Duval v. Northern Assurance Co. of America
722 F.3d 300
5th Cir.2013Background
- BHP Billiton and Deep Marine entered into a Master Services Agreement (MSA) under which Deep Marine would provide construction support vessels and both sides pledged indemnity supported by insurance or self-insurance.
- The MSA defines groups: Contractor Group (Deep Marine and affiliates) and Company Group (BHP and affiliates), with a broad definition of claims.
- Duval, an employee of Wood Group/Deepwater Specialists, allegedly injured during an offshore transfer from a Deep Marine vessel to a BHP platform, suing Deep Marine and Dolphin Services.
- Deep Marine sought defense, additional insured status, and indemnity from BHP under the MSA; BHP accepted tender in 2008.
- Deep Marine later filed for Chapter 11; a bankruptcy order stayed the Duval action against Deep Marine, but allowed it to proceed against Deep Marine’s insurers.
- Underwriters (the insurers) asserted that they could be protected and indemnified by BHP under the MSA, and sought relief under Rule 14(c); the district court granted summary judgment for BHP.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MSA indemnity runs to Underwriters | Underwriters contend MSA requires BHP to indemnify the insurers. | BHP argues indemnity runs only to Deep Marine (Contractor Group) and not to insurers (Underwriters). | Indemnity runs only to Contractor Group; Underwriters have no rights under MSA. |
| Effect of Underwriters’ tender and waiver | Underwriters claim waiver of defenses by BHP upon tender and defense of Deep Marine. | BHP did not admit any obligation to Underwriters; waiver does not create a contractual duty. | Waiver is inapplicable; no obligation to Underwriters arises from tender. |
| Application of self-insurance to additional insured/primary insurance terms | Underwriters argue added insured/primary insurance terms apply regardless of self-insurance. | Self-insurance is not insurance; terms apply only when liability policies are used. | Additional insured and primary insurance requirements do not apply to BHP’s self-insurance. |
| Subrogation windfall argument and potential liability to Duval | Underwriters would be subrogated to Deep Marine’s rights and seek indemnification from BHP. | Subrogation cannot grant more rights than Deep Marine had; no loss to BHP accrues. | Subrogation does not create a direct indemnity obligation for BHP. |
Key Cases Cited
- Hertz Corp. v. Robineau, 6 S.W.3d 332 (Tex. Ct. App. 1999) (self-insurance is not true insurance; lacks assurance obligations)
- Foreman v. Exxon Corp., 770 F.2d 490 (5th Cir. 1985) (indemnity interpretation and scope in corporate contracts)
- Kemp v. Gulf Oil Corp., 745 F.2d 921 (5th Cir. 1984) (indemnity clause interpretation in maritime/energy context)
- Ford Motor Co. v. Tex. Dept. of Transp., 264 F.3d 493 (5th Cir. 2001) (contract interpretation and standard of review for independents)
- Descant v. Adm’rs of Tulane Educ. Fund, 639 So.2d 246 (La. 1994) (state-law interpretation of indemnity provisions)
- Greater Houston Small Taxicab Co. Owners Ass’n v. City of Houston, 660 F.3d 235 (5th Cir. 2011) (interpretation and scope of contractual indemnities in ancillary disputes)