Rig Tenders, Inc. v. Santa Fe Drilling Co.

585 P.2d 505
CourtAlaska Supreme Court
DecidedDecember 11, 1978
Docket3118
StatusPublished
Cited by4 cases

This text of 585 P.2d 505 (Rig Tenders, Inc. v. Santa Fe Drilling Co.) is published on Counsel Stack Legal Research, covering Alaska Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rig Tenders, Inc. v. Santa Fe Drilling Co., 585 P.2d 505 (Ala. 1978).

Opinion

OPINION

CONNOR, Justice.

This case is before us for the second time. The circumstances which gave rise to this action were described in our opinion in Rig Tenders, Inc. v. Santa Fe Drilling Company, 536 P.2d 114 (Alaska 1975). Only those facts necessary to an understanding of the instant appeal will be repeated here.

One of Santa Fe Drilling Company’s employees had been killed while operating a crane aboard a drilling platform owned by Marathon Oil Company. Immediately prior to the accident which caused his death, the employee was attempting to lift heavy equipment from the M/V Rig Pusher, a vessel owned and operated by Rig Tenders, Inc., and chartered to Marathon.

The employee’s estate recovered benefits under the Longshoremen’s and Harbor Workers’ Compensation Act, and then filed suit against Rig Tenders, Inc., Cook Inlet Marine, and Puget Sound Tug & Barge (the owners and operators of the vessel being unloaded at the time of the accident), Marathon Oil Company (the owner and operator of the drilling platform), Unit Crane and Shovel Corporation (the manufacturer of the crane), and J. Ray McDermott & Company (installer of the crane), alleging negligence and unseaworthiness. Rig Tenders, Cook Inlet Marine, and Puget Sound Tug & Barge in turn brought a third party action against Santa Fe, alleging breach of an implied warranty of workmanlike performance, and seeking indemnity in the event that the employee’s estate recovered against Rig Tenders. 1

The employee’s estate settled the case during trial, receiving $150,000 from Cook Inlet Marine (affiliated with Rig Tenders), $75,000 from Marathon and $10,000 from McDermott. 2

*507 The third party action proceeded. Following discovery, third party defendant Santa Fe moved to join Travelers Indemnity Company, Rig Tender’s insurer, as a third party plaintiff. This motion was granted and Santa Fe filed an amended answer to the third party complaint.

Thereafter, Santa Fe moved for summary judgment, asserting that Travelers had expressly waived its rights of subrogation in favor of Santa Fe and, in the alternative, that Travelers’ claim constituted an attempt to gain subrogation against its own assured. 3 Santa Fe based its argument on Paragraph 12 of Endorsement No. 1 of the Travelers policy, which reads as follows:

“It is understood and agreed that Underwriters hereby waive all rights of subro-gation against Smith-Rice Co., and/or Smith-Rice Derrick Barges, Inc. and/or any of their affiliated and/or inter-related companies, also any other companies and/or U.S. Government departments with whom the assured has entered into contracts providing for release of liability-”

Santa Fe’s argument requires that Paragraph 12 of Endorsement 1 be read together with Endorsement 3 in which Marathon is named as an additional assured, and with the “Labor and Services Agreement” entered into between Santa Fe and Marathon. Paragraph 5 of the latter agreement reads as follows:

“Except to the extent that the insurance coverage referred to in Paragraph 4 is applicable,[ 4 ] Santa Fe shall not be liable to Marathon for and Marathon shall indemnify and save Santa Fe harmless from and against any and all claims, demands, liabilities, loss, cost or expense or causes of action of any nature whatsoever for injury to or death of persons or for damage to or involving Santa Fe’s personnel while furnished to Marathon under this agreement; provided, however, that in no event shall Santa Fe be liable under the provisions of Item 4b above respecting third parties for an amount in excess of One Hundred Thousand Dollars ($100,000.00) for all claims arising out of any single incident; provided further, that Marathon shall require that third parties entering onto or servicing the project first obtain Workman’s Compensation, Employer’s Liability, and Third Party Liability Insurance. Marathon shall provide Santa Fe with a waiver of subrogation in Santa Fe’s favor on all insurance provided by Marathon for operation of these projects, or in the event Marathon shall elect to be self-insured for these operations, Marathon shall then indemnify and hold Santa Fe harmless in respect of such coverages.”

Thus Santa Fe maintained that Marathon was an assured under the Travelers’ policy and that Marathon had entered into an *508 agreement with Santa Fe providing for release of liability so as to bring Santa Fe under the provisions of Paragraph 12, Endorsement 1, whereby Travelers waived rights of subrogation. Claiming to be a third party beneficiary under the Travelers policy, Santa Fe maintained that it was an entity contemplated by the parties to the Travelers contract and in whose favor Travelers had agreed to waive all rights of sub-rogation. Under this theory, Santa Fe argued that Travelers had breached its contract by bringing the subrogation action, and that Santa Fe was therefore entitled to damages for this alleged breach.

Finally, Santa Fe contended that owing to the indemnity and hold harmless agreement between Marathon and Santa Fe, Travelers was in effect seeking subrogation against its own assured, Marathon.

Third party plaintiffs filed a cross motion for summary judgment in response to Santa Fe’s motion for summary judgment. They maintained that Santa Fe was not, and was never intended to be, protected under the Travelers policy. In their view, Santa Fe’s contract with Marathon concerned the operation of Marathon’s drilling platform, whereas the Travelers policy protected Marathon only with regard to the operation of the vessel M/V Rig Pusher. In addition, they interpreted paragraphs 4 and 5 of the agreement between Marathon and Santa Fe as raising a material question of fact as to whether Marathon had any duty to indemnify Santa Fe for claims arising out of this particular incident.

In support of their motion, third party plaintiffs attempted to explain the underlying intentions of the parties to the Travelers policy by citing the first paragraph of Endorsement No. 1, which reads as follows:

“1. It is agreed that the assured hereunder is as follows:
Rig Tenders, Inc., and/or Sea Tenders, Inc. and/or Cook Inlet Marine, Inc. and/or Port Nikiski Dock & Terminal Co. and/or any of their subsidiary and/or affiliated and/or inter-related companies (as now or as may be hereafter constituted) and/or any of their vessels and/or any registered owner, (or their agents) of any vessel named in the schedule of vessels attached.”

Third party plaintiffs claimed that the waiver of subrogation found in Paragraph 12, Endorsement 1 applied only to the assureds as defined in Paragraph 1 of that endorsement.

During oral argument on the summary judgment motion the trial judge commented that he saw “nothing in the policy that distinguishes Marathon as an additional insured from the assured itself, Rig Tenders.

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Cite This Page — Counsel Stack

Bluebook (online)
585 P.2d 505, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rig-tenders-inc-v-santa-fe-drilling-co-alaska-1978.