### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 12-31102

GLENN DUVAL,
Plaintiff

v. NORTHERN ASSURANCE COMPANY OF AMERICA; M ARKEL AMERICAN INSURANCE COMPANY, Defendants-Third Party Plaintiffs - Appellants

v. B H P BILLITON PETROLEUM DEEPWATER, INCORPORATED, Third Party Defendant - Appellee

Appeals from the United States District Court for the Western District of Louisiana

Before STEWART, Chie f J u d g e , H I G G INBOTHAM and JONES, C i r cuit Judges. PATRICK E. HIGGINBOTHAM, Circuit Judge: This appeal turns on whether third-party insure r s can enforce a master

se r v i c e s agreement’s defense, indemnification, and insurance obligations. We conclude that those o bligations run between the two pa r ties to the master services agreement and thus are not enforceable by the insurers. U n i t e d S t a te s C o u r t o f A p p e al s

F i f t h C i rc u i t 

### F I L E D J uly 5, 2013 Ly l e W . Cay ce Clerk Case: 12-31102 Document: 00512297630 Page: 1 Date Filed: 07/05/2013No. 12-31102 I. BHP Billiton Petroleum Deepwater, Inc. (“BHP”) is an energy exploration company. P r i o r to i ts bankruptcy filing, Deep Marine Technology, Inc. (“Deep Marine”) was an o i l f

i e l d service company that owned and operated v essels to support offshore construction. Effective April 18, 2006, BHP and D eep Marine entered i nto a Master Services A greement (“MSA”), pursuant to which Deep Marine agree d to provide construction support vessels to BHP. The MSA contained reciprocal i ndemnity obligations and required the parties t o support their respective indemnity obligations with liability insurance, self-insurance,

or a combination thereof. In addition, the M SA contained a c hoice of law clause, stipulating that general maritime law governs interpreta t i o n of the MSA and, to the extent general maritime law is not applicable, Texas law applies. Glen D uval ( “Duval”), a n employee of Wood Group/Deepwater Specialists, Inc. (another BHP contract o r ) , claims to have suffered injuries during an offshore personnel b as k e t t ransfer from a vessel owned b y Deep M a rine to a tension-leg platform owned by BHP. On April 8, 2008, he filed suit a gainst Deep Marine, alleging that the negligence o f D e e p M a rine’s personnel aboard the

vess e l c a u sed his injuries. In an amended complaint, h e also asserted a claim against Dolphin S e rvices, L.L.C., the employer of the a llegedly negligent crane operator. Duval did not, and has not, alleged t hat BHP has any liability for his injuries. On A p r i l 25, 2008, Deep Marine sought defense, additional insured status, and indemnity from BHP under the MSA, and it tendered the defense of Duval’s claims to BHP. BHP accepted tender on May 14, 2008. On December 4 , 2009, Deep M arine filed for Chapter 11 bankruptcy in the Southern D istrict of Texas, a nd D u v al’s suit was automatically stayed. On September 10, 2 010, the b ankruptcy court entered an order permitting D uval to proceed with his case against D e e p M a r i n e ’ s i n s u r e r s , b u t p e r m anently enjoining him from “ enforcing, levying, attaching, collecting, or otherwise recovering in any matter or by a ny means” against Deep Marine or its e s t a t e . P ursuant to
2 Case: 12-31102 Document: 00512297630 Page: 2 Date Filed: 07/05/2013No. 12-31102

that order, the distr i c t c ourt reopened the case. On January 4, 2 012, Duval amended his c omplaint to name Northern A s surance Company of America and Markel A m e rican Insurance Company (“Underwriters”), the protection and indemnity insurers of Deep Marine, as additional defendants under Louisiana’s Direct Action Statute. 1 O n February 7, 2012, Underwriters filed a third-party complaint against BHP, seeking to be “fully prote c t e d, defended, indemnified, held harmless and provided insurance coverage” by BHP in accordance with the MSA and purporting to tender BHP to Duval under Federal Rule of Civil Procedure 14(c). Underwriters and BHP filed cross-motions for summary judgment, each disputing whether U nderwriters could enforce BHP’s contractual insurance, defense, and indemnity obligations to Deep Mar ine after Deep Marine’s bankruptcy d ischarge. Following a h e a ring with oral argument, the district court granted B HP’s m o tion for summary j udgment, denied Underwriters’ motion for summary j u d g m e n t, and dismissed t he action with prejudice. 2 Underwriters timely appealed. 3 We have subject matter jurisdiction pursuant to 28 U.S.C. § 1292(a)(3), which provides for interlocutory appeal from a district court’s order “determining the rights and liabilities of t he parties to admiralty cases.” 4

II.

