Joe W. King v. I. E. Miller of Eunice, Inc.

• Court: Louisiana Court of Appeal
• Decided: November 21, 2007
• Docket: CA-0007-0167
• Status: Unknown

Opinion

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

07-167

JOE W. KING, ET AL.

VERSUS

I. E. MILLER OF EUNICE, INC., ET AL.

********** APPEAL FROM THE FOURTEENTH JUDICIAL DISTRICT COURT PARISH OF CALCASIEU, NO. 2001-3459 HONORABLE DAVID A. RITCHIE, DISTRICT JUDGE **********

GLENN B. GREMILLION JUDGE

**********

Court composed of U. Gene Thibodeaux, Chief Judge, Sylvia R. Cooks, Marc T. Amy, Glenn B. Gremillion, and James T. Genovese, Judges.

Thibodeaux, C.J., dissents Cooks, J., dissents.

JUDGMENT VACATED; REMANDED.

D. Keith Wall Marcantel & Marcantel P. O. Box 1366 Jennings, LA 70546 (337) 824-7380 Counsel for Plaintiffs/Appellees: Joe W. King Janice King Richard J. Guidry 1580 LL&E Tower 909 Poydras St. New Orleans, LA 70112 (504) 588-1580 Counsel for Plaintiffs/Appellees: Joe W. King Janice King

Terry Thibodeaux, L.L.C. Frohn & Thibodeaux P. O. Box 2090 Lake Charles, LA 70602-2090 (337) 433-5523 Counsel for Defendants/Appellants: American Home Assurance Company I. E. Miller of Eunice, Inc.

James D. Hollier Jennie P. Pellegrin Laborde & Neuner P. O. Drawer 52828 Lafayette, LA 70505-2828 (337) 237-7000 Counsel for Intervenors/Appellees: Grey Wolf Drilling Company, L.P. Insurance of Wausau GREMILLION, Judge.

The third-party plaintiff, I. E. Miller of Eunice, Inc., appeals the

judgment of the trial court denying its motion for summary judgment and granting

summary judgment in favor of the third-party defendant, Grey Wolf Drilling

Company, L.P. An employee of Grey Wolf was injured as a result of the negligence

of I.E. Miller’s employees. I.E. Miller sought indemnification from Grey Wolf

pursuant to an indemnification clause contained in the master service agreement

between the two parties. In granting judgment in favor of Grey Wolf, the trial court

held that the Louisiana Oilfield Anti-Indemnity Act voided the indemnity agreement

and dismissed I.E. Miller’s claims against it with prejudice. We vacate and remand.

FACTS

Joe King, a tool pusher for Grey Wolf, suffered serious injuries when he

became pinned between two generators which were being moved by I.E. Miller’s

employees. Thereafter, King and his wife, Janice, filed suit against I.E. Miller and

its insurer. Grey Wolf intervened in the suit to recover workers’ compensation

benefits paid to King as a result of his work-related accident. Thereafter, I.E. Miller

filed a third-party demand against Grey Wolf seeking indemnity and defense from it

pursuant to a reciprocal indemnity agreement contained in the master service

agreement existing between them. In response, Grey Wolf affirmatively argued that

the indemnity agreement at issue was unenforceable pursuant to the Louisiana

Oilfield Anti-Indemnity Act, as set out in La.R.S. 9:2780. I.E. Miller then filed a

motion for summary judgment to have Grey Wolf’s affirmative defense stricken as

the master service agreement contained a choice of law provision which applied

1 Texas law to any issue arising under the contract. Although not in the record, the trial

court denied the motion. I.E. Miller sought supervisory writs from this court, but was

denied. See unpublished writ King v. I.E. Miller of Euncie, Inc., 05-1258 (La.App.

3 Cir. 1/30/06).

Grey Wolf filed a motion for summary judgment seeking to have the

indemnity clause voided pursuant to La.R.S. 9:2780. I.E. Miller again filed a motion

for summary judgment arguing that it was entitled to a defense and indemnity as

provided by the agreement. Following a hearing on the motions, the trial court took

the matter under advisement. Thereafter, it rendered judgment granting summary

judgment in favor of Grey Wolf and denying the same in favor of I.E. Miller. The

trial court then dismissed I.E. Miller’s claims against Grey Wolf with prejudice. This

appeal by I.E. Miller followed.

ISSUES

On appeal, I.E. Miller argues that the trial court erred in failing to find

that Texas law applied in this matter and, as a result, that it was entitled to a defense

and indemnity from Grey Wolf pursuant to the indemnity provision found in the

master service agreement.

SUMMARY JUDGMENT

It is well settled that an appellate court performs a de novo review of the

record on the appeal of a trial court’s grant of summary judgment. Pursuant to

La.Code Civ.P. art. 966(B), summary judgment shall be rendered “if the pleadings,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to material fact, and that

2 mover is entitled to judgment as a matter of law.”

CONFLICT OF LAWS

The conflict of law provisions pertinent to the resolution of this issue are

found in La.Civ.Code arts. 3540, 3537, and 3515. Initially, Article 3540 provides:

“All other issues of conventional obligations are governed by the law expressly

chosen or clearly relied upon by the parties, except to the extent that law contravenes

the public policy of the state whose law would otherwise be applicable under Article

3537.” Article 3537 provides:

Except as otherwise provided in this Title, an issue of conventional obligations is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.

That state is determined by evaluating the strength and pertinence of the relevant policies of the involved states in the light of: (1) the pertinent contacts of each state to the parties and the transaction, including the place of negotiation, formation, and performance of the contract, the location of the object of the contract, and the place of domicile, habitual residence, or business of the parties; (2) the nature, type, and purpose of the contract; and (3) the policies referred to in Article 3515, as well as the policies of facilitating the orderly planning of transactions, of promoting multistate commercial intercourse, and of protecting one party from undue imposition by the other.

