Ace American Insurance Company v. M-I, L.L.C.
699 F.3d 826
5th Cir.2012Background
- M-I has provided performance fluids management services for BP’s offshore drilling; master services agreement (MSA) governs future work but does not itself require specific work.
- MSA is a blanket contract; BP issue of work is communicated directly to M-I, often orally, with M-I creating tickets and time sheets tied to platforms or vessels.
- Hernandez, an M-I employee, was injured on the Thunder Horse platform; Hernandez’s claims included workers’ compensation and a personal injury suit; BP tendered Hernandez’s claims to M-I which settled.
- ACE filed a declaratory judgment action seeking to avoid coverage payments; M-I counterclaimed for breach of contract and Texas Insurance Code claims; district court granted ACE partial summary judgment on OCSLA applicability.
- The district court and the Fifth Circuit held OCSLA applies, making Louisiana law (LOIA) control the indemnity provisions and invalidate them if applicable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does OCSLA apply to governing indemnity provisions? | ACE argues OCSLA applies, so Louisiana LOIA governs indemnities. | M-I argues OCSLA may apply but requires analysis of situs and maritime-law factors. | Yes; OCSLA applies and LOIA invalidates the indemnities. |
| How is the OCSLA situs determined in a blanket contract context? | Focus on where the specific work is performed under the work order; the work order dictates situs. | The blanket contract governs situs unless work orders specify otherwise. | Situs determined by focus of the specific work order; Thunder Horse work placed indemnity on a Gulf OCSLA situs. |
| Does maritime law apply of its own force to this dispute? | Maritime law should govern the contract and indemnities by nature of offshore work. | Work on a stationary platform is not maritime in nature, so maritime law does not apply of its own force. | Maritime law does not apply of its own force. |
| Is Louisiana LOIA inconsistent with federal law, and thus inapplicable if OCSLA applies? | LOIA is invalid where OCSLA-selected state law applies. | LOIA remains applicable under state law if OCSLA applies, but the district court held LOIA would invalidate indemnities. | LOIA would invalidate the indemnity provisions under OCSLA. |
| Do the three PLT requirements for surrogate federal law apply to this dispute? | All PLT requirements are met, supporting state law as surrogate. | Product of the focus-test and treaty interpretations supports OCSLA application. | All PLT requirements were met; state law applies as surrogate federal law. |
Key Cases Cited
- Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th Cir. 2009) (focus-of-contract situs; blanket contract interpreted with later work orders)
- Davis & Sons v. Gulf Oil Corp., No. 919 F.3d 313 (5th Cir. 1990) (two-part contract analysis; determine maritime vs. land law based on work order)
- United Texas Petroleum Corp. v. PLT Engineering, Inc., 895 F.2d 1043 (5th Cir. 1990) (PLT test; three requirements for state law as surrogate federal law)
- Greater Houston Small Taxicab Owners Ass’n v. City of Houston, 660 F.3d 235 (5th Cir. 2011) (summary judgment standard and standard of review)