Thibodeaux v. Vamos Oil & Gas Co. , 487 F.3d 288 ( 2007 )

United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
May 17, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 05-30964
ROY THIBODEAUX,
Plaintiff,
v.
VAMOS OIL & GAS CO, ET AL.,
Defendants,
v.
DPR INTERNATIONAL LLC,
Defendant - Third Party Plaintiff - Appellee,
v.
MAXUM SERVICES INC,
Defendant - Third Party Defendant - Appellant.
* * * * * * * * * *
consolidated with
No. 05-31061
GABINO SILVA,
Plaintiff,
v.
DPR INTERNATIONAL LLC, ET AL.,
Defendants,
v.
DPR INTERNATIONAL LLC, d.b.a. Axxis Drilling,
Defendant - Third Party Plaintiff - Appellee,
v.
MAXUM SERVICES INC,
Third Party Defendant - Appellant.
Appeals from the United States District Court for the
Western and Eastern Districts of Louisiana
Before REAVLEY, DeMOSS, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
These consolidated appeals arise from two actions, one brought
by Roy Thibodeaux and the other by Gabino Silva, against DPR
International, LLC doing business as Axxis drilling (Axxis). Axxis
filed third-party claims against Maxum Services, Inc. (Maxum)
seeking indemnity and defense in each case. On summary judgment,
the district court found that Maxum owed Axxis an obligation of
indemnity and defense and Maxum brings these appeals.
We DISMISS the appeal deriving from Thibodeaux’s claim for
lack of jurisdiction. Because Thibodeaux’s underlying claim is not
yet resolved, there is no appealable order establishing the
parties’ substantive rights and liabilities as envisioned by 28
U.S.C. § 1292(a)(3).
In contrast, Silva’s claim has settled and the district
court’s order is final and appealable. Considering the merits, we
AFFIRM the district court’s judgment that Maxum must defend and
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indemnify Axxis in Silva’s case.
I. BACKGROUND AND PROCEDURAL HISTORY
Maxum is a contract labor provider that directly employed
Silva and Thibodeaux. Maxum entered into a Master Service
Agreement (MSA) with Axxis, whereby Maxum would provide personnel
for Axxis’s drilling operations. Pursuant to the MSA, Maxum
assigned both plaintiffs to work for Axxis on the inland drilling
vessel FREEDOM. Plaintiffs allege that they sustained injuries
during their work as roustabouts on the FREEDOM and brought Jones
Act claims against Axxis.
While refuting the plaintiffs’ substantive claims, Axxis filed
a third-party demand against Maxum seeking indemnity and defense.
Axxis made this claim under the MSA’s provisions stating that Maxum
agreed “to protect, defend, indemnify and hold harmless [Axxis] .
. . from and against all claims, demands, causes of action, cost,
expenses, or losses . . . arising in connection herewith in favor
of Maxum’s employees.” The MSA further provided that it “shall be
governed by and interpreted in accordance with the general maritime
law and statutes of the United States . . . .”
Based on this language, Axxis sought summary judgment
declaring that Maxum must defend and indemnify it in the underlying
suits. Without disputing the plain meaning of the MSA’s indemnity
terms, Maxum made two arguments relevant here: (1) it was unaware
that its employees would be used in a maritime assignment, thereby
vitiating its consent to the contract as applied to these Jones Act
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claims; and (2) Louisiana law invalidates the indemnity clause and
it, rather than maritime law, should be used to interpret the MSA.
The district court rejected Maxum’s arguments and granted
summary judgment in favor of Axxis.
II. DISCUSSION
A. Jurisdiction
This court has jurisdiction over three types of appeals: (1)
final orders, 28 U.S.C. § 1291; (2) certain types of interlocutory
appeals, 28 U.S.C. § 1292(a); and (3) an appeal involving a
question certified as final by the district court, 28 U.S.C. §
1292(b). See United States v. Powell, 468 F.3d 862, 863 (5th Cir.
2006).
While these cases are consolidated, they come to us in
different procedural postures that require separate jurisdictional
consideration. Silva settled his claims against Axxis, and Maxum
agreed that the settlement was reasonable. As the defense and
indemnity claims are all that remain, we have jurisdiction to hear
the appeal deriving from Silva’s case as a final order. See 28
U.S.C. § 1291.
Thibodeaux’s claims have not settled and are still being
litigated, eliminating § 1291 as a possible jurisdictional basis.
