Summary
The United States Court of Appeals for the Fifth Circuit held that a vessel boarding and utilization agreement requiring a labor contractor to indemnify and insure a vessel operator was supported by consideration and enforceable. The court further held that the agreement was maritime in nature, making the Louisiana Oilfield Anti-Indemnity Act inapplicable. It concluded that the insurer was not liable because the policy's watercraft exclusion applied and the vessel operator could not establish negligent misrepresentation or equitable estoppel.
Topics
Practice areas
Questions Presented
- Whether PMI's promise under the Vessel Boarding and Utilization Agreement was supported by consideration despite Seacor's alleged preexisting duty to transport PMI employees under its charter agreements with the oil companies.
- Whether the Vessel Boarding and Utilization Agreement was a maritime contract and therefore outside the Louisiana Oilfield Anti-Indemnity Act.
- Whether Gray Insurance Co. was obligated to provide coverage to Seacor under the additional-insured provision despite the policy's watercraft exclusion.
- Whether Seacor could recover from Gray under negligent misrepresentation or equitable estoppel based on an insurance certificate.
Holdings
- The agreement was supported by consideration and was enforceable because PMI obtained a legally enforceable right to board Seacor's vessels that PMI did not previously possess, even if Seacor separately owed the oil companies a duty to transport PMI employees.
- The agreement was a maritime contract because it concerned transportation of employees to and from offshore platforms on navigable waters, and its indemnification provisions were therefore valid and not barred by the Louisiana Oilfield Anti-Indemnity Act.
- The watercraft exclusion plainly excluded coverage to Seacor, making the additional-insured provision irrelevant to the consolidated cases.
- Seacor could not prevail under either theory because it showed neither a misrepresentation nor justifiable detrimental reliance on Gray's insurance certificate.
Key quotations
“We conclude that the contract is supported by consideration and is enforceable.” (-2-)
“With the creation of the VBA, however, PMI had a distinct, legally enforceable right to board SEACOR’s vessels. This is sufficient consideration to form a contract.” (-11-)
“Because the agreements at issue in this case are solely for the transportation of employees to and from the platforms, Laredo controls and we hold that the VBA is a maritime contract which renders the indemnification provisions valid.” (-12-)
Factual background
Production Management Industries, L.L.C. supplied workers to offshore oil companies whose charter arrangements provided transportation to offshore platforms on vessels operated by Seacor. Seacor required PMI to sign a Vessel Boarding and Utilization Agreement under which PMI agreed to name Seacor as an additional insured, waive subrogation rights, and delete the watercraft exclusion from its commercial general liability policy in exchange for transportation of PMI employees on Seacor vessels. After three PMI employees were injured while transferring between platforms and Seacor vessels, Seacor sought defense and indemnity from PMI and Gray Insurance Co.; the disputes centered on the agreement's consideration, maritime character, and insurance coverage.
Procedural history
The injured employees sued the vessel operators, and the vessel operators filed third-party claims against Production Management Industries, L.L.C. and Gray Insurance Co. seeking defense and indemnity under a Vessel Boarding and Utilization Agreement. Three district courts reached differing conclusions concerning whether the agreement was supported by consideration. The Fifth Circuit reviewed the summary-judgment rulings de novo, affirmed the judgment for Seacor against PMI in Johnson, vacated the judgment against Gray in Johnson, and vacated summary judgments in favor of PMI in the Hoffpauir and Fleming matters while affirming Gray's dismissal in those matters.
Remand instructions
In Johnson v. Seacor Marine Corp., affirm summary judgment for Seacor against PMI, vacate the judgment against Gray, and remand for further proceedings if necessary and entry of judgment. In Hoffpauir v. Seacor Marine Corp. and Fleming v. GSI LLC, vacate the district courts' orders granting summary judgment in favor of PMI, affirm Gray's dismissal, and remand to the appropriate district courts for further proceedings if necessary and entry of judgment.