As indicated in the comments to Article 3537, this article is intended to be read in

conjunction with La.Civ.Code art. 3515, which provides:

Except as otherwise provided in this Book, an issue in a case having contacts with other states is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue.

That state is determined by evaluating the strength and pertinence of the relevant policies of all involved states in the light of: (1) the relationship of each state to the parties and the dispute; and (2) the policies and needs of the interstate and international systems, including the policies of upholding the justified expectations of parties and of

3 minimizing the adverse consequences that might follow from subjecting a party to the law of more than one state.

Comment (b) to Article 3515 explains that:

The objective is to identify “the state whose policies would be most seriously impaired if its law were not applied to that [particular] issue”, that is, the state which, in light of its relationship to the parties and the dispute and its policies rendered pertinent by that relationship, would bear the most serious legal, social, economic, and other consequences if its law were not applied to that issue.

(Alteration in original). See Harrison v. R.R. Morrison & Son, Inc., 37,992 (La.App.

2 Cir. 12/10/03), 862 So.2d 1065, writ denied, 04-0101 (La. 3/19/04), 869 So.2d 857,

and Roberts v. Energy Dev. Corp., 235 F.3d 935 (5th Cir. 2000).

In this instance, two policies are in conflict: (1) the policy of upholding

contracts freely and voluntarily entered into by the parties, and (2) Louisiana’s stated

public policy against indemnity and defense provisions in oilfield contracts.1 We will

evaluate these two policies in light of Articles 3537 and 3515.

The following facts are evident after a review of the evidence. I.E.

Miller is a domiciliary of Louisiana; Grey Wolf, for the purposes of this issue, is a

domiciliary of Texas, although it also has offices in Louisiana and Wyoming.

1 La.R.S. 9:2780(A) provides:

The legislature finds that an inequity is foisted on certain contractors and their employees by the defense or indemnity provisions, either or both, contained in some agreements pertaining to wells for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state, to the extent those provisions apply to death or bodily injury to persons. It is the intent of the legislature by this Section to declare null and void and against public policy of the state of Louisiana any provision in any agreement which requires defense and/or indemnification, for death or bodily injury to persons, where there is negligence or fault (strict liability) on the part of the indemnitee, or an agent or employee of the indemnitee, or an independent contractor who is directly responsible to the indemnitee.

4 La.Civ.Code art. 3517. The basic form of the master service agreement was drafted

by Grey Wolf in Texas, and then sent to I.E. Miller in Louisiana. I.E. Miller amended

in part and signed the agreement in Louisiana and then sent it back to Grey Wolf in

Texas. Grey Wolf then approved the agreement and signed it. The parties anticipated

that work under the agreement would take place in Texas, Louisiana, Mississippi, and

Alabama. A verbal work order was issued by Grey Wolf’s Eunice office which

contemplated work to be performed only in Louisiana. The work order required I.E.

Miller to move a drilling rig located at the Holland #1 Lease, Well 50093, to Richard

#2 Lease, Well 50133, all of which took place in Calcasieu Parish. The accident at

issue occurred in Louisiana, which caused the resultant injury to a Louisiana resident.

During the interim between the contract date and the accident, 30.17% of the work

between the parties occurred in Louisiana, 51.78% occurred in Texas, 17.03%

occurred in Texas and Louisiana, and the remaining 1% occurred outside Texas and

Louisiana.2 In light of this evidence, we find that the relationship of Louisiana is

stronger to each party than the relationship of Texas to each party.

However, in examining the policy considerations laid out by Article

3537, we find that the facts weigh in favor of applying Texas law. The master service

agreement was drawn up by Grey Wolf and, although I.E. Miller amended other

language found in the agreement, the Texas choice of law provision was accepted by

it. Thus, we find that I.E. Miller would justifiably expect to be subjected to the law

of Texas and would suffer minimal adverse consequences if subjected to that state’s

2 The trial court did not give much weight to this evidence, which was presented in an affidavit by C. Malcolm Gordon, vice-president of operations for I.E. Miller. We, also, do not give much weight to this information.

5 law.

Moreover, the weighing of the policy considerations set out in Article

3515 tips the scale in favor of applying Texas law to the instant matter. The

Louisiana Oilfield Anti-Indemnity Act was enacted to protect Louisiana

subcontractors from the imposition of an inequity foisted on them in oilfield contracts

by larger entities. Grey Wolf does not fit within that category of entities the Act

sought to protect. Rather, Grey Wolf is the “wolf” from which subcontractors were

intended to be protected. Thus, Texas’ policy of upholding contracts which are freely

and voluntarily entered into far outweighs Louisiana’s policy of protecting oilfield

subcontractors. Additionally, we find that a greater imposition would be placed on

I.E. Miller if we apply Louisiana law as it has already provided indemnity and

defense to Grey Wolf upon its request in an unrelated suit in Louisiana, i.e., the

Villier case.

Thus, in applying Articles 3537 and 3515, we find that the law of Texas

would apply in the absence of the choice of law provision found in the master service

agreement. Since Texas law would apply in either case, we find that the trial court

wrongly voided the mutual indemnity and defense provision contained therein. The

judgment of the trial court granting summary judgment in favor of Grey Wolf is

vacated, and we remand the matter for further proceedings pursuant to this opinion.

CONCLUSION

For the foregoing reasons, the trial court’s grant of summary judgment

in favor of Grey Wolf Drilling Company, L. P., is vacated and we remand the matter

for further proceedings. The costs of this appeal are assessed to the third-party

6 defendant, Grey Wolf Drilling Company, L. P.