Nerco Oil & Gas, Inc. v. M.R. Friday, Inc.

816 F. Supp. 429, 1993 U.S. Dist. LEXIS 3527, 1993 WL 89117
District Court, W.D. Louisiana·Decided March 10, 1993·No. Civ. A. No. 91-0460·Published·Cited by 5 cases

Opinion

RULING

LITTLE, District Judge.

Nerco’s suit is grounded on Friday’s breach of an indemnity agreement. That breach impacted Friday’s insurers, also de[430] fendants in this matter. The defendants have filed an answer asserting defenses, including the frequently litigated Louisiana Oilfield Anti-Indemnity Act (La.R.S. 9:2780). The defendants have also filed a motion for summary judgment essentially asserting that the Anti-Indemnity Act (the Act) is a complete shield to Nerco’s demands, so much so that a complete dismissal is warranted. Ner-co has filed a motion to strike the Act defense of the defendants.

As we will demonstrate by the following discussion, the motion for a summary judgment is GRANTED. Concomitantly, the motion to strike is DENIED.

The uncontested material facts follow. For many years, fugacious minerals have been the subject of exploration and capture in the Black Lake Field in Natchitoches Parish, Louisiana. Historically, the Black Lake Field has been, and continues to be, a miner-ally productive area. Within the Black Lake Field are production units approved by the Louisiana Commission of Conservation. It is fair to say that the units are created for the purpose of conserving minerals so that natural resource waste will not result from unregulated drilling and production. The unit in the Black Lake Field that stages this lawsuit is described in Commissioner’s Order No. 686 dated 27 January 1965.

Nerco is the authorized unit operator. Generally speaking, the operator is charged with the responsibility of a prudent manager. The operator manages the property in such a manner that the maximum benefits are obtained for the mineral owners, having due regard for the regulatory laws. The operator also oversees the maintenance and replacement of equipment and machinery. It is not unusual for the unit operator to elicit the assistance of independent contractors to perform some of the duties contractually undertaken by the unit operator.

In this instance, Nerco, the unit operator, contracted with M.R. Friday, Inc. to perform maintenance tasks. We need not reiterate all the terms of the 5 February 1988 contract between Nerco and Friday. We do, however, point out three provisions in the agreement. First, the scope of the work undertaken by and assigned to Friday is stated in non-teehnical terms.

1.1 CONTRACTOR shall furnish qualified supervision, labor and craftsmen which are necessary to perform any and/or all work of maintenance, repair, and renovation, including turnarounds, and minor capital expansions assigned to CONTRACTOR by OWNER’S GOL-DONNA, LOUISIANA, BLACK LAKE UNIT FACILITIES. It is to be understood that CONTRACTOR does not have exclusive rights to all work to be assigned by OWNER as further defined in Article 11.1.

Defendants’ Exhibit C at 1, Maintenance Agreement. Second, paragraph 9 places upon Friday the obligation to defend, indemnify, and hold harmless Nerco for liability and expenses it may face from suits brought by any person including Friday employees. The responsibility of indemnity is limited, however, to “the maximum extent allowed by law.” Paragraph 9, Maintenance Agreement.

Finally, Friday is required by paragraph 22 to provide insurance to cover its responsibilities undertaken in the contract.

On 19 April 1989, Friday was working at Nerco’s instruction in the Black Lake Field on a facility known as the Satellite # 3 Compressor Station. An explosion occurred resulting in injury and property damage. Ner-co’s responsibility has been determined vis-a-vis the injured parties. In accordance with the contract terms, Nerco seeks indemnity from Friday and its insurers for the payments Nerco made as a result of the explosion. Friday and its insurers resist the demand reasoning that the indemnity is prohibited by the Act.

Friday’s summary judgment motion and Nerco’s motion to strike the Friday defense center on the same subject viz the application of the Act to the promise of indemnity. If the Act applies, Friday owes no indemnity. If the Act is inapplicable, the promise is enforceable.

Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits, show that there is no genuine [431] 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). In our analysis, “[w]e must ‘review the facts drawing all inferences most favorable to the party opposing the motion.’ ” Valley Construction Company v. Marsh, 984 F.2d 133, 134 (5th Cir.1993) (quoting Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986)). Before we can find that there is no genuine issue for trial, the court must be satisfied that the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. Id. (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986)).

We need not revisit the parsing of the Act conducted by the Fifth Circuit in Transcontinental Gas v. Transportation Insurance Co., 953 F.2d 985 (5th Cir.1992). Nor need we cite every case interpreting the Act, although we will cite some that do. We will, and do, mention that the judicial effort employed in analysis of the Act leads one to consider that the Act is less than pellucid and could stand legislative fine tuning. The Louisiana Supreme Court has described the purpose of the Act.

The purpose of the legislature, and thus the policy interest of the state, is to protect certain contractors, namely those in the oilfields, from being forced through indemnity provisions to bear the risk of their principals’ negligence.

Rodrigue v. Legros, 563 So.2d 248, 254 (La.1990).

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Nerco Oil & Gas, Inc. v. M.R. Friday, Inc., 816 F. Supp. 429, 1993 U.S. Dist. LEXIS 3527, 1993 WL 89117 (W.D. La. 1993).

816 F. Supp. 429 (Nerco Oil & Gas, Inc. v. M.R. Friday, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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