United States Court of Appeals

Fifth Circuit

FILED

April 16, 2004

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 02-30949

 

MARQUETTE TRANSPORTATION COMPANY, INC., 

Plaintiff-Counter Defendant

Appellant-Appellee-Cross-Appellant,

BLUEGRASS MARINE, INC.; IOWA FLEETING SERVICE, INC.; 

ZURICH AMERICAN INSURANCE COMPANY, INC.; THE WATER 

QUALITY INSURANCE SYNDICATE

Plaintiffs-Appellants,

versus

LOUISIANA MACHINERY COMPANY INC., Etc; ET AL,

Defendants,

LOUISIANA MACHINERY COMPANY INC., doing business as Louisiana

Machinery Power Systems;

Defendant-Appellee,

QUALITY SHIPYARDS, INC.

Defendant-Counter Claimant

Appellee-Appellant-Cross-Appellee

--------------------

Appeals from the United States District Court

for the Eastern District of Louisiana

--------------------

Before HIGGINBOTHAM, SMITH, and WIENER, Circuit Judges. 

WIENER, Circuit Judge:

The plaintiff-appellants in this maritime action were the

owners and operators of the M/V KAY ECKSTEIN (the “KAY”) and their
2

insurers (collectively, “Plaintiffs”). The KAY was a triple screw,

steel hulled push boat which was originally constructed in 1973.

In 1999, the KAY’s three Caterpillar 3606 engines, which had been

installed in 1992, were overhauled and other extensive renovations

were performed by defendant-appellant Quality Shipyards, Inc.

(“Quality”) and defendant Louisiana Machinery Company, Inc.

(collectively, “Defendants”). After the work was completed, the

KAY successfully underwent dock and sea trials and was returned to

Marquette, which operated the vessel for five weeks without

incident. Late in May 1999, however, a catastrophic engine-room

fire led to the KAY’s total loss. 

Plaintiffs sued Defendants for maritime negligence and breach

of express and implied warranties of workmanlike service. Quality

counterclaimed seeking attorneys’ fees and court costs. After a

bench trial, the district court concluded that (1) Marquette had

not carried its burden of proof with regard to negligence and

causation, but (2) Quality’s counterclaim was without merit,

notwithstanding the repair agreement’s indemnity provision. Both

sides appealed. Although we see no reason to disturb the district

court’s disposition of the negligence and breach of contract

claims, we conclude that the trial court erred in interpreting the

indemnity provision here at issue and in denying Quality’s

counterclaim. 

I. Facts and Proceedings
3

The KAY underwent extensive maintenance and repair work in

1998-99, including the overhauling of its three Caterpillar

engines; designing and fabricating kort nozzles and I struts around

its screws; removing, modifying, and reinstalling the screws,

rudders, and shaft lines; and testing and delivering the vessel.

The engine overhauls included installing new fuel and oil filters

and resealing and rebushing the oil pump. The contract price for

the work was $870,000.

None of the KAY’s crewmembers witnessed the start of the fire,

although one crewman had been in the engine room thirty minutes

prior to the fire’s estimated start time. The KAY lost engine

propulsion approximately thirty minutes after the fire was first

noticed, and sank shortly thereafter. After the KAY was raised

from the river approximately 10 days after it had sunk, Plaintiffs

discovered that the check valve fittings on the center main engine

were loose.

At trial, Plaintiffs’ primary contention was that Defendants

had improperly torqued (tightened) the check valve fittings on the

KAY’s center main engine. According to Plaintiffs’ theory, those

under-tightened fittings had been gradually loosened by engine

vibration, eventually allowing a fuel spray to develop. Plaintiffs

advanced several potential ignition sources, the most probable of

which —— according to Plaintiffs —— was the exhaust pipe of the

generator’s diesel engine. When the trial ended, the district

court concluded that Plaintiffs had not carried their burden of
4

proof with regard to either fault or causation, and held for

Defendants. Plaintiffs argue on appeal that the district court

erred as a matter of law by holding Plaintiffs to an improperly

high burden of proof.

