem’s principal trade or business, even when all the
record is viewed in the light most favorable to Mr.
Cole. Taking all the testimony and all reasonable in-
ferences from it, in the light most favorable to Mr.
Cole, it clearly appears that Chevchem was his statu-
tory employer.
For these reasons the motion for judgment notwith-
standing the verdict is granted. Because of the result
thus reached, it is unnecessary to consider the other
motions.
/s/ ALVIN B. RUBIN
UNITED STATES
DISTRICT JUDGE
New Orleans, Louisiana
December 20, 1971.
‘ el
eS ae
APPENDIX IX
Filed: Jan. 4, 1972
In the District Court of the United States
Eastern District of Louisiana
New Orleans Division
Civil Action
Number 68-1943
Section C
William F. Cole,
Plaintiff,
versus
Chevron Chemical Company-Oronite Division,
Defendant.
JUDGMENT
The complaint of plaintiff, Mr. William F. Cole, as-
Ssetted against Chevron Chemical Company and the
third-party complaint of Chevron Chemical Company
asserted against Mechanical Contracting Engineers,
Inc. and Liberty Mutual Insurance Company, as filed
in the above-entitled and numbered Civil Action, were
ttied before the Court and a jury, by agreement and
Stipulation of the parties, on July 12, 13, 14 and 30,
1971, and the jury after having heard the evidence and
testimony answered interrogatories, as follows:
36a
CHARGE OF THE COURT AND VERDICT
1- Was the work for which Chevron contract-
ed with Mechanical Contracting Engi-
neers, Inc., part of Chevron’s regular
trade, business or occupation?
Yes NoX
SPECIAL VERDICT
1- Was Mr. Cole injured on February 16,
1968?
Yes____ NoX
2- If your answer is “Yes”, was that injury
proximately caused by negligence on the
part of Chevron?
Yes X No ___
3- If you answered question No. 1 “Yes” and
question No. 2 “Yes”, then was Mr. Cole
negligent?
Yes NoX
4- If you answered question No. 3 “Yes”, was
the contributory negligence a proximate
cause of his injury?
Yes No
5- If you answered questions No. 1 and No. 2
“Yes”, and either question No. 3 or No. 4
“No”, what amount of damages is due Mr.
Cole?
$67,500.00
(Total Amount of Damages)
sate.
REE
te GREY
37a
and thereafter, the Court made findings of fact on July
30, 1971 and conclusions of law on October 7, 1971, in
connection with the claims of Chevron Chemical Com-
pany asserted against Mechanical Contracting Engi-
neers, Inc. and Liberty Mutual Insurance Company,
which now form part of the record. Subsequently, post-
trial motions for judgment in accordance with motions
for directed verdict, alternatively for judgment non
obstante veredicto and new trial were filed by Chevron
Chemical Company and a motion for new trial limited
to argument of legal issues was filed jointly by Me-
chanical Contracting Engineers, Inc. and Liberty Mu-
tual Insurance Company, having been heard through
notice, and considering the entire record, evidence,
stipulations, testimony, and argument, I rendered and
filed my opinion on December 20, 1971;
IT IS ORDERED, ADJUDGED AND DECREED
that there be judgment in favor of Chevron Chemical
Company, in accordance with the defendant’s motion
for a directed verdict and the complaint and cause
of action asserted by Mr. William F. Cole against Chev-
ron Chemical Company be and they are hereby dis-
missed; and, in the event the motion for a directed
verdict had been denied, then I would have granted
the motion for new trial by Chevron Chemical Com-
pany;
IT IS FURTHER ORDERED, ADJUDGED AND
DECREED that the motion for new trial limited to
argument of legal issues by Mechanical Contracting
Engineers, Inc. and Liberty Mutual Insurance Com-
pany, be and it is hereby denied;
38a
IT IS FURTHER ORDERED, ADJUDGED AND
DECREED that Chevron Chemical Company have
judgment against and recover from Mechanical Con-
tracting Engineers, Inc. and Liberty Mutual Insurance
Company, jointly, severally and in solido, the sum of
SIX THOUSAND ONE HUNDRED NINETY-FIVE
AND NO/100 ($6,195.00) DOLLARS, for legal fees and
costs incurred through and including July 30, 1971 in
the defense of plaintiff's complaint, with interest there-
on at the rate of 6% per annum from November 30,
1971 until paid, and costs in accordance with the provi-
sions of the Federal Rules of Civil Procedure, Rule
54, without prejudice to the right of Chevron Chemical
Company to subsequently prosecute any claim it may
have for additional legal fees and costs incurred in
the future, arising out of the defense of plaintiff's de-
mands.