Maxum claims that this Court has jurisdiction under § 1292(a)(3),
which provides that this Court has jurisdiction over appeals from:
(3) Interlocutory decrees of such district courts or the
judges thereof determining the rights and liabilities of
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the parties to admiralty cases in which appeals from
final decrees are allowed.
“Orders which do not determine the parties’ substantive rights or
liabilities, however, are not appealable under section 1292(a)(3)
even if those orders have important procedural consequences.”
Complaint of Ingram Towing Co., 59 F.3d 513, 517 (5th Cir. 1995)
(citation omitted). Interlocutory appeals are not favored, and we
strictly construe statutes permitting them. Id. at 515.
Maxum neglects to even consider whether the decree at issue
determined its rights and liabilities as contemplated in §
1292(a)(3), and we find that it did not. We have previously held
that a district court order holding a third-party insurance company
liable for covering a defendant did not satisfy the requirements of
§ 1292(a)(3) so long as the primary plaintiff’s claim was
unresolved. See Hollywood Marine, Inc. v. M/V Artie James, 755
F.2d 414 (5th Cir. 1985). We reasoned that, like Maxum, “the party
whose contention is rejected remains in the litigation and the
issue of its liability on the claim asserted remains to be finally
resolved.” Id. at 416.
In other words, because Thibodeaux has yet to establish that
the primary defendant is liable, whether Maxum is liable as a third
party is entirely undetermined. The same could not be said if the
district court denied Axxis’s indemnity claim, or if liability was
5
established and all that remained was a damages determination.1
Because Thibodeaux’s claim is unresolved, the district court’s
indemnity order did not determine Maxum’s liabilities, and we lack
jurisdiction. If Thibodeaux’s claim fails, Maxum’s obligation to
indemnify Axxis will amount to nothing.
Notably, despite our request for briefing on jurisdictional
issues, Maxum does not argue that the duty to defend provides a
unique jurisdictional basis that might make Hollywood Marine’s
analysis inapplicable here. Maxum “bears the burden of
establishing this court’s appellate jurisdiction over this appeal,”
and there is no need to explore jurisdictional bases the appellant
does not address. See Acoustic Sys., Inc. v. Wenger Corp., 207
F.3d 287, 289 (5th Cir. 2000). As we stated in Hollywood Marine,
“[d]espite our request for special briefs addressed to the
1
An order denying indemnity completely settles the third-
party’s liability as to both the plaintiff and the principal
defendant, as it establishes that the third party has no liability
whatsoever. Hollywood Marine, 755 F.2d at 415 (discussing
O’Donnell v. Latham, 525 F.2d 650 (5th Cir. 1976)); see also
Campbell v. Sonat Offshore Drilling, Inc., 27 F.3d 185, 187 n.3
(5th Cir. 1994) (finding denial of indemnification claim appealable
and contrasting Hollywood Marine as requiring indemnity).
If liability on the principal claim is resolved then an order
requiring indemnification will conclusively establish the rights
and liabilities of the third party as to both the principal and the
defendant sufficient for jurisdiction under § 1292(a)(3). This is
true even if the damage award is still pending. See Stoot v. Fluor
Drilling Serv., Inc., 851 F.2d 1514, 1516 (5th Cir. 1988) (“An
interlocutory decree which finally determines the liability of at
least one party to a maritime suit is appealable under § 1292(a)(3)
even if damages haven’t been finally computed.”).
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jurisdictional question, the parties do not suggest as a basis for
appeal the possible effect of the district court’s ruling as
determining liability for the costs of defense. We, therefore,
express no opinion on that subject.” 755 F.2d at 416.
We DISMISS the appeal deriving from Thibodeaux’s claim (05-
30964) for lack of jurisdiction. We proceed to the merits on the
dispute arising out of Silva’s claim (05-31061).
B. Maxum has a Duty to Defend and Indemnify Axxis
The district court found on summary judgment that the MSA
required Maxum to defend and indemnify Axxis. “We review the
district court’s legal conclusions, including its interpretation of
contracts, de novo.” Texaco Exploration & Prod., Inc. v. AmClyde
Engineered Prods. Co., Inc., et al., 448 F.3d 760, 777 (5th Cir.
2006).
The MSA’s language is perfectly clear. It provides that Maxum
will defend and indemnify Axxis against all claims brought by Maxum
employees in connection with the MSA. It is undisputed that Silva
is a Maxum employee, that he was assigned to work for Axxis as
contemplated by the MSA, and that his claim arises from that work.
