Atlantic Specialty Ins Company v. Phillips ( 2019 )

Case: 19-30182 Document: 00515173113 Page: 1 Date Filed: 10/24/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-30182 October 24, 2019
Summary Calendar
Lyle W. Cayce
Clerk
ATLANTIC SPECIALTY INSURANCE COMPANY; EXCESS
UNDERWRITERS SUBSCRIBING SEVERALLY TO POLICY NUMBER
TMU - 407387,
Plaintiffs - Counter Defendants - Appellees,
v.
PHILLIPS 66 COMPANY,
Defendant - Third Party Plaintiff - Counter Claimant – Appellant,
v.
BLANCHARD CONTRACTORS, INCORPORATED,
Third Party Defendant – Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:17-CV-9318
Before CLEMENT, ELROD, and OLDHAM, Circuit Judges.
PER CURIAM: *
Phillips 66 and Blanchard Contractors entered into a Master Services
Agreement, which governed maintenance work on a Phillips 66 natural gas
pipeline. During the work, an explosion injured two workers. Those workers
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 19-30182
sued Phillips 66. Believing that its Agreement with Blanchard indemnified
them from the workers’ claims, Phillips 66 sought a declaratory judgment
stating that the Agreement’s indemnification and insurance provisions were
valid. And, as a consequence, Phillips 66 also argued that Blanchard’s insurer,
Atlantic, had a duty to defend them from the workers’ claims. 1 The district
court granted summary judgment in favor of Blanchard and Atlantic, holding
that the Louisiana Anti-Indemnity Act (“LAIA”) invalidated the
indemnification and insurance provisions of the Agreement. Our review is de
novo. In re Louisiana Crawfish Producers, 852 F.3d 456, 462 (5th Cir. 2017).
Phillips 66 first argues that its agreement with Blanchard does not fall
within the LAIA. That is not true. The LAIA voids indemnity and insurance
provisions in “construction contracts.” LA. REV. STAT. § 9:2780.1. The statute
defines “construction contracts” capaciously to include “any agreement for the
. . . maintenance of a . . . structure . . . gas line, appurtenance or other
improvement to real property.” LA. REV. STAT. § 9:2780.1(A)(2)(a). A natural
gas pipeline is fairly encompassed in the “gas line” provision of the statute. But
even assuming a “gas line” does not include “natural gas pipeline,” Phillips
fails to show why a natural gas pipeline would not otherwise be a “structure”
or “improvement to real property.” Cf. Black’s Law Dictionary (defining
structure to include “any construction, or any production or piece of work
artificially built up”); Guzzetta v. Tex. Pipe Line Co., 485 So. 2d 508 (La. 1986)
(analyzing who owned a pipeline based on Louisiana law applying to
“improvements”).
Second, Phillips 66 argues that its pipeline falls within an exception to
the LAIA that applies to pipelines that transport “commingled” gas. But, as
For simplicity, we refer to both Atlantic Specialty Insurance Company and Excess
1
Underwriters Subscribing Severally To Policy Number TMU – 407387 as “Atlantic.”
2
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No. 19-30182
relevant here, the “commingled” exception only applies to “gas gathering lines.”
LA. REV. STAT. § 9:2780.1(A)(2)(b)(ii). A “gas gathering line” is a term of art
that is not defined in the LAIA. But Louisiana courts have used the term in
conjunction only with lines that run amongst wells or between production
facilities and the first processing plant. See Spanish Lake Restoration, LLC v.
Petrodome St Gabriel II, LLC, 186 So. 3d 230, 232 (La. Ct. App. 2016) (noting
the defendant “installed an aboveground pipeline in the form of a natural gas
gathering line that runs from the Section 13 well pad”); Warren Energy
Resources, Inc. v. Louisiana Tax Comm’n, 825 So. 2d 572, 577 (La. Ct. App.
2002) (stating gas gathering lines delivered “production . . . to one gas plant”);
cf. Magnolia Petroleum Co. v. Sandlin, 137 So. 595, 596 (La. Ct. App. 1931).
Moreover, the Louisiana courts’ usage comports with the definition adopted by
the American Petroleum Institute (API) and the Federal Government. See 49
C.F.R. §192.8; API Recommended Practice 80, “Guidelines for the Definition of
Onshore Gas Gathering Lines” (April 2000). Against this backdrop of
consistent usage, Phillips 66 offers no alternative definition. Cf. ANTONIN
SCALIA & BRYAN A. GARNER, READING LAW § 54. And it is undisputed that the
Phillips 66 pipeline does not travel from a either a well or production facility
to an initial processing facility. Instead, the pipeline runs between processing
facilities. Therefore, it is not a gathering line as that term is used in the
statute.
Third, Phillips 66 argues that this interpretation of the LAIA runs afoul
of another Louisiana statute—the Louisiana Oilfield Anti-Indemnity Act
(“LOAIA”). LA. REV. STAT. § 9:2780. The LAIA specifically requires that courts
consider the LOAIA and ensure that they do not “add to” or “subtract from” its
provisions. LA. REV. STAT. § 9:2780.1(E). But LOAIA is inapplicable. That
statute, by its own terms, applies only to “agreements pertaining to wells.” LA.
REV. STAT. § 9:2780; see Johnson v. Amoco Prod. Co., 5 F.3d 949, 954 (5th Cir.
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1993). A natural gas pipeline does not pertain to a well when the gas has been
so commingled that it “can no longer be identified with a particular well.”
Johnson, 5 F.3d at 954. Here, Phillips 66’s own evidence shows that its pipeline
travels from a facility where gas is commingled— sourced “from multiple
different offshore production and gathering facilities”—to another processing
plant. Notably, Phillips 66 nowhere suggests that this commingled gas can “be
identified with a particular well,” as required by LOAIA. Johnson, 5 F.3d at
954. As a result, LOAIA has not been added to or subtracted from in our
analysis. It just does not apply.
Fourth, Phillips 66 argues that Atlantic owed a duty to defend it from
the workers’ claims. In Louisiana, insurers only owe a duty to defend to their
insured. See Meloy v. Conoco, 504 So. 2d 833, 838 (La. 1987). Blanchard is
insured by Atlantic. And Blanchard agreed to add Phillips 66 as an “additional
insured.” But, as discussed above, that agreement is void under the LAIA.
Since there was no basis in law for Atlantic to cover Phillips 66 as an insured,
Atlantic had no duty to defend them. Cf. Edwards v. Continental Cas. Co., 841
F.3d 360, 363 (5th Cir. 2016) (stating that the duty to defend does not apply
when a “petition unambiguously excludes coverage”).
Finally, Phillips 66 claims that the district court erred by engaging in
“factfinding” or looking at “extraneous evidence.” It did not. The court
considered the record, evaluated the statutes, and consulted the relevant legal
authorities. We have done the same and see no error.
AFFIRMED.
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