New Orleans, Louisiana, January 4, 1972.
/s/ ALVIN B. RUBIN
DISTRICT JUDGE
Respectfully submitted:
/s/ LLOYD C. MELANCON
MESSRS. McLOUGHLIN, BARRANGER,
PROVOSTY AND MELANCON
Counsel for Chevron Chemical Company
720 Hibernia Bank Building
New Orleans 70112
523-5116 Our LM0172
39a
APPENDIX X
IN THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 72-1025
WILLIAM F. COLE,
Plaintiff-Appellant,
versus
CHEVRON CHEMICAL COMPANY - ORONITE
DIVISION,
Defendant-Appellee,
MECHANICAL CONTRACTING ENGINEERS, INC.,
and LIBERTY MUTUAL INSURANCE COMPANY,
Third Party Defendants-
Appellees-Appellants.
Appeals from the United States District Court for the
Eastern District of Louisiana
(April 23, 1973)
Before GEWIN, GOLDBERG and DYER,
Circuit Judges.
DYER, Circuit Judge: Two questions are present-
ed on appeal in this Louisiana-based diversity case:
. ousk Kuoree - eae wees ive he Loa ae
RAIMA Nt BN RAR FAIRS tT FORDE RR ORS IDS TDF ob? BAe SS hi Ores arabe
(1) whether the work that Mechanical Contracting En-
gineers, Inc., performed for Chevron at its plant in
Belle Chasse, Louisiana, was, as a matter of lav, part
of Chevron’s “trade, business, or occupation” for the
purposes of establishing coverage under § 6 cf the
Louisiana Workmen’s Compensation Statute, La. Rev.
Stat. Ann. $ 23:1061;' and (2) whether in Lovisiana,
an indemnity agreement that does not expressly speci-
fy the indemnitor’s intent to indemnify for the indemni-
; tee’s own negligence is enforceable where the damage
is caused by the concurrent negligence of the indemni-
tee and indemnitor, rather than by the sole negligence
2 of the indemnitee. We affirm in part and reverse in
part.
hbk ES aioe Aa ear
% tLa. Rev. Stat. § 23:1061 provides:
Where any person (in this section referred to as
principal) undertakes to execute any work, which is a
part of his trade, business. or occupation or which
he had contracted to perform, and contracts with
any person (in this section referred to as contractor)
for the execution by or under the contractor of the
whole or any part of the work undertaken by the
principal, the principal shal! be liable to pay any
employee employed in the execution of the work or
to his dependent, any compensation under this Chap-
: ter which he would have been liable to pay if the
4 employee had been immediately employed by him;
Z and where compensation is claimed from, or proceed-
ings are taken against, the principal, then, in the
application of this Chapter reference to the principal
shall be substituted for reference to the employer,
except that the amount of compensation shall be cal-
culated with reference to the earnings of the employee
under the employer by whom he is immediately em-
ployed.
Where the principal is liable to pay compensation
under this Section, he shall be entitled to indemnity
from any person who independently of this Section
would have been liable to pay compensation to the
employee or his defendant, and shall have a cause of
2 action therefor.
