Gaspard v. Offshore Crane

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 2, 1997
• Docket: 96-30255
• Status: Published

Opinion

REVISED IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 96-30255

RAYMOND GASPARD, ET AL., Plaintiffs, versus

OFFSHORE CRANE AND EQUIPMENT, INC., a Unit of Amclyde Engineered Products, Inc., Defendant;

SEACOR MARINE, INC., Defendant-Appellee,

ANGLO-AMERICAN INSURANCE COMPANY, LIMITED, Third Party Defendant-Appellee,

versus

CHEVRON, U.S.A., INC., Defendant-Third Party Plaintiff-Appellant.

Appeal from the United States District Court for the Eastern District of Louisiana

February 25, 1997

Before HIGGINBOTHAM, SMITH, and BARKSDALE, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Chevron appeals dismissals granted in favor of defendant

Seacor Marine and third-party defendant Anglo-American Insurance.

In order to resolve Chevron’s appeals, we must scrutinize the

meanings of two troublesome phrases in maritime contracts. First,

we hold that the inclusion of the words “loading or unloading” in the indemnification agreement between Chevron and Seacor requires

Seacor to indemnify Chevron for damage caused by a platform crane

that malfunctioned during unloading. Second, we conclude that the

“causal operational relation” test does not apply when the parties

to a protection and indemnity insurance policy omit the words “as

owner”; the omission in this case means that Anglo-American

Insurance Company was not entitled to summary judgment on Chevron’s

third-party claim that the policy covers vessel-related liability

that is based on Chevron’s negligence as a platform operator.

I.

Raymond Gaspard worked for Nabors Drilling Company as a

roustabout. In September of 1993, he was performing drilling

services on a Chevron oil platform in the Gulf of Mexico. As part

of his duties, he boarded the M/V Long Island, a cargo vessel tied

up next to the platform, to help unload drill pipe. He was to rig

a sling from the arm of a crane located on the platform. While Mr.

Gaspard was on the deck of the Long Island, the crane

malfunctioned, its fastline broke, and the headache ball fell on

him. He lost both of his legs in the accident.

Chevron had leased the Long Island from Seacor Marine. The

blanket time charter agreement between Chevron and Seacor contained

an indemnification provision that protected Chevron against

all liabilities . . . 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 . . . carrying of cargo [or] loading or unloading of cargo [or] loading or unloading of passengers . . . , and whether or not caused or contributed to by the

2 negligence, strict liability or fault of Charterer . . . .

The contract also required Seacor to purchase protection and

indemnity insurance and to name Chevron as an additional insured.

Ordinarily, such policies limit the lessor’s coverage to damages

incurred “as owner of the vessel.” According to the contract,

however, the policy purchased by Seacor would omit such language.

Seacor purchased the required policy from Anglo-American Insurance

Company. According to the policy, “[t]he so-called Other than

Owner, as Owner and/or Other Insurance Clauses contained in this

Policy shall be deemed deleted as may be required by contract.”

Anglo-American agreed to cover personal injuries, “[h]owsoever

caused and occurring during the period of this Policy, arising out

of, or having relation to the Assured’s chartering, brokering,

towing, berthing, servicing, operating, maintenance and/or use of

vessels (including loading and/or unloading).”

Mr. Gaspard filed suit in Louisiana state court against a

variety of defendants, including Seacor and Chevron. The petition

alleged that the platform crane “constitute[d] a ‘ruin’ caused by

vices in its construction, and improper design, and/or failure to

repair it, all within the meaning of La. Code Civ. Art. 2322 so as

to make defendant, Chevron, responsible for the loss . . . .” The

record shows and the parties agree that any negligence occurred in

the course of operating the platform crane and did not take place

on board the Long Island. The defendants removed the case to

federal court. Chevron filed a cross-claim against Seacor for

contribution, indemnity, costs, and fees. Chevron also filed a

3 third-party complaint against Anglo-American to establish coverage

under the protection and indemnity policy.

On March 31, 1995, the district court denied Chevron’s motion

for partial summary judgment against Seacor. The court held that

the time charter agreement did not obligate Seacor to indemnify

Chevron for injuries caused by a platform crane while the Long

Island was being unloaded. Three weeks later, the court dismissed

all claims against Seacor. On February 14, 1996, the court granted

summary judgment to Anglo-American. The court’s order explained

that the omission of the “as owner” clause from Anglo-American’s

insurance policy did not extend Anglo-American’s coverage to

Chevron’s operation of the platform crane.