1 L A

. R E V

. S T A T

. A N N

. § 22: 1269.

2 The d is trict court did not is s ue a w ritten op inion.

3 D uval did not ap p eal the d is trict court’s jud gm ent.

4 28 U

. S. C. § 1292( a) (3)

. 3 Case: 12-31102 Document: 00512297630 Page: 3 Date Filed: 07/05/2013No. 12-31102

We review a district c ourt’s order granting summary j udgme n t d e novo , applying the same standards as the distric t c o u r t

. 5 “Summary judgment is warranted if the pleadings, t he discovery and di s c losure materials on f ile, and any affidavits show that there is no genuine [dispute] as to any material fact and that the movant is entitled to judgment as a m atter of l aw.” 6 When parties file cross-motions for summary judgment, “we review each p arty’s motion independently, viewing the evidence and inferences in the light m ost favorable to the nonmoving party.” 7 “Interpretation of the terms of a contract, including an indemnity clause, is a matter of law, r eviewable de novo on appeal.” 8 “[T]he obligation to indemnify is to b e strictly construed,” 9 and “a c ourt should not cons t r u e a n indemnity clause to impose liability for a loss neither expressly within its terms nor of such a character that the parties probably intended to exclude the loss.” 1 0

I II. The parties dispute whether the MSA requires BHP to protect, defend, indemnify, and hold harmless Underwriters against Duval’s claim. We conclude that it does not and therefore a ffirm the district court’s g rant of summary judgment in favor of BHP. To be clear, the parties agree that t he MSA required

5 G rea ter H

ous. Sm a l l Ta xi ca b Co. O w ners A ss’n v . Ci t y of H ous. , 660 F .3d 235, 238 ( 5th Cir. 2011)

.

6 Id. ( quoting DePree , 588 F. 3d at 286) ( alteration in original)

.
7 Ford M

otor C o. v . Tex. D ep t. of Tra nsp . , 264 F. 3d 493, 498 ( 5th Cir. 2001)

.
8 Kem p v . Gul f O il Corp

. , 745 F. 2d 921, 924 (5th Cir. 1984)

.
9 Forem a n v . Exxon Corp

. , 770 F. 2d 490, 497 n. 12 ( 5th Cir. 1985) ( internal quotations and citations om itted )

1 0 Kem p , 745 F. 2d at 924 ( quoting Corbi tt v. D i a m ond M. D ri l l i ng C o. , 654 F .2d 329, 333 ( 5th Cir. 1981) ) ; see H a rdy v . G ul

f O i l C orp . , 949 F. 2d 826, 834 ( 5th Cir. 1992) ; Forem a n , 770 F. 2d at 497 n. 12. 4 Case: 12-31102 Document: 00512297630 Page: 4 Date Filed: 07/05/2013No. 12-31102

BHP to protect, defend, indemnify, release and hold harmless Deep Marine against Duval’s claim. Specifically, the MSA provided: Company [BHP] shall protect, defend, indemnify, release, and hold harmless Contractor Group f r o m and against a ny a nd all c laims arising o u t of, resulting from or in connection with the provision of the Goods and/or Services pursuant to this Contract for: (I) any injury, death, or illness suffered by any person in Company Group; and (II) any damage to or loss of any equipment, materials, vessels, or other property of any member of Company Group . . . .
The parties d e fined “ Contractor Group” t o in c l u d e t h e C ontractor (Deep Marine); its subsidiaries, affiliates, contractors, and subcontractors; and the “agents, representatives, servants, directors, officers, a ssign s , managers, members, shareholders, owners, employees and invitees of a ll of the foregoing.” It defined

“ Company Group” to include BHP, as well as its subsidiaries, affiliat e s , contractors, and subcontractors, a nd employees “of all of the foregoing.” Finally, the MSA defined “claims” to i n c l u d e “all claims losses, demands, causes of action,

s u i t s , p r o c e e d i n g s , f

i n e s, p enalties, judgments, obligations a nd liabil i t i e s o f e v e r y kind a nd character.” Thus, Duval’s claim against D e ep Marine fell w ithin the
scope of BHP’s indemnification obligation because it was a p e rsonal injury claim asserted by a p erson in Company Group (an employee of a BHP contractor) against a member of Contractor Group (Deep Marine). But the s ame is not true of Duval’s claim against Underwriters. Under the plain language of the MSA, BHP’s indemnification and defense obligations only ran to members of the “Contractor Group.” The p arties could h ave included the Contractor’s insurers within the definition of “Contractor Group,” as parties in o t h e r c ases h ave done, 1 1