YAS wa! Aa own Blok, Mobo lod She a
4la
Mechanical was hired by Chevron to do general weld-
ing and pipe fitting work at its Belle Chasse plant. The
job primarily consisted of cutting and removing old
pipes, valves, gratings, and other refinery parapher-
nalia to make way for construction of additional facili-
ties and installation of new equipment. In February
1968 Cole, a welder employed by Mechanical for the
Chevron job, was injured during the course of his em-
ployment at the Belle Chasse plant. He sued Chevron
under the general negligence law of Louisiana for dam-
ages he sustained as a result of his slipping and falling
in a puddle of oil while he was helping a fellow em-
ployee carry a heavy piece of steel grating. The puddle
was comprised of both “old” and “new” oil; the new
oil was spilled when Mechanical’s welders cut pipes
containing the oil, but the old oil had been left from
Chevron’s earlier operations.
Cole contended that Chevron was negligent in that
it breached the duty it owed him as a Mechanical em-
ployee to remove old oil from the floor before Mechani-
cal began working in the area and that Chevron’s fire-
watcher breached his duty to clean up the spilled new
oil. Chevron countered that it was Cole’s “statutory
employer” within the meaning of La. Rev. Stat. Ann.
§ 23:1061 and that therefore Cole’s exclusive remedy
for his injury was workmen’s compensation since un-
der Louisiana law a workman cannot maintain a tort
action against his statutory employer. La. Rev. Stat.
Ann. § 23:1032. In response to Cole’s claim, Chevron
also asserted a third-party complaint against Mechani-
cal and its insurer, Liberty Mutual Insurance Com-
pany, on the basis of a written indemnity agreement
NEN AAY MOS thie Be FT AIA le ODN IE eh PS wre tn st SLE ie VB Nt 2d I RITES oe HEUTE OE ela,
42a
between Chevron and Mechanical for the work being
performed by Mechanical when Cole was injured.
Prior to trial Chevron filed a motion for summary
judgment supported by affidavits; the motion was
granted and the suit dismissed. On appeal, this Court
reversed that judgment and remanded the cause for
trial on the merits because material factual issues re-
mained to be tried. Cole v. Chevron Chemical Co,, 5
Cir. 1970, 427 F.2d 390. In so holding the Court pointed
out that:
In cases such as Arnold v. Shell Oil Company,
5 Cir., 1969, 419 F.2d 43, and Allen v. United
States Fire Insurance Company, 222 So.2d 887
(La. Ct. App. 1969), the factual picture of the
principal employer’s business operations, and
of the part the activity in issue played in those
operations, was well defined. Here, on the oth-
er hand, the picture of Chevchem’s operations
at its Oronite Division Plant is not clear. That
Chevchem is engaged in the production of
petro-chemicals derived from hydrocarbons is
| not conclusive of the issue whether all types of
welding work performed at its Oronite Divi-
| sion Plant — demolition and construction
work, as well as “repair” and “maintenance”
work — are part of the “regular operations”
. at the Plant. Further factual development is
necessary. ...
427 F.2d at 394.
43a
On remand, Cole’s suit against Chevron was tried
in two parts. The first day of testimony related only
to the issue of whether Chevron was the statutory em-
ployer of Cole. This issue was submitted to the jury;
it determined that the work for which Chevron con-
tracted with Mechanical was not part of Chevron’s
“trade, business, or occupation.” After the second
phase of the trial was completed on the following day,
a special verdict was rendered. The jury found that
Cole was injured, that his injury was caused by the
negligence of Chevron, that Cole was not contributorily
negligent, and that he was entitled to damages
of $67,500.
Subsequently, Chevron filed a motion for a judgment
notwithstanding the verdict and alternatively for a new
trial. The district court granted the motion for a judg-
ment N.O.V. and conditionally granted a new trial,
contingent on the judgment N.O.V. not being affirmed
on appeal. In the meantime, Chevron’s indemnity ac-
tion against Mechanical was tried without a jury, and
the district court held that Chevron was entitled to
indemnification because Mechanical had been concur-
rently negligent in that it had a contractual obligation
to keep “a competent man in the vicinity ... to super-
vise the work” and its personne] failed to call the spill-
age of new oil to the attention of Chevron’s firewatcher.