In March of 1996, Mr. Gaspard settled with Chevron and the

other defendants. Chevron agreed to pay Gaspard $100,000. Because

they had already been dismissed, Seacor and Anglo-American did not

participate in the settlement. Chevron appeals both the district

court’s March, 1995, ruling that the time charter agreement does

not require Seacor to indemnify Chevron and also the court’s

February, 1996, ruling that the Anglo-American insurance policy

does not cover Chevron’s liability.

II.

We begin by asking whether the inclusion of the words “loading

or unloading” in Seacor’s indemnification agreement makes Seacor

liable for Mr. Gaspard’s injuries. The district court’s denial of

Chevron’s motion for partial summary judgment is subject to review

de novo. Chevron argues simply that the indemnification provision

4 included injuries arising out of the unloading of cargo from the

Long Island, even if Chevron was negligent. We agree with Chevron

that the agreement’s language is broad enough and explicit enough

to encompass liability for injuries such as the one sustained by

Mr. Gaspard.

Seacor prevailed below by convincing the court to apply the

rule that even broadly worded indemnification clauses that refer to

claims “directly or indirectly connected with the possession,

management, navigation, and operation” of a vessel are insufficient

to create a duty to indemnify for injuries caused by a platform

crane during unloading. In Lanasse v. Travelers Ins. Co., 450 F.2d

580 (5th Cir. 1971), cert. denied, 406 U.S. 921 (1972), we

confronted remarkably similar facts and a similarly expansive

indemnification agreement. A crew member aboard a utility tender

was nearly crushed to death when the operator of a Chevron platform

crane negligently allowed a welding machine to swing against the

vessel’s railing. We held that the vessel owner’s promise to

indemnify did not contemplate injuries caused by the negligent acts

of a platform crane operator during unloading. “As broad as those

terms are to comprehend injuries caused by the operation of the

vessel in a practical sense, they do not comprehend an occurrence

in which the vessel’s sole contribution is to be there as the

carrier from which the cargo is being removed.” Id. at 583.

Accord Smith v. Tenneco Oil Co., 803 F.2d 1386, 1388-89 (5th Cir.

1986) (holding that indemnification for any claim that “arises out

of or is incident to performance” of a time charter agreement does

5 not apply to liability for a platform crane operator’s negligence

in lowering a worker to the vessel’s deck); Hobbs v. Teledyne

Movible Offshore, Inc., 632 F.2d 1238, 1241 (5th Cir. 1980).

The district court reasoned that the plain language in the

indemnity agreement in this case is already broad enough to include

activities such as unloading cargo; therefore, specifically adding

“loading or unloading cargo” to the indemnity agreement does not

add anything new. On this view, if the broadest possible

provisions, such as the ones in Lanasse, do not apply when the

negligence is due to a platform crane, then these provisions cannot

apply here, in spite of their explicit reference to unloading.

Chevron encouraged the court to follow Clement v. Marathon Oil

Co., 724 F. Supp. 431 (E.D. La. 1989). In Clement, an empty

personnel basket struck an engineer while it was being lowered to

the deck of a chartered vessel from a platform crane. As in this

case, the time-charter indemnity agreement specifically referred to

“loading and unloading.” The court distinguished the Lanasse line

of cases and held that the owner of the vessel had a duty to

indemnify the charterer. Id. at 434. Cf. Lavergne v. Chevron

U.S.A., 782 F. Supp. 1163, 1171 (W.D. La. 1991) (distinguishing

Clement because “[t]here is no reference to Chevron being

indemnified against its own fault in the charter agreement, nor

does indemnification extend to loading and unloading operations”),

aff’d, 980 F.2d 1444 (5th Cir. 1992) (mem.). But Chevron’s

invocation of Clement in this case failed to persuade the district

court, which explained that the phrase “loading or unloading” is

6 merely “a redundancy that does not broaden the scope of the

clause.”

In our view, the inclusion of “loading or unloading” worked a

definite change in the scope of the indemnity arrangement.