Quality counterclaimed for the attorneys’ fees and costs it

incurred in defending the suit, basing its claims on the repair

agreement’s indemnification provision, which by its terms applies

to such expenses:

Each party agrees to defend, indemnify and hold harmless

the other party’s indemnitees free and harmless from and

against any and all suits, claims, or liabilities

(including, without limitation, the cost of defending any

suit and reasonable attorney’s fees).

When it first considered the indemnity provision, the district

court granted Quality’s motion to exclude parol evidence on the

question of the parties’ intent, holding that the terms of the

provision were unambiguous. The court denied Quality’s motion for

summary judgment on this claim, however, indicating that the

indemnification provision would not be enforceable if the

Defendants had acted with gross negligence. The district court

subsequently ruled that although Quality was not negligent in this

matter, the indemnity provision had to be interpreted in

conjunction with the other provisions of the repair agreement. As

the agreement required each party to obtain specified insurance

policies, concluded the district court, the proceeds of those

policies were intended to be the “primary payer” of the subject

damages, ahead of the contract’s indemnity obligations: “There is
1 Marquette Transpo. Co., Inc., et al., v. Louisiana Mach.

Co., Inc., et al., 2002 WL 1809092 at *18 (Aug. 7, 2002).

2 622 F.2d 186 (5th Cir. 1980).

3 81 F.3d 552 (5th Cir. 1996). The district court also relied

on In Re Diamond Services, 2001 U.S. Dist LEXIS 6812 (May 16,

2001), a district court case that we affirmed in an unpublished

opinion.

5

no logical way to reconcile the indemnity provisions and the

mandatory insurance provisions ... other than to find that the

parties intended that the insurance coverages be exhausted prior to

the indemnity obligation being triggered.”1 

In reaching this conclusion, the district court relied on Ogea

v. Loffland Brothers Company2 and Tullier v. Halliburton

Geophysical Services, Inc.,

3 cases in which each party to an

indemnity agreement was required to name the other as an

“additional insured” under the mandated insurance policies.

Quality argues that because there was no requirement in the instant

contract to name the party opposite as an additional insured,

Marquette was not entitled to any benefit from the insurance

policies at issue. As such, insists Quality, it should be

reimbursed by Marquette under the terms of the indemnification

provision without regard to those insurance policies. The district

court took a “broader view,” finding that the “existence of

mandatory reciprocal insurance obligations” was determinative,

despite the fact that, unlike the situations in Ogea and Tullier,

the instant obligations did not require that the other party be
4 Marquette Transportation, 2002 WL 1809092 at *18.

5 See, e.g., Dow Chem. Co. v. M/V Roberta Tabor, 815 F.2d

1037, 1042 (5th Cir. 1987).

6 See, e.g., Boudreaux v. American Ins. Co., 262 La. 721, 762-

63 (La. 1972).

7 See Id.; Minerals & Chems. Philipp Corp. v. S.S. Nat’l

Trader, 445 F.2d 831 (2d. Cir. 1971).

8 See, e.g., Boudreaux, 262 La. at 761-63.

6

named as an additional insured.4 Quality thus maintains that the

district court’s ruling constitutes an unwarranted extension of our

precedent.

II. Analysis

A. Standard of Review

We review the district court’s conclusions of law —— including

its contractual interpretations —— de novo. We review findings of

fact for clear error.

5

B. Burden of Proof

Plaintiffs must show negligence and causation by a

preponderance of the evidence.6 Marquette correctly notes that in

a fire case, these elements frequently must be established by

circumstantial evidence because of the fire’s destruction of the

physical evidence.7 Even so, the evidence available must be

sufficient to find both negligence and causation.8 We address each

in turn.

1. Negligence
9 Marquette Transportation, 2002 WL 1809092 at *6.

10 Id. at *5.

7

The district court correctly noted that, to assess whether

Defendants were negligent, the court first had to “determine

whether it is more probable than not that the couplings were loose

at the time the vessel left the shipyard or whether vibration or

heat from the fire likely loosened the fittings.”9 This task was

complicated by the fact that the KAY had been under water, exposed

to river currents and elements, for some 10 days before it was

raised and examined. Furthermore, when Plaintiffs’ representative

examined the KAY and reported that the check valve fittings at

issue were loose, he neglected to mark the fittings in any way that

would record for posterity just how loose they were. Instead,

Plaintiffs’ representative relied on “his degree of ‘gentle

shaking’ and his ability to rotate the fittings” to estimate their

condition at the time of the fire,10 but this “measurement” was

performed after the fittings had been subjected to (1) the extreme

heat of the fire and (2) the currents of the river. 