1 1 See, e. g. , M

id- Conti nent Ca s. Co. v . S wi ft Energy Co. , 206 F

. 3d 487, 494 ( 5th Cir. 2000) ; M

a gee v. Ensco O

ff shore Co. , N o. 11- 1351, 2012 WL 1825274, at *3 ( E

. D

. La. M ay 18, 2012) ; BJ Serv ’s Co. , USA v . Thom p son , N o. 6: 08- 510, 2010 WL 2024725, at *6 (W. D

. La. M ay 14, 2010)

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but they did not do so. In turn, BHP owes no duty to U nderwriters, and we find Underwriters’ arguments to the contrary unpersuasive. Underwriters a r g ue that BHP waived any potential defenses to its contractual obligations by accepting Deep Marine’s tender of Duval’s c laim and defending Deep Marine in the matter. But waiver is simply inapplicable here. Even though BHP accepted Deep Marine’s tender of Duval’s claim, it never indicated it had a ny obligation to Underwriters. Instead, its defense arises out of an unknowable change in factual circumstances—specifically Deep Marine’s discharge in bankruptcy, the bankruptcy court’s order permanently enjoining Duval f rom proceeding against D eep Marine, and Underwriters’ s u b s e q uent claim against BHP. Underw r iters also make four substantive arguments in favor of their interpretation of the MSA. First, Underwriters attack BHP’s characterization of the MSA as an indemnity agreement r equiring that Deep Marine make payment to D uval before BHP’s i n d e m nification obligation becomes enf o r ceable. 1 2 They argue that the MSA requires BHP to indemnify Deep Marine against liability, so B HP’s indemnificati o n obligation becomes enforceable once Deep Marine’s liability is established, not when Deep Marine eventually m akes p ayment on that l i ability. 1 3 Underwriters point out that, under Louisiana’s Direct Action Statute, Deep Mar i ne must b e found liable in

1 2 U nd erw riters als o attack B HP ’s general characterization of the M SA as an ind em nity agreem ent. They contend that an ind em nity ag reem ent mus t contain a p re- p aym ent p rovis ion, requiring p aym ent of claim s by the ind em nitee, and argue that becaus e the M SA contains no language requiring p re- p aym ent of claim s by Deep M arine, it is not an ind em nity agreem ent. We d is a g r e e . The cas es U nd erw riters rely on to argue that an ind em nity agreem e n t r e q u i r es p re- p aym ent are ins urance cas es in w hich the p olicies at is s ue w ere characterized as ind e m n i t y p o licies becaus e they required pre- p aym ent as a p rerequis ite to the ins urer’s liability. The M SA d oes not p u r p ort to be a liability ins urance policy, and U nd erw riters cite no authority ind icating that the M SA’s ind em nif ication language s hould be interp reted to require anything other than ind em nif ication as it is typ ically und ers tood

.
1 3 See 42 C. J. S. § 27, § 28. 6 Case: 12-31102 Document: 00512297630 Page: 6 Date Filed: 07/05/2013No. 12-31102

order for Underwriters to be h eld liable. 1 4 Therefore, they contend, even though Deep Marine will never pay damages to Duval, B H P ’ s i ndemnification o bligation will b ecome enforceable once liability i s established. But even assuming arguendo that the MSA requires indemnification against liability and that Deep Marine will eventually be held liable, Underwriters s till cannot prevail because BHP’s indemnification obligation—whatever i t s s cope—runs onl y t o Deep Marine. Second, U n d e r writers contend that summary judgment in favor of BHP

was impro p e r b e cause, upon their payment of any judgment or settlement to Duval, they will become s ubrogated to all o f D eep Marine’s rights, including its

r i g h t s a g a inst BHP u n der the MSA. This argument also fails to p ersuade. Assuming arguendo that payment by Underwri t ers w o uld give rise to subrogation, Underwriters would nevertheless have no cla i m a g ainst BHP because “a subrogee can obtain n o greater rights than i ts s u brogor had.” 1 5 Deep Marine would not, and c ould not, incur a n y l o s s in the Duval a ction, so Underwriters could not seek i ndemnification from BHP. And, because BHP has agreed to continue provid i n g D e e p M a r i n e w i th a nominal defense, Underwriters would not have a breach of contract claim against BHP. Third, Underwriters argue that B H P a g r e ed to become Deep Marine’s primary insurer against liability to members o f Company G roup. They point to the MSA’s r e q u i r ements (1) t hat BHP support its indemnification obligations with self-insurance, a liability insurance policy, or a combination thereof and (2) that the insurance c o v e r age BHP obtains n ame Deep Marine as an additional insured a nd serve as primary insurance, without the right of contribution from
any i n surance policies maintained by Deep Marine. We fin d t h e a r gument inapplicable here because BHP chose to s elf-insure for claims under $1 million

