Bourg v. Chevron USA Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: July 9, 1996
• Docket: 95-30933
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

_____________________

No. 95-30933 Summary Calendar _____________________

REYNOLD P. BOURG, SR., ETC.,

Plaintiff,

versus

CHEVRON U.S.A. INC., ET AL.,

Defendants.

______________________

CHEVRON U.S.A. INC.,

Third Party Plaintiff-Appellee,

McCALL ENTERPRISES INCORPORATED, ET AL.,

Third Party Defendants,

McCALL ENTERPRISES INCORPORATED; NORWICH UNION FIRE INSURANCE SOCIETY LIMITED; ZURICH RE (U.K.); HANSA MARINE INSURANCE CO. U.K. LTD.; VESTA U.K. INSURANCE CO. LTD.; LEGAL & GENERAL ASSURANCE SOCIETY LIMITED,

Third Party Defendants-Appellants.

_________________________________________________________________

Appeal from the United States District Court for the Western District of Louisiana (CA-93-0472) _________________________________________________________________ June 21, 1996 Before DAVIS, BARKSDALE, and DeMOSS, Circuit Judges. PER CURIAM:*

McCall Enterprises, Inc., and its underwriters (collectively

"McCall") contest being required to indemnify Chevron U.S.A. Inc.

for defense costs and the amount paid by Chevron to settle a

personal injury claim brought against it by an employee of a

subcontractor of Chevron who allegedly was injured when boarding

McCall's vessel, which was under time charter to Chevron. We

AFFIRM.

I.

In 1990, Chevron and McCall entered into a time charter;

McCall was to provide vessels for transporting persons and property

to and from Chevron's oil and gas platforms in the Gulf of Mexico.

The time charter provided that McCall would defend and indemnify

Chevron from liability for personal injury "arising out of or in

anyway directly or indirectly connected with the performance of

service" under the time charter, including "transportation of

passengers" and "loading or unloading of passengers". As required

by the time charter, McCall named Chevron as an additional assured

on its liability insurance policies.

In March 1992, Reynold Bourg, a welder employed by a Chevron

subcontractor, allegedly was injured when he transferred, via swing

rope, from a Chevron platform to a McCall vessel operating pursuant

* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4.

- 2 - to the time charter. Bourg filed suit against McCall and Chevron,

claiming that their negligence caused his injuries. Chevron filed

a third party complaint against McCall, seeking defense and

indemnity pursuant to the time charter.

The district court granted Chevron's motion for summary

judgment on the third party complaint, holding that the time

charter indemnity provision unambiguously obligated McCall to

defend and indemnify Chevron. One week before trial, Chevron

settled with Bourg for $75,000, and moved for approval of the

settlement. (Following trial of Bourg's action, judgment was

entered for McCall.) The district court approved the settlement,

holding that Chevron was potentially liable to Bourg in an amount

far in excess of the settlement.

II.

McCall contends that Bourg's claim against Chevron was not

within the scope of the indemnification clause and, alternatively,

that the district court erred by ordering reimbursement of the

settlement amount based on Chevron's potential, rather than actual,

liability. Of course, we review the summary judgment de novo,

applying the same standard as the district court. E.g., Douglass

v. United Services Automobile Ass'n, 79 F.3d 1415, 1429 (5th Cir.

1996) (en banc). Summary judgment "shall be rendered forthwith if

the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that

- 3 - there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law". FED.

R. CIV. P. 56(c).

A.

The indemnity provision provides:

[McCall] hereby agrees to fully indemnify and hold [Chevron] forever harmless, and to undertake to defend [Chevron] of and from any and all liabilities, losses, damages, and costs, of whatsoever nature or kind, for personal injury or death, ... arising out of or in any way directly or indirectly connected with the performance of service under this agreement or the ownership, maintenance, management, operation, transportation of passengers, ... loading or unloading of passengers or navigation of the vessel, and whether or not caused or contributed to by the negligence, strict liability or fault of [Chevron], or of any person or party for whose acts [Chevron] is or may be liable.

(Emphasis added.)

McCall contends that Bourg's claim against Chevron is not covered

because the indemnity provision does not specify that

indemnification for personal injury extends to injuries to

employees of third parties, nor does it state with sufficient

specificity that injuries occurring when the vessel is serving as

nothing more than an "inert locale" are within its scope.

A charter agreement for a vessel is a maritime contract, to be

construed according to maritime law. See Fontenot v. Mesa

Petroleum Co., 791 F.2d 1207, 1214 (5th Cir. 1986). Under federal

maritime law,

- 4 - a contract of indemnity should be construed to cover all losses, damages, or liabilities which reasonably appear to have been within the contemplation of the parties, but it should not be read to impose liability for those losses or liabilities which are neither expressly within its terms nor of such a character that it can be reasonably inferred that the parties intended to include them within the indemnity coverage.