Because of these factors, the district court relied on

circumstantial evidence to extrapolate the status of the fittings

as of the time that the KAY had left the shipyard. The court noted

that during the KAY’s five weeks of operation prior to the fire,

there had been no evidence of a loose check valve fitting; that is,

no crew member ever saw fuel seeping or spraying from the
11 This was so despite hourly engine-room inspections on the

day of the fire, including one just 30 minutes before the fire

broke out. Previously, however, one of the KAY’s crewmembers had

found a loose check valve fitting on the port engine, which he

tightened to avoid complications. See Marquette Transportation,

2002 WL 1809092 at *6-7.

12 Id. at *6.

13 See Id. at *8, *10.

14 See Id. at *3.

8

connection.11 Therefore, reasoned the district court, one important

question is “if the fittings were improperly tightened before the

vessel left the shipyard, would the fittings have leaked at some

point after the ship left the shipyard and prior to spraying fuel

on the date of the fire?”12 On this question, there was trial

testimony from more than one source that if the fittings were loose

because they had been improperly torqued, a leak likely would have

developed as soon as the engine was cranked and pressure built up.13

Further complicating Plaintiffs’ negligence theory is the fact

that it is not clear who reinstalled the fuel transfer line after

the engine mountings were drilled. First, there was no notation on

any written record indicating that Defendants’ employees had

performed that task.14 Neither did the check valve fittings

themselves need to be loosened for the fuel pump to be reinstalled.

Finally, record evidence indicates that Marquette personnel ——

including an engineer —— were at the site when the work was

completed. As those employees had previously performed some work

on the engine, it is at least possible that Plaintiffs’ own
15 Id. at *15.

16 Id. at *8.

9

employees participated in the reinstallation of the pump. Given

the lack of evidence suggesting that the check valve fittings were

loose when the KAY left the shipyard, and the lack of evidence that

Defendants’ employees alone were responsible for improperly

torquing the fittings if they were in fact loose, the district

court concluded that “Plaintiffs have not proved by a preponderance

of the evidence that there was any contractual breach or maritime

negligence by either defendant.”15

2. Causation

The district court was equally unimpressed by Plaintiffs’

causation theory. Experts on both sides testified that, over time,

engine vibration could further loosen an improperly torqued

fitting, eventually leading to a spray of fuel; and that it was

hard to know how long it might take for such a spray to develop.

Defendants, however, produced experts with significant experience

working with the flared valve fittings here at issue (experience

the Plaintiffs’ experts did not have), who ventured that it would

be “highly improbable” for loose fittings to move from no leak to

a full-blown spray within the 30-minute period involved in this

case.16 

Defendants created a model of the center main engine to

demonstrate that even a check valve fitting improperly torqued to
17 Id. at *12-13. Again, the model dealt with the degree of

improper torquing alleged by Plaintiffs; because the check valve

fittings were not marked after Plaintiffs’ original inspection, it

was impossible to say how loose the fittings were when the KAY was

raised from the river, much less how loose they might have been at

the time the fire started.

18 See Id. at *10.

19 Id. at *15.

10

the degree alleged by Plaintiffs would not produce a fuel spray

that could reach what Plaintiffs identified as the most likely

source of ignition —— the diesel generator exhaust pipe.17

Defendants also produced a fire expert who stated that the absence

of a specific “flash pattern” indicated that the fire did not start

in the area alleged by Plaintiffs.18 In other words, even if the

check valve fittings were loose when the KAY left the shipyard, it

is unclear that those fittings could have caused the fire under

these circumstances, much less that in fact they did so. The

district court found for Defendants on this issue, concluding that

“Plaintiffs have also not met their burden of proof with respect to

causation.”19

3. Plaintiffs’ contentions on appeal

On appeal, Plaintiffs argue that the circumstantial evidence

they produced was sufficient for a finding of liability by a

preponderance of the evidence, given how that standard has been

interpreted in the applicable case law. The district court, argue

Plaintiffs, held them to an inappropriately high burden of proof on

negligence and causation. For support, Plaintiffs cite cases
20 See, e.g., Boudreaux v. American Ins. Co., 262 La. 721 (La.

