In re Louisiana Oilfield Contractors Ass'n Insurance Fund

549 B.R. 457, 2016 Bankr. LEXIS 261, 2016 WL 361738
CourtUnited States Bankruptcy Court, W.D. Louisiana
DecidedJanuary 27, 2016
DocketCASE NO. 14-51518
StatusPublished

This text of 549 B.R. 457 (In re Louisiana Oilfield Contractors Ass'n Insurance Fund) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Louisiana Oilfield Contractors Ass'n Insurance Fund, 549 B.R. 457, 2016 Bankr. LEXIS 261, 2016 WL 361738 (La. 2016).

Opinion

REASONS FOR DECISION

ROBERT SUMMERHAYS, UNITED STATES BANKRUPTCY JUDGE

The present matters before the court are three motions for relief from the automatic stay filed by Kelvin Hoyt, Richard Kozma, and Westley Bourg (individually, a “Movant” and, collectively, “Movants”), and a motion for an order determining that certain claims and causes of action are property of the estate filed by the debtor, Louisiana Oilfield Contractors Association Insurance Fund (“LOCA”). The core issue raised by each of these motions is the extent to which the Movants' can assert claims against (1) their own employers, and (2) LOCA members who did not employ them. The court took these matters under advisement following oral argument. The court has considered the parties’ arguments, briefs, and the relevant authorities, and rules as follows.

BACKGROUND

LOCA is a workers’ compensation group self-insurance fund formed pursuant to the Louisiana Trust Code and governed by LSA-R.S. § 23:1191 et seq. LSA-R.S. § 23:1195 provides that the members of a “bona fide” trade or professional association “may agree to pool their liabilities to their employees on account of personal injury and occupational disease arising out of or incurred during the course and scope of the employment relationship.” The statute provides that such funds are not deemed to be workers’ compensation insurance and are not subject to the Louisiana Insurance Code. LSA-R.S. § 1195A(3). LOCA’s members made annual contributions to the fund based on each member’s estimated payroll, and LOCA engaged a risk management company to adjust the claims of injured workers. If the fund experienced a shortfall, LOCA would assess each of its members a pro rata share of the shortfall.

The relationship between LOCA and its members is governed by statute and contract. LSA-R.S. §§ 23:1195 and 1196 govern the creation of self-insurance funds and define certain rights and obligations of members to the fund. With respect to the contractual aspect of the parties’ relationship, section 1195A(2) provides that “[a]n agreement to pool liabilities under this Chapter shall be set forth in an indemnity agreement signed by the employer and the fund representative acknowledging and agreeing to the assumption of the liabilities as set forth in this Subpart.” Accordingly, the members of LOCA entered into the Second Revised and Restated Louisiana Oilfield Contractors Association Insurance Fund Trust and Indemnity Agreement (the “Trust and Indemnity Agreement”). This agreement delineates the rights and obligations of LOCA and its members. Article VI of the Indemnity Agreement sets forth the powers and duties of LOCA’s trustees. Article VI, Section 1(a) grants the trustees the power to “assess, [459]*459demand, collect, receive and hold member premiums on assessments in such amounts and at such times as [the trustees], in their discretion, deem necessary and proper, to effectuate the purposes of the Trust ....” Article VII of the Indemnity Agreement governs the rights and obligations of LOCA’s members. Article VII, Section 2(h) provides that LOCA’s liability “to the employees of any member-employer is specifically limited to such obligations as are imposed by Louisiana law ... against the employer on account of personal injury and occupational disease arising out of or incurred during the course and scope of the employment relationship.” Article VII Section 4 provides that if LOCA suffers a deficit, the trustees “will assess the [Trust’s members] in an amount necessary to cover the deficit and provide sufficient loss reserves,” and states that a. fund’s members waive any right of contribution against other fund members.