According to the district court’s reasoning, it does not matter

that the contract says explicitly that Chevron’s negligence in

unloading the vessel will trigger the indemnification clause; so

long as the contract includes indemnification for liability

“arising out of or in any way directly or indirectly connected with

the performance” of the contract, the Lanasse line of cases

precludes indemnification for injuries caused by a platform crane.

But denying indemnity here would make it impossible for parties to

a time charter contract to agree that the owner will indemnify the

charterer for any liabilities caused by the owner’s negligence in

the course of loading or unloading the vessel.

The district court’s syllogistic logic misapprehends the

spirit of the rule we announced in Lanasse. The question there was

whether the expansive language agreed upon by the vessel owner and

the charterer was explicit enough to allow the conclusion that the

parties meant to cover events such as a crane operator’s negligence

in unloading the vessel. We concluded that “the operation of the

crane was not even remotely related to the operation, navigation,

or management of the vessel.” 450 F.2d at 583. Cognizant of the

principle that courts should construe indemnification agreements

narrowly, we refused to adopt “the fullest meaning which

lexicography would permit.” Id. at 583-84 (quoting Batson-Cook Co.

7 v. Industrial Steel Erectors, 257 F.2d 410, 413 (5th Cir. 1958)).

But the Lanasse court did not hold that more specific

indemnification contracts must be construed to exclude damages

caused by a platform crane during unloading. Nor did it hold that

damages caused by a platform crane during unloading can never be

subject to indemnification when the contract mimics the language in

Lanasse by reciting that indemnification extends to any claim

“arising out of or in any way directly or indirectly connected with

the performance of service under this agreement.” It merely held

that indemnity for injuries caused by platform cranes during

unloading requires “the plainly expressed intention of the parties,

manifested by language couched in unmistakable terms.” Id. at 584.

In response to Fifth Circuit case law, Chevron went out of its

way to include “loading or unloading” in the indemnification

agreement. It also went out of its way to state unambiguously that

Chevron’s own negligence would not stand in the way of

indemnification. See Theriot v. Bay Drilling Corp., 783 F.2d 527,

540 (5th Cir. 1986) (holding that indemnification “‘without regard

to . . . the negligence of any party,’ clearly and unequivocally

provided Bay Drilling with indemnification for its own

negligence”). The contract, then, said that if Chevron was

negligent while unloading the Long Island, Seacor would have to

provide indemnification. We decline the invitation to use Lanasse,

8 which contained a different indemnification agreement, to frustrate

the calculated reference to “unloading” in this agreement.1

The indemnification agreement applies only to activities that

have some relation to the Long Island. According to Seacor,

Chevron’s negligence had nothing to do with unloading the Long

Island because the defects in the platform crane were general.

Seacor contends that unless Chevron acted negligently specifically

during the unloading operations, the indemnification agreement does

not apply. Of course, we agree that the contract does not burden

Seacor with liability for defects in the platform crane generally.

But we disagree that the crane’s failure was not “connected with

the performance of service . . . [or the] loading or unloading of

cargo” under the time charter agreement. Even if the platform

crane malfunctioned because of long-term inattention to

maintenance, the injury “arose out of” or was “directly or

indirectly connected with” Chevron’s use of the crane during

unloading. The indemnification agreement is not limited to

situations in which Chevron’s negligence takes place on board the

Long Island. Nor is it limited to breaches of care that could only

cause harm during the platform’s interaction with a cargo vessel.

The fact that the crane could just as easily have caused an injury

1 Chevron also argues that “loading or unloading” adds something to the more general “ownership, maintenance, management, operation,” etc. language because the entire list is governed by the disjunctive “or.” Both parties cite Black’s Law Dictionary concerning the force of “or” as opposed to “and.” These arguments are not helpful. The fact that elements in a list are disjunctive does not prevent one element from duplicating other elements in the list.

9 on the platform after the time charter agreement expired does not

take this particular injury outside of the indemnification

provision.

Vessel owners can continue to obtain the protection of Lanasse

by making use of the broad indemnity language at issue in that

case. But once a vessel owner explicitly agrees to indemnify a

charterer for liabilities that arise from negligent unloading

operations, it can no longer hide behind the rationale in Lanasse

and its progeny. We approve of the Clement decision and hold that

Seacor’s agreement to indemnify Chevron embraces Chevron’s

liability for the negligent operation of its platform crane while

unloading the Long Island. The district court erred when it denied

Chevron’s motion for summary judgment against Seacor.

