IN RE: Crescent Energy Services, LLC
2:15-cv-00819
E.D. La.Jun 8, 2017Background
- Crescent Energy Services owned and operated the S/B OB 808; pump operator Corday Shoulder was severely injured in a well blowout while working on a Carrizo well, resulting in amputation.
- Crescent filed a limitation action; Shoulder and Carrizo asserted claims. Carrizo cross-claimed against Crescent and third-party claimed coverage/indemnity under Crescent’s insurance policies, including a Hull/Protection & Indemnity (P&I) policy issued by Certain Underwriters at Lloyd’s of London (Lloyd’s).
- The Master Service Agreement (MSA) between Crescent and Carrizo required Crescent to add Carrizo as an additional insured and contained reciprocal indemnity provisions.
- Carrizo moved for summary judgment arguing Lloyd’s P&I policy covers it (1) as an additional insured and (2) via a contractual-liability endorsement that covers Crescent’s hold-harmless/indemnity obligations under the MSA.
- Lloyd’s moved for summary judgment denying coverage, arguing the policy limits coverage to liabilities arising from vessel operations and thus does not cover Carrizo’s well-related liability; Starr filed motions but lacked standing to seek judgment against Lloyd’s.
- The court granted Lloyd’s motion, holding the P&I policy does not cover Carrizo either as an additional insured or under the contractual-liability endorsement; Carrizo’s claims against Lloyd’s were dismissed with prejudice.
Issues
| Issue | Carrizo's Argument | Lloyd's Argument | Held |
|---|---|---|---|
| Whether Carrizo is covered as an additional insured under Lloyd’s P&I policy | MSA required Crescent to add Carrizo as additional insured; deletion of “as owner” language expands coverage to Carrizo | Policy limits coverage to liabilities arising from vessel operations; deletion does not extend coverage beyond vessel operations | Not covered — policy limited to vessel-related liabilities; Carrizo’s liability arose from well operations, not vessel operations |
| Whether contractual-liability endorsement covers Crescent’s indemnity obligations to Carrizo under the MSA | Endorsement extends coverage to liability arising from hold-harmless/indemnity agreements in vessel-service contracts, so it must cover Crescent’s indemnity to Carrizo | Endorsement is limited by the policy’s vessel-operations scope and does not cover liabilities beyond what the hull/P&I policy already insures | Not covered — endorsement only insures contractual liability that would otherwise be covered (i.e., vessel-related liabilities) |
| Standing of Starr to move for summary judgment on Lloyd’s obligations | Starr sought a determination that Lloyd’s policy covers Carrizo | Lloyd’s and the court: Starr has not sued Lloyd’s and lacks standing to seek judgment on Carrizo’s claim against Lloyd’s | Starr’s motions denied for lack of standing |
| Whether precedent supports reading policy language as limiting coverage to vessel operations | Carrizo relied on cases suggesting deleted “as owner” language can broaden coverage | Lloyd’s relied on cases holding identical limiting language confines coverage to vessel operations | Court followed precedent limiting coverage to vessel-related liabilities and denied coverage to Carrizo |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting principles)
- Gaspard v. Offshore Crane & Equip., Inc., 106 F.3d 1232 (5th Cir. 1997) (policy language limiting additional-assured coverage to what owner/operator could obtain; coverage confined to vessel-related liabilities)
- Helaire v. Mobil Oil Co., 709 F.2d 1031 (5th Cir. 1983) (distinguishable—policy there lacked limiting language, so indemnity could extend to platform-related acts found vessel-related)
- Cater v. Placid Oil Co., 986 F.2d 1418 (5th Cir. 1993) (contractual-liability endorsement limited by "as owner" clause; coverage confined to liabilities incurred as vessel owner)