Reasoning that Cole’s injuries were therefore caused
“directly or indirectly” (the words of the indemnity
agreement) by Mechanical, the court concluded that
Mechanical was bound to indemnify Chevron for any
damages that it might owe Cole as well as for its costs
of defense, which were stipulated to be $6,915. This
Se ee ee Se i ” te
eee _
44a
appeal by Cole on the statutory employer question and
by Mechanical on the indemnity issue ensued.
Was the Work Performed by Mechanical and
Cole Part of Chevron’s “Trade, Business, or
Occupation”?
Section 6 of the Louisiana Workmen’s Compensation
Statute, La. Rev. Stat. Ann. § 23:1061, provides that
any person (referred to as a principal) who contracts
out work which is a part of his “trade, business, or
occupation” is liable for workmen’s compensation to
any of the contractor’s employees who are injured
while engaged in such work to the same extent as if
the contractor’s injured employee were one of the prin-
cipal’s own employees. In other words, under certain
circumstances, the principal is considered to be the
statutory employer of the independent contractor's
employees for the purpose of establishing coverage un-
der the Workmen's Compensation Statute. The purpose
of this provision is to prevent the principal from evad-
ing his workmen’s compensation responsibility by in-
terposing an independent contractor between himself
and employees who are actually utilized in perform-
ing a part of the principal’s “trade, business, or occu-
pation.” Cole v. Chevron Chemical Co., 5 Cir. 1970,
427 F.2d 390, 392; Arnold v. Shell Oil Co., 5 Cir. 1969,
419 F.2d 43, 46. Section 23:1061 benefits the emplovees
of the contractor when the contractor is financially
impoverished, because the principal may be held liable
for their workmen’s compensation. “On the other
hand, when the contractor is able to fulfill his compen-
sation responsibilities, the provision operates to limit
his employees to the maximum benefits payable under
45a
the Workmen’s Compensation Statute, since the prin-
cipal, as their ‘statutory employer,’ is, like the con-
tractor, immunized from tort liability to the employees
by the exclusive — remedy provision of that act. La.
Rev. Stat. Ann. § 23:1032.” Cole v. Chevron Chemical
Co., supra at 392-93.
The standard for determining whether a given ac-
tivity performed by an independent contractor is part
of a principal’s “trade, business, or occupation” is,
to a degree, dependent upon the factual context of the
case. The Louisiana courts in the early cases of Sea-
bury v. Arkansas Natural Gas Corp., La. App. 1930,
127 So. 25, and Dandridge v. Fidelity & Casualty Co.,
La. App. 1939, 192 So. 887, applied a two-pronged test
based on business necessity and employment of simi-
lar workers. However, keeping in mind the policy that
workmen’s compensation law should be liberally con-
strued regardless of whether the employer or employ-
ee is the party asserting coverage, the Louisiana courts
in Turner v. Oliphant Oil Corp., La. App. 1940, 200 So.
513; Thibodaux v. Sun Oil Co., La. App. 1949, 40 So.2d
761; Doucet v. W.H.C., Inc., La. App. 1968, 212 So.2d
267; and Allan v. United States Fire Insurance Co.,
La. App. 1969, 222 So.2d 887, retreated somewhat from
this two-pronged test. In these cases the court held
that the fact that the principal did not have any em-
ployees engaged in a similar activity was not control-
ling where the work contracted out was so necessary
to the principal’s operations that, if it were not per-
formed by the independent contractor, the principal
would have to hire workers of its own to perform the
task.