Despite MSA’s clear language, Maxum argues that (1) the contract is
invalid because error vitiated Maxum’s consent, and (2) it is
unclear whether maritime law applies, and if it does not, then the
indemnity clause is unenforceable under the Louisiana Oilfield
7
Indemnity Act. See LA. REV. STAT. 9:2780. Neither of Maxum’s
arguments give us much cause for concern.
1. Error did not Vitiate Maxum’s Consent
Maxum’s only argument as to why its consent to the MSA was
invalid is that Exhibit A, which set forth the insurance
requirements and was referenced throughout the MSA, was not
attached to the MSA during negotiations. Without Exhibit A, Maxum
allegedly did not realize it could be held liable under the Jones
Act. It argues that this mistake vitiates its consent to the
contract.
One party’s error may vitiate consent to a contract “only when
it concerns a cause without which the obligation would not have
been incurred and that cause was known or should have been known to
the other party.” LA. CIV. CODE art. 1949. Assuming Maxum’s
allegations are true, which requires overlooking a number of the
MSA’s provisions suggesting that maritime law will apply, the
district court pointed out that Maxum only argues that it did not
have Exhibit A during contract negotiations. It “does not argue
that Exhibit ‘A’ was absent from the final version of the contract
[its president] signed.”
The MSA, as signed, is explicit that Maxum must provide
coverage for Jones Act liability. Assuming Maxum misunderstood
this point, it provides no evidence that Axxis knew or should have
known about this mistaken reading of the contract’s plain terms.
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“In the context of contract interpretation, only when there is a
choice of reasonable interpretations of the contract is there a
material fact issue concerning the parties' intent that would
preclude summary judgment.” Gonzalez v. Denning, 394 F.3d 388, 392
(5th Cir. 2004). Given the plain terms of the signed MSA, any
misunderstanding was attributable solely to Maxum’s carelessness
and cannot serve to vitiate its consent.
2. The MSA is Governed by Maritime Law
Maxum’s final argument is that Louisiana law should apply to
strike down the MSA’s indemnity clause. However, if the MSA is a
maritime contract governed by maritime law, as Axxis argues,
Louisiana law is inapplicable and the parties agree that the
indemnity provision is enforceable. See Demette v. Falcon Drilling
Co., 280 F.3d 492, 500 (5th Cir. 2002).
There is no bright-line rule used to determine whether a
contract is maritime in nature. Id. at 500 (describing it as “a
perplexing affair”); Theriot v. Bay Drilling Corp., 783 F.2d 527,
538 (5th Cir. 1986). Determining whether the MSA is a maritime
contract governed by maritime law depends partly on “its historical
treatment in the jurisprudence,” and partly on a six-pronged “fact-
specific inquiry.” Demette, 280 F.3d at 500 (discussing Davis &
Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316 (5th Cir. 1990)).
It is uncontested that the FREEDOM is an inland drilling barge, and
personnel contracts for such barges are historically treated as
9
maritime contracts. Demette, 280 F.3d at 500–01.
As for the fact-specific inquiry, we need not consider each of
the six prongs listed in Demette individually.2 Axxis points out
that the undisputed evidence shows that all six of these factors
militate in favor of finding that this was a maritime contract and
Maxum never makes any allegation disputing that. Maxum only makes
a conclusory statement that there are insufficient facts to find
that maritime law applies. But Maxum cannot defeat a motion for
summary judgment merely by claiming “some metaphysical doubt” as to
the material facts. Matsushita Elec. Indus. Co., Ltd v. Zenith
Radio Corp., 475 U.S. 574, 586 (1986). “[T]he mere existence of
some alleged factual dispute between parties will not defeat an
otherwise properly supported motion for summary judgment.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).
Axxis’s argument is strengthened by the MSA’s choice-of-law
provision stating that general maritime law is applicable.
2
The six prongs are as follows:
1. What does the specific work order in effect at the
time of the injury provide?
2. What work did the crew assigned under the work
order actually do?
3. Was the crew assigned to do work aboard a vessel in
navigable waters?
4. To what extent did the work being done relate to
the mission of the vessel?
5. What was the principal work of the injured worker?
6. What work was the injured worker actually doing at
the time of injury?
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The district court properly found that the MSA is governed by
maritime law and Maxum has failed to point to any concrete factual
dispute that could alter that finding. Under maritime law, it is
undisputed that the indemnity provision at issue is valid, so we
affirm the district court’s judgment.
III. CONCLUSION
We DISMISS the appeal arising from Thibodeaux’s claim for lack
of jurisdiction. We AFFIRM the district court’s summary judgment
related to Silva’s claim.
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