LOCA filed for relief under Chapter' 11 of the Bankruptcy Code on December 12, 2014. Early in the case, the court entered an order extending the stay to all actions and proceedings against members of LOCA on the grounds that any such claims were property of the bankruptcy estate. This extension of the stay was unopposed at the time. Subsequently, a group of injured workers employed by various members of LOCA sought relief from the automatic stay to pursue claims against these members. LOCA then filed the instant motion seeking a ruling that these claims are property of the estate and that Movants do not possess independent claims against LOCA members who did not employ them.

DISCUSSION

A. Claims Against Members Who Did Not Employ Movants.

Movants first seek broad relief from the automatic stay on. the grounds that they have direct claims against LOCA members who never employed them. A essential element of a workers’ compensation claim under Louisiana law is the existence of an employer-employee relationship. See Ferguson v. HDE, Inc., 274 So.2d 783 (1973); Williams v. Ajax Lumber, 819 So.2d 458 (La.App. 3 Cir. 6/5/02); 14 Malone & Johnson, Louisiana Civil Law Treatise: Worker’s Compensation Law and Practice 65 (5th ed.2010). Accordingly, Movants possess workers’ compensation claims against the LOCA member companies that employed them at the time of their injury. Movants seek to expand that liability to other LOCA members solely by virtue of their membership in the fund. This argument essentially eliminates the employment relationship as an essential element of a workers’ compensation claim, at least with respect to member companies of self-insurance funds created under LSA-R.S. § 1191 et seq. Movants base this expansion of liability on LSA-R.S. 23:1196(F), which provides that the members of a group self-insurance fund, like LOCA, are “liable in solido for liabilities of the fund.” According to Mov-ants, this imposition of in solido liability creates an independent cause of action by an injured worker against any member of LOCA regardless of whether the worker was actually employed by. that member.

Whether a statutory provision creates an independent private cause of action under Louisiana law turns on legislative purpose and intent as reflected in the text and context of the relevant provision. See, e.g., Anderson v. Ochsner Health System, 172 So.3d 579 (La.2014); Phillips v. Patterson Ins. Co., 813 So.2d 1191 (La.App. 3 Cir. 4/3/02). Here, the text and context of section 23:1196F do not support an independent. private cause of action or the expansion of workers’ com[460]*460pensation liability advocated by Movants. First, the text of this provision imposes in solido liability with respect to “liabilities of the fund,” not with respect to individual workers’ compensation claims. The text does not refer to individual workers’ compensation claims or the capacity of individual claimants to sue fund members based on this imposition of in solido liability. Rather, the text and statutory context of section 23:1196F indicate that it is part of a broader set of provisions that delineate the powers of a group self-insurance fund created under LSA-R.S. section 1191 et seq., and the relationship between that fund and its member employers. These provisions — and the LOCA Trust and Indemnity Agreement created under these provisions — empower LOCA to “assess” its members in “an amount necessary” to cover any deficits in the fund’s operations. The LOCA Trust and Indemnity Agreement also gives LOCA the exclusive right to enforce its assessment powers in court, and to recover appropriate attorneys fees from its members. In light of these assessment powers, the imposition of in soli-do liability with respect to the liabilities of the fund

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Related

Ferguson v. HDE, Inc.
274 So. 2d 783 (Louisiana Court of Appeal, 1973)
Phillips v. Patterson Ins. Co.
813 So. 2d 1191 (Louisiana Court of Appeal, 2002)
Reed v. Cooper (In Re Cooper)
405 B.R. 801 (N.D. Texas, 2009)
Wagoner v. CHEVRON USA INC.
55 So. 3d 12 (Louisiana Court of Appeal, 2010)
Yana Anderson v. Ochsner Health System and Ochsner Clinic Foundation
172 So. 3d 579 (Supreme Court of Louisiana, 2014)
Williams v. Lumber
819 So. 2d 458 (Louisiana Court of Appeal, 2002)

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Bluebook (online)
549 B.R. 457, 2016 Bankr. LEXIS 261, 2016 WL 361738, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-louisiana-oilfield-contractors-assn-insurance-fund-lawb-2016.