1 4 See D esca nt v . A dm ’rs of Tul a ne Educ. Fund , 639 So. 2d 246, 249 (La. 1994)

.
1 5 Com p l a i nt of A dm i ra l Tow i ng & Ba rge Co. , 767 F. 2d 243, 250 ( 5th Cir. 1985)

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and t h e p a r t i e s a g ree that Duval’s claim i s not for more than $1 m illion. We conclude that t he additional i n s u r e d and p rimary insurance requirements do not apply to BHP’s self-insuranc e . F o r o n e, the M SA focuses on “insurance coverage” and “policies of i nsurance” when describing both the additional insured and primary insurance requirements, leading u s to b elieve that those requirements only apply when BHP chooses to support its indemnity o bligation with a liability insurance policy. When a c o m p a n y s elf-insures, by contrast, “there is no contract with an insurance company.” 1 6 We find f urther support f

or our r e ading in Texas

case law. In Hertz Corp. v . Robineau , the Texas Court of Appeals explained that “the term ‘self-insurance’ i s a misnomer” because “in effect, a self-insurer does not provide i nsurance at all.” 1 7 It went on to m ake clear that a self-insurer does not “ assume[] all the d uties and burdens of an insurer,” unless the parties have expressly contracted for “liability coverage.” 1 8 “To say that a self-insurer will pay the same judgments and in the same amounts a s insurance c ompany w ould have had to p ay is one thing; while it is obvious that to assume all the obligations that exist under a [liability policy] is quite another thing.” 1 9 We therefore conclude that the additional i nsured and primary insurance requiremen t s d o n ot apply BHP’s self-insurance. Fourth, Underwriters argue that because “discharge of the debtor does not affect the l iability of any other entity on, or the property of any other entity for, such debt,” 2 0 we should e nforce BHP’s contractual o bligations. Otherwise, they contend, BHP will receive a w indfall. T his argument, t oo, misses the point. It is t rue that Deep Marine’s b ankruptcy does not affect the liability of any other

1 6 B L A C K ’ S L A

W D I C T I O N

A R Y 819 ( 8th ed

. 2004)

.
1 7 6 S. W. 3d 332, 336 ( Tex. Ct. Ap p . 1999) ( em p has is in original)

.
1 8 Id.

1 9 Id. ( internal quotations om itted )

.
2 0 11 U

. S. C. § 524( e)

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entity, such as U nderwriters, to Duval. But Duval h as not alleged that BHP has any potential liability for his claims. T hat makes sense beca u s e BHP’s only obligation is an indemnifica t i o n o b l i g a t i o n t o D e e p Marine; u nlike Underwriters, it has no secondary liability to injured tort victims, like Duval. Before concluding, w e p ause briefly to address Underwriters’ contention that they could tender BHP directly to D u v a l u n d e r Federal Rule of Civil Procedure 14(c). Such tender was improper because Duval has no claim against BHP. The MSA only obligates BHP t o indemnify members of the “ Contr a ctor Group.” A s a n e m p l oyee of Wood Group ( a BHP c ontractor), D uval is only a member of “Company G roup,” n ot “Contractor Group,” so BHP’s co n t r a c t u al obligations do n ot run to him. And, even if they did, because no claims have been asserted against Duval, BHP w o u l d h ave no o bligation to indemnify and defend him. 2 1 Moreover, as we have previously explained, U nderwriters did not agree to act as the primary i n s u r e r o f D eep M arine against Duval’s claim, so Duval could n ot bring suit directly against BHP under Louisiana’s Direct Action Statute.

IV. For t he reasons s et f

orth above, we AFFIRM the judgment o f the district court.

2 1 It is w orth noting that D uval neither op p os ed BH P’s m otion for s um m ary jud gm ent ( w hich exp res s ly s ought d is m is s al of the tend ered claim ) nor ap p ealed the d is trict court’s d is m is s al of the tend ered claim

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