1972); Valiant Ins. Co. v. City of Lafayette, 574 So.2d 505 (La.

App. 3 Cir. 1991).

21 See Universe Tankships, Inc., v. Pyrate Tank Cleaners, Inc.,

152 F.Supp 903, 922 (S.D.N.Y. 1957).

22 See, e.g., Hanover Ins. Co. v. Jacobson-Young, Inc., 294

So.2d 564, 567 (La. App. 4 Cir. 1974).

23 262 La. 721 (La. 1972).

24 294 So.2d 564, 568 (La. App. 4 Cir. 1974).

11

discussing the burden of proof in fire cases, which stand for the

propositions that (1) circumstantial evidence may support a finding

of negligence and causation,20 (2) a plaintiff’s proof need not

exclude or eliminate every other possible cause of the fire,21 and

(3) a plaintiff need not establish the method or point of ignition,

but only sufficient circumstances implicating the defendant.22

Plaintiffs’ arguments on this issue ultimately fail, as all

the cases that they cite contain circumstances allowing for strong

inferences of negligence and causation —— circumstances not present

in the instant case. In Boudreaux v. American Insurance Company,

23

for example, the restaurant that burned down was under the

exclusive control of the defendants on the evening of the fire,

which started after hours. Similarly, in Hanover Insurance Company

v. Jacobson-Young, Inc.,

24 a fire broke out because Jacobson-Young

employees had improperly stored flammable materials in an area

where only Jacobson-Young employees were allowed. The other cases
25 In Universe Tankships, Inc., v. Pyrate Tank Cleaners, Inc.,

152 F.Supp 903 (S.D.N.Y. 1957), it was apparent at trial that

defendants had negligently used critically weakened pyrex bowls for

the lamps inside the tank, negligently failed to install nonsparking metal guards or cages on those bowls, and negligently

permitted its employees to work inside the tank at a time when the

tank had not been tested for its toxic and explosive gas content.

In addition, the court found plaintiffs’ expert witnesses

“impressively reliable and persuasive.” Id. at 907. U.S. v.

Standard Oil Co. of California, 495 F.2d 911 (9th Cir. 1974) is a

similarly distinct situation: the court in that case explained that

circumstantial evidence could suffice to find negligence and

causation in the course of upholding, not overruling, the trial

court’s negligence determination. (“Our review of the record

reveals substantial circumstantial evidence ... which supports the

district court’s finding ....”). Id. at 916.

26 Universe Tankships, 152 F.Supp at 920 (quoting United States

v. Masiello, 235 F.2d 279, 286 (2d. Cir 1956)(Judge Frank,

concurring).

12

cited by Marquette are similarly distinguishable.25 Additionally,

all the cases ultimately detail the same burden of proof, which the

plaintiff meets when “the inferences from the testimony are such as

to persuade that the occurrence of an essential fact was more

likely or probable than its non-occurrence.”26 

In the cases cited by Plaintiffs, the fact patterns were such

that the circumstantial evidence was sufficient to find liability.

Here, in contrast, (1) there was credible expert testimony on both

sides, (2) the KAY had been out of Defendants’ control for more

than a month before the fire, and (3) the destruction caused by the

fire made it difficult to discern the cause. In combination, these

facts made it difficult for Plaintiffs to prove their theory of the

accident, even by a preponderance. And, in its capacity as the

finder of fact, the district court concluded that Plaintiffs had
27 Marquette Transportation Co., Inc., et al., v. Louisiana

Machinery Co., Inc., et al., 2002 WL 1809092 at *14 (Aug. 7, 2002).

28 Id.

13

failed to carry this burden, labeling their theory as “improbable,”

and “possible, but unlikely.”27

Plaintiffs make two additional arguments about the district

court’s methodology, both revolving around the claim that the court

put them to an improperly high burden of proof. Plaintiffs argue,

for example, that the burden shifted to Defendants to propose an

equally probable cause of the fire after Plaintiffs met their

burden by demonstrating negligence. This argument, of course,

presumes that Plaintiffs actually met their burden in the first

place, and is undermined by the district court’s facially logical

—— and apparently proper —— conclusion that they had not done so.

