Chevron Oronite Company LLC v. Jacobs Field Services North America Inc.
2:18-cv-02279
E.D. La.Jan 23, 2019Background
- Chevron Oronite (successor to Chevron Chemical) sought indemnity from Jacobs (successor to J.E. Merit) under contract indemnity provisions for a 2018 settlement of an asbestos mesothelioma suit brought by Wayne Bourgeois, a former J.E. Merit welder.
- Bourgeois alleged asbestos exposure at Chevron’s Belle Chasse facility (work performed by J.E. Merit) during 1989–1993; he sued in 2017 and died shortly after tendering.
- Chevron tendered defense to Jacobs twice (July and November 2017); Jacobs refused both times but later produced contracts and communicated with counsel in the underlying litigation.
- Chevron settled the underlying suit for $550,000 on January 24, 2018, within the settlement range previously communicated to Jacobs.
- The Court previously held on summary judgment that Chevron had shown potential liability, triggering Jacobs’ indemnity obligation; remaining trial issues were settlement reasonableness and proper fees/costs.
- After reviewing submissions, the Court found the $550,000 settlement reasonable, awarded indemnity for the full amount, prejudgment interest from payment date, and awarded Chevron attorney’s fees and ordinary litigation costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard to trigger contractual indemnity (actual vs. potential liability) | Tender and communications sufficed; potential liability standard applies. | Argued Chevron must show actual liability. | Court (on summary judgment) applied potential-liability standard and found Chevron showed potential liability. |
| Burden to prove settlement reasonableness | Once potential liability shown, burden shifts to indemnitor (Jacobs) to prove settlement was unreasonable. | Jacobs argued under Louisiana law the indemnitee must prove reasonableness. | Court adopted Wisconsin Barge Line rule (burden on indemnitor) as likely Louisiana law; Jacobs failed to show unreasonableness. |
| Reasonableness of $550,000 settlement given multiple possible exposure sources | Settlement fell within ranges of comparable mesothelioma awards; Chevron informed Jacobs and settled reasonably. | Jacobs argued many other defendants could share fault and did not demonstrate Chevron’s share made settlement excessive. | Court found Chevron’s settlement reasonable; Jacobs presented no evidence to rebut. |
| Recovery of attorney’s fees and costs under indemnity clause | Contract explicitly allows recovery of reasonable attorney’s fees and ordinary litigation costs; Chevron documented rates and hours. | Jacobs disputed amounts but offered no effective challenge to reasonableness. | Court awarded fees and ordinary costs as reasonable; excluded nonrecoverable expert fees from ordinary costs and awarded prejudgment/post-judgment interest. |
Key Cases Cited
- Wisconsin Barge Line, Inc. v. Barge Chem 300, 546 F.2d 1125 (5th Cir. 1977) (shifts burden to indemnitor to show post-settlement unreasonableness once potential liability is shown)
- Parfait v. Jahncke Servs., Inc., 484 F.2d 296 (5th Cir. 1973) (maritime case discussing indemnitee’s burden to justify settlement)
- Molett v. Penrod Drilling Co., 826 F.2d 1419 (5th Cir. 1987) (discussing requirements for indemnitee to recover after settling without indemnitor’s consent)
- Cole v. Celotex Corp., 599 So. 2d 1058 (La. 1992) (governing law for repeated tortious exposures and survival claims)
- Rando v. Anco Insulations, Inc., 16 So. 3d 1065 (La. 2009) (discussing historical workers’ compensation effect on mesothelioma claims)
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (Johnson factors for adjusting lodestar attorney-fee awards)