Cochran v. B J Services Co USA

Court of Appeals for the Fifth Circuit·Decided September 24, 2002·No. 01-30640·Published

Opinion

REVISED SEPTEMBER 24, 2002

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-30640

CORY DALTON COCHRAN

Plaintiff - Appellant

v.

B J SERVICES CO USA; ET AL Defendants

DRILLMARK CONSULTING INC Defendant - Appellant

NABORS DRILLING USA INC

Defendant-Intervenor Plaintiff - Appellant v.

MID-CONTINENT GROUP

Defendant - Appellee

Appeals from the United States District Court for the Western District of Louisiana

August 16, 2002

Before KING, Chief Judge, and HIGGINBOTHAM and EMILIO M. GARZA, Circuit Judges.

KING, Chief Judge:

Plaintiff-Appellant Cory Cochran sought recovery on his personal injury negligence suit under an insurance policy issued

to Defendant-Appellant Drillmark Consulting, Inc. by Defendant- Appellee Mid-Continent Group. Cochran appeals the district court's summary judgment in favor of the insurance company. For the following reasons, we REVERSE and REMAND.

I. FACTUAL AND PROCEDURAL HISTORY Defendant-Appellant Drillmark Consulting, Inc.

("Drillmark"), Defendant-Appellant Nabors Drilling USA, Inc. ("Nabors"), and Defendant B.J. Services Co. U.S.A. ("B.J. Services") all contracted with Union Pacific Resources Company ("UPR") to perform various functions on an oil drilling operation. Defendant-Appellee Mid-Continent Group ("Mid- Continent") contracted with Drillmark to provide insurance for some of Drillmark’s obligations arising from the UPR drilling operation. Drillmark contracted with UPR to supervise the UPR site overall and to report back to UPR regarding the work of other contractors. Drillmark assigned Roy Springfield to be the overall supervisor on the UPR site. In the vernacular of drilling operations, Springfield was the “company man.”

On July 5, 1997, Plaintiff-Appellant, Cory Cochran, a derrick hand employed by Nabors, was injured while removing a cement head owned by B.J. Services from the head’s casing on top of the drilling rig. Cochran filed a personal injury suit alleging negligence against, inter alia, B.J. Services, Nabors, UPR, and Drillmark. Drillmark supervisor Springfield was not

present at the scene of Cochran's accident with the cement head. Cochran alleged that Springfield's absence constituted a failure to supervise by Drillmark that caused Cochran's injury.

Cochran later added Mid-Continent as a defendant, seeking recovery from the insurer pursuant to the insurance contract between Mid-Continent and Drillmark, which contract provided for defense and indemnification of Drillmark by Mid-Continent for any covered obligations.1 Mid-Continent denied Drillmark coverage for obligations arising from Cochran’s suit based on a provision within the Mid-Continent-Drillmark policy that excludes coverage for any obligations arising due to Drillmark furnishing “professional services” on the UPR operation. On June 19, 2000,

1 UPR, Drillmark, and Mid-Continent were added as defendants in amended complaints. A Mid-Continent subsidiary, Mid-Continent Casualty Company, was the Mid-Continent entity originally added as a defendant.

The parties are not clear as to whether only indemnification or also defense is the subject of this appeal. Cochran's amended complaint naming Drillmark as a defendant appears to pray for both indemnification and defense by requesting "all damages to which [Cochran] is entitled to receive ... from the date of judicial demand and for all costs of these proceedings .... and for all general and equitable relief." The insurance policy issued by Mid-Continent entitles insured Drillmark to "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury'" and provides for Mid-Continent's "right and duty to defend the insured against any 'suit' seeking those damages." Mid-Continent asserts that defense is not a subject of this appeal, only indemnification, and that Mid- Continent is already providing defense. The record on appeal and the district court's decision fail to clarify this point. Because the only issue we determine on appeal is that the exclusion at issue here does not, as a matter of law, apply to exclude coverage by Mid-Continent in this case, any issue with respect to the duty to defend is not material to our determination on appeal.

Mid-Continent moved for summary judgment claiming no liability under the policy it issued to Drillmark. On August 9, 2000, based on the district court’s finding that the professional services exclusion applied to Drillmark’s alleged failure to supervise removal of the cement head, the district court granted summary judgment in favor of insurer Mid-Continent. Cochran, Nabors, and Drillmark (collectively, the "Appellants") timely appeal that summary judgment.2 II. STANDARD OF REVIEW

This court reviews summary judgment de novo, applying the same standards as the district court. Chaney v. New Orleans Pub. Facility Mgmt., Inc., 179 F.3d 164, 167 (5th Cir. 1999). Summary judgment is appropriate when there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). III. MID-CONTINENT'S OBLIGATION TO PROVIDE COVERAGE TO DRILLMARK The district court applied Louisiana law to hold that the professional services exclusion provision in the Mid-Continent- Drillmark insurance contract released Mid-Continent from any insurance liability arising from Cochran’s suit as a matter of law.3 In deciding cases governed by state law, we are bound by

2 B.J. Services does not appeal the summary judgment.

3 Defendant-Appellant Drillmark argues in the alternative that the district court erred in applying Louisiana law and that Texas law governs this case so that, under Texas law, Mid-

applicable decisions of the state's highest court. See, e.g., Gaia Techs. Inc. v. Recycled Prods. Corp., 175 F.3d 365, 375 n.11 (5th Cir. 1999) (citation omitted). The Louisiana Supreme Court has yet to interpret the scope of the precise type of professional services exclusion provision implicated in this case in like circumstances. In the absence of a decision on point by the Louisiana Supreme Court, we must ascertain how that court would rule if faced with the interpretation of the scope of the Mid-Continent-Drillmark provision. See id. To accomplish that task, we may look for guidance from decisions by Louisiana intermediate appellate courts, see id., and decisions by federal courts applying Louisiana law. See State Farm Mut. Auto. Ins. Co. v. Coviello, 233 F.3d 710, 713 (3d Cir. 2000) (citation omitted); Meridian Mut. Ins. Co. v. Kellman, 197 F.3d 1178, 1181 (6th Cir. 1999) (citation omitted).

The professional services exclusion provision within the Mid-Continent-Drillmark insurance contract reads in relevant part:

Continent owes coverage to Drillmark. Drillmark makes this argument for the first time on appeal, and thus we are entitled to disregard it on that ground alone. See, e.g., Employers Ins. of Wausau v. Occidental Petroleum Corp., 978 F.2d 1422, 1430 n.8 (5th Cir. 1993) (A “party has an obligation to call the applicability of another [forum’s] law to the court’s attention in time to be properly considered.”) (quotation omitted). Moreover, because we agree with Drillmark's asserted interpretation of its contract with Mid-Continent under Louisiana law, we find it unnecessary to address this argument.

EXCLUSION - ENGINEERS, ARCHITECTS OR SURVEYORS PROFESSIONAL LIABILITY .... This insurance does not apply to "bodily injury", "property damage" ... arising out of the rendering of or failure to render any professional services by [Drillmark] or any engineer, architect or surveyor who is either employed by [Drillmark] or performing work on [Drillmark's] behalf in such capacity. Professional services include: 1.

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