PURINE BT EE iE BARS CS VER ONE REI PIR LEO, BF ATE a RE te PS
46a
In Arnold v. Shell Oil Co., supra, the Fifth Circuit
was confronted by an analogous factual situation. An
employee of an independent contractor was injured
while repairing a Shell heater-treater, which is a de-
vice used to separate sand and salt water from fresh-
ly mined oil. Shell had no workers employed on this
job and, in fact, had always contracted out its heater-
treater maintenance work. It was undisputed, how-
ever, that the proper functioning of the heater-treater
is necessary to the efficient operation of an integrated
oil company, because the salt water and sand would
corrode the pipeline if not removed before pumping
the oil to the refinery. Based on these facts, the Court
held that Shell was the injured employee’s statutory
employer as a matter of law, concluding that to de-
termine if an activity is part of a principal’s “trade,
business, or occupation” for purposes of Louisiana’s
Workmen’s Compensation Statute, the proper test is
“whether the particular activity is essential to the busi-
ness.” In so holding, the Court relied heavily on the
rationale of the latter line of Louisiana cases that under
such circumstances, the “fact that the employer or
industry as a whole contracts out the activity is not
controlling.” 419 F.2d at 50.
Likewise, the panel of this Court that originally con-
sidered the case sub judice when it was on appeal from
the entry of summary judgment pointed out that simi-
larly not controlling is the fact that the principal hires
employees of his own to do work related to the activity
being performed by the contractor’s employees. “In-
stead, the decisive factors are the nature of the activity
being contracted out, the nature of the principal em-
ployer’s business, and the relationship between the
Pinte Doge ot RE
47a
particular activity and the broader business opera-
tion.” Cole v. Chevron Chemical Co., supra at 394. Al-
though the employment of similar workers is not con-
trolling, where a principal in fact acts as his own gen-
eral contractor or has a number of his own employees
regularly performing a task substantially similar to
the activity which he contracts out, the principal there-
by affords a definite indication that the work engaged
in by the contractor’s employees is part of his own
trade or business. See La. Rev. Stat. Ann. § 23:1061,
comment at 489-90; cf. Lutz v. Long-Bell Lumber Sales
Corp., La. App. 1934, 154 So. 645; see also Horrell v.
Gulf & Valley Cotton Oil Co., La. App. 1930, 131 So.
709. Indeed, in the recent case of Doss v. American
Ventures, Inc., 1972, 261 So.2d 615, the Louisiana Su-
preme Court held that American, the owner-lessor of
a building that was nearly destroyed by a hurricane,
was liable for workmen’s compensation to the injured
employee of a contractor hired to rebuild the structure,
on the ground that American was engaged in the con-
struction business when the employee was injured
since, at the time of the injury, American was acting
as its own general contractor for the project. See also
Gray v. Louisiana Power and Light Co., La. App. 1971,
247 S.2d 137, where the court held that, because LP&L
acted as its own general contractor in erecting towers
for power transmission lines, it was the statutory em-
ployer of an injured worker employed by a sub-con-
tractor hired to construct the foundation on which to
erect the towers.
In the present case, the general welding and pipe
fitting work that Chevron hired Mechanical to do and
that Cole was performing when injured was part of
~ wee Dette 2, I err> Sa ORE AS. > TESS ERE 4h
ITS Hie me Ee AEDS Sith Te Ay + «tnt s 2 tee DP + 2%
a-complex plan of expansion and renovation which
Chevron established soon after the Belle Chasse plant
was opened in 1943 and which proceeded rather con-
tinuously over the following 26 years, dependent only
on economic activity. Over 100 tanks, innumerable
pipes, and various types of other equipment for pro-
ducing petro-chemicals were added, and the value of
the plant was increased some 25 times.
Significantly, the expansion of the Belle Chasse facili-
ties was always directly supervised by Chevron itself.
The company employed a full-time maintenance crew
of 35 men, each of whom were trained as welders and
pipefitters and cross-trained as carpenters and elec-
tricians. Depending upon the size of a particular proj-
ect and the workload of the maintenance crew at the
time, Chevron would either have its own staff do the
construction and renovation work, or it would contract
out part or all of the work. However, even when the
work was contracted out, Chevron acted as its own.
general contractor. Chevron’s engineers prepared the
blueprints, planned the schedule for each project, co-
ordinated the work schedules among the various proj-
ects, and as the work progressed on each project inter-
mittently made quality control tests.
