International Marine, L.L.C. v. Integrity Fisheries, Inc.
860 F.3d 754
| 5th Cir. | 2017Background
- Tesla contracted International for a tow vessel (M/V INTERNATIONAL THUNDER) and contracted (initially Integrity, later Sea Eagle) for a chase vessel (F/V LADY JOANNA) to conduct a towed-sonar archaeological survey.
- Tesla owned and operated the towfish and Tesla personnel operated Tesla equipment that tracked the towfish; the JOANNA’s contractual role was to follow and remain above the towfish.
- After a towfish malfunction and redeployment, the towfish cable allided with a submerged mooring line of Shell’s drilling unit M/V NAUTILUS, causing significant damage; a jury later apportioned fault (Tesla 75%, International 25%) in Shell v. Tesla.
- Tesla and International sued Integrity and Sea Eagle for contractual indemnity under their MSAs (Article 9) and sought coverage as additional insureds under the insurers’ policies (Article 11); insurers were impleaded.
- The district court granted summary judgment for Integrity and Sea Eagle, finding the NAUTILUS damage did not “arise out of or relate to” operation of the JOANNA, and dismissed related claims against insurers; the Fifth Circuit affirmed indemnity dismissal but vacated and remanded the insurance claims for lack of policy evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether indemnity clause (“arising out of or related to operation of vessel”) requires Integrity/Sea Eagle to indemnify Tesla/International for NAUTILUS damage | JOANNA’s role in the joint survey (positioned above towfish; relaying sonar via Tesla equipment) made its operation related to the loss | The JOANNA merely followed the towfish and successfully performed its chase-vessel duties; the negligent decision to redeploy the towfish was independent of JOANNA’s operation | Indemnity denied — JOANNA’s operation was independent of the negligent act causing the damage, so indemnity did not apply |
| Whether a gratuitous warning by JOANNA’s captain creates indemnity liability | Plaintiffs suggested the warning implicated JOANNA’s responsibility | Defendants treated the warning as gratuitous and not causative | Warning does not create indemnity liability |
| Whether insurance coverage follows indemnity ruling automatically | Plaintiffs argued being named additional insureds entitles coverage consistent with MSA obligations | Defendants argued absence of indemnity and lack of policy language defeats coverage | Remanded — insurance coverage depends on actual policy language, which was not in the record |
| Proper standard for interpreting maritime indemnity/insurance provisions | Plaintiffs urged broad construction of “arising out of/related to” language | Defendants urged limitation when indemnitor’s contractual performance is independent of the loss-causing conduct | Court applies broad construction generally, but limits it where alleged indemnitor’s performance is completely independent of the negligent act; here, independence defeats indemnity |
Key Cases Cited
- Corbitt v. Diamond M. Drilling Co., 654 F.2d 329 (5th Cir.) (indemnity covers losses within parties’ contemplation; unexpected undertakings not inferred)
- Fontenot v. Mesa Petroleum Co., 791 F.2d 1207 (5th Cir.) (broad construction of "arising in connection with" language when activity is reasonably incident to contract)
- Marathon Pipe Line Co. v. M/V Sea Level II, 806 F.2d 585 (5th Cir.) (indemnity does not extend where alleged indemnitor did not contract to perform the act that caused the loss)
- Six Flags, Inc. v. Westchester Surplus Lines Ins. Co., 565 F.3d 948 (5th Cir.) (policy language is the starting point to determine insurance coverage)
- Ingersoll-Rand Fin. Corp. v. Emp’rs Ins. of Wasau, 771 F.2d 910 (5th Cir.) (interpretation of marine insurance contracts generally guided by state law post-Wilburn)
- Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310 (U.S.) (state law governs interpretation of marine insurance policies absent controlling federal rule)