Similarly, Plaintiffs argue that the district court improperly

“impos[ed] ... a requirement to prove the exact mode and point of

ignition.” The district court did note that it “reject[ed] the

notion that such a [fuel] spray permeated the elbow joint of the

diesel generator exhaust in an amount sufficient to ignite.”28 This

statement, however, is merely part of the district court’s

discussion of the strengths and weaknesses of Plaintiffs’ case.

And, that discussion of the ignition point matters little in the

overall context of this case, as the district court also found that

the other elements of Plaintiffs’ fire theory were improbable and
29 Id. at *15. 

30 Emphasis added. The “other party’s indemnitees,” in the

case of Marquette, are defined in section 8(B) as “Shipyard, its

parent, subsidiary, and affiliated companies, each of their

officers, directors, and employees, the Vessel, its registered

owner, its master and crew, and each of their respective

underwriters.”

14

that there was no contractual breach or maritime negligence by

Defendants in any event.29

In sum, we perceive that the district court did weigh the

conflicting evidence —— all of it credible —— and concluded that

Plaintiffs had not proved their theory of the accident by a

preponderance of the evidence. That there are many fire cases in

which the plaintiff was able to bear his burden with purely

circumstantial evidence does not automatically make the district

court’s approach —— or its conclusion —— erroneous.

C. Indemnification

Quality’s counterclaim, as noted, is based on the repair

agreement’s indemnification clause, which binds the signatories,

Quality and Marquette. That clause provides, in relevant part:

Each party agrees to defend, indemnify and hold harmless

the other party’s Indemnitees free and harmless from and

against any and all suits, claims, or liabilities

(including, without limitation, the cost of defending any

suit and reasonable attorney’s fees) for loss or damage

to property owned, leased or operated by the indemnitor,

regardless of cause, including the negligence or other

legal fault of any of each party’s Indemnitees.

30

Quality argues that “property owned, leased or operated” by

Marquette includes the KAY itself. Therefore, according to
31 622 F.2d 186 (5th Cir. 1980).

15

Quality, because Marquette wrongfully sued for the loss of its

“property,” Marquette should be responsible for the expenses

Quality incurred in defending the claim.

As we have noted, the district court’s decision on this matter

turned on the interplay between the indemnification clause and the

reciprocal insurance obligations required by the repair agreement.

Specifically, Quality was required to purchase:

at its own expense for its own employees, properties and

operations, the following policies of insurance:

(A) By Shipyard -

(1) Worker’s Compensation ... and employer’s

liability insurance and/or appropriate maritime employers

coverage ...;

(2) Comprehensive Public Liability and Ship

Repairers’ Liability Insurance ... including broad form

contractual liability coverage ...;

(3) Automobile liability insurance ...; and

(4) Full form physical damage insurance on all

property (including floating equipment and vessels)

owned, chartered, operated, or otherwise used by the

Shipyard.

The repair agreement contains similar insurance requirements for

Marquette, with additional required coverages.

The district court looked to a series of cases in which we

held (or affirmed) that, because of reciprocal insurance

requirements, contractual indemnity provisions did not apply until

the limits of those insurance policies had been reached. In other

words, the insurance policies were the “primary payers” and should

be exhausted before any indemnity obligations attached. In those

cases —— Ogea v. Loffland Brothers Company,

31 Tullier v. Halliburton
32 81 F.3d 552 (5th Cir. 1996).

33 2001 U.S. Dist. LEXIS 6812 (May 16, 2001). As the district

court noted, this case was upheld on appeal in an unpublished

opinion. Therefore, although we discuss the published district

court case, the principles expressed in it were affirmed in our

unpublished opinion.

34 Tullier, 81 F.3d at 554.

35 Diamond Services, 2001 U.S. Dist. LEXIS 6812 at *11. There

was some question whether the P&I policy at issue would be extended

to cover Chet Morrison Contractors, Inc., the adverse party in that

case. The district court, however, declined to reach that issue,

deciding that the fact that the liability insurance provided

through the P&I policy was primary was dispositive.