Below, the district court granted a judgment N.O.V.
in favor of Chevron on the basis that there was no
substantial evidence to support the jury’s verdict. The
proper standard for granting a directed verdict.
or judgment N.O.V., and for reviewing the granting.
or denial of such motions on appeal, has been exhaus-
tively explained in Boeing Co. v. Shipman, 5 Cir. 1969,
411 F.2d 365, 374-76. Basically, granting the motions
49a
is proper when, viewing all of the evidence and all.
of the reasonable inferences that can be drawn there-,
from most favorably toward the party opposed to the.
motion but without weighing the evidence or inferences
and without determining the credibility of the witness- ,
es, the facts and legitimate inferences point so over-
whelmingly in favor of the moving party that reason- |
able men could not arrive at a contrary decision.
Applying these principles to the instant case, we de-
termine that the granting of Chevron’s motion for a:
judgment N.O.V. by the district court was proper. The’
uncontroverted evidence conclusively established that
anumber of Chevron’s full-time employees were regu-
larly engaged in the same type of work as being per-
formed by Mechanical and Cole, that Chevron had been
in the process of modernizing and expanding its Belle
Chasse facilities on a continuous basis for over a quart-
er century, that throughout this period Chevron had as
a matter of course acted as its own general contractor
for the work which its own maintenance crew did not
have the time to handle, and that Mechanical was but
a sub-contractor on this project. Thus, as in Owen v.
Kaiser Aluminum and Chemical Corp., 5 Cir. 1969, 417
F.2d 303, it is clear that La. Rev. Stat. Ann. § 23:1061
applies.
Moreover, unlike the sugar refinery in Moak v. Link-
Belt Co., La. App. 1970, 229 So.2d 395, the evidence
here shows that Chevron could not have continued to
operate its business indefinitely without completing the
expansion and renovation work undertaken by Me-.
chanical. The uncontroverted testimony of the opera-
50a
tions manager of the Belle Chasse plant, Mr. Estopin-
nal, which was the only relevant evidence regarding
the necessity or essentiality of Mechanical’s work for
Chevron, was to the effect that, although Chevron pre-
sumably would have been able to continue its opera-
tions at the plant for the time being without the work
being done, the modernization and expansion of the
Belle Chasse plant would somehow have been finished
— even if Mechanical had refused to perform under
the terms of the contract — because the work was
essential to the plant’s continued efficient and competi-
tive operation.
In short, we agree with the district court that there
was no substantial evidence to support the jury’s find-
ing that the work which Mechanical was hired to do
was not part of Chevron’s “trade, business, or occupa-
tion.” Even when the record is viewed in the light most
favorable to Cole, the evidence that Chevron is Cole’s
statutory employer is completely overwhelming; we
cannot conceive how reasonable men could reach a
different conclusion.
Contractual Indemnity.
The only other issue on appeal, involving Chevron’s
third-party complaint against Mechanical, is whether
under Louisiana law indemnity is owed when the in-
demnitee is wholly or partially at fault and the indem-
nity agreement fails to expressly require indemnifica-
tion for accidents resulting from the indemnitee’s neg-
ligence. A careful review of the relevant Louisiana
cases convinces us that indemnity is not owed in sucn
a situation.
ee
5la
The pertinent contractual provision between Chev-
ron and Mechanical was:
General Liability: CONTRACTOR shall in-
demnify and save COMPANY harmless from
and against any and all loss, damage, injury,
liability, and claims thereof for injuries to or
death of persons, and all loss of or damage to
property of others, resulting directly or indi-
rectly from CONTRACTOR’S performance of
this contract.
Based on a finding of concurrent negligence on the
part of both the indemnitor, Mechanical, and the in-
demnitee, Chevron, the district court held that Chev-
ron was entitled to indemnity under the agreement.