III.

We turn now to the question of whether Anglo-American’s policy

covers Chevron’s liability. Again, we review de novo the district

court’s grant of summary judgment in favor of Anglo-American. Our

case law has elucidated the meaning of an “as owner” clause in

insurance policies that cover charterers’ liability. Based on that

case law, we hold that the omission of the “as owner” clause

creates at least a genuine issue of material fact as to whether

Anglo-American extended coverage to Chevron’s actions as a platform

operator. Because the policy could be construed to cover liability

that arises from the negligent operation of the platform crane, we

reverse Anglo-American’s summary judgment.

10 Once again, Lanasse is the seminal case. We concluded in

Lanasse that Chevron caused the injury as a platform operator

rather than as an “owner” of the chartered tender. The protection

and indemnity policy, however, covered Chevron only for liabilities

incurred “as owner” of the tender. Consequently, we affirmed the

district court’s judgment in favor of the insurer. We held

specifically that a policy that covers a charterer’s liability

incurred “as owner” of the chartered vessel does not provide

coverage unless there is “some causal operational relation between

the vessel and the resulting injury.” 450 F.2d at 584. “[W]here

injury is done through nonvessel operations, the vessel must be

more than the inert locale of the injury.” Id. Accord Randall v.

Chevron U.S.A., 13 F.3d 888, 907-09 (5th Cir.), modified on other

grounds, 22 F.3d 568 (5th Cir.), cert. dismissed, 115 S. Ct. 5,

cert. denied, 115 S. Ct. 498 (1994); Stockstill v. Petty Ray

Geophysical Div., 888 F.2d 1493, 1496-97 (5th Cir. 1989); Texas

Eastern Transmission Corp. v. McMoRan Offshore Exploration Co., 877

F.2d 1214, 1228 (5th Cir.), cert. denied, 110 S. Ct. 332 (1989).

If the policy had retained the “as owner” language, Anglo-

American would have no responsibility to provide coverage for

injuries caused by Chevron’s actions as a platform operator. But

omitting the “as owner” language can make Lanasse’s “causal

operational relation” test inapplicable. In Helaire v. Mobil Oil

Co., 709 F.2d 1031, 1041-42 (5th Cir. 1983), we held that omitting

the words “as owner” can expand coverage to include injuries

inflicted as a platform operator rather than merely as the operator

11 of the vessel. The plaintiff in Helaire was injured while

attempting to unload casing onto a platform during bad weather. We

affirmed the district court’s holding that the relevant protection

and indemnity insurance covered the platform operator because the

negligence pertained to operating the chartered vessel in spite of

the high seas. As an alternative holding, we pointed out that the

parties had omitted the “as owner” clause from the policy, so there

would be coverage even if the charterer’s negligent conduct had not

been “as owner” of the vessel:

Moreover, even assuming that Mobil’s liability may have arisen from its status as platform operator, indemnification was still properly awarded. . . . The words “as owner of the vessel named herein” were deleted from the policy. The district court found that this deletion was intended to provide coverage for Mobil regardless of the capacity in which Mobil was sued. Certainly this finding was not clearly erroneous. . . . Consequently, the court’s indemnification order is proper regardless of whether Mobil incurred liability as a “vessel owner” or as a “platform operator.”

709 F.2d at 1042 (footnote omitted). See also Randall, 13 F.3d at

908 (“[W]e also noted [in Helaire] that the words ‘as owner of the

vessel’ had been deleted from the policy, so the time charterer was

entitled to coverage regardless of the capacity in which it was

sued.”).

Anglo-American’s primary response to the Helaire opinion is

simply to assert that its alternative holding is dicta. But we are

bound by Helaire’s second rationale just as firmly as if it were

the only reason offered by the Helaire court. See Oncale v.

Sundowner Offshore Services, Inc., 83 F.3d 118, 120 (5th Cir.