16

Geophysical Services, Inc.,

32 and In Re Diamond Services33 —— the

contractual insurance obligations included the express requirement

that each party name the other as an additional insured under the

applicable policies. In Tullier, we noted that this factor had

been “controlling” in Ogea, and deemed it so again in Tullier.

34

In Diamond Services, the district court explained that although

there was no additional-insured requirement for the Comprehensive

General Liability policy, which contained the contractual liability

coverage, there was such a requirement for the P&I policy, which

provided primary coverage. The district court in Diamond Services

explained that the “essential fact is that the liability insurance

provided ... under Diamond’s P&I policy is primary and, therefore,

before CMC is required to indemnify Diamond, the limits of the P&I

policy must be exhausted.”35

In the instant case, there are no contractual provisions

requiring “additional insured” coverage or, as in Diamond Services,
36 Tullier, 81 F.3d at 553-54 (quoting Ogea, 622 F.2d at 190).

37 In Re Diamond Services, 2001 U.S. Dist LEXIS 6812 at *10

(citation omitted).

17

dictating that the contractually-required insurance policies

provide primary coverage. The district court nevertheless looked

past this fact, taking a “broader view” and examining the

underlying reasoning of Ogea and Tullier. As the district court

noted, in both of those cases we explained that it is necessary to

read all contractual provisions “in conjunction with each other in

order to properly interpret the meaning of the contract.”36 This

mandate, combined with the following reasoning from Diamond

Services, led the district court to conclude here that the presence

of “additional insured” coverage is not a critical factor: 

There is no reason for an indemnitor to require an

indemnitee to procure insurance if the indemnitor did not

intend to limit its indemnification obligations to the

excess of the required insurance coverage. ... To read

the indemnity and insurance requirements any other way

produces an incoherent result, e.g., why would CMC

require Diamond to obtain certain insurance policies if

CMC is required to indemnify Diamond for any claims

covered under those policies.37

The district court explained that, “[a]fter considering the repair

agreement as a whole,” it came to the same conclusion as did the

Diamond Services court: “There is no logical way to reconcile the

indemnity provisions and the mandatory insurance provisions ...

other than to find that the parties intended that the insurance
38 Marquette Transportation Co., Inc., et al., v. Louisiana

Machinery Co., Inc., et al., 2002 WL 1809092 at *18 (Aug. 7, 2002).

18

coverages be exhausted prior to the indemnity obligation being

triggered.”38

We disagree with the district court’s conclusion that there is

“no logical way” to reconcile the indemnity and insurance

provisions without finding that the parties intended that the

insurance limits be exhausted prior to attachment of the indemnity

obligations. This line of thinking is appropriate in cases like

Ogea, Tullier, and Diamond Services, where the contracts contained

“additional insured” requirements or dictated the primacy of

insurance coverage over indemnification obligations, or both. That

made it illogical to read the underlying contracts as providing for

anything other than an indemnity obligation that does not become

operable until and unless the insurance proceeds are exhausted. In

the absence of similar contractual language, however, this

reasoning is inapposite. In the instant case, the insurance

requirement appears to be designed to provide a solvent, deep

pocket for any indemnity obligations that may eventuate between the

parties and to cover any third-party claims that might arise. It

simply is not true that there is only one way to integrate the

repair agreement’s indemnity and insurance obligations. In this

absence of language supporting the district court’s interpretation

of those provisions, we cannot accept it.
39 Discussing Marquette’s contention that the indemnity

clause’s discussion of “property” did not include the vessel

itself, or was at least ambiguous, the district court asserted:

“[T]he terms of the Agreement are not ambiguous ....” 

19

Marquette also makes a number of alternative arguments on the

indemnity clause. Although all these arguments are based, at least

in part, on the assumption that the indemnity clause is ambiguous,

and have therefore been either directly or inferentially addressed

by the district court’s decision on summary judgment,39 we touch on

each briefly.

First, Marquette argues that an ambiguity exists in the “other

parties’ indemnitees” language of the indemnity clause.

Specifically, Marquette notes that “the vessel ... its registered

owner, and each of their respective underwriters” are included in

the definitions of both “owner indemnitees” and “shipyard

indemnitees.” Marquette asserts that this makes the provision

“confusing and contradictory as to who is indemnifying whom.”