Since Mechanical’s negligence partially caused Cole’s
accident, the court reasoned that his consequent in-
juries were embraced by the phrase “resulting directly
or indirectly from CONTRACTOR’S performance.”
We disagree. Louisiana law is clearly to the effect
that the failure of the parties to refer expressly to “neg-
ligence” in an indemnity contract is evidence of the
parties, intention not to provide indemnification for the
indemnitee’s negligent acts. Bagwell v. South Louisi-
ana Electric Co-op Assoc., La. App. 1969, 228 So.2d
599; Arnold v. Stupp Corp., La. App. 1967, 205 So.2d
197; see Plantation Pipeline Co. v. Kaiser Aluminum
and Chemical Corp., La. App. 1969, 222 So.2d 905; Ele-
phant, Inc. v. Hartford Accident & Indemnity Co., La.
App. 1968, 216 So.2d 837; Brady v. American Insurance
Co, La. App. 1967, 198 So.2d 907. The parties’ clear
and unequivocal intent to indemnify against damages
RAE DOE BOIS LT BRET AIT IG IIT LOLS TEL LEI AL EE LILLE ALLEL LIA OE ADE SELL De
52a
caused solely by the indemnitee’s own negligence must
be expressly articulated by specific reference to “neg-
ligence.” Otherwise, the presumption is that the in-
demnification is applicable only to vicarious responsi-
bility of the indemnitee resulting from negligent acts
of the indemnitor. Bagwell v. South Louisiana Elec-
tric Co-op Assoc., supra; Arnold v. Stupp Corp., supra.
Garsalitz v. Olin Mathieson Chemical Corp., 5 Cir. 1970,
429 F.2d 1033; and Grigsby v. Costal Marine Service
of Texas, Inc., 5 Cir. 1969, 412 F.2d 1011. Compare Jen-
nings v. Ralston Purina Co., La. App. 1967, 201 So.2d
168.
These same precepts and presumptions are equally
applicable where the damage is caused by the concur-
rent negligence of the indemnitee and indemnitor,
rather than by the indemnitee’s sole negligence. In
the recent case of Strickland v. Nutt, La. App. 1972,
264 Sa.2d 317, which involved a finding of concurrent
negligence and an indemnity agreement remarkably
Similar to the one in the case sub judice, the Louisiana
court specifically rejected the district court’s decision
below in the present case, Cole v. Chevron Chemical
Co., E.D. La. 1971, 334 F.Supp. 263, and denied indemni-
ty.
We reject the proposition that indemnity con-
tracts should be interpreted differently de-
pending on whether the indemnitee is solely
negligent or there is concurrent negligence on
the part of both indemnitee and indemnitor.
We are aware of the case of Cole v. Chevron
Chemical Company-Oronite Division, 334
53a
F.Supp. 263 (U.S.D.C., E.D. La. 1971) wherein
the Federal District Judge indicated that the
holding of Jennings v. Ralston Purina Co., 201
. §o.2d 168 (La. App. 2d Cir. 1967) and Arnold v.
* Stupp Corp., 205 So.2d 797 (La. App. Ist Cir.
1967) were applicable only where there was
sole negligence on the part of the indemnitee.
We agree rather with the language of the US.
Fifth Circuit Court of Appeals in Transconti-
nental Gas Pipe Line Corp. v. Mobile Drilling
Barge, 424 F.2d 684 (1970) that,
“Although in Batson-Cook [Batson-
Cook Company v. Industrial Steel Erec-
tors, 5 Cir., 257 F.2d 410] the indemnitor
was not negligent and the damage was
caused solely by the negligence of the in-
demnitee, the rule requiring specificity of
the intent to indemnify for the indemni-
tee’s own negligence is equally applicable
in situations where, as here, the concur-
ring negligence of the indemnitee and in-
demnitor causes the damage. See United
States v. Seckinger, 5 Cir. 1969, 408 F.2d
146, reversed on other grounds 397 U.S. 203,
90 S.Ct. 880, 25 L.Ed.2d 224 (October 13,
1969).”