12 1996), petition for cert. filed, 65 U.S.L.W. 3432 (U.S. Dec. 16,

1996) (No. 96-568). In contrast to the procedural posture of

Helaire, we do not have the benefit of a fact-finder’s

determination that the parties intended for the deletion to extend

coverage to Chevron’s vessel-related liabilities incurred as

platform owner. But Helaire at least demonstrates that our law is

consistent with Chevron’s argument that we should construe the

policy to cover Mr. Gaspard’s injury. Its very existence means

that there is at least a genuine issue of material fact as to

whether Chevron’s interpretation is accurate.2

Anglo-American also argues that Helaire conflicts with

McMoRan. But McMoRan concerned an indemnity provision in which the

vessel owner agreed that “[a]ny language in the policies . . .

which limits the coverage afforded to an assured who is not a

shipowner or who is not entitled to the rights of limitation to

which a shipowner is entitled shall be deleted.” 877 F.2d at 1226.

The McMoRan decision, then, dealt with a charterer who wanted to

make sure merely that its coverage would be no less than what it

would have been if it were the owner of the vessel. By contrast,

Chevron in this case wanted to make sure that its coverage would

2 If the contract is unambiguous, no question of fact remains, and Chevron is entitled to summary judgment on remand. Employers Ins. of Wausau v. Occidental Petroleum, 978 F.2d 1422, 1430 (5th Cir. 1992), cert. denied, 510 U.S. 813 (1993). Because the district court did not have occasion to rule on the question of the contract’s ambiguity, we do not reach it. The Helaire Court, considering the effect of the deletion of an “as owner” clause as a matter of first impression, apparently concluded that the resulting policy retained ambiguities that required a factual inquiry into the parties’ intentions. We leave it to the district court to decide whether this policy is similarly ambiguous.

13 not be limited to what it would have been if it were actually the

owner of the vessel. Randall discussed both Helaire and McMoRan

and found no conflict between them. See 13 F.3d at 908, 908-09.

The district court recognized that Anglo-American’s policy

would ordinarily be governed by Helaire rather than by the Lanasse

line of cases. Its summary judgment in favor of Anglo-American was

based on the policy’s declaration that “if claim is made by anyone

other than the owner and/or operator of the vessel(s) insured

hereunder, such person or entity shall not be entitled to a broader

scope of coverage than would the owner and/or operator had claim

been made by the owners and/or operator as an Assured hereunder.”

The district judge analyzed this sentence to mean that “[i]f

Chevron makes a claim as owner of the platform, as opposed to as

owner/operator of the vessel, the clause still limits the scope of

coverage to that otherwise available under the policy. The policy

provides coverage for an accident arising from the use of one of

Seacor’s vessels.” In other words, the court understood this

sentence to accomplish the same thing that the “as owner” clause

would have accomplished had it been included in the policy.

We disagree with the district court’s reading of the policy.

The sentence it relied on applies only if a party other than Seacor

or Chevron, the owner and operator of the vessel respectively, were

to bring a claim. In that event, coverage is limited to what

Seacor or Chevron could have obtained under the policy. The

language cited by the district court has no application to this

litigation.

14 The Lanasse court’s reasoning turned on the “as owner” clause

in the policy involved in that case. As Helaire demonstrates,

Lanasse’s “causal operational relation” test does not necessarily

apply when the parties omit this clause from a protection and

indemnity policy. When Chevron went out of its way to omit the

clause, and when Anglo-American consented to including Chevron as

an additional insured without limiting coverage to Chevron’s

liabilities sustained “as owner” of the Long Island, the parties

created a protection and indemnity policy that could be interpreted

to extend coverage to Chevron’s vessel-related negligence committed

as platform operator.

IV.

We hold that the indemnification agreement required Seacor to

indemnify Chevron for its liability to Mr. Gaspard. Consequently,

the district court erred when it denied Chevron’s motion for

summary judgment against Seacor. On remand, the district court

must calculate the damages Seacor owes to Chevron.

The district court also erred when it granted summary judgment

in favor of Anglo-American. The deletion of the “as owner” clause

created at least a genuine issue of material fact as to whether

Anglo-American’s policy covered vessel-related liabilities

involving Chevron’s negligence in its capacity as a platform

operator. Because of the procedural posture of the case, the

district court still has the task of deciding in the light of our

opinion whether Chevron should prevail in its third-party claim

against Anglo-American.

REVERSED AND REMANDED.