Although, certainly, an indemnity claim by the vessel’s owners

against themselves would be contradictory and confusing, we find no

ambiguity in the contract’s requirement that Marquette indemnify

Quality. “Shipyard, its parent, subsidiary, and affiliated

companies” are the first of the listed “Shipyard indemnitees.”

That fact, in combination with the phrase “[e]ach party agrees to

defend, indemnify, and hold harmless the other party’s

indemnitees,” makes clear that Marquette agreed to indemnify

Quality and hold it harmless.
40 Marquette claims the clause “serves to absolve the shipyard

of all obligations,” and that the contract does not “contain any

other clause or language disclaiming express or implied

warranties.”

20

Marquette also argues that the indemnity clause amounts to an

unenforceable exculpatory clause. Again, we disagree. First, the

clause clearly indicates that the indemnification obligation will

attach regardless of the negligence of any of the indemnitees:

“Each party agrees to defend, indemnify and hold harmless the other

party’s indemnitees ... regardless of cause, including the

negligence or other legal fault of each party’s indemnitees.”

Second, this particular indemnity clause does not absolve Quality

of its warranty duties under the contract as Marquette alleges.40

If Quality had been found to be in breach of those warranties,

perhaps our application of the indemnity clause would be different.

As Quality apparently met its duties under the contract, however,

it is entitled to indemnification from Marquette for the costs and

expenses caused by the latter’s suit.

Marquette contends in addition that the phrase “property

owned, leased, or operated” does not encompass the vessel itself.

In an effort to support this proposition, Marquette notes that the

term “vessel” is used 19 times in the repair agreement, but the

term “property” is used only six times, and argues this is an

indicator that different meanings are ascribed to the two terms.

Although the limited use of the term “property” may suggest a

limited meaning, the plain fact is that, as between the terms
41 In its order on the cross-motions for summary judgment, the

district court came to the same conclusion on this point: “If

Marquette intended for the loss of the vessel to be exempt from

this broad clause, it could have included such an exclusion.”

42 Although the parties changed only subparagraph 8(B), and the

precise indemnification language at issue in the instant case comes

from 8(C), this is nevertheless an important indicator of Quality’s

knowledge of the contents of paragraph eight. 

21

“property” and “vessel,” the former is the broader of the two.

“Vessel” is a lesser included type of “property,” but it is

property nonetheless. If Marquette had wanted to exclude the

vessel from the ambit of “property,” it could have insisted on

language such as “property other than the vessel” or even “other

property” in the indemnity clause.41 No such language is present,

however, and we will not infer limiting language absent any

indication of party intent.

Finally, Marquette asserts that the indemnity clause should be

construed against its drafter —— Quality —— again, because of the

clause’s alleged ambiguity. Beyond our conclusion, shared by the

district court, that the language is not ambiguous (certainly not

in the context of the instant case), we note further that changes

—— initialed by both parties —— were made to the indemnification

provisions found in paragraph 8 of the repair agreement.42 This

shows that Marquette read and considered the language of the

indemnification clause —— again, language that we do not find

ambiguous. Under these facts, we decline to impose a strained
22

construction of the language on Quality for having drafted the

initial version of the agreement.

III. Conclusion

The district court did not require Plaintiffs to meet an

incorrectly difficult burden of proof on the issues of negligence

and causation; rather, Plaintiffs simply failed to carry the proper

burden. On the issue of indemnification, however, the district

court’s expansive application of the Ogea/Tullier reasoning to the

instant situation is unwarranted. The repair agreement in this

case —— unlike those in Ogea and Tullier —— did not require that

any party opposite be named as an additional insured; neither did

it dictate that the required insurance would provide primary

coverage before indemnification. Absent explicit language

entitling Marquette to benefit from the proceeds of those insurance

policies, we see no justification for reading such provisions into

the agreement. We therefore affirm that portion of the district

court’s August 6, 2002 Order finding that Plaintiffs had not

carried their burden of proof with regard to negligence and

causation, but reverse that portion of the Order finding Quality’s

counterclaim without merit by virtue of the interplay between the

repair agreement’s indemnification clause and insurance

obligations. The decision of the district court is therefore

AFFIRMED in part, REVERSED in part, and REMANDED with instructions.
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