We are of the opinion that the above language
sets forth the better rule for interpreting in-
demnity agreements and that the Courts of this
state should adopt that rule. ...
264 So.2d at 323.
RENEE APPLET Se BS EI A OE OE Ee EES
54a
Accordingly, because the jury found that Cole’s in.
juries were proximately caused by Chevron’s negli-
gence and since the indemnity agreement does not use
the talismanic word “negligence” or otherwise make
unequivocally clear the parties’ intent to indemnif,
for injuries caused, in part or in whole, by the negli-
gence of the indemnitee, we conclude that Chevron
is not entitled to recover under the indemnification
provision of the contract.
The district court’s judgment N.O.V. in favor of
Chevron is affirmed. The judgment of the district court
that Mechanical must indemnify Chevron for its costs
of defense and for any damages owed to Cole as a
result of the injuries he sustained at the Belle Chasse
plant in 1968 is reversed with directions to enter judg-
ment for Mechanical.
AFFIRMED IN PART AND REVERSED IN PART.
55a
APPENDIX XI
IN THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
October Term, 1972
No. 72-1025
D. C. Docket No. 68-1943 Sec “C”
WILLIAM F. COLE,
Plaintiff-Appellant,
versus
CHEVRON CHEMICAL COMPANY - ORONITE
DIVISION,
Defendant-Appellee,
MECHANICAL CONTRACTING ENGINEERS, INC.,
and LIBERTY MUTUAL INSURANCE COMPANY,
Third Party Defendants-
Appellees-Appellants.
Appeals from the United States District Court for the
Eastern District of Louisiana
Before GEWIN, GOLDBERG and DYER,
Circuit Judges.
gs kro ts Bae Soe:
56a
JUDGMENT
This cause came on to be heard on the transcript of
the record from the United States District Court for
the Eastern District of Louisiana, and was argued by
counsel;
ON CONSIDERATION WHEREOF, It is now here
ordered and adjudged by this Court that the judgment
of the said District Court in this cause be, and the same
is hereby, affirmed in part and reversed in part with
directions to enter judgment for Mechanical in ac-
cordance with the opinion of this Court;
It is further ordered that defendant-appellee pay to
third party defendants-appellees-appellants, Mechani-
cal Contracting Engineers, Inc., the costs on appeal
to be taxed by the Clerk of this Court.
April 23, 1973
Issued as Mandate:
57a
APPENDIX XIl
IN THE
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 72-1025
WILLIAM F. COLE,
Plaintiff-Appellant,
versus
CHEVRON CHEMICAL COMPANY - ORONITE
DIVISION,
Defendant-Appellee,
MECHANICAL CONTRACTING ENGINEERS, INC.,
and LIBERTY MUTUAL INSURANCE COMPANY,
Third Party Defendants-
Appellees-Appellants.
Appeals from the United States District Court for the
Eastern District of Louisiana
ON PETITION FOR REHEARING AND PETITION
FOR REHEARING EN BANC
(Opinion April 23, 1973, 5 Cir., 1973, ___ F.2d ——_).
(June 19, 1973)
Before GEWIN, GOLDBERG and DYER,
Circuit Judges.
UNSERE NE ALON AER PNT ek EP MEENA CO RPE te ETA NOEL ince NNN DENCE 9 By SOP RETE ONS ACT AD EA
58a
PER CURIAM: The Petition for Rehearing filed on
behalf of Chevron Chemical Company — Oronite Dj.
vision, is DENIED and no member of this panel nor
Judge in regular active service on the Court having
requested that the Court be polled on rehearing
en banc, (Rule 35 Federal Rules of Appellate Proce.
dure; Local Fifth Circuit Rule 12) the Petition for Re.
hearing En Banc is DENIED.
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