Id. at 1214 (brackets and citation omitted).

The indemnity provision is clear and unambiguous. It contains

no language limiting covered passengers to Chevron employees, nor

does it exclude coverage when the vessel is an "inert locale". To

the contrary, Bourg's claim that he was injured while boarding the

McCall vessel is encompassed by the plain language of the agreement

("loading ... of passengers").

B.

1.

"The general rule requires an indemnitee to show actual

liability on his part to recover against an indemnitor". Fontenot,

791 F.2d at 1216. However, "a defendant need only show potential

(rather than actual) liability to recover indemnity where either

(1) the defendant tenders the defense of the action to the

indemnitor; (2) the claim for indemnity is founded upon a judgment;

(3) the defendant's claim is based on a written contract of

insurance or indemnification". Id. at 1216-17. McCall asserts

that, because Chevron failed to give adequate notice of its

intention to settle with Bourg, equitable indemnity principles

- 5 - required Chevron to show actual, rather than potential, liability

in order to be indemnified for the settlement amount. Chevron

counters that it was not required to notify McCall of the

settlement because its claim was based upon a written contract of

indemnity; but that, in any event, it notified McCall of Bourg's

offer and settled only after McCall refused to act.

The cases relied on by McCall concerning equitable

indemnification principles are distinguishable, because they did

not involve claims for indemnity based on written contracts. See,

e.g., Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir. 1987)

(tort-based indemnity claim); Burke v. Ripp, 619 F.2d 354 (5th Cir.

1980) (tort-based indemnity claim); Parfait v. Jahncke Service,

Inc., 484 F.2d 296 (5th Cir. 1973) (claim for indemnity based on

implied warranty of workmanlike performance), cert. denied, 415

U.S. 957 (1974); and Whisenant v. Brewster-Bartle Offshore Co., 446

F.2d 394 (5th Cir. 1971) (claim for indemnity based on implied

warranty of workmanlike performance). In Parfait, our court

distinguished indemnity claims based on written contracts:

The actual-versus-potential liability problem is unique to cases in which the original defendant (indemnitee) has settled with the original plaintiff without giving the third- party defendant (indemnitor) an opportunity to approve the amount of the settlement or to conduct the defense, and in which traditional indemnity principles are not modified by express contract between the parties.

Parfait, 484 F.2d at 304; see also Molett, 826 F.2d at 1429 ("if

- 6 - the indemnitee's claim is founded on judgment or on a written

contract establishing some other basis for indemnification",

indemnitee is not required to prove actual liability or that

indemnitor was not prejudiced by indemnitee's failure either to

inform indemnitor of settlement negotiations or tender it defense

of suit); Burke, 619 F.2d at 356 (distinguishing "cases where the

claim for indemnity is founded on a judgment or a written

contract"). Accordingly, because Chevron's indemnity claim is

based on a written contract, the claimed inadequacy of its notice

to McCall of its intention to settle does not require that it prove

actual, rather than potential, liability.

2.

In the alternative, McCall contends that Chevron presented

insufficient evidence to establish potential liability. A court

confronted with a valid indemnity agreement "should insure that the

claim was not frivolous, that the settlement was reasonable, that

it was untainted by fraud or collusion, and that the indemnitee

settled under a reasonable apprehension of liability". Fontenot,

791 F.2d at 1218.

Bourg claimed that Chevron was negligent (1) because it

required him to transfer from the platform to the vessel via swing

rope in rough seas, and (2) because Chevron's employee, Theriot,

grabbed Bourg's work vest when Bourg attempted to land on the deck

of the vessel, preventing him from landing properly or from

- 7 - swinging back to the platform. Theriot died prior to the trial of

Bourg's action. And, prior to that trial, the district court

denied Chevron's motion in limine, in which it sought to exclude

Theriot's statement to Bourg, shortly before the incident, that

because the seas were rough, they would have used a helicopter,

instead of the vessel, if one were available.

In support of its assertion that Chevron had no potential

liability based on the alleged rough sea conditions, McCall relies

heavily on the jury's finding that McCall was not negligent in

causing Bourg's injury. But, because Chevron made the decision to

settle with Bourg prior to that trial, the jury's verdict absolving

McCall of negligence is not relevant to an evaluation of Chevron's

potential liability. McCall points out, too, that Bourg, in his

first deposition, did not claim that Theriot's grabbing his work

vest contributed to cause his injury, and made such a claim for the

first time in his second deposition. Although that inconsistency

obviously might have some impeachment value and thus impact on a

jury's credibility determination, it is insufficient to negate

Chevron's potential liability.

III.

For the foregoing reasons, the judgment is

AFFIRMED.

- 8 -